Hey guys, if you are like me then you are probably often looking into ways that money can be made online. Unfortunately however, there are just as many scams out there as there are legitimate ways in which to make an income and one of the most common ones that people get themselves caught up in are pyramid schemes.
This is often due to the fact that pyramid scheme ‘managers' have become adept at making themselves look legitimate even though they are far from it. So if you are looking at the program and asking yourself “is this a pyramid scheme?”, here are 5 things that you can look for.
- Do they promise big returns for little to no work?
- Is there an actual product to sell?
- Is the focus on recruitment rather than sales?
- Do you have to purchase a product or pay a joining fee?
- TIs your payment traceable?
What is a Pyramid Scheme?
Well that's the trick – there are a number of varying opinions out there on what actually constitutes a pyramid scheme. I mean technically, every business could be classified as a pyramid scheme if based purely on its hierarchical structure or organizational chart.
Next we have the Multi Level Marketing (MLM – a.k.a Network Marketing) industry that due its heavy focus on recruitment is often written off as just another pyramid scheme. There is no doubting some are, but again, there are some grey areas here as well (which I will address later on). So, in order to give ourselves a baseline, let's go all legal for a minute with a formal description. The United States Federal Trade Commission (FTC) describes a pyramid scheme as follows:
“They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public.”
Further requirements are that they need to be able to show that their profits come from the actual sale of goods and not from recruitment – which is the fine line that many MLM companies skirt around… So, based on the description above, let's run through my 5 tips to look for below:
1. Do they promise big returns for little to no work?
I have put this one first as even though we will touch on it again in each of the next four options below, if you see this, close your browser down and go take a cold shower. Whether you are looking at a pyramid scheme or not, any site that tells you that you can make money without doing any of the work is a scam.
There are absolutely a lot of ways that you can make money online but trust me, all of them take hard work and dedication to succeed. I mean how many traditional brick and mortar stores do you know that open their doors for 3 minutes a day and make a fortune?
Pyramid schemes do it via promises that all you need to do is sell a product that “sells itself” and get your friends to do the same and you will be rich! Just remember the old reality test – if it appears too good to be true then it probably is…
2. Is there an actual product to sell?
This is the biggest clue. If you are being recruited into the program under the proviso of making huge profits on a product that really doesn't exist, then run away as fast as you can. If I am being honest, these are becoming less and less prominent now due to the crackdown on them in most countries around the world however that doesn't stop a product being shown in the sales blurb.
If you are unsure, ask to see the product or, if you think it is worthwhile, buy it. You will soon know the truth if there are more excuses than actual products. Oh, and just in case you are wondering – an eBook is NOT a product on which to base this sort of program.
Ponzi Schemes
One of the most common versions of this sort of arrangement is called a Ponzi Scheme. This involves new recruits paying an entry fee to the program on the promise of a profit. Sadly the profit is simply the money that those recruited under them pay to join the program as well which is divided out to those up the pyramid lines. As more and more people are recruited however, the money runs out as there is not enough to go around and those who entered late in the piece lose everything.
That's right! Wealthy Affiliate provided me with all of the tools and training I needed to get this post in front of my audience - a.k.a YOU!
You too can start your very own online business here that can make you money from anywhere in the world!!
3. Is the focus on recruitment rather than sales?
This follows on from the comment above in regards to asking for a product. As you run through the literature (if it exists to start with) for the ‘program', check out where the focus is aimed. Does it:
1. Cover hints and tips as to how to sell a product – and I mean a real product, not just the program itself
or
2. Does it simply talk you through how to recruit others?
If your answer is number 2, then chances are you have stumbled into a pyramid scheme.
High Ticket Products
A common trick with these sort of schemes is to entice new members with promises of making money selling high ticket training programs. This makes new members believe that they are actually selling programs worth $1000s of dollars when in fact, the training program is simply covering the steps required to recruit more members to sell the same program to recruit even more members (if that makes sense?). Again, if you ask to see the product and it is a simple e-Book or one page website, it is probably a pyramid scheme.
