Multi Level Marketing or Pyramid Scheme – How to Know

Mention the words “multi level marketing” and everyone will tell you, “pah, it’s nothing but a pyramid scheme!” But is that really true? Well, it’s is definitely the right reaction to have sometimes. Many, many multi level marketing opportunities are pyramid schemes. However, that doesn’t mean they all are, and there is ample evidence that this is the case. Brands like Pampered Chef, Avon and Mary Kay are all run in the multi level marketing format, and they are respected and successful businesses. So how do you spot the difference? Here are the things you should look for that will let you know that idea being pitched to you is not a viable business opportunity but rather a pyramid scheme that could cost you big time in the long run.

Listen carefully when you’re being pitched a multi level marketing opportunity. If you set aside all of the promises of wealth and the endless success stories from people “just like you,” you may find that many multi level marketing pitches are essentially pretty superficial and free of any real details. What exactly does the company sell? How exactly do they sell it? You may come to realize that what this company is focused on is recruiting people, getting them to pay a membership fee, and then getting them to recruit more people – and so on and so forth. When a company doesn’t have a real product that they are concerned with selling, you are definitely dealing with a pyramid scam.

The important thing here to note is that you shouldn’t be confused by the fact that the company does actually have a product. Most multi level marketing companies have something they profess to sell, from travel deals to nutritional supplements. But is that really their bread and butter? They may tell you it is, but take a closer look. Are the products you have to purchase to re-sell so highly priced that there is no way you could turn a profit on them? Is the line extremely limited? Does it seem like there really is a market for that good? Sometimes the “product” is just something they keep around to distract investigators who are trying to shut down pyramid scams.

What about the sales materials you are given and the sales training they provide to you. Are they teaching you about the product? Are they telling you to try to turn every customer into a representative like yourself? A good company will have an easy time finding reps because they sell products that are of good quality and people will naturally want to sell them themselves. A bad company will need to recruit right out of the gate will not really care what you think of the products or if you even buy them at all.

Last but not least, you may wonder what the harm actually is in a pyramid scam. Well, they’re destined to fail, they prey on those who can least afford to take part, and they’re illegal. All good reasons to protect yourself from getting involved.