According to the Federal Trade Commission, if the money you make is based primarily on the number of distributors you recruit, and your sales to them, rather than on your sales to outside people who plan to use the products, it’s probably a pyramid scheme. The best way to tell if a multi-level marketing company is legitimate is to do your research, however. The FTC provides eight steps you should follow when evaluating a multi-level marketing opportunity:
- Find and study the company’s track record.
- Learn about the product
- Ask questions.
- Understand restrictions
- Talk to other distributors.
- Consider using a friend or adviser as a neutral sounding board or for a gut check.
- Take your time – don’t let anyone rush you into making a decision.
- Think about whether the plan suits your talents and goals.