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    Multi-Level Marketing Vs Pyramid Schemes: WWW - CONSUMER.SD - GOV - 605-773-4400 - 1-800-300-1986

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    Ylor Noniuq
    Multi-level marketing involves individuals selling products to the public through word-of-mouth and receiving commissions on their own sales as well as the sales of those they recruit. Pyramid schemes, in contrast, involve no real products but instead promise high returns solely for recruiting others to pay money into the scheme. To assess a multi-level marketing opportunity's legitimacy, research the company's history, reputation, and compensation structure to ensure rewards are based primarily on product sales rather than recruitment.

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    Multi-Level Marketing Vs Pyramid Schemes: WWW - CONSUMER.SD - GOV - 605-773-4400 - 1-800-300-1986

    Uploaded by

    Ylor Noniuq
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    Multi-level marketing involves individuals selling products to the public through word-of-mouth and receiving commissions on their own sales as well as the sales of those they recruit. Pyramid schemes, in contrast, involve no real products but instead promise high returns solely for recruiting others to pay money into the scheme. To assess a multi-level marketing opportunity's legitimacy, research the company's history, reputation, and compensation structure to ensure rewards are based primarily on product sales rather than recruitment.

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    Multi-level marketing involves individuals selling products to the public through word-of-mouth and receiving commissions on their own sales as well as the sales of those they recruit. Pyramid schemes, in contrast, involve no real products but instead promise high returns solely for recruiting others to pay money into the scheme. To assess a multi-level marketing opportunity's legitimacy, research the company's history, reputation, and compensation structure to ensure rewards are based primarily on product sales rather than recruitment.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    10 views2 pages

    Multi-Level Marketing Vs Pyramid Schemes: WWW - CONSUMER.SD - GOV - 605-773-4400 - 1-800-300-1986

    Uploaded by

    Ylor Noniuq
    Multi-level marketing involves individuals selling products to the public through word-of-mouth and receiving commissions on their own sales as well as the sales of those they recruit. Pyramid schemes, in contrast, involve no real products but instead promise high returns solely for recruiting others to pay money into the scheme. To assess a multi-level marketing opportunity's legitimacy, research the company's history, reputation, and compensation structure to ensure rewards are based primarily on product sales rather than recruitment.

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    © All Rights Reserved
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    Download as pdf or txt
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    MULTI-LEVEL MARKETING vs PYRAMID SCHEMES

    Multi-level Marketing (MLM) or network marketing, is individuals selling products to the


    public — often by word of mouth and direct sales. The main idea behind the MLM strategy
    is to promote maximum number of distributors for the product and exponentially increase the
    sales force. The promoters get commission on the sale of the product as well as compensa-
    tion for sales their recruits make thus, the compensation plan in multi-level marketing is
    structured such that commission is paid to individuals at multiple levels when a single sale is
    made and commission depends on the total volume of sales generated.

    Pyramid Schemes are, however, fraudulent schemes, disguised as an MLM strategy. The
    difference between a pyramid scheme and a lawful MLM program is that there is no real
    product that is sold in a pyramid scheme. Participants attempt to make money solely by re-
    cruiting new participants into the program. The hallmark of these schemes is the promise of
    sky-high returns in a short period of time for doing nothing other than handing over your
    money and getting others to do the same.

    Legitimacy
    Learn more about the company, by finding and studying the company’s track record. Do an
    internet search with the name of the company and words like review, scam, or complaint.
    Look through several pages of search results. You also may want to look for articles about
    the company in newspapers, magazines, or online. Find out:
     how long the company has been in business
     whether it has a positive reputation for customer satisfaction
     what the buzz is about the company and its product on blogs and websites
     whether the company has been sued for deceptive business practices
     Check with your state Attorney General for complaints about any company you’re con-
    sidering, although a lack of complaints doesn’t guarantee that a company is legitimate.

    Don’t pay or sign a contract in an “opportunity meeting.” Take your time to think over your
    decision. Your investment requires real money, so don’t rush into it without doing some re-
    search first.

    SOUTH DAKOTA OFFICE OF ATTORNEY GENERAL

    This handout is for informational purposes and should not be construed as legal advice or as a policy of the South Dakota Attorney General.
    If you need advice on a particular issue, you should consult a private attorney or other experts.

    WWW.CONSUMER.SD.GOV • 605-773-4400 • 1-800-300-1986


    Ask your sponsor for the terms and conditions of the plan, including:
     the compensation structure
     your potential expenses
     support for claims about how much money you can make
     the name and contact information of someone at the company who can answer your
    questions

    Get this information in writing. Avoid any plan where the reward for recruiting new distrib-
    utors is more than it is for selling products to the public. That’s a time-tested and traditional
    tip-off to a pyramid scheme.

    Keep in mind that when you recruit new distributors, you are responsible for the claims you
    make about how much money they can earn. Be honest, and be realistic. If your promises
    fall through, you could be held liable, even if you are simply repeating claims you read in a
    company brochure or heard from another distributor. If you don’t understand something, ask
    for more information until it is absolutely clear to you.

    This handout is for informational purposes and should not be construed as legal advice or as a policy of the South Dakota Attorney General.
    If you need advice on a particular issue, you should consult a private attorney or other experts.

    WWW.CONSUMER.SD.GOV • 605-773-4400 • 1-800-300-1986

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