Matrix Scheme

A matrix scheme is a business model, widely regarded as fraudulent, in which participants pay money for a low-value product and are added, as a side benefit of that purchase, to a waiting list for a product of substantially greater value than what they paid. In practice, participants buy a low-cost item, commonly priced between fifty and a hundred dollars, such as an e-book, screensaver or piece of software, and join a queue; once a set number of new buyers, often ten, have joined behind them, the person at the front of the queue receives the promised higher-value reward, typically an item such as a laptop or television, and leaves the scheme, while everyone else moves up one place and the cycle repeats. The structure is mathematically self-limiting: if ten new participants must join for every one reward given out, only about ten percent of participants can ever reach the front of the queue, and the rest depend entirely on continued recruitment of new buyers to keep the scheme running. The United Kingdom's Office of Fair Trading has described matrix schemes as unsustainable, and while they share the underlying structural problem of pyramid and Ponzi schemes, a matrix scheme is distinguished from those by promising a tangible product to participants rather than a purely financial investment return.