MLM and PYRAMID SCHEMES

Pyramid schemes are illegal in most countries; unfortunately it can be quite difficult to tell the difference between an illegal pyramid scheme and a genuine MLM scheme. However the main difference is, an MLM scheme is designed to sell product and a pyramid scheme is designed to recruit new members.

The questions you need to ask to determine the legitimacy of the scheme should be;

1. Is there a large amount of upfront money required? A legitimate MLM business should not require large start up costs.

2. Will the company buy back unsold inventory? You might not get back what you paid, but you should get back at least 75%.

3. What sort of emphasis is placed upon the market you will be selling to? If there doesn’t seem to be much emphasis on customers then chances are their main business is recruitment.

4. Is there a lot of emphasis placed on recruitment? Are incentives or commissions offered to recruit new members? Does the plan suggest you will make more money through recruitment rather than selling?

This is an extract from a larger online article that can be found at http://www.bbbcubed.com