How can I clearly distinguish between a pyramid scheme and a legitimate sales opportunity?
Many years of broad experience in the direct sales field and extensive research led to the identification of five causal and defining characteristics of a compensation plan that clearly separate exploitive MLM/pyramid/chain selling schemes from legitimate sales opportunities. These five characteristics – referred to as the “5 Red Flags” – both cause the horrendous loss rates and clearly define or distinguish between a pyramid or chain selling scheme and a legitimate income opportunity. A detailed report on these characteristics is posted on the research page of our web site. The compensation plans of over 300 MLM programs have been tested against these 5 Red Flags of “recruiting MLMs” (those with pay plans that primarily reward the recruiting of a downline, making sales to non-network customers a comparative waste of time – which applies to nearly all MLMs). In the compensation plans of recruiting MLMs, we find these “Five Red Flags” (causative and defining factors): • Recruiting of pa
