How To Differentiate Between Legitimate Network Marketing vs Pyramid Scheme

 

How To Differentiate Between Legitimate Network Marketing vs Pyramid Scheme
How To Differentiate Between Legitimate Network Marketing vs Pyramid Scheme

There are many work from home businesses you can do to make income from home, one of them is through network marketing platform. Many people are confused between the legitimate network marketing business and the pyramid scheme.

(Along with this post, I attached a free resource for you to download. This is a quick checklist to help you identify if the opportunity you are considering now a legitimate network marketing or a pyramid scheme. To get your free resource, simply click the pink banner below to send us a Facebook Message, type “free download 3” in your message.)

Free Download: Legitimate Network Marketing vs Pyramid Scheme Quick Check

Here is the quick guideline to help you differentiate between the two so that you can make a wise decision of which company to participate:

Free Download: Legitimate MLM vs Pyramid Scheme Quick Check
To download, click the image above to send us a Facebook Message, type “free download 3” in your message.

Legitimate Network Marketing

Legitimate network marketing companies (also widely known as multilevel marketing) are selling competitive and high-quality products/services that provide a sustainable source of income to their distributors/sellers. Below are some criteria of a legitimate network marketing business:

  • Provide accurate information about the company, its products and what one can expect as a seller of the company’s products and services.
  • Charge a nominal fee for a starter kit – the median cost for the start-up kit is $99 and usually includes items such as samples, catalogs, order forms and other tools (including competent online tools) that help the seller begin selling.
  • Have a product/service that is competitive in the marketplace and is purchased by the ultimate user.
  • Require sellers to hold little or no inventory and has a buyback policy to protect against inventory loading.
  • Promote consumer protection and guarantees. Many of these are voluntary standards that exceed the requirements of any regulations created by the Federal Trade Commission (FTC) or mandated by federal or state law.
  • Base compensation primarily on the sale of products and services to the ultimate user. Compensation can be generated from either your own sales or the sales of others you have recruited.
  • Take time to describe the business and give potential sellers adequate time to make a decision – any opportunity worth having will be there tomorrow.
  • Preferably also a registered member of DSA that is pledged to abide by a strict Code of Ethics that outlines a high set of standards for interactions with both sellers and customers.
Legitimate network marketing companies are selling competitive and high-quality products/services that provide a sustainable source of income. #networkmarketing #legitimatebusiness #workfromhome #homebusiness Click To Tweet

 Pyramid Schemes

Pyramid schemes take advantage of and defraud people because they:

  • Promise large earnings with little effort.
  • Promise that one can earn a substantial income merely for recruiting people into the operation.
  • May or may not be a “product” to sell, but if there is it generally has little or no actual value (aka low-quality products)
  • Convince people to buy large amounts of inventory which they cannot easily sell to others and is not returnable (this is called “inventory loading”).
  • Charge large up-front fees to get involved, with no high-quality products in return. Promoters of pyramid schemes will also try to pressure people to sign up immediately by suggesting the same opportunity will not be available later.
  • Base compensation primarily on activity (these payments for recruitment are called “headhunting fees”). Participants are convinced to pay to get involved with the promise of receiving “headhunting fees” when they recruit others.

In a pyramid scheme, money from new participants is used to pay recruiting commissions (that may take any form, including the form of securities) to earlier participants just like how, in classic Ponzi schemes, money from new investors is used to pay fake “profits” to earlier investors.

In a pyramid scheme, money from new participants is used to pay recruiting commissions to earlier participants. #pyramidscheme #workfromhome Click To Tweet

I hope the above explanation will help you better to differentiate between legitimate network marketing business and pyramid scheme.

Free Download: Legitimate Network Marketing vs Pyramid Scheme Quick Check

 

(Photo by Daria Nepriakhina on Unsplash)


Check out the resources below that will help you start a work from home & healthy lifestyle:

1. Work From Home – Learn More Here

We provide online tools, systems, coaching and support to those that appreciate the benefits of working from home. Find out more if you are considering working from home.

2. Momtrepreneur & Lifestyle Community – Come Join Us Here

Here, we share our insights, experiences and encouragements to be a well-versed Momtrepreneur. Besides business, we may also talk about life topics such as parenting, self-improvement, lifestyle and many more.

3. More Tips On How To Eat Clean & Healthy As A Busy Mom – Let’s Start Here

Besides running my home business, I am also taking good care of my body to make sure I stay healthy. Without a healthy body, I won’t be able to accomplish much in my business and also in my family life. As a busy mom, I need to be efficient in managing time and money too. I cook very simple yet delicious weight loss meals everyday.

Do you want to get more tips on how to eat clean and healthy while still busy with your business/career and family matters? I have created a new facebook group just for that. Come join us to start the healthy clean eating lifestyle!

4. Motivational Gallery – Click Here

I compile some useful motivational quotes to help you change the way you see things and inspires you to move on in life. You can easily save the images into your Pinterest board or to your mobile.

 

You may follow me here: Facebook | Twitter | Instagram | Pinterest

Someone else might need these simple tips. If you find this is helpful, simply share with your friends and comment below. I would like to hear from you.