The “technically” legal MLM.

I have seen a lot of ads for these businesses. You can easily tell which ones they are with a little research. The most popular seems to be the one where new members pay a “membership” fee directly to their sponsor to access training material. Sounds good right? Only at first.

I started searching for info on MLMs vs Pyramid Schemes. These are just some of the differences I have found between the two.

Business Goal…
In a MLM, the goal is to sell goods or services to consumers.
In a Pyramid Scheme, the goal is to recruit new members.

Profits…
In a MLM, profits are generated by the sales of goods or services to consumers.
In a Pyramid Scheme, profits are generated by recruiting new members.

Start Up Cost…
In an MLM, there is little or no cost to get started.
In a Pyramid Scheme, members pay recurring “membership” fees to access “educational,” “advertising,” or “training” materials that can be found for free somewhere else.

After learning what I have, the question is are businesses like these “technically” legal or are they just flying under the radar of the Federal Trade Commission.

My recommendation is to look where the profits come from. Legit money is made from sales of a product to consumers. If you are involved in a company that does NOT offer its products WITHOUT enrolling, you may be in a pyramid scheme.

image

Advertisements