Legitimate opportunity or pyramid scheme?

Many people have found success in direct selling for companies which use a multilevel compensation plan. Unfortunately, not all opportunities are legitimate, and it’s easy to get caught up in the enthusiasm and big promises of a pyramid scheme posing as a trustworthy company.

 

The Better Business Bureau provides consumers with information to help determine whether or not a company is trustworthy.

Multilevel marketing is a method to sell goods and services through other distributors. These plans promise that if you sign up as a distributor, you will receive commissions from sales you make, as well as sales of the people you have recruited as your distributors. On the contrary, a pyramid scheme’s commissions are primarily based on the number of distributors recruited and generally ignore the marketing and selling of products and services.

The difference between these two plans can seem unclear, but there is one key distinction – MLMs are legitimate, and pyramid schemes are illegal.

The BBB offers the following questions to ask before deciding whether or not to join an MLM:

• Does the compensation come primarily from recruiting others as opposed to the sale of the product?

• Does the product or service seem too good to be true, and is it priced at an expensive rate?

• Do you feel pressured to join? Is the emphasis placed on the “opportunity” rather than the value of the product?

If you answered yes to any of these questions, you are probably looking at a pyramid scheme. While a Multilevel Marketing Plan can be a legitimate and exciting new venture, the bottom line is, do your research as you consider any MLM opportunity.

Here are some tips to consider before you make your decision:

• Don’t pay or sign any contracts in an “opportunity meeting” or any other high-pressure situation. Insist on taking your time to think over a decision to join. Talk it over with your spouse, an accountant or an attorney.

• How do you feel about the way you were recruited and do you feel comfortable approaching friends and family in this same manner? People don’t appreciate having their friendship exploited, this usually ruins relationships.

• Beware of those that don’t command the respect themselves and lean on the credentials or character of others.

A legitimate company will portray an honest picture of the opportunity, including the possible risks, rewards and challenges. A pyramid scheme, however, will enthusiastically sell you on the promise of making tons of money with very little effort. Unfortunately, self-deception is the hardest to recognize so take the time to research thoroughly.

Kelvin Collins is the president and CEO of the Better Business Bureau of Central Georgia &the CSRA Inc. For questions or complaints about a company, call (800) 763-4222.

 

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