how do you identify a ponzi scheme?

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The Franchise
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how do you identify a ponzi scheme?

Post by The Franchise »

so my boss signed up for moviepass through costco, got his card in about 2 weeks, talked it up and told me i should sign up, so i did.

32 days later, 4-5 alleged times the card was sent, and yet i have no card, i have seen no movies, and now all the ones i want to see like pitch perfect 3 are no longer in theaters.

so i got to thinking - their business seems largely unsustainable, based on people who forget to turn off auto-renew, and people who forgot they signed up and/or dont see movies often. they constantly are trying to grow the company, but have failed to deliver with respect to my card.

am i caught up in a ponzi scheme, or am i just dealing with a new company that is understaffed/has garbage customer support?

if i ever do get my card i kind of have been thinking of doing movie reviews in podcast or youtube so stay tuned !



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Re: how do you identify a ponzi scheme?

Post by rsersen »

I admit I'm not familiar with moviepass, but since your boss got a card, I'm going to say it's probably incompetence rather than a scam. Especially since the deal with Costsco seems to be fairly new (announced just last month) - I'm sure that's given them a huge influx of new customers that they may not be prepared to handle yet. Growing pains and all that.

I would call them and tell them that it's been x days, and you've been told a card is on the way half a dozen times. Then say you want to cancel your membership (with a full refund of anything you've paid so far), because the company hasn't provided the goods and services they promised. Stay on the line and keep going through supervisors, be a dick if you have to, don't take no for an answer.

One of two things will happen. Either they'll get their * together and you'll get a card in a remarkably fast turnaround time. Or you'll get your money back and know not to do business with them again. I guess they could still tell you to pound sand (very unlikely), at which point you can get your bank or credit card company to stop letting them charge you. My money would be on option #1.
arebelspy wrote:
May 13th, 2020, 10:16 pm
Agree with Ryan.
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Re: how do you identify a ponzi scheme?

Post by Cam Solusar »

So I know some avid moviegoers who have movie passes and it's legit. The company has existed for awhile but their new CEO way reduced the price of the pass back over the summer. The theory I've heard is they're selling the analytics data they obtain from their customer's usage. You're correct that it is not sustainable though, so there has to be some other way they're getting money. They could also be banking on the fact that, like insurance, most people don't get their moneys worth.

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Re: how do you identify a ponzi scheme?

Post by Gergall »

rsersen wrote:I admit I'm not familiar with moviepass, but since your boss got a card, I'm going to say it's probably incompetence rather than a scam.
Ah, but that's the critical part of a ponzi scheme. Some of the buyers actually DO get exactly what was promised, and then they spread the word to a bunch of other people who get ripped off.

Now, I don't truly believe that this is a scam, but I felt like I just had to point that out :-D
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Re: how do you identify a ponzi scheme?

Post by arebelspy »

did your boss make money referring you, and do you make money referring other people, and your boss gets a cut of that?

this would be a pyramid scheme.

a ponzi scheme would be if you were investing money in this, and your money was used to pay previous investors, rather than an actual investment making money.

the short answer is no: it's not a ponzi scheme.

even if you never get a card, it still isn't.

sounds like poor customer service. demand some free months or something. and then move on. it's like $10, right?

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Re: how do you identify a ponzi scheme?

Post by Gergall »

arebelspy wrote:a ponzi scheme would be if you were investing money in this, and your money was used to pay previous investors, rather than an actual investment making money.
Oh, sort of like if Brad's boss was getting some impossibly good deal on movies for a very low investment, secretly paid for by people like Brad who put their money in and never got anything back for their investment?

:lol:

I don't believe there is a scam here but I maintain that it could fit the shape of a ponzi scheme.
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Re: how do you identify a ponzi scheme?

Post by spideyguy0 »

I signed up last month and got my card in about 10 days. Well worth it, especially in NYC where movies range between $16-$24.
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Re: how do you identify a ponzi scheme?

Post by The Franchise »

spideyguy0 wrote:I signed up last month and got my card in about 10 days. Well worth it, especially in NYC where movies range between $16-$24.
Yeah it seems like good value, especially as i am trying to limit my overall entertainment budget in order to do the mustache saving stuff joe is into. Do you go to that amc where they stopped accepting it?

Anyway i guess probably not a ponzi scheme, but it did seem as though there was a possibility they used my 90$ yearly fee to pay for earlier subscribers to go to movies

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Re: how do you identify a ponzi scheme?

Post by spideyguy0 »

The AMC closest to me doesn’t accept it, but this is Manhattan, so there’s another one a subway stop away that does.
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Re: how do you identify a ponzi scheme?

