Know What a Pyramid Scheme is So You Can Avoid Them

Know How to Identify a Pyramid Scheme

In these economic times there needs to be more questions asked than ever so you don’t fall prey to a scam. Don’t be taken by some scam artist. Learn what to look for and the questions to ask. Make sure you find yourself involved in a legitimate business.

What is IT?

An illegal scam intended to take your money. Usually, each new participant pays for the chance to advance to the top and profit from payments of others who join later.

There is usually no product or services sold by the company.

A pyramid scheme is a non-sustainable business model that primarily makes its money by enrolling other people into the scheme.

Face it, if a company is legitimate, there is some type of sales and/or services involved. Commissions are how you make your money as an independent distributor. I think some network marketing companies do themselves a disservice by saying their distributors are not sales folks. The bottom line is, sales of a product or service is how you make your money as a distributor.

Avoid salespeople who:

• Disparage other products or firms
• Try to confuse you, abuse your trust or take advantage of your lack of experience
• Treat you as if you have just won a contest and just sign on the dotted line

Avoid Companies that:

• Charge a substantial entry fee (the cost of a sales kit and/or back-end office is normal) the sales kit is usually a very low cost.
• Pressure you to buy large quantities of product.
• Will not allow you to return product (within reason).
• Sell few or no products to customers

Things to Know

• They are losers. You will loose your money that is how they are designed.
• They are fraudulent. Folks prey on you and sell their scam as a MLM or network marketing business opportunity.
• They are illegal. When these scams are discovered by law enforcement they are closed down.

Tell the Difference Between a Pyramid Scheme and Legitimate Network Marketing Company

Illegitimate businesses seek to make money very quickly. Network marketing companies help you build a business, which takes time. You sell a product or service to build your business (and the company you represent).

Ask Yourself Before Deciding

• How much are you required to pay to become a distributor?
• Will the company buy back unsold inventory?
• Are the company’s products sold to consumers?

Follow Your Gut Instinct

Listen to yourself. There is no such thing as a get rich quick business. Remember the old saying “if it sounds too good to be true, it is.” Don’t fall into the trap of instant money, it is more likely to be a pyramid scheme.