The difference between a Pyrmid Scheme and a Legitimate MLM business
By olydove
@olydove (1209)
United States
June 16, 2009 6:38pm CST
Trust me it's a fine line but it's easily distinguished.
The bottom line is "If the product or service being offered is worth equal or more value than the price being asked it is indeed a legitimate MLM business"
If I try to sell you a box of chocolates for $200 and say "This will cure all your ailments" while having 2 people in my downline doing the same thing and we're all earning by frauding you, yes that's a pyramid scheme.
Another discussion here on MyLot prompted me to post this, and I would also like your thoughts and opinions.
3 responses
@derlilaStern (1756)
• United States
22 Jun 09
I very much disagree with your definition, unless I am misunderstanding what you are saying.
It is a pyramid scheme if the person at the top get paid for doing nothing. So if Person #1 (the top) has person #2 and person #3 under them. Person #1 had started out selling and got #2 and #3 involved. Now person #1 is no longer selling, but #2 and #3 are. If person #1 is still getting paid based on what #2 and #3 are doing even though #1 is doing nothing, it is a pyramid scheme. If person #1 stops getting paid because they are no longer selling then it is a legitimate MLM.
Saying 'This will cure your ailments' has nothing to do with a pyramid scheme, it is just plain illegal.
1 person likes this
@olydove (1209)
• United States
26 Jun 09
Correction I should have put " This will cure your ailments, and it's only an ordinary box of chocolate that doesn't cure any ailments and is not worth the $200 price tag."
If the person in each position didn't make at least some sort of commission from the people they recruit then there would be no reason for MLM period, and then it would be in fact just a direct or affiliate sale with no levels, you just happened to recruit another affiliate or agent. Of course the person at the top would eventually have the options of sitting back and collection from all their recruits hard work but if they were smart they wouldn't,.. they'd take the time to help their recruits, train them, and even maybe help build their recruits downline.
I hate those programs that try to sell you the "Just sign up and you don't have to do anything but earn" or "No recruiting needed" Ok then why are you trying to recruit me? ugh!
If there was no way for the person on the bottom to earn then yeah it would to me fall in the definition of a pyramid scheme.
@amazonlover (1)
• United States
18 Jun 09
I see things a little different. If you spend let's say $150 to start a business online, and it took you say six months to make your money back. You got schemed. See to me you lost money with you time. you want to do business so it don't take up all you time.
1 person likes this
@olydove (1209)
• United States
19 Jun 09
I agree Amazon YAY you're finally here! Welcome to Mylot my good friend I have missed you dearly.
Yes if it costs a ridiculous amount of money then yeah it's not worth it but if it's only a small amount and the earning potential is great, and it's a good product that many people can use then in my opinion it's worth a shot.
@rosdimy (3926)
• Malaysia
17 Jun 09
The way I see it a rose is still a rose even if called by another name. There are roses of various colours, and pyramid schemes come in various guises.
Anything that has one person at the top, and an expanding base,is a pyramid scheme. MLMs claim their products are worth more than the price they are asking for. In many cases they sell products unavailable in the local store. Therefore there is no real comparison. Since the nature MLMs is earning commissions from downline activities, the price of a product needs to be inflated. Otherwise the commission cannot be paid. At the end of the day those at the bottom do not earn much. The hard work they do only benefits those several layers above. This is one of the reasons why MLM companies face a wall after some time, and they hve to change their strategy to get new members.
I am no longer involved in MLM.
all the best,
rosdimy
rosdimy
@rosdimy (3926)
• Malaysia
19 Jun 09
Strictly speaking myLot is not an MLM company because there is no selling of products. Furthermore, there is only one layer involved. People can join without having any upline, whereas it is impossible to do so in MLM, unless we are the original starter.
MLM works for the early birds. The latecomers usually have to be satisfied staying at the bottom, unless they use their position to 'persuade' others to join under them.
Don't get me wrong, I am not against MLM per se. It is just the way I see and feel. I wish you luck in your efforts to be successful in MLM.
1 person likes this
@olydove (1209)
• United States
20 Jun 09
See this is why I like MyLot so much because we can see others point of view. Thank you for sharing your thoughts. I consider anything where I can earn with the help from others on another level ( even 1 level below myself ) multi level marketing. Even though MyLot has no "selling of products" per say but indeed it does offer a service.
The service is the socialization and networking that we are doing here.
True when being at the bottom it is more difficult to earn in MLM that is why one must be careful about the company they join and make sure that the product is something even newcomers to the internet world could use.
Thanks so much for your thoughts and have a great weekend,OlyDove
