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Is It Legal Multi Level Marketing Or An Illegal Pyramid Scheme?

Aug 17, 2007
Everyone wants to get rich quick, well almost everyone. Most people know stories about the lucky few who are dumb as snot but have been in the right place at the right time and riches just rained down on them. Some people think that their time will be soon. Then a knock on the door, an email, a telephone call, hey join this moneymaking scheme and you can not lose. Invest a reasonable amount of money in some multi level marketing plan and the product attached to it will almost sell itself. Plus, for every new person you bring into the fold, you get a nice split on their profit too.

Sound too good to be true? Well it may be according to the United States Federal Trade Commission, a deep pocketed federal agency that has the power to wear you out financially. How can you make the distinction between an illegal pyramid scheme and a legal multi level marketing plan? In pyramids, commissions or money return is based on the number of distributors or sales people recruited. The products that the plan sells are really being sold to new recruits, not end users. The product that the pyramid scheme sells is more window dressing than real goods and services that consumers are using.

A legal multi level marketing system, and yes there are many good programs out there, also have you sign up additional recruits to sell goods and services but the difference is that you do not depend upon new recruits for most of your earnings, you rely on the actual consumers of your goods. There are grey lines here so you need to be careful.

According to the Federal Trade Commission, if you are mixed up in an illegal pyramid scheme, you are also in trouble, not just the head promoters. There are some general guidelines to help distinguish between a legal multi level marketing program and an illegal pyramid scheme.

Avoid any plan that includes commissions for recruiting additional distributors. It may be an illegal pyramid.

Beware of plans that ask new distributors to purchase expensive products and marketing materials. These plans may be pyramids in disguise.

Be cautious of plans that claim you will make money through continued growth of your downline, that is, the number of distributors you recruit.

Beware of plans that claim to sell miracle products or promise enormous earnings. Ask the promoter to substantiate claims.

Beware of shills - decoy references paid by a plans promoter to lie about their earnings through the plan.

Do not pay or sign any contracts in an opportunity meeting or any other pressure-filled situation. Insist on taking your time to think over your decision. Talk it over with a family member, friend, accountant or lawyer.

Do your homework! Check with your local Better Business Bureau and state Attorney General about any plan you're considering - especially when the claims about the product or your potential earnings seem too good to be true.

Remember that no matter how good a product and how solid a multilevel marketing plan may be, you'll need to invest sweat equity as well as dollars for your investment to pay off.
About the Author
Mitch Endick is a short article writer for the popular
get rich web site:
GetRichQuick.net. provides information on get rich quick schemes and mlm opportunities.
His website,www.GetRichQuick.net
also has information on MLM or Multi Level Marketing programs and illegal pyramid schemes.
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