2017-07-20 / Editorial Page

This weeks tips from the BBB

Many people have found suc­cess in direct selling for companies which use a multi-level compensa­tion plan. Unfortunately, not all opportunities are legitimate, and it’s easy to get caught up in the enthusiasm and big promises of a pyramid scheme posing as a trust­worthy company. So how do you tell the difference? BBB provides consumers with information to help determine whether or not a company is trustworthy.

What is a Multilevel Marketing Plan? Multilevel Marketing is a method to sell goods and services through other distributors. These plans promise that if you sign up as a distributor, you will receive com­missions from sales you make, as well as sales of the people you have recruited as your distributors. On the contrary, a pyramid scheme’s commissions are primarily based on the number of distributors re­cruited and generally ignore the marketing and selling of products and services.

The difference between these two plans can seem unclear, but there is one key distinction ‘MLM’s are legitimate, and pyramid schemes are illegal, so it’s very important to do your homework.

BBB offers the following ques­tions to ask before deciding whether or not to join an MLM: l Does the compensation come primarily from recruiting others as opposed to the sale of the prod­uct? l Does the product or service seem too good to be true, and is it priced at an expensive rate? l Do you feel pressured to join? Is the emphasis placed on the ‘op­portunity’ rather than the value of the product? Are there promises of large profits for minimal work and little experi­ence? l What is the marketability of the product? Is there a similar product on the market for less money?

If you answered yes to any of these questions, you are probably looking at a pyramid scheme. While a Multilevel Marketing Plan can be a legitimate and exciting new venture, the bottom line is, do your research as you consider a MLM opportunity. It could be a pyramid in disguise.

Here are some tips to consider before you make your decision: l Don’t pay or sign any contracts in an “opportunity meeting” or any other high-pressure situation. Insist on taking your time to think over a decision to join. Talk it over with your spouse, a knowledgeable friend, an accountant or an attor­ney. l How do you feel about the way you were recruited and do you feel comfortable approaching friends and family in this same manner? People don’t appreciate having their friendship exploited, this usually ruins relationships. l Beware of those that don’t com­mand the respect themselves and lean on the credentials or character of others. l Can you survive off of the sales of the product without recruiting other distributers? Pyramid schemes survive by pulling in new distribut­ers and little attention is placed on the product. l Realistically, how many people can be enrolled in any given area before saturation occurs? If every­one in your neighborhood is selling hamburgers, then pretty soon it is going to be difficult to sell hamburg­ers. l Check any company or opportu­nity out with BBB before joining.

Keep in mind, a legitimate com­pany will portray an honest pic­ture of the opportunity, including the possible risks, rewards, and challenges. A pyramid scheme, however, will enthusiastically sell you on the promise of making tons of money with very little effort. Unfortunately, self-deception is the hardest to recognize so take the time to research thoroughly before getting caught up in the hype.

For more tips you can trust, visit bbb.org.

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