One of the most common and oldest myths is that an MLM can not be a illegal pyramid scheme simply because it has a product. I'm not quite sure where this myth was started, but it seems to be by someone with a vested interested in an MLM product or company.
However it was started, this is one of the easiest MLM Myths to put to rest. The FTC has two very good articles on the subject. Each are very straight-forward
"Not all multilevel marketing plans are legitimate. Some are pyramid schemes."
The rest of that article has a lot of information for how to determine whether an MLM is a pyramid scheme. If you are considering getting involved in an MLM, it is well worth taking the 2 minutes to read the article in detail.
"Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. However, they all share one overriding characteristic. They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure."
I've put the last sentence in bold because it clearly shows that some pyramid schemes use a product to appear to be legal.
Furthermore the FTC has shut down companies like JewelWay, which had products, for being a pyramid scheme.
Bottom Line: If you hear someone spreading this very old myth and the person is involved in an MLM company, it is best to run away from the person and the company. They clearly don't have a grasp on their own business, which should make warning bells go off in your head about anything and everything they say involving the "opportunity."This post involves:
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