If you aren’t going to fall victim to pyramid scheme businesses, then you’ll need to find ways to recognize them. Here’s a good place to start: legit networking or multi-level marketing businesses involve sales of actual products, while pyramid scheme businesses don’t, per Live Sorted. Andrew Lelling, an attorney in Massachusetts, told CNBC: “There are legitimate multi-level marketing companies. The difference is that a legitimate company makes its revenue from the actual sale of a product. A pyramid scheme does not.”
In cases where actual products are presented, pay attention to their marketing strategy. If they are more concerned about recruitment networks than they are about promoting their products to attract more buyers, they are likely one of the pyramid scheme businesses you should run away from (via The Balance Small Business.)
Pyramid schemes are also known to promise offers that sound way too good to be true, per Job List. Bruce Dorris, president of the Association of Certified Fraud Examiners, said, ”Any time that you have a direct solicitation from someone, ‘Hey, look, you can come in. You can work from your house. You can make this amount of money and if you can get some other people to work for you from their homes, you’ll make even more money,’ that’s a huge red flag to walk away” (via CNBC). Remember: if it sounds too good to be true, it probably is.
