MLM or Multi-level Marketing is a system or strategy in marketing the business through direct selling of the products and recruiting distributors to sell and recruit. It offers rank level compensation for sales and recruits made.
However, Pyramid Scheme poses the same strategy as the MLM, except that the products are not real. Members-only make money by recruiting new members in the program. It promises an immense amount of money in just a short period for doing nothing.
This is the main way Multi-level marketing and pyramid schemes operate differently from each other.
You’ll notice they both have this system of recruiting members and training them to have their recruits. Still, if you pay attention, the main goal of MLM is recruiting more members for the sole purpose of promoting the product and expanding the sales of products they offer. On the other hand, the Pyramid scheme may start with you, presenting few to no products to sell and go straight to asking you to invite more people to register and join the team.
The number of people the pyramid scheme requires is just so impossible to get and achieve. The faster you add more people to your group, the faster the money growth you’ll make. Still, when this happens, the company may have that difficulty compensating you because it’s not just you that they need to pay but all of the other members who’re working hard on recruiting new members. And because these companies are fraud, have no products to sell, and do not have many investors to support and supply the compensation – they tend to stop the business, leaving behind the promised return of your investment. It leaves you hanging and devastated because you’ve taken the risk of investing your life’s fortune, savings, and property for it.
Do some research before signing any contract. Know that distinguishing the difference between MLM and Pyramid Scheme might be tricky.
The FTC or Federal Trade Commission set guidelines to help consumers and those who want to make suitable investments know the difference between legit companies and fraud ones.
Below are some example of questions you should research if you’re interested in joining a certain MLM:
In this internet-driven generation, you might as well use it to do research and invest time to look for reviews, news, articles, and even complaints about the MLM before signing anything and risking your hard-earned money.
It is better to research it yourself and look at what the company offers and if they are true to their claims. You’ll be responsible for the people you’ll invite to join a specific multi-level marketing company because it’s not only your money that’s invested but also theirs…
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