How to Explain The Difference Between
M.L.M. and An Illegal Pyramid
By Tim Sales
You're not in the M.L.M. industry very long before you hear the phrase, "That's one of those pyramids!" Or the question, "Is this one of those pyramids?"
The "pyramid" objection comes up because people have no knowledge, incomplete knowledge or wrong knowledge about M.L.M. and pyramids. Please notice that I wrote "pyramid" there. In other words, a person could think M.L.M. is a pyramid because they DON'T KNOW WHAT A PYRAMID IS.
When my son was young I would point out a car and say the word, "car." He soon picked it up and would point to a car and say, "car." Then, he pointed to a bus and said, "Car." I said "No, bus." He didn't believe me. Why? Because he had already determined that anything that moved on four wheels was a car!
Have you had prospects who have already determined that M.L.M. is a pyramid?
To solve this, I found a bus and a car that were parked side by side and pointed out those features that make them different from each other and those features that make them alike. Only then could my son determine if what he was looking at was a car or a bus.
Similarly, YOU must be knowledgeable about what a pyramid is, so you can point out the differences between a pyramid and M.L.M. (network marketing) for your prospect.
Let me explain the differences between pyramids and M.L.M.
Pyramid
The word pyramid has simply come to mean a business that seems like a scam.
Scam
A fraudulent business scheme. Fraudulent comes from the Latin word fraud, which means deceit. Deceiving someone means to trick them.
FACT: There is no activity (stock trading, charities, law firms, medical doctors, religion, M.L.M., government, etc.) that does not have a history of fraudulent activities.
In looking at scams, it is important to locate the actual source that is creating the scam; there is ALWAYS at least ONE person.
Source
One that causes, creates, or initiates; a maker.
If a person kills someone with a rock - don't blame the rock! The rock isn't the source and didn't kill the person. A person with bad intentions is the source and USED a rock to do damage.
If a scammer uses telemarketing to seduce its victims into a scam - don't blame the telephone. The scammer [a person] is the source and USED a telephone to deploy his scam.
If a scammer [a person] uses M.L.M. to deploy his scam - don't blame M.L.M.
An industry can't be a scam as it's not capable of tricking people. People are the only ones capable of tricking someone.
M.L.M. is not the culprit in pyramids, the culprit is the unethical activities of a person or group.
The reason scams sometimes use M.L.M. is because it's a powerful way to distribute anything.
Illegal Pyramid Scheme
An illegal business that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered.
Sometimes there may appear to be a product - but it's only there to "look" like a real business. Few people outside of the pyramid desire the product or they can get the same product elsewhere at a less expensive price.
If you enrolled me into your business and I paid $300 to join BUT THERE WAS NO VALUABLE PRODUCT THAT WAS EXCHANGED - that could be an illegal pyramid.
This does not mean that M.L.M. is an illegal pyramid because people enroll others into a business. The fine line between legal M.L.M. and illegal pyramid scheme (according to the Federal Trade Commission - FTC) is the exchange of a real product.
Yet, if you enrolled me and I bought $300 worth of products to see if I want to do the business - then that is NOT an illegal pyramid as long as the product is a "real" product and not some gimmicky product. Most legitimate M.L.M. companies give a thirty day 100% refund on products if you don't like them. And if you buy inventory to sell and then change your mind about the business, most legitimate M.L.M. companies will give you back 90% of the purchase price.
So the primary difference between an illegal pyramid and a legitimate M.L.M. company is that a pyramid does not have a "real" product. A legitimate M.L.M. company has a real product that people outside of the business desire. Another difference that the FTC (Federal Trade Commission) looks for in determining if a company is a pyramid is how the business is conducted. If there is a lot of hype (saying someone can make a lot of money with little or no work) or the emphasis is entirely on getting new recruits instead of a balance between getting customers and getting new recruits - then it could be a pyramid.
Putting pyramids into perspective
Sometimes I like to point out that there is a lot of negative emphasis put on illegal pyramids, but if you put it into perspective with other industries it allows the prospect (or distributors) to also see the undue emphasis. How I put pyramids into perspective is by pointing out the losses caused by pyramids versus losses caused by other activities. Look at this image:
As you can tell, pyramids do not cause a lot of financial losses compared to other activities. Don't misunderstand my comment on pyramids - I dislike them a lot. I want them eliminated. But there's undue emphasis put on them compared to where people lose the most money.
For a longer version of this article that you can show prospects to help them understand the difference between a pyramid and a legitimate M.L.M. company, check out the article site I built specifically to overcome your prospects' objections and misunderstandings:
http://www.firstclassmlm.com/2007/12/07/pyramid-schemes-and-scams/
With admiration,
Tim Sales
P.S. For more in-depth information on this topic study the Professional Inviter lecture series. You'll also want to begin using the Build Your Own Business Brochure, which is a phenomenal presenting and recruiting tool specifically designed to show your prospects that YOUR business is real and not a scam.
See samples of this tool and save 25% by clicking here: Build Your Own Business
