Network marketing or ponzi schemes

Network Marketing, or MLM, has been a successful way to sell products and services for the last 60 years.
A company decide to encourage the use of word of mouth rather than other means of marketing. As a reward for successfully promoting the products, the person is rewarded with a cash back based on the results of the promotion he has done.

Network Marketing companies need to show their distributors a structured overview of the customers linked to their network. It is easy to make the mistake of comparing this structure to the ones used in illegal Ponzi schemes or pyramid games.

So, how can the average John determine whether he is presented to a legal Network Marketing company or an illegal pyramid scheme?

The simplest and safest method is to ask yourself: What do I get for my money?
If you are asked to pay for a product or a service, you need to determine whether this product or service is worth the price you are asked to pay.
When you have paid for the product or the service and you have been delivered what you agreed to pay for, then you can be quite certain that you have not paid into a Ponzi scheme.

The other warning signal you should look for is the "Get Rich Now without doing anything" phrase. Only illegal money games claims this. Even though many MLM companies have fantastic compensation plans and it is a proven fact that Network Marketing has created a large number of millionaires over the resent years, there is no "Get Rich Fast" schemes which created that, but clever work in active teams which create success for many.

If you use these two checkpoints before joining a Network Marketing company, I am sure you will be safe and when you work smart, you may also prosper.