WARNING – WARNING … they are NOT the same thing!!
What people DO NOT understand is that there IS a HUGE difference between Network Marketing (aka MLM) and a pyramid scheme.
In fact, the Federal Trade Commission (FTC) explains that network marketing is a means to sell goods or services through distributors. By being part of a network marketing company usually entitles the distributor (0r rep) to earn commissions on sales or products or services sold as well as for recruiting other distributors.
On the other side … Pyramid schemes may have similar structures BUT have a completely different focus. Pyramid schemes reward members for pretty much just recruiting new distributors, and for the most part completely disregard the marketing and selling of of the actual product. And that’s horrible!
And did you know that in most states pyramid schemes are completely outlawed!! Why? Because they without a doubt fall apart and collapse! Sooner or later, the recruitment of new distributors stops. When that happens, the plan collapses and most of the people involved — except perhaps those at the very top of the pryamd — lose money.
The FTC’s website (www.ftc.gov) offers these tips to help you avoid an illegal pyramid scheme:
1) Beware very careful of plans that promise enormous earning or claims to sell miracle products.
2) Avoid any plan that offers commissions for recruiting additional distributors.
3) Be cautious of plans that claim you’ll make money through continued growth of your downline — the commissions on sales made by new distributors you recruit — rather than through sales you make yourself.
4) Beware of plans that ask new distributors to spend money on high-priced inventory.
5) Do your research people! Check with the Better Business Bureau and/or state attorney general about the company you’re considering joining, especially if it claims that your potential earnings or the product sound too good to be true.
If you research Beachbody you will notice that they are an accredited business with an A+ rating with the BBB. As a distributor/rep (aka Coach), you receive 25% commissions on all products you sell without having to recruit. If a Coach decides to recruit they receive team bonuses based on their team’s performance along with their direct commissions. (Isn’t that how the majority of sales teams for any business are also set up? I have a ton of friends in sales and it’s pretty much the same concept.) Also, the person who signs up “under” you can definitely FAR EXCEED your performance … so the person “on top” does NOT make all the money. It’s based on the old tried and true system of what you put in is what you get out.
If you want more information or want to further learn the difference between a pyramid scheme and a legitimate network marketing business, visit the Direct Selling Association’s website at www.dsa.org.
You can also find more info at the Better Business Bureau’s site at www.bbb.org.