Almost three out of every four people in multi-level marketing jobs make no money or actually lose money. Of course, most people would never knowingly take on a job with such a high risk of not getting paid. But when that job promises to let you work from home, it can suddenly seem worth a try.
Thanks to the internet, work-from-home scams have increased in recent years. And they look far different than they used to. The days of pyramid and Ponzi schemes are mostly over: now, you’re more likely to get recruited for multi-level marketing or fake virtual assistant jobs.
How can you tell a scam from a real work-from-home business opportunity? And what about those gray areas that aren’t quite scams, but aren’t quite profitable either? We’ve got the answers—read this before you commit to something you might regret.
Pyramid and Multi-Level Marketing Schemes: What’s the Difference?
Most people have heard of pyramid schemes. These now-illegal scams promise to pay members for merely recruiting more people, instead of selling products or services. As more people join, recruiting becomes impossible, so new members can’t profit.
Since they’re widely mistrusted and mostly illegal, you don’t run across many pyramid schemes these days. But in some ways, the multi-level marketing (MLM) model has taken their place.
MLMs are one of the most common misleading work-from-home “jobs” available today. But as anyone trying to recruit you for an MLM will tell you, “It’s not a pyramid scheme!” And they’re right—it’s not.
MLMs hinge on selling products or services, while also trying to recruit new members to work below you. The model marries the pyramid idea with actual products to sell. You may also see MLMs referred to as networking marketing opportunities.
And to be clear: it is possible to make money through an MLM. It’s just that only a small fraction of people who join make money, while the vast majority makes nothing or loses money. So even though an MLM may not be a scam in the same way a pyramid scheme is, we recommend avoiding these high-risk “opportunities.”
Why do so many people lose money with MLMs? It has to do with the way these companies are structured. People who join have to buy their own inventory to sell, and they often get pressured to buy larger stocks than they need. Then, they make money through commissions from their sales. They can also profit by recruiting new people and getting a commission from each of these members of their “downline.”
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Source : Want to Work from Home? Watch out for These Common Job Scams
