MLM Marketing vs. Pyramid Scheme

One of the misconceptions that people may have about a networking company is that it is a pyramid scheme. Pyramid Schemes are illegal and costly scams that people sign into because they are promised serious money with no effort. Network Marketing, however, is a legitimate and popular way to own your own business and work your own hours.

So what exactly is the difference between a Pyramid Scheme and a MLM business? Well, the Direct Selling Association has loads of information about pyramid schemes and how to avoid them, but there are three questions that the DSA suggests you ask yourself in order to avoid being taken in by this scam:

1. How much are you required to become a distributor?
Pyramid schemes will have a large sign up fee that you must pay in order to join. Most of the time it is around $1,000.00. In order to appear legitimate, most pyramid schemes will tell you that this fee pays for products that you must have, or training that you are required to go through, or software programs you need to run your business, etc. However, the products you receive are worthless and you are out $1,000. Legitimate MLM companies want to make it easy for you to start the business; therefore they charge a minimal fee to sign up, usually the cost of a kit.

2. Will the company buy back unsold inventory?
Legitimate MLM companies will buy back any inventory that you have not sold if you quit the business, sometimes for up to 90% of what you bought it for. Pyramid schemes, on the other hand, will not buy back any inventory and you are then stuck with worthless products and no way to make your money back.

3. Are the company's products sold to consumers?
If there is little effort to sell the products to consumers and instead you are pressured only to recruit more people, then run away. Legitimate MLM companies only make money when products are sold to consumers, while Pyramid schemes only make profits when new people are duped into signing on and purchasing worthless inventory.

So there you have it. In Pyramid Schemes, people are generally working for themselves and could care less who they are hurting when they recruit people into the scheme. However, if you join a legitimate MLM company, you will be pleasantly surprised on how everyone you are working with wants to help you succeed and reach your goals. Networking Marketing is a legitimate and real choice for someone who wants the freedom of running their own business but cannot afford the costly start up costs and risks involved with starting a business in the traditional manner. With MLM, the start up cost is minimal and the system for success is already in place; you don't have to try to figure out things on your own. As we say in my business of choice, "You are in business for yourself, but not by yourself".