Multi-Level Marketing Jobs (Pyramid Schemes)
The economy is tanking and a multi-level marketing job -- perhaps listed as “network” or “matrix” marketing -- claims you can earn big bucks in no time. It sounds too good to be true… and unfortunately it is.
Multi-level marketing is a system of selling goods or services in which you sign up other people to work for you and they, in turn, recruit others to work for them. You earn commissions on your sales and on the sales of your recruits. You can build a successful company on this model if you focus both on products and product sales. But if a promoter offers to pay you a commission for recruiting new distributors, watch out. Most states outlaw this practice, also known as a “pyramid” scheme.
State laws against pyramid schemes require that you only receive commissions for selling goods or services, not for recruiting new distributors. Any fee you pay to join a pyramid scheme is money lost.
Postal Inspectors offer guidance to help you decide whether a job offer is an illegal pyramid scheme:
Avoid plans that pay commissions for recruiting distributors.
Avoid plans that ask new distributors to purchase expensive inventory -- they can collapse quickly.
Be wary of plans claiming you’ll make money through commissions on sales from new recruits, rather than through your own sales.
Beware of “miracle products” or promises of enormous earnings. Ask promoters to back claims with hard evidence.
Beware of shills -- “decoy” references paid by a plan’s promoter to describe their fictional success in earning money through the plan.
Don’t pay promoters or sign contracts in an “opportunity meeting” or other high-pressure situation. Insist on taking time to think over your decision to join, and then talk it over with your spouse, a knowledgeable friend, an accountant, or a lawyer.
Check with your local Better Business Bureau and state Attorney General about any plan you’re considering -- especially if the offers sounds too good to be true.
If you believe you’ve been defrauded in a scheme that involves the U.S. Mail, report the incident to Postal Inspectors online or to your nearest Postal Inspection Service office