Understanding Illegal Pyramid Schemes
Thinking of joining a direct selling business?
Make sure it is a legitimate direct selling business and not an illegal pyramid scheme.
Here are a few things to consider:
IS THERE A PRODUCT?
Direct selling is a distribution path for quality and competitively priced products. Be careful if a product doesn’t seem genuine, appears speculative or is vaguely described. Pyramid schemes often use products to disguise attempts to secure payments for others in the scheme.
ARE EARNINGS CLAIMS TOO GOOD TO BE TRUE?
Earnings from direct selling are from a distributor’s sales and sales by others the distributor brings to the business. Direct selling can be very rewarding but it takes time and effort to establish a successful business. Be wary of “get rich quick” claims and assurances of easy money and passive income.
WHAT DOES IT COST TO JOIN?
DO YOU UNDERSTAND THE MARKETING PLAN?
ARE PRODUCTS USED BY CONSUMERS?
IS THERE AN EMPHASIS ON RECRUITING?
WHAT HAPPENS WITH UNSOLD INVENTORY?
Don’t let yourself be pressured into any business opportunity. Thoroughly research what is being offered and if necessary seek independent advice from a professional advisor, the ACCC or other Fair Trading Agency or the DSA.