 |
I tend to follow the keyword trends of Eiro Research related searches in the major search engines, such as Google, Yahoo, and MSN. Many people look to the internet to determine whether or not that “great opportunity” they just heard about from a friend is scam or illegal pyramid scheme of some sort.
After checking the popular search results today, sure enough, the current 2nd most popular pair with “Eiro Research” was “pyramid.” Naturally, as with any Multi-Level marketing (MLM) company, people want to know the real deal about the company. No one has started any improper Eiro Research pyramid scheme alerts yet, but clearly some one out there is interested in understanding the difference because it shows up as heavy volume in Google.
Pyramid Schemes have been and still remain a threat to all direct and internet related business. Various scams have created mountains of skepticism in the MLM field. So, what separates these so-called “pyramid schemes” from legal, ethical MLM opportunities? Let’s look at the #1 common misconception:
Programs and companies that involve recruiting people to earn money are illegal pyramid schemes!
This belief is very common, but it is absolutely 100% false. Many people look at MLM compensation plans and think just because it involves a matrix payplan or shows some form of stacked sponsorship levels resembling a slight pyramid shape that the opportunity must be a scam. This is not necessarily true, and the difference is very important to understand.
The FTC (Federal Trade Commission) requires a legal Multi-Level Marketing business to pay commissions based off of products sales. Simply paying people rewards for the sole act of recruiting is an illegal action. Let’s look at an example…
At Eiro Research, when an Eiro distributor or “active member” recruits another individual to join Eiro and create an account, he receives absolutely nothing. That’s right- the distributor receives NOTHING for the act of recruiting itself. However, once the new referred member buys a product or sets an auto-ship, the distributor receives a percentage of that sale as a commission.
Monetary rewards can only be offered to distributors once real, legitimate products of value are sold. This concept really isn’t too different from your local doctor or dentist offering you $25 – $50 for referring your friends to his/her office, or from review / auction sites earning an affiliate commission whenever you purchase merchandise online.
Earning commissions for referring consumers to a business is perfectly legal and ethical since it helps all three parties: The consumer receives a useful product, the business gains customers, and the distributor or “affiliate” earns a reward.
Concerning business opportunities in the form of MLM, many people look at word “recruiting” in a shady or negative light. If prospecting is done professionally and ethically, there is no need to associate the act of recruiting in this way. Recruiting is the highest act of selling, because not only is the MLM distributor trying to sell a product or service; he is also taking on the role of leader, requiring him to help teach his “recruit” how to achieve the same results and develop a profitable business. Sincere, professional “recruiters” look at their new team members as more than just an opportunity to pocket a few extra dollars.
— — —
WARNINGS to look for when differentiating “Legal” from “Pyramid”
When trying to identify legitimate MLM companies over pyramid schemes, there are many aspects that may look solid, but are cleverly masked to (1.) appear legal when they are not, and/or (2.) unethically benefit the owners or “top-level” earners of the company at the expense of the members and distributors.
1. The MLM company must sell unique, beneficial products or services
Remember if a products or services are absent from a compensation plan, the company is operating an illegal pyramid scheme. However, many programs attempt to resemble legitimate MLMs by involving cheap, insignificant, or useless products / services. Others place no emphasis on the products and only talk about “recruiting” and “making money.” Both of these signs should serve as red flags as you complete your own due diligence on a company!
Usually these two signs go hand in hand with each other; i.e. the MLM leaders and top-level distributors never bother discussing the value of the products and services because they are essentially worthless. The following test usually helps determine the ethical representation and use of the MLM product / service: If the business opportunity and referral incentives did not exist, would people still be interested in purchasing the products or services?
2. MLM payplans must give each new distributor the opportunity to earn the same rewards for his/her own hard work and efforts
This qualification can be very difficult to research, especially when the company involves several top-level earners and multiple bonuses. Generally, a simple matrix provides equal opportunity for each new member. However, some MLM companies actually encourage stacking and positioning in order to benefit the leaders and top-level earners at the expense of commissions and bonuses that could have been passed on to the newer members and average distributors. Some programs retain the bulk of payout level bonuses and commissions for only the highest members, while passing out measly percentages to the average member.
Take note that bonus checks awarded to distributors for achieving a certain level of success is not necessarily a red flag; in fact, most programs have this sort of reward program to some extent. However, if you start to notice after a while that your hard work and successful team building efforts result in a curiously low, trifling reward, you may want to start carefully researching where all the money is really going. Certain MLM companies have been proven to “stack the cards against you,” so pay very close attention to every check and bonus you receive.
— — —
To some communities, MLM has an overall negative connotation, because:
#1. Many unethical and/or illegal companies have taken advantage of their members and these furious victims have spread the word high to the hills for the past 50 years.
#2. Many people are drawn in to MLM companies by hype and/or their own unrealistic expectations, expect an easy, essentially “get-rich-quick” deal, fail to work and build a strong business, and then quickly assume it was the “fault” of the business.
Don’t be deceived. Not all “pyramid-shaped” business operations are evil schemes destined to suck away your savings. Eiro Research is fairly new health product based company that fits the legal MLM mold. We will cover an in-depth explanation as to how Eiro complies with the requirements of a respectable, ethical business model in the “Eiro Research Pyramid Scheme Scare” PART II, coming soon! 
Feel free to bookmark us or use the RSS link in the top right corner to stay on top of our latest articles!
— — — — —
- Mr. Ryz
RyzEiro@yahoo.com
Very true! I have been with a mlm that looked good had all signs of carrying on legally. but we found out that all the money that our uplines were making came from selling us more stuff. I think that is dishonest. Don’t tell others ur leading the kind of life dreamed of because of the bizness when ur earning more from other stuff!!! We left that mlm and I think we stayed a little too long. There is probably good mlm out there we just didn’t choose the right one.
You forgot to mention the junky types. I fell into a couple of those groups and MANNN I swear they’d try to get everyone involved in some new amazing business every week! Maybe it’s a good way for some to earn fast money, but we’d all lose. I don’t know why people always have to chase the next big thing. Sometimes it’s very expensive.
If you really want to get into the true MLM heart, you need to find a product you love, stick with it and try to grow it each day. 100 different MLM memberships is just going to bring 100 different expenses. Don’t ever fall into that trap, some of those MLM junky salesman love to sell you on the idea of quick money, but the only people who earn is them, the people pulling the chain!
I was with the amway pyramid scheme a few years ago. never made anything and got a few friends in it too that lost money:(
hurtful thing about all that is your up line can treat you like the best friend he’s ever had and as soon as you don’t want to keep on with the biz he stops doing anything with you and calls you names like LOSER. i think a lot of them are full of lies and only want to keep you in so they make more money. since then I’ve learned of better ways to make money. no i don’t think mlm must be bad but you sure better avoid the ones that only care to take your money.
So, as I understand it, as long as there is a product offered, no matter how grossly over-priced it is, and no matter the incredible odds of any individual doing well, it is legal? Sounds very Machievellian to me.