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The Ins And Outs Of Pyramid Schemes


There are valid Multilevel Marketing (MLM) businesses in the world, but how do you determine if the business offer you recently received is truly MLM and not a pyramid or Ponzi scheme? Have the knowledge and look for the signs.

Be cautious about unsolicited email for money-making opportunities. Many unsolicited emails are fraudulent in nature and the money-making opportunities they offer are often pyramid schemes. If the offer claims you can make money doing little or no work, or claims that a certain astronomical amount of money can be earned in a short amount of time then be wary. No one can guarantee how much money you'll make by a certain time, that depends on how much work you put into it and how successful you are at convincing buyers to purchase it. Some pyramid schemes are disguised as "gift clubs". New recruits "gift" money to current members with the promise that they then will receive money in the form of "gifts" from the next round or recruits. Remember that if the proposed plan depends on profits gained from recruiting new members beneath you then it is a pyramid scheme. In legitimate multilevel marketing, profits come from primarily the selling of goods or services to consumers and end users.

Most successful businesses depend on repeat sales. If there is not a regular demand for the products or services a business offers, then that business will fail. A legitimate multilevel marketing plan only succeeds if it offers tangible goods or services that a customer wants. Another sign that a proposed business offering is truly a pyramid scheme is if the bulk of your profits comes from sales of your product to other distributors below you (or in your downline). Profits should come from sales that you and any distributors under you make to consumers or end users. Some fraudulent companies even try to force distributors to pay for more product than they will most likely be able to sell.

If you have determined that the business opportunity presented to you is a pyramid scheme but are still thinking of participating, no that all pyramid schemes are doomed to collapse. This isn't to say that no one will make money, as unethical or illegal as it may be, some people make a great deal of money in a pyramid scheme. Usually those that make money are the ones who started it or who got in early. It's impossible to keep on getting new recruits who will pay to participate in any scheme. If you've paid money to the people above you and there's no one new coming in below you to pay you, that is when the pyramid has collapsed.

There are many legitimate business opportunities available in life, and the Internet is no different, but when offered an opportunity do some investigative work. Print out all the information and contact your state or local consumer protection agency, they can usually provide you with the advice or information you need. Also, type some of the exact wording from the offer you received into the search engine of your choice. This simple investigative step will often yield a large amount of forum or informative posts on this exact offer, or an offer just like it. Read about others' experiences and add that to your own instincts. Don't just make a decision, make an informed decision.
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