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.
‘Downline’ is a term used by MLMs and pyramid schemes to refer to those who work under you. It can be confusing, since MLMs also give salespeople the opportunity for promotion to a supervisory role.
The MLM strategy is to establish a large population of salespeople to distribute the project and increase their sales force exponentially. Promoters get commission on the sale of the product, as well as income for sales their recruits make.
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.
Some examples of phony pyramid scheme products are ‘miracle cures,’ unfamiliar health products at seemingly high prices, or low-cost, high-yield investment opportunities.
Let’s say, for instance, there was a pyramid scheme that sold inexpensive DVDs. [4] X Research source This seems like a legitimate product. But how much profit can you hope to make off each unit? It may be hard to tell. If there is high reward for recruiting members in addition, look for other signs of a pyramid scheme.
