Some people today refer to all network marketing schemes as pyramids if you even pay anything in the way of a sales kit. For example, if you pay for a sales kit as a condition of your distributorship, that does not constitute a pyramid because you are getting something for your money. Paying for a sales kit introduces you to the products your organization distributes and gives you an introduction into using your own products. For example, before network marketing hit the Internet, how would it have looked if you were a distributor of XYZ Corporation, you brought a potential distributor to your home for a marketing demonstration, and you had none of the products in your home? It certainly would not make you very credible as a recruiter, would it? That’s why the sales kits were provided to introduced, so that new distributors could begin using the products of their organization.
Network marketing is not immune to scams by any means, and it’s important that you be aware of anything that sounds unethical or illegal. Paying something for nothing is a red flag off the bat, but there may be others as well. Scams crop up all the time, so you need to make yourself aware of their existence. Follow the adage that if it sounds too good to be true, it probably is. In the mid 1990s when both Amway and Prim America were competing for a piece of the pie, there was another organization who attempted to convince people they were “better” than Amway, and when people joined, they discovered that unlike Amway, a distributor could not pass his sponsor; he had to wait until his sponsor moved up the ladder before he could. Prim America, on the other hand, did not have unlimited spots at the top of the ladder nor was there room in the middle to move at an enormous pace – it required positions to be available as in any corporate structure. These marketing plans may have been changed since then, but that is just an example of some of the tactics unscrupulous network marketing upline may use in order to bring in new recruits, especially if they know that recruit is with another organization.