Be cautious about participating in any program that asks distributors to purchase expensive inventory. There are horror stories of people with a basement or garage full of merchandise that no one will buy. Make sure the product or service offered by the company is something you would buy without the income opportunity and the product or service is competitively priced.
Illegal pyramid schemes often sell products at prices well above retail or sell products that are difficult to value, such as health and beauty aids, new inventions or "miracle" cures. Never sign a contract or pay any money to participate in a multi-level marketing program, or any business opportunity, without taking your time and reading all of the paperwork. Talk the opportunity over with a spouse, knowledgeable friend, accountant, or lawyer.
If you feel that you are being subjected to high-pressure sales tactics or are not being given enough time to review the details, go elsewhere.
When questions are raised about pyramids, comparisons may be made to corporations where there is one person at the top who makes the most money. What they fail to state is that corporations do not seek to recruit an unlimited number of employees or pay employees based on recruiting new employees.
Beware when the products or services are simply vehicles for recruitment. If you decide to become a distributor, remember that you are legally responsible for the claims you make about the company, its product, and the business opportunities it offers. That applies even if you are simply repeating claims you read in a company brochure or advertising flyer. If you decide to solicit new distributors, be aware that you are responsible for any claims you make about a distributor's earnings potential.
Be sure to represent the opportunity honestly and avoid making unrealistic promises. If those promises fall through, remember you could be held liable. If you join a pyramid scheme disguised as a multi-level marketing program, your decision will affect not only you, but also everyone you bring into the program.
Many people devote a substantial amount of time trying to market these worthless ventures. Ultimately, if a multi-level marketing opportunity sounds too good to be true, it probably is. If you have a general consumer complaint, please file a complaint with the Attorney General's Consumer Protection Division at:.
Consumer Protection Division P. Browsers that can not handle javascript will not be able to access some features of this site. Some functions of this site are disabled for browsers blocking jQuery. Close Search Box. Official Website of Michigan. What is the Difference?
The promoters at the top of the pyramid make their money by having people join the scheme. They pocket the fees and other payments made by those who join under them. When the scheme collapses, relationships, friendships and even marriages can be damaged over money lost in the scam.
If you think you have provided your account details to a scammer, contact your bank or financial institution immediately. We encourage you to report scams to the ACCC via the report a scam page. This helps us to warn people about current scams, monitor trends and disrupt scams where possible. Please include details of the scam contact you received, for example, email or screenshot. Participants of these clubs or programs are required to characterize their investments as "unconditional gifts" by signing waivers.
The truth of the matter, however, is that by making these "gifts," everyone expects those further down on the pyramid to do the same. The intention is not to make an unconditional gift. Consequently, not only are these people involved in illegal pyramid schemes, they may also be violating tax laws.
Those investors who actually believe that the products or services which the promoters sold to them are legitimate, inevitably realize that they have been scammed. It is only when these products and services are unsaleable, and the promoters refuse to repurchase them, that they finally become aware that they have participated in an illegal pyramid scheme.
The easiest way to avoid being defrauded is obviously not to participate in any promotion that appears to be a pyramid scheme. The following are some additional tips to help you steer clear of pyramid schemes:.
The Office of Attorney General's website is provided in English. However, the "Google Translate" option may assist you in reading it in other languages. Google Translate cannot translate all types of documents, and it may not give you an exact translation all the time. Anyone relying on information obtained from Google Translate does so at his or her own risk. The Office of Attorney General does not make any promises, assurances, or guarantees as to the accuracy of the translations provided.
A copy of this disclaimer can also be found on our Disclaimer page. Skip to main content. Local Menu. Pyramid Schemes In recent years many companies have successfully utilized so-called "multi-level marketing" practices. What Is A Pyramid Scheme? In fact, the only way anyone could make money from pyramid schemes, is if other people are defrauded into giving money upon the promise that they in turn will be repaid Pyramid promoters often target closely knit groups such as religious or social organizations, sports teams, and college students to increase pressure to participate.
The following are some additional tips to help you steer clear of pyramid schemes: Gather all information regarding the company, its officers, and its products or services. Get written copies of the company's marketing plan, sales literature, contracts, etc.
Avoid promoters who fail to explain their plans clearly and in detail. In particular, read the company's prospectus or other written material. A prospectus is a legal document that gives prospective investors information about a company. If you don't understand it, get someone independent of the company to explain it to you.
Find out if there is a demand for the product or service. Is there a similar product or service on the market? If so, how well does it sell? If the promoters seem to be making most of their money by selling distributorships or large start-up inventories to new recruits, stay away.
Ask if you must buy a product to become a distributor. Find out if the company will buy back your inventory --you could get stuck with unsold products. Legitimate companies will buy back inventory for at least 80 to 90 percent of what you paid. Get all promises in writing.
0コメント