"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
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
MSD@sec.state.ma.us. 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.