MLM (Multi-Level Marketing) companies have made a resurgence in the last 10 years. When performing a simple online search for MLMs, you will probably be bombarded with words like “scam” and “pyramid scheme.” No doubt some bad MLMs may be little more than barely legal pyramid schemes, however, there are some MLMs that are legitimate business opportunities that allow for individuals towards the bottom of the pyramid to earn as much or more than those at the top.
Pyramid Scheme v. MLM
There is a lot of confusion about the difference between pyramid schemes and legitimate MLM merchant account opportunities. When searching for an MLM to join, be able to recognize the warning signs of a pyramid scheme.
- Pyramid schemes are unsustainable businesses that generally have no products or services while collecting money in the form of a fee for new members.
- The only to make money for new members is to recruit more members. However, when a pyramid reaches a certain level, new members have no way to make money.
- These schemes usually promise high returns in a short amount of time for just signing up others.
- Vague company descriptions, repetitive assurances that the company is legal (pyramid schemes are illegal), and little to no products or services offered.
Multi-Level Marketing Companies are structured in a pyramid, however, they are legitimate business opportunities to make a sustainable income. Here are the signs of a good MLM.
- Members can theoretically make income by selling products or services.
- Members at lower levels of the pyramid have the potential to earn as much as those at the top if they are willing to work.
- There is a small or no enrollment fee.
- The company does a good job and describing itself, its products, and its purpose.
- The company stresses that income is generated mainly through the selling of products or services.
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