Is Network Marketing A Pyramid Scheme
What you are considering joining might be a legitimate network marketing business, or it may be a fraudulent pyramid scheme. While both can help you generate extra income, pyramid schemes are “smart” illegal scams designed to steal your money.
If your friend comes to you excited about a business opportunity that involves selling products and recruiting other people to the same, first, hold on.
While network marketing programs are a legal marketing strategy, the system resembles pyramid schemes, so they share the same ethical issues.
Because of this, many people will ask, is network marketing a pyramid scheme?
Absolutely NO. Network marketing is a legitimate system where a manufacturer pays people outside the company to sell products directly to customers.
On the other hand, pyramid schemes prey upon the unsuspecting.
Indeed, People who subscribe to pyramid schemes may not realize they have joined a fraudulent venture until they lose all they invested.
Is network marketing a pyramid scheme
Absolutely not, network marketing is a legal business model that is offered to those who are looking to do networking to help build their network marketing business with the help of others who join them, as for a pyramid scheme those programs are designed for you to recruit others so they buy into a program and they receive no product or service in return for their money, and you as the sponsor is only earning an income by just getting others recruited into the payment plan.
In this article, I will help you understand what network marketing is to help you make an informed decision. Keep reading!
- What is network marketing
Network marketing, also known as multilevel marketing (MLMs, is a marketing strategy in which people recruit people to sell a company’s products directly to the customers.
When you join network marketing, you can have two revenue streams.
You can make money either selling the company’s products yourself or by recruiting new participants into the marketing systems and earn a commission from what they buy and their overalls sales to customers.
Unlike starting a business from scratch, you will have the support of the company you’re working with.
The idea behind network marketing is to recruit the optimal number of distributors for the product; therefore, increasing the sales force.
As a network marketer, you are given the opportunity to build your own independent sales force, commonly known as a downline.
After motivating, recruiting, and training other people to sell the same products, you will earn a commission from their sales.
While many people fail at network marketing, it is a legit business that can be highly profitable if you commit enough time and effort.
- What is a Pyramid Scheme
Pyramid schemes are illegal programs that work similarly to network marketing.
Unlike in MLMs, pyramid schemes require you to invest your money upfront based on a promise that other people will also invest in the system where some money will filtrate back to you.
It is simply a money game and, of course, a SCAM.
Unlike in network marketing, distributors or promoters in pyramid schemes will use hypes and deception to lure you into their illegal system.
They use pitches about what you will likely earn to trick you. Since it is a money game, pyramid schemes barely involve any products.
Even if there are products involved, be careful. The products are solely meant to camouflage the money game.
Like in network marketing, pyramid schemes promise that you to make money if you recruit more people into the system.
You may, of course, make money, but upon accomplishing a certain level of achievement. Even so, pyramid schemes will promise you to create wealth.
For this reason, keep an eye on any multilevel marketing opportunity promising wealth beyond your wildest dreams.
- So, is network marketing a pyramid scheme
No, network marketing is not a pyramid scheme. Network marketing is a legitimate business where you promote or sell genuine products at a reasonable price.
Network marketing can net you a healthy income, but this will always depend on your efforts in making sales and recruiting more people.
In network marketing, anyone in the system gets a percentage of the revenue regardless of their level.
When you become a network marketing participant, you can multiply your efforts and skills to make more as you also help others succeed.
Network Marketing has proved itself as an excellent revenue stream.
Although many people tend to fail at network marketing, it is still one of the attractive business propositions anyone can venture into.
While both network marketing and pyramid schemes are multi-level marketing opportunities, they significantly differ in how one makes money.
Unlike network marketing, where you sell genuine and valuable products directly to customers to generate income, pyramid schemes involve a money game, where you can only make money when someone else loses money.
- How can you identify a pyramid scheme
Pyramid schemes are money games designed to steal from you.
If the pyramid scheme you are joining has some sort of product, you will be required to buy a certain amount of products at regular intervals even if you have more than you can sell or use.
For a pyramid scheme that is purely a money game, you have to keep on recruiting more people to the system to maintain the revenue stream.
Even if you are not making enough money to live on, the company will keep on promising you lavish rewards if you commit extra efforts.
Depending on the scheme, you may have to attend “unnecessary” training sessions and even pay for them.
- That said, here are ways to identify pyramid schemes
- Promoters encourage you to buy more products than you can use or resell so that you get some bonuses or merely to be an active participant.
- The company and promoters emphasize recruiting more people to the system, arguing that it is the best approach to make money.
- Promoters barely give you time to study the company. Instead, they use high-pressure tactics to force you to join the system so that they can benefit.
- You are given unrealistic promises about your earning potentials.
If you are eyeing multi-level marketing opportunities, you need to be careful.
Even if network marketing is not a pyramid scheme, some may not be a wise investment.
All the same, make sure to research any company before joining their said network marketing business.
After collecting factual information about any multi-level marketing opportunity, decide whether or not to join depending on what it offers.
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