Don’t Get Caught In A Pyramid Scheme
Apr 29, 2013 | 4564 views | 3 3 comments | 4 4 recommendations | email to a friend | print

Column. Don’t Get Caught In A Pyramid Scheme

Many people have found success in direct selling for companies which use a multi-level compensation plan. Unfortunately, not all opportunities are legitimate, and it’s easy to get caught up in the enthusiasm and big promises of a pyramid scheme posing as a trustworthy company. So how do you tell the difference? BBB provides consumers with information to help determine whether or not a company is legitimate.

What is a Multilevel Marketing Plan?

Multilevel Marketing is a method to sell goods and services through other distributors. These plans promise that if you sign up as a distributor, you will receive commissions from sales you make, as well as sales of the people you have recruited as your distributors.


On the contrary, a pyramid scheme’s commissions are primarily based on the number of distributors recruited, and the sales are made to these distributors, rather than consumers. There is usually a sign-up fee, and rarely is there a legitimate product or service.


The difference between these two plans can seem unclear, but there is one key distinction – MLM’s are legitimate, and pyramid schemes are illegal, so it’s very important to do your homework.

“It’s easy to get caught up in the enthusiasm and big promises, but remember, there are no short cuts to success”, said Mechele Agbayani Mills, President and CEO of BBB Serving Central East Texas. “Keep a level head and evaluate all opportunities objectively. If you feel pressured to make a decision with which you are not comfortable or if the opportunity sounds too good to be true, just walk away.”

BBB offers the following questions to ask before deciding whether or not to join an MLM:

1. Does the compensation come primarily from recruiting others?Are profits made mainly by membership fees or bonuses as opposed to the sale of this product?

2. Does the product or service seem too good to be true, and is it priced at an expensive rate?

3. Is there a startup cost which includes training materials, or are you required to invest a lot of money without receiving a valuable product?

4. Do you feel pressured to join, and is it difficult to reach anyone when you have questions about the business?

5. Are there promises of large profits for minimal work and little experience?

If you answered “yes” to any of these questions, you are potentially at risk for being involved with a pyramid scheme. While a Multilevel Marketing Plan can be a legitimate and exciting new venture, the bottom line is, do your research as you consider an MLM opportunity. It could be a pyramid in disguise.

Keep in mind, a legitimate company will portray an honest picture of the opportunity, including the possible risks, rewards, and challenges. A pyramid schemer, however, will enthusiastically sell you on the promise of making tons of money with little effort. Successful direct sellers treat the experience like running a small business.

Before signing up with direct selling company, check the company out with your BBB at or on the Direct Selling Association’s website at

For more tips on how to be a savvy consumer, go to To report a fraud or scam, call the BBB Hotline: (903) 581-5888.


Comments-icon Post a Comment
Deb Bixler
April 30, 2013
I have a page that is a great resource on researching pyramid schemes.... maybe you would want to add it as a reference for your readers.

It is a great resource to share with those wanna-be direct sellers who are unsure of the whole pyramid thing.

Includes scripts and checklists on how to research.

The BBB is really a good resource but it only covers complaints filed with them. Everyone is considered OK until a complaint is filed against them.
Deb Bixler
April 30, 2013
Sorry for double post but I see the link is wrong. Should be and please fix! thanks:

Check it out!
David Thornton
April 30, 2013
CrimeBustersNow warning - The BBB is an unreliable source on pyramid schemes since they have endorsed, promoted, protected and given “A” ratings to many of these schemes.

i.e. The BBB was either willfully blind or

totally incompetent in there assessment of Pigeon King International multi-million dollar Ponzi scheme incubated in Canada spreading to the U.S., despite several credible warnings and obvious evidence, the BBB gave this scam a top rating even two days after it collapsed, until our organization informed the BBB of the collapse.And that is just one of many examples!

The “Pigeon King” is currently on trial in the largest fraud ever perpetrated in the Region of Waterloo (Ontario Canada.



We actively hunt down, expose and destroy money-laundering pseudo corporations posing as legitimate "Business Opportunities” ...simply because it is the right thing to do. If you feel you don’t fit that description and feel that we have libeled your corporation or you personally; don’t endure attacks on your character, reputation and credibility suffering millions in losses….. SUE!