So that you can avoid losing money in an MLM scam, or worse, having to fight charges or going to jail for participating in one, you need to know what to look for in order to spot one. Don't build a business first and then find out right from wrong. Regardless of how the compensation plan is designed, regulators consider what the distributor spends his or her time doing. If the bulk of that time is in activities which involve recruiting, rather than on product or service sales, then it can be determined to be a pyramid. A strong retail base (sales that are not from distributor purchases) is a good indicator of a solid company. Read more »