Science Fair Project Encyclopedia
Matrix scheme
A matrix scheme or matrix site is a business model involving the exchange of money primarily for being added to a waiting list for a product. Once a list receives enough new members, the person at the top of the list receives the product, and the next person in the list moves up. Matrix schemes are heavily promoted across the Internet, especially on sites such as eBay and craigslist.
The operation of matrix schemes varies. To move upward in the list, the person must wait for new members to join, or refer a certain number of people to the list. The products involved with a matrix list are usually high-demand consumer electronics, such as portable digital audio players, plasma and high-definition television sets, laptop computers, and cellular phones. More people joining a list improve the likelihood of people near the top receiving the product, but the numerosity of newcomers decreases the likelihood that sufficient quantities of new people will join the list to assure all the more numerous recent joiners will reach the top. Critics note that since mathematically this process cannot continue, eventually the matrix must collapse.
Unlike a pyramid scheme, a side product is delivered to each newcomer in the course of the enrollment purchase. Critics charge the side product is generally of little or no value, while promoters argue the side product is in itself worth the cost of purchase and enrollment. Most matrix site owners sell electronic books or software CD-ROMs as the side product, and then add the purchaser to the product list as a "bonus."
The legality of matrix schemes is still unclear. Matrix site owners claim their scheme is within the law. The U.S. Federal Trade Commission and the U.K. Trading Standards office have issued warnings to the public about the schemes. Several matrix sites have been shut down by lawsuits, and legal action is pending against the owner of EZExpo.com, one of the major matrix sites. Matrix site promoters contend these complaints are generated by less reputable matrix sites that do not reflect all matrix operators.
Matrix scheme supporters acknowledge that considerable research should be performed before investing in any such venture, but argue that the rewards for investing in a good matrix scheme are substantial.
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