Beware Of Illegal Pyramidal Schemes

Written by Ken Stewart

Hey Nigeria, what's up with the recent spate of illegal pyramid schemes being promoted there? First there was TelexFree (shut down), now you've got Helping Hands International (H2i), 4 Corners Alliance, Goldmine Liberty, etc!

And if you're promoting any of those programs or other similar type deals, do those of us that are REAL professionals in the network marketing industry a favor and stop promoting such programs as legitimate network marketing opportunities! They're not! They're nothing more than recruiting deals and illegal pyramid schemes-period, end of story!

It's rather obvious that many people in our industry, regardless of where they are from, have no clue how to properly evaluate companies, products, pay plans, and opportunities, apparently can't determine whether a program is a legitimate network marketing opportunity or an ILLEGAL pyramid scheme, and are in dire need of an education when it comes to regulatory compliance!

Here are some "red flags" and signs that a program would be considered to be an illegal pyramid scheme by regulators-violating any of the following, let alone several or more, would put you in regulatory hot water and subject both the company to being shut down and you being hit with civil/criminal penalties for being involved with and promoting an illegal pyramid scheme:

1) If you have to pay money in order to participate and earn an income;

2) If you have to recruit people and/or recruit a certain number of people in order to earn an income;

3) If the program has a one time, low cost of entry, especially without a consumable product being sold, that's usually a major "red flag" the program is likely an illegal pyramid scheme (the program's longevity is then automatically based on continued recruiting of new people and the revenue from that recruiting!);

4) If the program's primary emphasis is on recruiting;

5) If the only thing changing hands between people is money;

6) If whatever is being promoted has intrinsic value or appeal primarily to business participants only;

7) If the vast majority of the revenue being used to pay commissions and bonuses is coming from the act of recruiting and not legitimate product sales to end users;

8) If the program has "boards" that people move through with re-entries which promise more income or promotes the purchase of multiple positions as a means for making more money (A "front end load");

9) if distributors or reps use such words as "invest," "investment," "return" or "return on investment," "guaranteed income," mentioning a percentage of return, promising x amount will be earned if you invest x amount, etc., you are definitely going to get hammered!;

10) If the distributor or rep's primary reason for making a purchase is to earn commissions and bonuses;

11) If one or more of the above is true and there is a huge, disproportionate percentage of distributors to customers (non-business participants)-regulators like to see a minimum 3 to 1 customer (non-business participant) to distributor/rep ratio;

12) If whatever is being promoted has an inflated value and its primary purpose is to create the appearance of legitimacy.

Violating any one of the above, let alone several points or more, means your company is likely to be considered an illegal pyramid scheme! And Helping Hands International, 4 Corners Alliance, Goldmine Liberty, and others violate a number of the above points.

And just in case you're under the illusion that because you live in some foreign country, there's nothing U.S. authorities can do to you, think again! You can be hit with what are called "charge backs" (you have to return all the money you were paid or negotiate a settlement with the court appointed Receiver), and if you don't, due to either have inter-country cooperative agreements or your country being a signatory to the Hague convention, you're served by your own country's law enforcement authorities and hauled into court in your country where you're then forced to return all the "ill gotten gains" you received, and if you've spent the money, they'll seize your bank accounts, cars, house, etc.

More importantly, your country's law enforcement and regulatory authorities now know you were involved with an illegal pyramid scheme, and you now risk possible criminal charges, including fines and/or jail time.

I'm just amazed at the number of people who have little to no knowledge of such matters who like to argue, especially when they're arguing with someone with 33 years of network marketing experience, 17 years of regulatory compliance knowledge, is only 1 of around 150 people in the industry honored with induction into the Academy of MLM, and who has been involved in helping to get 2 illegal pyramid schemes shut down.

Smart people would listen to such an individual and take their advice, yet you'd be amazed at the number of uninformed, inexperienced people who not only like to argue, but disregard the information and advice! We call such people "fools" everywhere else in the world.

One can only wonder what the outcome would be if such people took several years and put the same effort and energy into a legitimate network marketing opportunity, but when you don't know what you don't know, you end up joining programs you shouldn't join, end up eventually wasting all that time, energy, and effort, and you stain your reputation.