4. Do you have to purchase a product or pay a joining fee?
This is a follow on from number 2 above in that quite often, those running the scheme will offer you access to the high ticket training for a ‘discounted' rate – i.e. “Join now and save 75%”. Again, if you are being charged a joining fee make sure you are getting a real, tangible product in return.
Sales red flags
There are a number of red flags you can look for here if you are being asked to hand over some cold hard cash in order to join a training program. These are:
- Long sales videos with lots of pitches but with no identification of the actual person behind the program.
- Fake testimonials telling how they have made $1000’s in the first month that they owned the program – hint: you will probably find the speaker under the ‘paid reviewers' section on Fiverr.com.
- Constant reminders that “I know you have been scammed in the past, but this is different – this is the real deal”.
- A long story about how the speaker was broke and about to lose his house and marriage until he discovered this program.
- The video/sales pitch never actually explains what the program is.
5. Is your payment traceable?
This one probably goes without saying, but if you do decide that everything looks above board and you can see value in the money you are about to pay, close your wallet or purse straight away if your payment is requested via non-traceable means. If you are asked to pay by cash, money order or some obscure crypto currency then start asking questions.
This also goes for promised payments back to you for your efforts in selling products or recruiting members. If you are asked to provide a bitcoin wallet, run!!
This also goes for in-program purchases. Many programs will ask to you to stay ‘active' via the ongoing purchase of products in order to get a return on your investment (again – do NOT pay for another e-Book). If there is no refund guarantee or a promise to do so via non-traceable means then chances are that the pyramid stops with the person whom has collected your cash.
Are MLMs a Pyramid Scheme?
Ok, so as I have mentioned above, when it comes to pyramid schemes, many place MLM programs right at the top of the list. And if you do any research into what constitutes a pyramid scheme (apart from my 5 red flags above) it is easy to see why. Almost without exception, MLM programs do tick a lot of the pyramid scheme boxes in that:
- Less that 1% of members make good money.
- There are some ongoing cost requirements.
- Some charge and ‘admin' or ‘website activation' fee to join.
- Information in regards to compensation plans is not as easy to locate as it should be.
- There is a large focus on recruitment.
- Some provide products at extremely over inflated prices.
And you know what they say… If it walks like a duck and quacks like a duck…
That's right! Wealthy Affiliate provided me with all of the tools and training I needed to get this post in front of my audience - a.k.a YOU!
You too can start your very own online business here that can make you money from anywhere in the world!!
How to ensure your MLM is legitimate
Look, MLM is an extremely difficult industry in which to make money – regardless of the niche. However, the main thing that keeps most MLM companies in the good graces of the relevant consumer protection bureau of their country of origin is that they do make most of their money from the sales of their products.
In their eyes, recruitment is utilised to assist members to make money, not the company itself. So, with that in mind if this is something that you would like to try your hand in, then I would suggest that before you sign up, do the following checks:
- Do they offer solid products? – Do your research into the products that they sell – obviously check if they are real to start with but then look at quality, popularity and even manufacturing processes
- Is all information visible? – Trust me, I have seen MLM sites where even the price of the product is hidden (in fact in more than a couple of occasions). If you cannot easily find all information to do with pricing or their compensation plan ad commission calculations are non evident or ambiguous, then I would be doing a lot more research first.
- Do they make you pay out? – It is a common trait for many MLM programs to set minimum sales targets in order to earn commissions. This usually means that if you cannot sell enough of the products to your customers, then you will have to make up the shortfall personally. Avoid programs with high payment requirements from you as a member – especially if there is no buy back option if you are not satisfied with the product – this is a common behaviour of a company that is more of a pyramid scheme than not.
- What is their training focus? – As per our Pyramid scheme red flags above – if their training is focused on recruitment rather than selling the products, then chances are it is a pyramid scheme. Also, check the compensation plan to see if more of the bonus options are aimed at recruitment rather than sales.
- What do their reviews say? – Now inherently, due to the fact that MLM is not easy to succeed in, you will always find a lot of negative reviews aimed at the companies involved. However, still look for those that have high number of complaints about being hassled to recruit rather than sell – trust me, they do stick out.
At the end of the day, trust your gut – as with pyramid schemes in general – if it sounds too good to be true, then it probably is.
