When people think of pyramid schemes when they hear ‘MLM’, it is a shame.
In fact, most people know that MLM is an honest, thriving industry which has sadly been tainted by those who take advantage of people who are willing to work to create their own business, those with a true entrepreneurial spirit.
But there are definite ways to tell the difference between a scam, or a pyramid scheme, and a legitimate business. Anyone considering a network marketing company should be aware of these. Otherwise you could be building a house of cards instead of a business, destined to fall.
Firstly, an attorney General would ask these two questions concerning the legitimacy of any multi-level marketing company:
1 – Would a logical thinking person pay this much money for the product or service if there was not a business opportunity involved?
2 – Does the income stop when the recruiting stops?
If the answer to the first question is “No” and/or the answer to the second question is “Yes”, then IT IS A SCAM!
Also remember these important details (they could keep you OUT OF jail):
Cash Gifting: If you hear about cash gifting programs, it is NOT a Gift if you Solicit it, unless you are a registered charity, and you report donations.
Information is not a product. Any program where you receive hundreds or thousands of dollars when someone joins, and your recruits receive nothing of intrinsic value they can hold in their hands, IS A SCAM.
CommiSsions on Tools are Illegal. Any program paying you commissions on a monthly website fee IS A SCAM.
Pyramid Scheme Exposed!
Take a look at this blog post describing a typical pyramid scheme, “Does CEO = Crooked Evil Opportunist?“. It is written by fellow network marketers who know from personal experience what it is like to lose with this ‘opportunity’, and why it is a scam.
Watch at the CBC video, but then continue to read their comment below the video link, and then the July 3rd comment from Bob and Anna in response to someone still faithfully carrying out her business in this pyramid scheme.
When someone has bought into such a scam it may well change them as they continue to try to break even or worse, make more money on the backs of more unwitting participants.
Bob and Anna are part of our team of mentors working to help network marketers know what to look for and what to avoid in selecting a network marketing opportunity, most importantly, what constitutes a scam and just what is illegal.
“If you think education is expensive, try ignorance” ~Derek Bok
******** UPDATE! **********
On April 1, 2010, BIM’s company leader, Alan Kippax, will be closing down his business due to charges brought aganst him. It seems he’ll be out of commission for a while – read the details here -
Hopefully you were not one of the unfortunate souls to be sucked into this scam, but it proves the point that ones selection of a company should include some checking of the compensation plan, policies and procedures, and particularly it’s founders and leaders!
To Your Massive Success!
Coach Freddie (28)
Oliver Tausend (28)
Amy Hagerup (24)
Gabriele Maidecchi (24)
Chris Fairchild (21)
Jennifer May (20)
John Engle (18)
Ryan Yokome (17)
Audrey Ross (15)
Steve Nicholas (15)
Hi Vicki
Thanks for helping us expose this “CEO” aka “Crooked Evil Opportunist!”
He’s still at it with ‘Business in Motion’, and if we can help just one person keep one dollar out of his pocket, we’ve had a good day.
Thanks again for your help. The industry needs more people like you who are not afraid to stand up and say “This is wrong!”
Together to the Top!
Bob and Anna Bassett
You would be surprised by how many scams like this I keep seeing in Italy as well, and how many people STILL fall for them.
For how logic your points are, I still doubt everyone will be convinced by them, you kinda get the feeling some people really want to be scammed
Gabriele Maidecchi´s last [type] ..6 ways to nurture your blogging ideas
Indeed Gabriele, some people can’t help but want to follow the hype. It’s just up to every one to do their due diligence!
Wishing You Brilliant Success!
Great review! You are giving me alot of ideas for content as I get started with my Social Media Marketing! : ) TY
Ray Bordley´s last [type] ..Branding Yourself Tips by Spencer Iverson and Floyd Williams
Hi Viki
I’m not exactly clear on why you make this statement: “CommiSsions on Tools are Illegal. Any program paying you commissions on a monthly website fee IS A SCAM.”
I don’t understand the difference between such commissions and life assurance brokers being paid a commission on monthly premiums paid on life policies for years and years to come.
As an example, if a website fee is, say, $2400 p.a. upfront, and the marketing associate whose efforts secured the sale earns a commission of, say, 10%, s/he would earn $240 at the time of the sale. If the company offers a monthly fee option (or only a monthly fee), then why would it be a scam if they pay the agent/affiliate the 10% on the monthly fee?
Am I missing something important here? The reason I ask is that I know of several companies that offer such commissions, Global Domains International being one of them. They certainly appear to be legitimate and I myself have a website with them. If someone is earning a percentage of my monthly $10 fee, why is that a scam?
Thanks, Viki.
Hi Gvain,
This information comes from information retrieved from various sources, one being MLM Watchdog, though I can’t remember for sure the original source. I believe if the ‘Tool’ is the product in and of itself (for example an affiliate commission received from something like GoDaddy) seems legit, but that a multi-level marketing pay structure which depends on paying out commissions based on the cost of the company website charged to distributors is questionable.
It’s unclear to me beyond this, but I hope that helps! I know there are far too many companies out there for the FTC to chase all illegitimate ones down, but I would be wary of ones that I thought were questionable. Anyway it’s of course entirely up to you and your perceptions. Also you could go to the Attorney General site or MLM Watchdog and do some digging if you are unsure.
Thanks for stopping by and for your comment!
Wishing you Tremendous success,
Wow! Thank you for your prompt response Viki.
Much appreciated.
Gavin