Legitimate Business or Illegal Pyramid?

By Jeremy Standiford

Legitimate Business or Illegal Pyramid?

There are literally hundreds of home based business opportunities available. Many of these companies are network marketing companies, some are good and some are illegal scams or “money games”. Now both legitimate and non-legitimate companies will tell you that you can make a six or seven figure income working from home, but the key is to be well informed enough to tell the difference between a legitimate business and a scam. The following are questions you should ask about any network marketing company you should consider. If the answer to any of these questions is the “wrong” answer then it is most likely an illegal pyramid scheme or at least an inferior company.

1. How will you get paid? The first question you should ask with any company is how you get paid. If you get paid from recruitment (i.e. the associate/franchise fee), and not from actual sales of a product or service then it is an illegal pyramid scheme. Find a different company.

2. Buybacks and Charge backs – Will the company offer to buyback any unsold/unused inventory you might have? Will the company let your customers do the same? Usually if the company does offer this, then the distributor of the product will also get a charge back. While charge backs are not something you may look forward to, a company that has a good return/cancellation policy is most likely legit.

3. What is the company most concerned with? A legitimate network marketing company will be most concerned with establishing a market for its product or service. If the company doesn’t seem to have much interest in distributing product and increasing market share, stay away.

There are other ways to tell if a company is legitimate, but these three are the major qualifiers for a legitimate network marketing company.

Now that you know the difference between a legitimate company and a scam, check out my next article, selecting a network marketing company that will offer you the greatest chance for success.

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