What is a Matrix Scheme?

A matrix scheme is a business model very similar to a pyramid scheme, in which people give money to be added to a waiting list. Sometimes people get a small token for their money, but the main attraction of this scheme is on waiting for a larger prize to be received at the end.

Once a person has signed on for a matrix scheme, his or her name is added to the bottom of a waiting list. As more people join in or new members are recruited, other names move up the list until they reach the top. The person at the top of the list receives a higher-priced item. Electronics such as computers or TV sets are common prices, but trips and cars are also a popular prize choice.

Most of the people who sign up for a matrix scheme never reach even the second level, as it eventually becomes impossible to recruit enough new members to keep the system going. Despite what promotes would like you to believe, the truth is that the token being sold is often overpriced. For example, the scheme may require you to buy an ebook for a price of $50 US Dollars (USD) in order to get into the system. Besides the fact that the item being sold is overpriced, the other problem is that 99 percent of the people entering a matrix scheme will never get anything except that original item.

While there are laws regarding matrix scheme operations as illegal, the Federal Trade Commission has warned consumers about the risks of participating in such processes. Over the years, many civil lawsuits have been brought up regarding matrix schemes. A good example is the Phones4Everyone matrix scheme. In it, people paid $35 USD for a cell phone signal booster and were then added to a list for a chance to obtain ipods and laptops. While there were about 18,000 members involved in the matrix, less than a handful of them ever got the promised free item.