Starting a side-hustle is so satisfying and can help you meet your financial goals. Sadly, the promise of riches also exposes you to an age-old scam called a pyramid scheme. These schemes often come in the form of multilevel marketing businesses, which are businesses where you sell products directly to customers via word of mouth.
While many multilevel marketing businesses are legitimate, some are pyramid schemes that set you up to fail. Legit multilevel marketing companies and pyramid schemes may look the same on the surface, the devil’s in the details.
In a pyramid scheme, the company compensates you more for recruiting new resellers than it does for selling products to the public. Sure, it’s common for multilevel marketing companies to pay you for bringing in new resellers, but most of your compensation should come from selling to customers.
Also, any company that pushes you to sign a contract and pay money to sign up during an “opportunity meeting” is likely a pyramid scheme. These companies design “opportunity meetings” to get you pumped about earning thousands of dollars and convince you to sign up before doing any research.
Avoid this costly impulse buy and collect all the contract information, potential expenses, commission scales, and any other information needed to help you make an educated decision. Take this information home and read it over before signing up and paying for anything. If the recruiter won’t give you anything more than a sales pamphlet or claims this is a one-time offer, walk away.
At the end of the day, most pyramid schemes earn the main recruiter tons of cash while you lose your entire investment.