Illegal Pyramid Schemes

"Do you want to work from home, be your own boss and earn lots of cash?" : On the Lookout for Illegal Pyramid Schemes

These types of ads have been around for a long time, but now with the global influence of social media, they are even more widespread and potentially riskier. Companies based in many parts of the world are setting up Illegal Pyramid Schemes that are disguised as Multi-Level Marketing businesses (MLMs).

MLMs of all types satiate the market and social media daily. Chances are you know at least one person who is earning a living selling products or services out of his or her home, most likely in the health and beauty industry. Many of these companies are legitimate and individuals can in fact be successful working for this type of MLM organization. So, what separates these legitimate companies from the illegal or Ponzi scheme companies? Priorities.

In a legitimate MLM company, the main focus is on the actual product or service. Certainly an individual can increase his or her profits by moving up the pyramid, so to speak, and earn commissions off of the lower level sales force or consultants in a trickle up fashion; but the priority of the business is to get its product or service out into the marketplace and to consumers.

The priority of the illegal companies is to recruit, recruit, recruit. The products or services, which are commonly in the fields of internet marketing, computer and technology, are ancillary to the "business." Very little time, if any, is spent on the discussion or promotion of the products. These companies make money from recruiting individuals and requiring them to make mandatory and hefty upfront payments in the form of start-up fees, payments for materials and membership fees in order to join the company. They also may require minimum sales before any payouts are made, as well as take regular automatic payments from a bank account or credit card. These companies make profits off of the "sales force" rather than the products or services.

If you are interested in a Multi-level Marketing company, be sure to do your homework. Ask for financial information about the products and company, a written contract detailing specifics such as payouts and cancellation options, and check with the Massachusetts Securities Division to determine if the company is legitimate. You can call (617) 727-3548 or email If you find yourself already involved in an illegal pyramid scheme, know your rights and how you can get out with the least amount of damage.

Categories: Blog Posts
Posted on Nov | 2014
Experienced Advocates | Effective Solutions