EditResearching the Company
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Do a web search of the company. With the internet, it is easy to find a wide number of impartial sources with opinions about companies. Add keywords like ‘scam’ or ‘reputation’ or ‘review’ to get directly to people’s opinions. Though pyramid schemes may hire internet marketers to produce false reviews — another illegal practice — you should find positive as well as negative reviews.[4]
- The Better Business Bureau (BBB) is a good place to start. It is a nonprofit that processes complaints filed against businesses and resolves questions of illegal or unethical behavior.
- Another great resource is The Federal Trade Commission website, which has information on companies that have been pursued or fined for illegal business practices.
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EditResearching the Business Model
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Look at the business model. MLMs should be quite straightforward. The salespeople are recruited to sell large quantities of merchandise to people outside the company. Pyramid schemes rely on exciting promises and buzzwords to cover up the fact that they don’t have a legitimate business model. Their actual model would not entice nearly as many people to buy in.
- Business models of MLMs should be easy to understand. For instance, they might have a successful line of hygienic products. Since products like shampoo are inexpensive to produce in mass amounts, there is often a considerable markup for the consumer. Use this method to walk yourself through how the business makes money.
- Business models for pyramid schemes are confusing. They often include fantastical promises about revolutionizing their industry or introducing a ‘miracle product.’ More importantly, they emphasize the process of recruitment and promotion over the actual product. Don’t get lured into the job until you understand how the company makes its money.
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