This series is to address the misinformation about what classifies a pyramid scheme, and to
discuss the characteristics of legit multi-level marketing companies (there is such a thing).
Obviously, I will try to be as objective as possible.
For full disclosure, I am an Independent Brand Partner with Nerium International™. However, the decision to join was not one I made lightly. Considering myself of moderate intelligence it simply baffles me how so many people continue to spew negativity towards this type of business structure.
Prior to signing up, I did my research, but with the recent chatter going on through the online world, I was compelled to take some time to do additional research with legitimate facts from reputable organizations. Let me be clear, this is not to try to persuade anyone to join me in Nerium International™, nor is it a clever disguise to get you to buy the product. My only genuine goal is to supply people with the correct information about Nerium International and the company structure. Let’s begin:
First I decided to see what the U.S. Securities and Exchange Commission had to say about pyramid schemes. According to their website, the basic description of a scheme is, “participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.”
The key phrases here are solely recruiting and the promise to get rich quick. Remember these when you are continuing on this journey with me of getting to the bottom of why people hate MLM’s. The following is each warning that the SEC explains for consumers to be wary of when considering a MLM, and these will be the seven areas this series will be focused on.
“When considering joining an MLM program, beware of these hallmarks of a pyramid scheme:
- No genuine product or service. MLM programs involve selling a genuine product or service to people who are not in the program. Exercise caution if there is no underlying product or service being sold to others, or if what is being sold is speculative or appears inappropriately priced.
- Promises of high returns in a short time period. Be leery of pitches for exponential returns and “get rich quick” claims. High returns and fast cash in an MLM program may suggest that commissions are being paid out of money from new recruits rather than revenue generated by product sales.
- Easy money or passive income. Be wary if you are offered compensation in exchange for little work such as making payments, recruiting others, and placing advertisements.
- No demonstrated revenue from retail sales. Ask to see documents, such as financial statements audited by a certified public accountant (CPA), showing that the MLM company generates revenue from selling its products or services to people outside the program.
- Buy-in required. The goal of an MLM program is to sell products. Be careful if you are required to pay a buy-in to participate in the program, even if the buy-in is a nominal one-time or recurring fee (g., $10 or $10/month).
- Complex commission structure. Be concerned unless commissions are based on products or services that you or your recruits sell to people outside the program. If you do not understand how you will be compensated, be cautious.
- Emphasis on recruiting. If a program primarily focuses on recruiting others to join the program for a fee, it is likely a pyramid scheme. Be skeptical if you will receive more compensation for recruiting others than for product sales.”
Please click on the links above to see a more in-depth look at each bullet in regards to Nerium International™. The series will be posted throughout the remainder of this week and next.