Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. Pyramid schemes might not be quite as old as the pyramids themselves, but they’ve been around for a long time.
These scams just will not go away! And they are EVERYWHERE!
They all share one overriding characteristic. Knowing this, will help protect you from contributing to these towers of terror, or from purchasing a product that is not safe or not even what it is claims to be.
They promise consumers or investors large profits based primarily on recruiting others to join their program. Some schemes may actually sell a product, but they often simply use the product to hide their pyramid structure.
(Not a true MLM.)
They are, hands-down, illegal. BUT! While new cases were redefining the law in the 1990's, Pyramid schemes came back with a vengeance. In the U.S., probably nothing has contributed to the growth of pyramid schemes as much as Internet marketing. The introduction of electronic commerce has allowed con artists to quickly and cost-effectively target victims around the globe.
There are so many WELL-KNOWN Companies that are suspected of Pyramid Scheming and under investigation. I am choosing NOT to list out these companies, because that is not the purpose of this blog. I know you would never shoot the messenger, however, I WILL RELAY what to look for!
How to tell if a company IS a pyramid scheme? or a Legit Business.
Scheme vs. MLM
Credit.com provides this:
-No genuine product or service. MLM programs involve selling a genuine product or service to people who are not in the program. Exercise caution if there is no underlying product or service being sold to others, or if what is being sold is speculative or appears inappropriately priced.
-Promises of high returns in a short time period. Be leery of pitches for exponential returns and “get rich quick” claims. High returns and fast cash in an MLM program may suggest that commissions are being paid out of money from new recruits rather than revenue generated by product sales.
-Easy money or passive income. Be wary if you are offered compensation in exchange for little work such as making payments, recruiting others and placing advertisements.
-No demonstrated revenue from retail sales. Ask to see documents, such as financial statements audited by a certified public accountant (CPA), showing that the MLM company generates revenue from selling its products or services to people outside the program.
-Buy-in required. The goal of an MLM program is to sell products. Be careful if you are required to pay a buy-in to participate in the program, even if the buy-in is a nominal one-time or recurring fee (e.g., $10 or $10/month).
-Complex commission structure. Be concerned unless commissions are based on products or services that you or your recruits sell to people outside the program. If you do not understand how you will be compensated, be cautious.
-Emphasis on recruiting. If a program primarily focuses on recruiting others to join the program for a fee, it is likely a pyramid scheme. Be skeptical if you will receive more compensation for recruiting others than for product sales.
I found that un-Scrambling the Scheme is not so simple.
It's a tad scary to think of buying product with empty promises, or unsafe ingredients. Especially when these products are being put into our bodies!
Do your research on companies...
Tell a friend they're scheming. ;)