Profit Masters Inc.
A Legitimate Business Opportunity

Profit Masters Inc. A Legitimate Business Opportunity

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Comparing a Legitimate Multi-Level Marketing with Illegal Pyramid Schemes

Are you under the impression that multi-level marketing plans are all pyramid schemes? Well, they're not - after the widely publicized pyramiding scandals of the 1960's which featured the flamboyant Glenn Turner and his "Koscot" and "Dare to Be Great" operations, legitimate Multi-Level-Marketing plans were approved in the late 1970s by the Supreme Court after a challenge by the FTC. Companies such as Profit Masters, Amway, Herballife, Shakley, and several others were challenged, and the Supreme Court, after hearing the case, said that MLM distributing plans provided a new marketing method to provide goods and services to consumers, and were (and are) therefore legitimate.

Many people consider all MLMs to be "pyramids" - but they fail to make the distinction between "illegal" and "legal" pryamids, considering anything that is based upon a pyramid shape to be illegal - forgetting that their own job, the government, their church, and virtually every organization that they belong to or know of is top-down oriented and shaped as a pyramid. Shape of the organization alone has no bearing upon legality or illegality. Some of the definitions of an "illegal" pyramid include getting paid just to bring others into the scheme ("headhunter's fees"), being locked in position (never being able to make more than the person above you), no legitimate product or service flowing, and where there is a product or service actually involved, requiring new recruits to purchase a substantial, non-returnable inventory to get started ("inventory loading").

Legitimate multi-level-marketing plans, like Profit Masters, are a way to sell real goods or services through distributors. These plans usually show that if you sign up to be a distributor, you will receive commissions - not only on your sales of the plan's goods or services, but also on the sales of the people you recruit to join the distributors. One of the keys is that there are actually tangible products and services moving through the network, rather than just the building of the network or "building mailing lists" or "sending recipes" or "sending jokes," etc., such as chain letters usually have you do.

Pyramid schemes have a similar structure, but a completely different focus. They concentrate on the commissions you could earn just for recruiting new distributors, and generally ignore the marketing and selling of products or services. The Federal Trade Commission requires a minimum of 10 non-distributor customers per month to be serviced by each distributor after a certain period - without these customers, it is an illegal pyramid.

Most countries outlaw pyramiding. The reason: Plans that pay commissions for recruiting new distributors inevitably collapse when new distributors can't be recruited. When a plan collapses, most people - except perhaps those at the very top of the pyramid - lose their money.

Many "new" MLM plans are started by the same people who just closed down another one after they found the "Sheriff at the door." Most operate for less than 2 years before they go out of business for one of several reasons:

They were illegal and were caught up with by local or Federal law enforcement agencies

They hawked a product or service that was not legitimate or desirable (believe it or not, there was one MLM hawking Herbal Enemas!) and could not sustain themselves

They were started by a company who never intended them to continue (using MLM to introduce a product in the marketplace is very cheap, and once that market is established, the company decides it can make more money by then selling it through retail/wholesale storefronts, and thus bypasses its distributors and sells to those storefronts cheaper does to the distributors - effectively cutting the throats of those who built its business).

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