Matrix scheme: Difference between revisions

Revision as of 03:59, 17 November 2019

Revision as of 15:10, 22 November 2019

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{{EngvarB|date=January 2014}}

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A '''matrix scheme''' (also known as a '''matrix sale''' or '''site''', and as a '''hellevator''', '''excavator''' or '''ladder scheme''') is a [[business model]] involving the exchange of money for a certain product with a side bonus of being added to a waiting list for a product of greater value than the amount given.<ref name=oftpress>{{cite web|url=http://www.oft.gov.uk/news/press/2005/161-05 |title=Matrix Website Scheme stopped by Office of Fair Trading |accessdate=5 August 2006 |url-status=dead |archiveurl=https://web.archive.org/web/20070314233701/http://www.oft.gov.uk/news/press/2005/161-05 |archivedate=14 March 2007 }}</ref> Matrix schemes are also sometimes considered similar to [[Ponzi scheme|Ponzi]] or [[Pyramid scheme|pyramid]] schemes.<ref name =msn1>{{cite web | url = http://msnbcwww.msnnbcnews.com/id/3078957 | title=$150 plasma TV site faces lawsuit | accessdate=5 August 2006|archive-url=https://web.archive.org/web/20070219081023/http://msnbc.msn.com/id/3078957/|archive-date=19 February 2007}}</ref> They have been called "unsustainable" by the United Kingdom's [[Office of Fair Trading]].<ref name =oftpress/> A matrix scheme is also an example of an 'exploding queue' in [[queueing theory]].

==History==

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==Operation==

The operation of matrix schemes varies, though they often operate similarly to pyramid or Ponzi schemes.<ref name =msn2>{{cite web | url = http://msnbcwww.msnnbcnews.com/id/3078976 | title=$150 for a plasma TV? A bad bet | accessdate=5 August 2006}}</ref> Some of the former participants of these schemes consider them to be a form of [[confidence trick]], although others are happy with their purchase. To move upward in the list, a person must wait for new members to join or refer a certain number of people to the list. This is accomplished through purchasing a token product of marginal value: usually e-books, cell phone boosters, screen savers, or other software CDs/DVDs. When a pre-defined number of people have purchased the token product, the person currently at the top of the list receives their reward item, and the next person in the list moves to the top. The rewards for those at the top of the matrix list are usually high-demand consumer electronics, such as portable digital audio players, high-definition television sets, laptop [[computers]], and cellular phones. Reaching the point on the list where one receives the expensive goods is termed "cycling".

In many cases, the token product alone could not be reasonably sold for the price listed, and as such legal experts claim that, regardless of what is said, the real product being sold is the "reward" in question in those situations. In these cases, the operator could be charged with running a gambling game or failing to supply ordered products. Steven A. Richards, a lawyer who represents [[multi-level marketing|multi-level marketing (MLM)]] companies for Grimes & Reese in Idaho Falls, Idaho, has stated that often there are no clear legal tests for Ponzi schemes. But if the product sold has no value or very little value, and consumers wouldn't buy it without the attached gift, the scheme probably runs afoul of federal and state laws.<ref name = msn2/>

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==External links==

*[http://msnbcwww.msnnbcnews.com/id/3078976 $150 for a plasma TV? A bad bet] – [[MSNBC]]

*[https://web.archive.org/web/20081030000647/http://www.thisislondon.co.uk/news/article-11783353-details/Warning+over+iPod+scam/article.do Warning over iPod scam] – [[London Evening Standard#Websites|This is London]]

*[https://www.wired.com/news/culture/0,1284,62226,00.html eBay scam uses iPods as bait] – [[Wired magazine|Wired]]