Learn the Difference Between Pyramid/Ponzi Strategies and Multi Level Marketing Strategies

Learn the Difference Between Pyramid/Ponzi Strategies and Multi Level Marketing Strategies

There's a lot of confusion regarding legitimate multi-level marketing and scams. I want to tell you directly that multi-level marketing is a great form of distribution and can have unlimited income potential. However, scams do exist and a Pyramid/Ponzi scheme is very different from a legitimate MLM. You need to understand that good multi-level marketing companies are established in accordance with the law, thus, they are legitimate businesses using legal multi level marketing strategies.

You may hear of MLM's being called network marketing. When people are thinking of multi level marketing strategies, which they may be wrongly be considering as a scam, what they are really referring to are Ponzi or Pyramid schemes. It's easy to understand why inexperienced people might think that way. A Pyramid hierarchy and a Ponzi scam use a similar business model to multi level marketing. Also, some multi level marketing businesses and pyramid or Ponzi schemes require you to pay an initial start-up fee. I say "some" for multi level marketing businesses because not all of them require an initial start-up fee while all Pyramid and Ponzi schemes require an initial investment fee. You will understand why in a minute.

Another similarity between them is that in both, you may earn commissions on people that you recruit into your business. Now, pay attention because in a moment, you will understand the difference between multi level marketing and pyramid/Ponzi scheme.

The initial fee you invest in a multi level marketing businesses can be used to buy some of the products or services that the particular company is selling. In pyramid or Ponzi schemes, your initial fee does not bring you anything but into the business. In Ponzi/Pyramid schemes, your initial fee will serve as your payment to be a member of the group. In fact, they offer nothing and the only thing they do is to maybe earn you money through other people who join the group (and maybe not). Here's what you need to know; if there is no product it's most likely a scam! But with good products, especially consumable products that people really want, great fortunes can be made legitimately.

You can also earn money in legitimate multi level marketing businesses through recruiting other people to join the business but you are recruiting people to help sell the products or services of the company. Some people are wary of multi level marketing strategies because of they mistake them for Ponzi or Pyramid schemes. Pyramid and Ponzi schemes have done a lot of damage to legitimate network marketing businesses before the Federal Trade Commission (FTC) was able to check them out.

Nevertheless, the FTC has been fairly strict in monitoring these illegal businesses causing Ponzi or Pyramid schemes to decline in existence. Just keep in mind those businesses offering commissions without any products or services are likely to be illegal. And the most important thing to remember is that, there are many great opportunities doing business with multi level marketing strategies.

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