Conclusion
And there it is – 5 things to check to see if you are about to be sucked into a pyramid scheme. I hope it has been helpful and as usual, please do not hesitate to comment below if you have any questions, need some advice or have any experiences to share.
Do you want further assistance with any of the above or would you like to know how to build your own legitimate online business?
Are you looking for a comprehensive training platform that can give you step by step training, 24/7 support, tools to develop and host your very own website, ongoing assistance with SEO and social media and access to some of the best affiliate marketing minds on the planet, then click on the following link to read more about Wealthy Affiliate. You won't make money quickly and it will take work – but trust me, if you are looking to build a sustainable business online then it will be worth it.
Until next time
Have fun
Paul
Note: If you make a purchase from this page, there is a very good chance that I make a commission from it – these commissions do not increase your sale price. This may include sales made via Wealthy Affiliate.
Introducing Wealthy Affiliate, My #1 Recommendation for Setting Up Your Own Online Business
When I started, I knew I wanted to work online, but had absolutely no idea where to begin! You see I had watched friends of mine run a sales party to sell essential oils and someone asked if they could just sell them online?
Then, as I sat on the bus heading into my office job, I started to wonder if I could do just that, sell essential oils online.
Anything to stop having to catch this bus to and from work every day right!
The trouble was, as I mentioned above, I had no idea how to even start.
So of course I started to look around online and found all these courses! They all promised me riches then took my money but left me with no riches!
Then I stumbled across the program that didn’t promise me riches, but told me it could help me get started even with no experience!
So I did that, joined Wealthy Affiliate that was it, and the rest as they say, is history!
But it doesn’t come without work!
That is the key here! I began on their starter membership and did the training! I then joined as a member and did some more training!
Each night after work, I would do a little more, then a little more.
And to cut a long story short, after 10 months I realized I didn’t really like writing about essential oils, so I sold the site for about $2000. But I had learned so much that I started another – about fishing and camping!
Then, after 18 months (by which time it had earned me close to $10k), I was offered $17k for the site, so I sold it too.
Now, through my travel blog, I’ve been able to fund my passion for travel and explore different places around the world.
In the past few months, I’ve been fortunate enough to travel to some amazing destinations, including Bali, Los Angeles, Dallas, Vancouver and Las Vegas.
The success of my travel blog has allowed me to fully fund my travels and explore new destinations with my family.
Try the Wealthy Affiliate as a Starter Member and Build your First Hub!
As you start your journey, Wealthy Affiliate is there for you with the most comprehensive training package I have ever seen – And as I have mentioned, I have used a few in my professional career trust me.
To get you started, Wealthy Affiliate has recently introduced the Hub.
The Hub
The hub is an AI based niche and website creation tool that will get you up and running with the foundation of your OWN business in just a few minutes. This includes:
- Your website – hosted and inclusive of a WordPress editor
- Your brand
- Your ‘done-for-you’ research
- Your blueprint
- A task list that is going to help you drive the creation and growth of your business moving forward.
The hub makes the website creation process simple which allows you to get started on the training with a solid base and understanding of the processes.
All you need to do is choose your subject – which is known as your ‘niche’ – and follow the steps on the screen.
Oh, and as you run through the training below you may realize that what you created above is not exactly what you want. That’s ok, you can just create a new hub!
Wealthy Affiliate Training
Then as you continue your journey, the Wealthy Affiliate Hub is there for you with the most comprehensive training package I have ever seen – And I have used a few in my professional career trust me.
Above we discussed the use of the Hub to set up a website. Once you have done this, you will be able to access the “Step-by-Step Core Training”.
This is available to all members including starter members and will give you everything you need to know to continue to create your online business.
Member Training
There are also Live weekly classes taught by REAL industry experts on a range of topics like artificial intelligence (AI), SEO, YouTube, WordPress, PPC marketing and more.
Great, What Else Does Wealthy Affiliate Have To Help You?
So, let’s keep this short, Wealthy Affiliate is a one-stop-shop platform that provides:
- The Hub – this is the starting point and uses AI processes to assist you in determining your niche and creating your brand.
- Complete training programs to assist with the development of your own affiliate marketing website in your own niche.