Post by timeofyouppi »

ponzi schemes are limited to investment opportunities, whereas this is a product/service that you are buying.

pyramid or multi level marketing schemes (amway, herbalife, etc) sell products but make their money in referrals and signing up new people more than selling products. getting credit for referring someone is common and doesn't make something a pyramid scheme, but if the person that refers you gets some type of credit for the people you refer or the focus is on referring/signing up new people instead of selling the product then it's probably a pyramid scheme. while pyramid schemes exploit their members with dreams of getting rich and often overpriced products that members are stuck with if they can't sell, they may sometimes have a few products that are worth buying on their own.
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Re: how do you identify a ponzi scheme?

Post by Gergall »

timeofyouppi wrote:ponzi schemes are limited to investment opportunities, whereas this is a product/service that you are buying
It's very very slightly like an investment in that the value you can get out of it varies.

Like if you buy a cookie, you get exactly one cookie. If you buy this movie pass, you potentially lose money or save money depending on how you use it.

If you can't use Ponzi Scheme to describe this scenario, then we need some other word that means "Exactly the same as a ponzi scheme except technically not an investment"
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Re: how do you identify a ponzi scheme?

Post by The Franchise »

Gergall wrote:
timeofyouppi wrote:ponzi schemes are limited to investment opportunities, whereas this is a product/service that you are buying
It's very very slightly like an investment in that the value you can get out of it varies.

Like if you buy a cookie, you get exactly one cookie. If you buy this movie pass, you potentially lose money or save money depending on how you use it.

If you can't use Ponzi Scheme to describe this scenario, then we need some other word that means "Exactly the same as a ponzi scheme except technically not an investment"

Yes, this. I suppose i was not focused on the investment requirement for it to be a ponzi scheme; was more focused on the idea of the company needing more and more buy in to pay out to the earlier investors, regardless of whether it was stock dividends or sending movie cards

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Re: how do you identify a ponzi scheme?

Post by arebelspy »

The Franchise wrote:
Gergall wrote:
timeofyouppi wrote:ponzi schemes are limited to investment opportunities, whereas this is a product/service that you are buying
It's very very slightly like an investment in that the value you can get out of it varies.

Like if you buy a cookie, you get exactly one cookie. If you buy this movie pass, you potentially lose money or save money depending on how you use it.

If you can't use Ponzi Scheme to describe this scenario, then we need some other word that means "Exactly the same as a ponzi scheme except technically not an investment"

Yes, this. I suppose i was not focused on the investment requirement for it to be a ponzi scheme; was more focused on the idea of the company needing more and more buy in to pay out to the earlier investors, regardless of whether it was stock dividends or sending movie cards
I mean, that's just a company operating at a loss trying to scale.

That'd be like calling uber, or Amazon's early years, a ponzi scheme.

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Re: how do you identify a ponzi scheme?

Post by The Franchise »

arebelspy wrote:
The Franchise wrote:
Gergall wrote:
timeofyouppi wrote:ponzi schemes are limited to investment opportunities, whereas this is a product/service that you are buying
It's very very slightly like an investment in that the value you can get out of it varies.

Like if you buy a cookie, you get exactly one cookie. If you buy this movie pass, you potentially lose money or save money depending on how you use it.

If you can't use Ponzi Scheme to describe this scenario, then we need some other word that means "Exactly the same as a ponzi scheme except technically not an investment"

Yes, this. I suppose i was not focused on the investment requirement for it to be a ponzi scheme; was more focused on the idea of the company needing more and more buy in to pay out to the earlier investors, regardless of whether it was stock dividends or sending movie cards
I mean, that's just a company operating at a loss trying to scale.

That'd be like calling uber, or Amazon's early years, a ponzi scheme.
Interesting. So their angle would be to increase their membership, even at a short term loss, and then either raise prices, partner with theaters, or something else to cover those losses and turn a profit?

Is this what amazon did when they introduced prime?

Also never considered uber operated at a loss to scale- seemed like it always would have been profitable.

Guess i have no business sense. Womp womp

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Re: how do you identify a ponzi scheme?

