How To Avoid Getting Scammed By Illegal Pyramid Schemes
By Marketing Basics
Multi-level marketing (MLM) or network marketing programs are a method of selling goods or services through distributors. These programs typically promise that if you sign up as a distributor, you'll receive commissions for your sales and those of the people you recruit to become distributors. These recruits are referred to as your "downline."
Some multi-level marketing programs are legitimate. However, others are illegal pyramid schemes. In pyramids, earned commissions are based on the number of distributors recruited. Most of the product sales are made to these distributors--not to consumers in general. The underlying goods and services, which vary from car leases to cosmetics to vitamins, serve only to make the schemes look legitimate.
Joining a pyramid is a risky proposition because the vast majority of participants lose money to pay for the rewards of a lucky few. Most people end up with nothing to show for their money except the expensive products or marketing materials they're pressured into buying.
If you're thinking about joining what appears to be a legitimate multi-level marketing program, take time to check out everything about the program. For example:
What's the company's track record? What product does it sell? Does it sell products to the general public? Does it have the evidence to back up the claims it makes about its product? Is the product competitively priced? Is it likely to appeal to a large customer base? How much is the investment to join the program? Is there a minimum monthly sales commitment to earn a commission? Will you be required to recruit new distributors to earn your commission?
Be skeptical if a distributor tells you that for the price of a "start-up kit" of inventory and sales literature--and sometimes a commitment to sell a specific amount of the product or service each month--you'll be on the road to riches. Many times participants spend a lot of money to "build their business" by participating in training programs, buying sales leads or purchasing the products themselves. Far too often, their own purchases are all they will ever see for their investments.
Also, if you decide to become a distributor, you are legally responsible for the claims you make about the company, its products and the business opportunities it offers. That applies even if you're repeating claims you read in a company brochure or advertisement. The Federal Trade Commission advises you to verify the research behind any claims about a product's performance before repeating those claims to a potential customer.
In addition, if you solicit new distributors, you are responsible for the claims you make about a distributor's earning potential. Be sure to represent the opportunity honestly and avoid making unrealistic promises. If those promises fall through, remember that you could be held liable.
The Federal Trade Commission (FTC) suggests that you use common sense when evaluating a multi-level marketing opportunity and consider the following tips before you make your decision:
1. Avoid any program that pays commissions for recruiting additional distributors. It may be an illegal pyramid.
2. Beware of programs that ask new distributors to purchase expensive inventory. These programs can collapse quickly--and also may be thinly-disguised pyramids.
3. Be cautious of programs that claim you will make money through continued growth of your "downline"-the commissions on sales made by new distributors you recruit--rather than through products you sell.
4. Beware of program that claim to sell miracle products or promise enormous earnings. Just because a promoter of a program makes a claim doesn't mean it's true! Ask the promoter of the program to substantiate any and all claims with cold, hard evidence.
5. Beware of shills--"decoy" references paid by a programs promoter to describe their fictional success in earning money through the program.
6. Don't EVER pay or sign any contracts in an "opportunity meeting" or any other high-pressure situation. Insist on taking your time to carefully think over your decision to join. Talk it over with your spouse or partner, a knowledgeable friend, and an accountant or lawyer.
7. Do your due diligence! Check with the Better Business Bureau and state Attorney General's office about any porgram you're considering--especially when the claims about the product or your potential earnings seem too good to be true.
The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or to get free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.
About the Author
Marketing Basics specializes in writing articles that teach,
explain and define basic marketing techniques. http://marketingbasics.blogspot.com
http://allsearchengineoptimization.blogspot.com
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What Everyone Should Know About How To Buy Wholesale
By: Melanie Burns
Finding a supplier for the product you want to sell, at a price that you can profit from, can be a big task. The best suppliers for your online sales or auctions do not advertise their services and often cannot be found online.
Those that you can find online tend to be middle-men. It is often difficult to get a good enough price to make any real profit online.
Let me tell you about my simple 2 step system to find an untapped source for wholesale suppliers. This is so simple that it's often overlooked as a source for product. This system involves thinking outside the box and not letting policy stop you. (continued below)
The First Step to find a supplier is to find someone that already sells or has access to what you want to sell. This could be a website, an eBay seller, a manufacturer, a wholesale outlet, or a regular store in your city. This is the easy step. You know what you are looking for and you can search on the internet, not for a wholesale source, but for anyone already selling what you want to sell.
Another valuable source for a local supplier is your local phone book. The yellow pages are the best way to find local sources. This should be the first place you look. Doing business locally with someone that you can meet face to face is a big plus for your business.
Another potential source for your product is to find a distributor who would be willing to private label a product for you. You could get a very high quality product for a much lower price than if it had the name brand label.
The Second and Key Step is to convince the source you found to become your supplier.
Manufacturers and wholesale sources often have minimum orders that might be beyond your reach if you are just starting out. Online retailers, eBay merchants, and retail stores may be your best bet. Try to find a small store who is looking to expand.
But remember, you are dealing with a human being and they can be convinced to do business with you. Just be sure to sweeten the deal for them. One way is to offer the person you are dealing with at your new found source, a percentage of your profits from the products he supplies you.
Be sure to project it out for him. If he can see the benefit of working with you even though it causes extra work for him, you can be successful in making a deal.
You could offer him 20% of the profit from sales of his products. For example you could show him that you project to make at least $100 profit from each product, and you expect to sell 40 of them per month. The $4000 a month means an extra $800 per month in his pocket. You still make a nice $3200 profit for the month in this example.
On top of that, he will be ordering more products from his supplier and may be eligible for a higher price break from them. This way, his reward for the effort to work with you, is making money on both sides.
There are many benefits you can offer your potential supplier, but no matter how you look at it, the main thing it comes down to is MONEY. What's in it for your potential supplier to do business with you? If can you show him that, you have a better chance of making a deal with him and starting your online sales.
NOTE: When looking for suppliers around your city, don't go trying to impress the big stores with your $800 or even $3,000 extra income per month proposal. Try going to the little stores that are looking to expand their business, they are the ones that are usually more open to new opportunities.
The big stores are making hundreds of thousands of dollars per month in profits, so an extra couple of thousand would probably not impress them the least bit.
So now you see that by thinking outside the box, you open the door to many possibilities and increase your ability to make money online with your products.
About the Author:
Copyright © Melanie Burns
This article is free for reproduction but must be reproducted in its entirety including live links and this copyright statement. Subscribe to the iBusiness How2 Newsletter to receive hot tips, how to's, internet business tools, and relevant product reviews by sending an email to: newsletter@internet-business-how-to.com
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