Q#121–Where’s the line between Multi-Level Marketing & a Pyramid Scheme?

Over the years, I’ve seen a lot of “opportunities” on the web and on TV that have made me just paranoid by reflex. I never have gotten into home distribution or some marketing opportunity, though I’ve had others try to get me into them.

As far as I know, nobody is trying to get to me now, but when I hear about selling products and inviting more people to be sellers… my alarm bells start going off.

Granted, I’ve watched too many episodes of American Greed to ignore Ponzi schemes and “too good to be true” stories. However, the businesses that are bonafide MLM’s and NOT fraudulent… I wouldn’t be able to tell.

And it’s a bit disconcerting to notice that most MLMs seem targeted toward weight loss, supplements, and/or women.

What sucks is their business model just doesn’t feel sustainable, even if they’re considered legit.

I’m sure most of us have seen the John Oliver segment about Multi-Level Marketing at some point, and that’s what got me thinking about this question. But even after looking up a few sites, I just can’t figure it out, unless it’s like what Harvey Dent said about heroes.

Will all good multi-level companies eventually live long enough to end up becoming pyramid schemes?

I know enough to know that the biggest difference is the product leaves an MLM to go into the broader world, not just sold to their distributors and their distributors and so on. But, in order to do sales, a sales force needs to be recruited. Most likely, the recruits will come from the lower distributors, and when the number of sellers is more than the number of customers for a stretch, what happens then?

Anybody have crap experiences with pyramid schemes (or good ones)? Crap experiences with MLMs (or good ones)? Anybody got anything on this?

Floor’s yours…

And if you haven’t seen that segment? Well, I’ll link to it:

I just remembered somebody tried to get me into Herbalife… hmm…

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