Ponzi/ Pyramid Schemers have stepped up their game. The good, old, classic indicators, though still relevant, are now being bypassed by the clever plots of the brains behind Ponzi schemes. To the untrained eye, the legitimacy of these schemes cannot be questioned. PHP Agency Inc belongs to this new order of Pyramid schemes.
PHP(people helping people) Agency Inc is a Multilevel Marketing company operating in the insurance niche market. Headquartered in Addison, Texas, was founded by Patrick Bet-David in 2009. As a “national financial services company”, It was created, according to the marketing pitch on its website, to” provide everyone access to the best insurance products offered.” Yet, as its workings show, PHP is better at getting money from recruits than selling insurance.
The classic criteria for distinguishing between a pyramid scheme and a true investment scheme is that the former has no underlying products, services, assets, or businesses that could be invested in. PHP beats this criterion expertly. It markets a range of insurance products: term life insurance, no medical exam life insurance, indexed universal life insurance, the return of premium, and fixed indexed annuities.
Perhaps the major reason PHP qualifies as a pyramid scheme is the way it goes about affiliate recruitment. A prospective investor, upon research, find out that the number of non affiliate subscription is dwarfed by affiliate subscription. It is worrisome that an insurance company with over a decade of existence still thrives on affiliate recruitment.
Another red flag is the nondisclosure of affiliate cost and cost of each insurance product on PHP’s website. This is an unforgivable ommission in the MLM world.
There is also an apparent pressure being put on affiliates to recruit and to purchase subscriptions. New affiliates have to pay some “initiation fee” on PHP trainings. The possibility of an affiliate an affiliate earning much would depend on the affiliate’s ability to convince people to join the PHP network. At a time when skepticism about MLM companies is high, many affiliates end up giving up trying.
PHP runs an eleven rank system and a unilevel compensation payment structure. For an affiliate to move up the ranks, that affiliate has to meet a quite unrealistic sales quota and has to recruit a very high number of affiliates. This ranking system also helps PHP to incentivize and pressurize recruiting through accrued commissions and bonuses.
Also, PHP uses the unilevel structure to funnel new funds generated by new affiliates upwards to few high ranked affiliates. This structure is also used to shuffle funds amongst affiliate to create an illusion of earnings.
Apart from the fact that the owner of PHP, Patrick Bet-David has no MLM experience, the Better Business Bureau has it that there is no evidence to proof that PHP really makes money from selling insurance. The only verifiable proof of income for PHP is through affiliate recruitment, and that makes it a Ponzi scheme.
Ponzi/Pyramid schemes work like lotteries: few people earn, many people lose. Affilate recruitment would stall sooner or later. Then PHP would no longer have capital to shuffle. Early adopters would cash out and the majority of investors would count their loses.