The illegal pyramid scheme comes tumbling down sooner or later
Is This an Illegal Pyramid Scheme?
Illegal pyramid schemes target online users that are in the market to land a work at home job or start their own home based business through MLM companies. Illegal pyramid MLM companies do not intend to provide a legitimate product or service to the end-user. The only true objective of internet pyramid scams is to recruit as many new members as possible. Why, you ask? Oh, the answer is quite simple indeed. It’s because these internet pyramid scams profit greatly from the high start-up fees charged to new members. But, not every business opportunity online is an illegal pyramid scheme. Below, we’ll give you an overview of the differences between legitimate home based business opportunities and illegal pyramid schemes.
Spotting an Illegal Pyramid Scam
Companies that aren’t affiliated with illegal pyramid scams actually provide their members with a product to sell! Sure, they may get a little commission here and there for a few referrals, but they make the bulk of their money by selling products. A perfect example of a legitimate MLM company that is far from operating under an illegal pyramid system is Avon Cosmetics. Avon compensates their representatives each time they sell a product. They’ll make a few dollars each time they refer a new representative, but the bulk of their income comes from customer sales.
Illegal Pyramid schemes on the other hand, rarely have a product to sell. They simply promise their members riches for recruiting new members. Some members of illegal pyramid MLM companies may be compensated in the range of $300 to $5,000 for each new recruit they bring to the company. But, in order to become a member with the illegal pyramid company, you’ll have to pay a hefty startu-p fee which typically sits well into the thousands. It’s considered an internet pyramid scam because the company isn’t providing a legitimate service or product; just the promise for the members of the internet pyramid scams. But, eventually, all illegal pyramid MLM businesses fail because there simply isn’t a rock-solid business in place.
