This describes mlm or network marketing pyramid schemes and how to identify a pyramid scheme when you see one.
Not all mlm or network marketing business opportunities are made equal. Some are real, legitimate businesses. Others are real-life pyramid schemes like the one you saw with Zeek Rewards.
In an effort to help you determine which is a real business opportunity and which isn’t, the Direct Selling New publication put together this litmus test. Use this criteria for yourself the next time you’re considering a business opportunity.
What Established Direct Selling Companies Have In Common – These companies have stood the test of time. Their business models have been validated by the FTC, the SEC and by a number of federal court decisions.
These legitimate business opportunity companies..
- offer financial incentives for personal product/service use, product/service promotion and sales force expansion
- derive primary commissions and revenue from ongoing and deliberate sales of products/services to outside customers – or in reasonable amounts – to distributors for their personal and family use
- don’t derive primary commissions and revenue from upfront purchases
Now in contrast..
What Deceptive, and Abusive Direct Selling Companies Have in Common – These types of companies and their marketing schemes have been prosecuted by the FTC and deemed as illegal.
These illegal business opportunity companies..
- urge new recruits to pay money or purchase product as a “gateway” to qualified rewards in the compensation plan
- make ongoing payments a small part of the compensation plan
- typically require large up front financial investments for inventory, training, administrative fees or bogus products in order to “buy into” the business opportunity
- use the “gateway” purchases as their primary source of revenue for paid commissions
In light of what happened recently with the Zeek Rewards “business opportunity”, I think it is in the consumer’s best interest to review this business criteria when evaluating their next business opportunity. The last think you want to have happen is to have all your commissions tied-up into receivership. When that happens, you’ll be standing in line to get back pennies on dollars you invested.
This article described mlm and network marketing pyramid schemes and how to use this criteria in evaluating mlm business opportunities.
KEYWORDS: mlm scam, mlm pyramid scheme, Zeek Rewards