- Website creation and publishing tools including access to WordPress editors and themes.
- AI Content article design and content creation
- Domain name purchasing (you get a free domain when you upgrade to the Premium membership).
- Website hosting, security and backup.
- Online help and chat forums.
- Weekly live training events.
- 24/7 support.
- Keyword access tools.
- SEO assistance.
The platform has been active for over 15 years with the original developers and owners, Kyle and Carson, still extremely active in its day to day operations – especially as they rollout their AI capabilities.
You Can Try it Yourself For Free
Now of course I can tell you all about how Wealthy Affiliate works (because it does) until I am blue in the face. But every other program out there – including the shams and scams – will tell you the same thing!
So how about you just try it for free yourself. The Wealthy Affiliate Starter membership is free to join and gives you access to everything you need to get started – all without the need to spend a cent!
With the starter membership, you get:
- 1 Limited Business Hub
- 1,500 AI Word Credits
- Try the AI Author Platform (BETA)
- 1 Practice Website
- Jaaxy Starter
- Limited Help & Support
- Core Niche Training (8 Classes)
And of course I will be there to help you every step of the way as well!
Look, in the interest of transparency, whilst Wealthy Affiliate does offer a free starter membership, this is designed to give you a look around, have a practice and see if it is worthwhile for you – which is a really great option.
However, as with all new businesses, you will need to make some investment so if you are serious about making money online , you will need to upgrade to a premium membership as this will give you access to all the tools you need in the one spot to succeed!
Afterall, every business needs tools to grow!
So How Much Does This Really Cost?
Wealthy Affiliate does not use upsells once you join – but as I mentioned in the video, to succeed here you will need to invest in a membership. There are a couple of options that provide access to all the tools, training and assistance that you could need – and a free domain as well.
Wealthy Affiliate offers a trio of membership tiers, as detailed on their pricing page.
You can opt for the Starter membership at no cost, the Premium membership for $49 per month or the Premium Plus+ membership for $99 per month. That’s the full extent of it – and you can absolutely build your website without having to spend another cent.
You won’t encounter any unexpected additional charges or covert fees and as a Premium member, you’re equipped with all the essentials to initiate, develop and expand a thriving online enterprise.
Those who opt for the Premium membership are provided with
- Hosting for their websites
- A complimentary domain name
- Access to hundreds of hours of current expert tutorials
- Various marketing and research tools
- Personal guidance from seasoned professionals in the field
- And much much more
And for those of you who want to make a serious investment into your future, there are some yearly options as well below to give you peace of mind that you have a whole year ahead of you to get stuff done!
And Don’t Forget the Personal Coaching
Once you join, not only do you get plenty of assistance from me, but you also have access to expert coaching, support and mentorship from real industry experts.
I mean, you can have access to all of the top-tier affiliate marketing training in the world, but inevitably, questions arise, particularly during the initial stages.
With an exceptionally dynamic and engaged community that boasts over 2.7 million members, Wealthy Affiliate offers an environment where you, as a member, can fully immerse and leverage this network.
You’re never alone; you have the collective wisdom of an entire community at your fingertips, ready to assist at any moment.
Plus, there’s always-on, rapid-response website support to handle any technical queries you may encounter.
Wealthy Affiliate Works: Real Results From Real People
As I have mentioned a number of times, Wealthy Affiliate has helped me make real money online though its training and tools.
I have made money each month as well as a sale for $17,000.
But again, those promoting other programs will tell you the same thing!
So let’s get away from me and see what others are saying:
To start with, Wealthy Affiliate has a 4.9 out of 5 Star TrustPilot rating, which is a remarkable accomplishment in any industry, let alone the online business industry.
And here are some of those reviews:
And this is what people are saying within Wealthy Affiliate as well:
So, Let’s Make a Decision!
Let’s be frank, you have read this far so why not go all in, click on the button below to get started on the way to your very online business.
And once you are in and have had a play around with the hub, look for the little envelope on the top right and there will be a message from me. It is of course automated so respond to let me know you are there and we can start this journey together.
(oh, and the profile is mine so you can find me that way as well)
See you there
Paul