Post by arebelspy »

The Franchise wrote:Interesting. So their angle would be to increase their membership, even at a short term loss, and then either raise prices, partner with theaters, or something else to cover those losses and turn a profit?
Totally. This is the plan
Is this what amazon did when they introduced prime?
Nah, Amazon was profitable by then (or at least was plowing profits back into r&d on products like various fire branded and alexa stuff to not show a profit, but was still profitable in all but name), but the early days when growing and trying to get critical mass to take away from brick and mortar, it lost money for years.
Also never considered uber operated at a loss to scale- seemed like it always would have been profitable.
Oh yeah, uber loses billions a year, a lot because of trying to gain a foothold in china, they subsidize rides (i.e. pay the driver more than the ride costs--they undercharge people, basically, and operate at a loss to try and gain market dominance).
Guess i have no business sense. Womp womp
the startup idea of "scale at all costs, even to the point of losing money" isn't always a spectacular business idea. plenty of dot coms about 17 years ago found that out, and I think some other startups are gonna see the same thing again soon.

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Re: how do you identify a ponzi scheme?

Post by mikefrench »

it's kinda funny to think of amazon in that early ten years or so as a ponzi scheme. i mean, i clearly remember people discussing "why is owning amazon stock a good idea" and they had some very weird conversations.
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Re: how do you identify a ponzi scheme?

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mikefrench wrote:it's kinda funny to think of amazon in that early ten years or so as a ponzi scheme.
My point was, it wasn't. It was a business (purposefully in that case, though not purposefully in the case of a lot of startups) operating at a loss. This is very different than a ponzi scheme, and perhaps analogous to moviepass.

The poor customer service is a separate issue that may be conflating them?

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Re: how do you identify a ponzi scheme?

Post by Blarg »

Amazon couldn't conceivably run as a Ponzi scheme because they have to spend money on infrastructure and products before the customer gives them money.

Depending on moviepass's deal with the theatres -- if they pay the theatres per movie seen -- it might be able to operate as a Ponzi scheme. If you sign up for $40, they don't have to "pay out" until you've seen four movies, which might be a couple months later. So by the time you see your fifth movie, they could conceivably be using the fees they are charging the new people signing up.


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Re: how do you identify a ponzi scheme?

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Blarg wrote:Amazon couldn't conceivably run as a Ponzi scheme because they have to spend money on infrastructure and products before the customer gives them money.

Depending on moviepass's deal with the theatres -- if they pay the theatres per movie seen -- it might be able to operate as a Ponzi scheme. If you sign up for $40, they don't have to "pay out" until you've seen four movies, which might be a couple months later. So by the time you see your fifth movie, they could conceivably be using the fees they are charging the new people signing up.
Collecting money before paying it out doesn't mean it's a ponzi scheme either.

Insurance companies do this all the time--their business is literally to collect premiums and pay out claims (that they can't get out of) much later.

This is why Warren Buffett bought insurance companies early in his career--he wanted the money that was kept in the meantime (the float) in that time gap between collecting premiums and paying out claims in order to have large sums of money to invest, much more so than he wanted the profits from the insurance companies themselves.

If he's not investing money with the expectation to earn more money than is invested which will be paid to him via future investor's payments, it's not a ponzi scheme.

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Re: how do you identify a ponzi scheme?

Post by dorshe1 »

arebelspy wrote:
Blarg wrote:Amazon couldn't conceivably run as a Ponzi scheme because they have to spend money on infrastructure and products before the customer gives them money.

Depending on moviepass's deal with the theatres -- if they pay the theatres per movie seen -- it might be able to operate as a Ponzi scheme. If you sign up for $40, they don't have to "pay out" until you've seen four movies, which might be a couple months later. So by the time you see your fifth movie, they could conceivably be using the fees they are charging the new people signing up.
Collecting money before paying it out doesn't mean it's a ponzi scheme either.

Insurance companies do this all the time--their business is literally to collect premiums and pay out claims (that they can't get out of) much later.

This is why Warren Buffett bought insurance companies early in his career--he wanted the money that was kept in the meantime (the float) in that time gap between collecting premiums and paying out claims in order to have large sums of money to invest, much more so than he wanted the profits from the insurance companies themselves.

If he's not investing money with the expectation to earn more money than is invested which will be paid to him via future investor's payments, it's not a ponzi scheme.
Insurance companies are much smarter that that.

For young healthy people offer plans that provide steady monthly/yearly income (term life insurance) at risk/return ratio much higher than a casinos and only pay out in the unlikely event that that person dies. They then take lump sum money from older sick people and guarantee them lifetime income (annuities) knowing that they will most likely die before they get all of their money back.

For the most part they are taking the money from young people from term insurance, paying the lifetime income for the old people and then they take the annuitized lump sums from older people and invest it, make a profit off of it and pay off the young people's death benefits off of it.

Pretty slick.

Also... poor service from a company isn't a Ponzi Scheme and probably isn't a scam. Some companies are poorly designed and poorly run that doesn't make them a scheme. If their service doesn't improve then they will lose customers and go out of business.

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