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10 Online Scams That Target Small Businesses

        Money | Scams

8
Multilevel Marketing Schemes
Russian criminal and ex-politician Sergei Mavrodi constructed an infamous series of pyramid schemes known as MMM. © SERGEI KARPUKHIN/Reuters/Corbis
Russian criminal and ex-politician Sergei Mavrodi constructed an infamous series of pyramid schemes known as MMM. © SERGEI KARPUKHIN/Reuters/Corbis

Multilevel marketing schemes, sometimes known as pyramid schemes, have a long and storied history. They're usually a subset of the "work from home" scam ("direct sales" is often the keyword) that offer almost unbelievable sums of money in return for a minimal amount of work. There are plenty of legitimate multilevel marketing companies out there — Avon and Tupperware are two big ones — but the Internet is also teeming with scams that can end up costing you dearly and maybe even getting you into legal trouble.

There are two aspects to the multilevel marketing business structure: selling a product or service, and recruiting new members to grow the pyramid. Disreputable multilevel marketing schemes tend to value recruiting new members over selling the actual product. It's not a good sign if you spend most of your time trying to get other people to join, or if you're not even totally sure what product the company is actually marketing. If you get little or no training that's focused on recruiting or have to pay to "move up" a level, just bow out while you're ahead.


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