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Have you ever been approached or been accused of being in a SCAM?  Someone telling you that your MLM business opportunity if a scam or one of those pyramid schemes.  How does that make you feel?  Well to tell you the truth it used to really bother me.  Knowing that I would never get involved in something that would ever hurt another individual I would feel offended and sometimes it is difficult to explain to people who were uneducated about the MLM industry and who didn’t want to look at the legality of the MLM industry.

So the questions is,

Is the Multi-level Marketing Industry a Scam or is it a Legal Business? 

Well in every country in which a MLM company operates it operates based on LAW and in the United States it is the Federal Government that states that the MLM industry is legal.  Each country has a similar governing body that they have put in place with similar laws to govern the facts that determine the legitimacy of the MLM network marketing industry.

Back in 1975 a Landmark Case took place when the US Federal Trade commission (FTC) took legal action and sued Amway in saying that it was an Illegal pyramid scheme.

In 1975 FTC Sues Amway

 After four years of litigation the Federal Government stated the Amway and the  MLM industry is  a legitimate business operation.

One of the major points made in the trial is that the defense brought in person after person who showed that they came into the company later in the so call “scheme” but made more money than the person who brought them in or people who had join many years prior.  These facts were so profound to the courts that the Federal Government had to rule that Amway and the Multi-level marketing industry is not an illegal operation and not a pyramid scheme.  It proved that it really doesn’t matter when you get into a legitimate MLM business opportunity that you can still make money and make a lot of it.  You can find success as long as you are willing to work hard and accomplish your financial goals.

So prior to 1979 people could have claimed that the MLM industry was an illegal pyramid  but since then only the uneducated would state that the MLM industry is an illegal pyramid scheme.  So we all need to salute Amway for blazing the trail.

Amway Wins Law Suit

So the question is does every person who joins an MLM company all have the same opportunity to find success.  The answer is an Yes  as long as it is operating correctly and not running what is an illegal pyramid scheme.

In addressing the pyramid questions what are some of the things that typify a Pyramid scheme

Tim Sales had appeared on the Larry King show some years ago and explained the

Difference between what an MLM company is and what an illegal pyramid scheme is .

Now just because the MLM industry has been proven to be a legitimate business it doesn’t mean that every company that pops up who says they are an MLM company is operating a legitimate business and one needs to be educated to determine what is legal and what is not.

There are three types of illegal pyramid schemes that one should look out for in the business opportunity field.

These 3 types of Illegal Pyramid schemes would be

1- A NO Product Pyramid scheme – This would be a company who exchanges money without a product

2- A Phony Product Pyramid scheme- These is also the company which operates with a phony product. A product which has no real value.

3 – Compensation Plan Pyramid Scheme – This is a company in which the compensation plan is designed unfairly to pay the people at the top all the money.

Know the Difference between A Legitimate MLM and a Pyramid Scheme

It is important to be able to assess if you are looking at an opportunity if it is a legitimate MLM business opportunity or if it is a illegal pyramid scheme.

Let take a look at the NO Produce Pyramid scheme and how to explain or identify this.  A no product pyramid scheme is when a person come in and pays a certain enrollment fee.  They then sign up another person who also pays this same enrollment fee.  In this case there is no product at all being purchased or exchanged for the money paid to enroll .  There is just the exchange of money with no product. This goes on and on and the  only way people get paid is through the enrollment of another person who just give their money away without and valuable product or service.  There is also no product that can be sold to an end consumer.  This is basically a money scheme. Usually once the entire matrix is filled up then the person at the top would receive a very large sum of money for completing their matrix.  One example of a NO Product pyramid scheme are Gifting programs.

Next let’s look at a Phony product Pyramid scheme.  This occurs because a person forming a company knows that the FTC will shut them down if there is no product delivered in exchange for money. So what they do is come up with a phony product.  A phony product is a gimmick product that does not have a real consumable demand and someone who is not involved in the company would not be purchasing it . One test to know if it is a gimmick product would be to say if I wasn’t in this business would I or anyone buy the product based on the value they would receiver and would they pay the price that it is being sold at.  The FTC would also look at how many customer does the company has.  That is why it is always good to have people who just consume the product within your company.

The third type of pyramid scheme is the Compensations Pyramid Scheme.  This is where the person at the top get paid a commission from everyone in the downline to infinity .  In all legitimate compensation plans there is some type of cutoff of compensation, if this wasn’t the case then the company would end up paying all the money that came into the company out to the people who were at the top, the company would fold and most people except for the few at the top would make money and the rest would get hurt.  A legitimate compensation plan can cut off the money flowing to infinity to the top in many ways.

The MLM as an industry is such a powerful industry to assist people in becoming financially and personally successful . Because it is so powerful many times people create companies and mislead people making a bad name for the MLM industry.  So you should be educated and should always check out the company , the management team and know the ways in which they are operating to really find a successful and powerful MLM company to get involved with.

Well I hope this help you in determining the difference between being a part of the powerful MLM industry or getting involved in an Illegal Pyramid Scheme.  Remember that the application of know is wisdom.  Use this knowledge to become powerful and make great decisions .  If you like this information please share it with other.

To Your Success

Douglas Paul Alp

602 714 2773

It’s About Your Success