I saw a joke picture of a pyramid with the CEO at top, the upper management next, then the middle management, then finally all the workers - and the newcomer was commenting, "No, thanks, looks like a pyramid scheme to me!"
But what makes a pyramid scheme a pyramid scheme is not that there is a hierarchy or more workers than managers. What makes it a pyramid scheme is when the worker's pay is not dependent on working, but on recruiting more "workers"!
While the law makers and lawyers will have you believe that there are some legit MLM companies, and that there are gray areas, the truth is, it is fairly simple to tell how bad they are.
1. Is it more profitable to recruit your downline than it is to sell the products?
2. Of 100 people who try this, are less than 10% having any kind of success?
3. Are clearly shill articles being wrote and posted online singing false praises about the company?
4. Does the company have to change it's name frequently to throw off consumer investigations?
5. Is the company reticent about giving it's name when they first talk to you?
6. Do they offer unrealistically high rates of pay for little or no experience?
7. Are the products readily available at stores already?
Any of these things can be indicators of a "non-legitimate MLM" or as I call them, "MLMs". When several or all factors are present, the sureness goes up.
For the first one, you can tell by the emphasis they put on building your downline. Or how you have to buy the products up front, or contract to get the products first. Examine how many products you'd have to sell to break even and start profiting...compared to how quickly you'd profit if you recruited others to sell instead.
For the second, good luck getting any admissions on this. Those working this are not really employees, so the company doesn't need to keep as thorough a record of them. And certainly your "boss" won't show you. But you can see if everyone seems "new" to this. You can get a feel for it. And their reaction to just you asking to speak to some who've done it for awhile will be revealing. Because past trotting out your upline boss's boss or some other higher up, they won't be able to show too many long term people in a business in which you're either rich or quit.
For the third, just google whatever name they finally give you. No Feed the Children International, no Save the Baby Seals, no orphanage for homeless cats will have the deluge of great and wonderful endorsements these MLMs supposedly have. But here's the thing to bear in mind - most all of them will be addressing the allegations that they are scams and pyramid schemes! Let that tell the tale. I grant that sometimes smoke exists without fire...just not too often. At the least - look deeper.
Fourthly, there are legitimate reasons for companies rebranding and/or renaming. But it happens more when there's been a lot of previous negative press. RJR Reynolds thus becomes Altria. Or Amway becomes Worldwide whatever this week. This makes you finding out how many times they've been sued or fined or sanctioned difficult. Pro-tip: If the company is less than five years old, but they speak like they've been around forever, there was probably a name change.
Fifthly, you've seen this ad where it loudly and brashly proclaims, "Internationally known wholesaler looking to expand into YOUR area!! Call now to get in on the ground floor!!!" If it's truly so well known, they'd say their name and you'd be like, "Oh, yeah, IBM!" But since their name is either tarnished, or newly changed, they can't give it to you at once, not till your emotionally invested in continuing.
Sixthly, what are they offering you - and for what? When it says, "$500 per week, no experience needed!" does that not indicate a red flag to you? "Starting at $17" when the prevailing wage in your area is closer to $9/hour? "I made $47,832 in my first three months!" Actually, if that last one strikes you as credible, then nothing I write will help you! Good luck on those condo time share sales!
Just know that no one wants to pay lots of money for no experience, because lots of money actually buys people who have a lot of experience! And if all the real salesmen passed on it - what does that tell you? Salesmen, real salesmen, go where the money is. If they're not already there, it's for them knowing it's lies. Hence the company now advertising for YOU!
Lastly, what are they selling? Some things are conducive to sales in a normal fashion. Cars and houses obviously can't be kept on store shelves. Other things like Security or Pest Control services, or even services in general may benefit by a sales staff going out and about.
But toothpaste? Dishrags? Vitamin supplements? Knife sets? What is this, the 1950s? They going to sell you an Encyclopedia set and a vacuum cleaner, too? Is their friend the Milkman and the Vegetable Pushcart vendor coming down the street next? All those things are found in stores, where they are mass produced in wonderful variety and priced to sell with only the usual mark up.
I am sure with razzle-dazzle and questionable charts and by buying in bulk and - most of all - becoming a downline distributor, you might, MIGHT, save a few bucks on some of this stuff. Might. I couldn't emphasize the "might" enough. But far more likely, the very amount of time, trouble, hassle and heartache in being a downline and building your own downline will make it impractical or uneconomical in the long run.
And probably in the short run, too. Just another good indicator that they are another out and out pyramid scheme with the products - average and over-priced at best - just being the legal cover.
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