For some people Network Marketing is viewed as immoral or even illegal. From time to time is has been likened to pyramid schemes and similar scams, so why is this?
The first thing to remember is that in any industry there are both very good and very bad companies. The same is true of Network Marketing. Anything can be considered to be a scam if the intention is to trick or mislead someone and this is true of every industry. If the question is “have people been scammed in Network Marketing?" then the answer would be yes, but this would have been due to the actions of a particular individual or company and not the industry itself. On the other hand, if the questions was: “are there Network Marketing companies who have the highest integrity, are open about their operations and do not scam people?" Then the answer is absolutely yes!
It is my understanding that for the majority of people who see Network Marketing as immoral, it is generally because they are fearful that it is a scam, or they worry that they will have to trick people to be successful for themselves. .
To address the issue of whether Network Marketing is an illegal pyramid I would like to draw on a few useful resources. Firstly, I would like to educate you about an organisation called the Direct Selling Association (DSA). The DSA is responsible for regulating the Direct Selling and Network Marketing industries to ensure that only legitimate companies are trading.
So, what constitutes an illegal pyramid? The DSA assesses a Network Marketing company on two criteria when determining their legitimacy. The first question relates to whether an Associate risks huge financial loss by participating in the business. If you do not receive products and business tools / services for the money you are investing then this should ring alarm bells in your head! The second question relates to whether an individual’s commissions are directly linked to the volume of product moving through the organisation. Can you earn commission without any product moving through your organisation? If so, then this could be considered as an illegal pyramid.
So, if the question is “have so called Network Marketing companies been responsible for operating an illegal pyramid?" then the answer would once again be yes, with this being due to the actions of a dubious company with little integrity. This would also be classified as a scam as the intention will be to trick and mislead people. If the question was “are all Network Marketing companies illegal pyramids?" then the answer would obviously be no!
My advice would be to ensure that the company you are currently representing, or considering representing, is recognised by the DSA and adheres to all of the policies.