Q: Some friends continue to insist that network marketing is a pyramid scheme. Other friends tell me they’re illegal and I’ll get into trouble. How do I know what’s legal and legitimate?
A: To help you understand what network marketing is, I must first explain what it isn’t. First, network marketing isn’t a pyramid scheme. Pyramids are similar to chain letters where people just invest money based on the promise that other people will put in money that will filtrate back to them and somehow, they’ll get rich. A pyramid is highly illegal and strictly a money game. Normally, there’s no product involved at all, just money changing hands. Modern-day pyramids may have a product, but it’s clearly there just to disguise the money game. As a general rule, in a pyramid scheme which does have products, you have to sign up to take a specified amount each month whether you have sales or not.
Network marketing is a legitimate business. First, it’s based on providing people with real, legitimate products they need and want at a fair price. While some people do make a lot of money through network marketing, their financial benefit is always the result of their own dedicated efforts in building an organization that sells real products and services.
Pyramids are illegal and are based on taking advantage of people. For a person to actually make money in a pyramid scheme, someone else has to lose money. But in network marketing, each person can multiply his or her efforts, skills and talents by helping others be successful. Network marketing has proved itself as part of the new economy and a preferred way to do business here and around the world.
Network marketing isn’t about taking advantage of your friends and relatives. Only a few years ago, network marketing meant retailing to, and sponsoring people from, your “warm list” of prospects. Although sharing the products or services and the opportunity with people you know is still the basic foundation of the business, today we see more people using sophisticated marketing techniques such as the Internet, conference calling and other long-distance sponsoring techniques to extend their network across the country and indeed the 158 countries in which Forever Living has a presence..
Network marketing isn’t a get-rich-quick scheme. Of course some people do make large amounts of money very quickly. Many would say those people are lucky. But success in networking isn’t based on luck. (Unfortunately, money won’t sprout wings and fly into your bank account no matter what someone has promised you.) Success in network marketing is based on following some very basic yet dynamic principles.
Now let’s discuss what network marketing is. Network marketing is a serious business for serious people. It’s a proven system where the design, creation and expense the corporate team has gone through becomes a road map for your own success. Just follow the simple, proven and duplicable system that the good companies provide.
The real key is this: Network marketing is all about leverage. You can leverage your time and increase the number of hours of work effort on which you can be paid by sponsoring other people and earning a small income on their efforts. J. Paul Getty, who created one of the world’s greatest fortunes, said “I would rather make 1 percent on the efforts of 100 people than 100 percent on my own efforts.” This very basic concept is the cornerstone of network marketing.
Legitimate direct selling companies contribute to a vibrant marketplace by selling competitive, high-quality products and services and providing a sustainable source of income for those who choose to sell those products. Specifically they:
- Provide accurate information about the company, its products and what one can expect as a seller of the company’s products and services.
- Charge a nominal fee for a starter kit – the cost for the start-up kit is £199.75 and includes the top twenty best-selling products, catalogues, order forms and other tools that help the seller begin selling.
- Have a product or service that is competitive in the marketplace and is purchased by the ultimate user.
- Require sellers to hold little or no inventory and has a buyback policy to protect against inventory loading. • Base compensation primarily on the sale of products and services to the ultimate user. Compensation can be generated from either your own sales or the sales of others you have recruited.
- Take time to describe the business and give potential sellers adequate time to make a decision – any opportunity worth having will be there tomorrow. Legitimate direct selling companies also promote consumer protection and guarantees. Many of these are voluntary standards that exceed the requirements of any regulations created by the Direct Selling Association (DSA) Members of the DSA have also pledged to abide by a strict Code of Ethics that outlines a high set of standards for interactions with both sellers and customers.
Pyramid schemes take advantage of and defraud people because they:
- Promise large earnings with little effort.
- Promise that one can earn a substantial income merely for recruiting people into the operation.
- May or may not be a “product” to sell, but if there is it generally has little or no actual value.
- Convince people to buy large amounts of inventory which they cannot easily sell to others and is not returnable (this is called “inventory loading”).
- Charge large up-front fees to get involved, either as a direct payment or in the form of an obligatory payment for “products”.
Promoters of pyramid schemes will also try to pressure people to sign up immediately by suggesting the same opportunity will not be available later. • Base compensation primarily on activity (these payments for recruitment are called “headhunting fees”). Participants are convinced to pay to get involved with the promise of receiving “headhunting fees” when they recruit others.
To put it simply, you receive an income based on your own sales and those of others you have recruited. Forever Living Products also offers a 60 day money back guarantee for ALL our products.