A variation of the pyramid schemes is known as multilevel marketing operations. Some of these are legal and some illegal. Be sure to involve a trusted adult if you are considering getting involved with one.
The fundamental way MLMs function is like this: You are offered the "opportunity" to distribute or sell some fantastic product or service. You'll need to put up some money to turn out to be a distributor, and then you can sell to your friends, family, and strangers. That's the first level.
The real money - or so they claim - comes if you are successful in selling not the product but more distributorships. In other words, you will attempt to get friends, family, and strangers to purchase exactly the same "opportunity" that got you involved. In this second level, you're promised a commission (a percentage with the value) on the sales from every other distributor you recruit, plus a smaller commission from every distributor your distributors recruit, and so on.
Again, think about the math. In theory, the person in the top of this pyramid stands to make money from dozens or hundreds or thousands of people who buy into the MLM scheme. The further down the chain you are, the smaller your cut.
But here is where some MLMs run into trouble. The first problem arises with legitimate businesses selling a real product; sooner or later there are a lot of small slices with the profit going to a lot of levels of the pyramid that the product can't possibly be sold at a profit.
The other kind of issue arises when an MLM is an out-and-out fraud. Some businesses exist only to sell distributorships and have no real product or service. The individuals involved hope to keep money by selling more and more distributorships and passing along commissions without ever offering a product to the public.
If you obtain an e-mail or find yourself being offered a strategy like this at a Web website, you may wish to ask a knowledgeable and trusted adult for help in examining the offer. You can call or contact the Better Business Bureau or your state's attorney general office and ask concerning the strategy.
Some of these MLM schemes may be legal and well intentioned, but numerous are not. And none of them offer you "free money for no function."
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Note: This article was sent to us by: Andrew Vrassey at 01152011
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