They will tell you that you can't lose. That it is the perfect money making opportunity.
A pyramid scheme is exactly what it sounds like. The structure is a pyramid and unfortunately the loser in the pyramid scheme will be at the bottom. Have you ever heard anyone tell you about the "best business" or "best moneymaking" opportunity EVER and all you have to do to get in on it is "join my team" and pay some sort of entry fee? Then a monthly fee to stay in? DING DING DING. That great opportunity is more than likely a pyramid scheme.
Pyramid schemes concentrate on getting more people to join in. You want to "build your bottom line" and get people to buy into the business. Yes, there is a product to sell. Most people involved in these schemes will tell you that when there's a product that it automatically means that it isn't a pyramid scheme. Ahhh. Yes. The "we have a product so we are legal" thing. Question is, which one are they pushing the hardest? The product or the recruitment?
I used to sell Avon and I was pretty good at it. In fact, I enjoyed it so much that I've contemplated doing it again recently. Avon is a company that pushes product sales more than recruitment. Yes, there is always someone above you that is getting a cut of what you sell but you are only encouraged to recruit others if you tell them that you are interested in that part of the business. Pyramid scheme? Far from it.
The product has to have actual worth and have a price point that is in line with what the value is. For example, if a company sells precious metals at a price point that is higher priced than what the well known internet based companies sell the same exact product for, be leery because it will not be easy to sell those coins and bullion. Why would anyone pay more than they had to? Most people won't which means sales of the actual product will be a very small percentage of the commissions.
If the company focus is on recruitment of others into your "down line" then you are more than likely dealing with a pyramid scheme. If the majority of the conversation focuses on the commission structure for getting other people to join, you are more than likely dealing with a pyramid scheme. If there is a monthly fee to continue in the business, you are more than likely dealing with a pyramid scheme.
There are successful people in these schemes/scams. A LOT of them and that's why they continue to be as popular as they are. The problem with the pyramid is that the closer to the bottom that you are, the more likely you will be to lose your investment. If you don't recruit others into the pyramid and if those others fail to recruit, you won't make any money. You could very well find yourself investing a LOT of time and money into something that will fail.
Now do not get me wrong, there are legitimate business opportunities out there that you can be successful at. It is very true that you get out what you put in when it comes to joining a legitimate MLM opportunity. You just need to stay alert and watch for the tell tale signs of the so called opportunity that in reality is a pyramid scheme.
- Mediocre or overpriced product that doesn't sell well.
- Focus is more on recruiting others into the "opportunity" than selling the product.
- Large fee to get into the "opportunity" and anytime there is a monthly fee to remain in, RUN.
- Terms like "be part of my team" and "build your down line" are used consistently.
- They tell you that you can't fail.