MLM – An Objective Review
Are you considering joining a multilevel marketing opportunity, also known as a MLM? If so, it is important to read the following information so you will know whether the new business opportunity you are thinking about investing in is a legitimate MLM business, or if it is a cleverly disguised pyramid scheme that is designed to take your money.
So, continue to read to learn the true differences between MLMs and pyramid schemes so you will be able to tell the difference between the two.
MLMs Can Be Genuine Business Opportunities
This type of business proposition is attractive to people from all walks of life. It provides people with the chance to become involved in a product distributing system.
Rather than starting a business from nothing, those who participate in MLMs have the support of a large direct selling company behind them. In addition, the company provides the participant with the products or services and sometimes even training.
Understanding The MLM System
When a person becomes a MLM contractor, distributor or consultant, they make money by selling the products or services to other participants involved with the company. This means that if a person is not already a member of the MLM company, the participant signs them up.
These participants can make money in several different ways. One way is they make money from their own sales. They can also earn a certain income percentage from the income that is generated from the distributors that they brought into the company. These lower level participants are referred to as a downline.
They can also receive bonuses if they sell a certain amount of products or services, or if they sign up enough new members. Many companies also offer cash, trips and cars to high producing distributors.
All of this sounds very good, and it is what attracts so many people to these programs. In a lot of ways, it is like being a member of a huge family.
What Are Pyramid Schemes?
Unfortunately, there are many MLMs that are not legitimate opportunities to start a business. These schemes and frauds are created to take money from the unaware and they are disguised as real business or investment opportunities.
As with real MLMs, pyramid schemes are very dependent on recruitment. These recruits must become distributors.
Similar to MLMs, these schemes and frauds promise distributors they will make money simply by signing up more people and reaching certain achievement levels within the company.
However, the main difference is that MLM is considered a legal business opportunity throughout most of the United States and pyramid schemes are not. In fact, just participating in a pyramid fraud or scheme is considered a crime in many jurisdictions, and can even be punishable with imprisonment.
How To Tell The Difference Between A MLM And A Pyramid Scheme?
The primary difference between a pyramid scheme and an MLM is in the way the company operates. The only goal of a pyramid scheme is to make a person part with their hard earned money. They then use their ‘distributors’ to recruit other ‘distributors’.
As always, it is important to always research new business opportunities. Get as much information as you can, and speak with other people who are either in the program or are using the products and services to determine if the opportunity is legitimate.