So.. This is a pyramid scheme?

Always answer with "What do you mean by that?" .. often people have no clue what they are talking about.

No one makes any money unless a product is sold. Is microsoft a pyramid. Whether you see value in the product is a decision left up to you after you do your due diligence.

Here is how I respond to this situation:

Prospect: "Ohhhh it's one of those pyramid schemes huh?"
Me: "What's your definition of a pyramid scheme?"
Prospect: "You know when the top guy makes all the money from the people below him."
Me: "Ohh you mean like the company you work for now? The owner makes the most, your boss makes more than you, etc..."
Prospect: "Yeah but I'm actually making money."
Me: "I'm actually making money too. Let me educate you on what a pyramid scheme or ponzi scheme is. It is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying an real investment or sale of products or services to the public. My company does have a real product and yes I am really getting paid. Actually, you might not be a good fit for our company after all. I do thank you for your time."
*** Walk Away ***

What this does is show the prospect you are serious about your business. Showing them that you don't "need" them, in fact deep down they will question if they need you! Let them feel like maybe they were wrong about judging your company. If they are really interested they will come back to you.

OMG I get asked that question all the time! LOL, I first ask them what they think a pyramid scheme is....wait for the answer then give them the exact definition of a pyramid scheme which is: A pyramid scheme is a fraudulent system of making money which requires an endless stream of recruits for success without any tangible product or sale value. I then go into: We have a product, and we make money selling that product. Yes it's based on a Pyramid but so is Walmart and Target and every other company out there. So no...it's not a Pyramid "Scheme". If they need more I then go into the history of my company, when it was founded, seals of approval, legalities etc. That usually calms the anxiety about it when I talk to people. Hope this helps! Good Luck!

~Karina

I found this quote by Dr. Peter J. Vander Nat, senior economist at the FTC, which is basically the FTC's definition of what a pyramid scheme is:

“The organization is deemed a pyramid scheme if the participants obtain their monetary benefits primarily from recruitment rather than the sale of goods and services to consumers”

– Dr. Peter J. Vander Nat, senior economist at the FTC, Journal of Public Policy and Marketing, Vol 21-1, 139-151, (2002)

Basically, per the FTC, commissions must be made on the sale of goods and services and not solely on recruiting distributors.

An actual pyramid is built from the ground up making it impossible to build any further on the bottom and no room at the top. To properly describe mlm or network marketing I say, flip the pyramid upside down, like a funnel. Sure much of the money flows down (technically up) but the one at the top is the one who started the company and made it possible for us to profit with it so that person should benefit the most. There is however, in this upside down model, plenty of room to build and profit. Nobody is losing out by deciding to take part in the opportunity, only those who don't get involved lose out. Wouldn't you want even a small piece of a very big pie?

Funny,

Now that it has been exposed that social security in the U.S. is nothing more than a ponzi pyramid scheme, it has made it much easier to explain to lay people who rarely know how to define a pyramid to begin with. This has always been a question we in the industry have had, but now it is easy to explain. Simply reply, NO, this is not like social security where they are paying out seniors with money taken in by juniors, this is a pyramid scheme, we in MLM are selling products and services of value, hence, no pyramid which involves moving money in and out of program like it is done with social security. The gov. can get away with it, but an MLM company is attacked for doing the same thing of paying money out to first in verses those just putting money into scheme. Most can understand this much easier now that social security has been proven to have no trust fund holding our mandated contributions for over 45 years. Yes, thanks to exposing this fact in recent years, it is no longer a mystery to explain a pyramid scheme to those who are clueless about how to explain a a pyramid scheme to begin with.

Good luck to all,

I like the way you put more insight on the "NEXT" strategy.. I am a firm believer by the way. You will waste so much time trying to get somebody to share your vision, that you will loose the ones who really matter.

I simply respond with, "NO, we are selling a product, a real product, at a highly competitive price. Ponzi and pyramid schemes have no real product, they simply collect money and redistribute it up the pyramid....like social security"