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In multilevel or network marketing good or services are sold through distributors. Typically as a distributor you gain commissions based on your sales and the sales of the people you recruit to become distributors. The recruits are commonly referred to as your “downline”.

The line between multilevel marketing plans and pyramid schemes is very thin. They both require members to sign in other members to make income; however in multilevel marketing plans there is a product or service offered. In pyramid schemes which are illegal money is made off of collecting sign up fees not off of any actual products or services that can be used by people outside of the plan.

If you are considering entering a multilevel or networking marketing plan do your research to make sure you are not investing in a pyramid scheme or other form of fraudulent business. Evaluate the plan and ask: Do distributors sell more products or services to other distributors or to the public? Does the amount of money distributors make depend more on recruiting and selling to other distributors rather than to the public? If the answers to either are yes you may be dealing with a pyramid scheme which you want to avoid.

When evaluating the plan consider the following:

Research the company’s track record. Obtain a reliability report on the company and search the internet to find out how long the company has been in business their reputation if there have been any complaints and information regarding disciplinary actions or lawsuits.

Search for information on the product or service offered to identify any problems or potential issues. Consider how the product or service is marketed and any advertising claims.

Ask questions regarding the terms and conditions of the plan how you will be compensated your potential expenses support for earnings claims and a contact person who you can speak with to answer your concerns. Get the information in writing including any policies restrictions or guarantees. This includes obtaining information about the cancellation and refund terms of the offer.

Speak with other distributors and ask them how much time and money they spent on marketing materials training and seminars if these are required. Also inquire about whether you are required to participate in periodic training and what happens if you opt out of the training. You should also ask about their success with the plan and any questions you have asked the sponsor to see if the answers are the same.

Determine if the plan suits your talents and goals. If you do not enjoy selling to the public or do not have the time to devote to selling this may not be the choice for you.

Keep in mind multilevel marketing plans are not easy. The success of the plan depends on the services and products you sell how you conduct sales and how well your recruits conduct their sales and recruiting. Remember you are responsible for the claims you make to recruits about how much money they can earn. These types of businesses have a very high turnover rate and many drop out because they do not earn the type of money they expected when they signed up or sales may be low. In any instance when recruits drop out or fail to perform as well as expected this can affect your quotas and earnings.

Note that you’re responsible for representations you make regarding the product or service even if you’re repeating information you were provided when you were solicited. This is why it is crucial to do as much research as possible before you choose a plan.

Take your time and do not yield to high pressure sales tactic that some distributors and sponsors use to get you to join. For detailed questions you can ask when evaluating an offer consider reading the FTC Facts on Multilevel Marketing Plans and Pyramid Schemes. You may file a complaint if you are experiencing a problem with a business.