Is Network Marketing A Pyramid Scheme?

Let me guess, somebody has just approached you and asked you to join their network marketing business and your instant thought was – is this one of those pyramid scams?? I believe that with some companies and certain pay plans this may be absolutely true. I get a lot of questions about my industry…

  • Is it a pyramid scheme?
  • Does everyone really have an opportunity to make money or only those who got in first?
  • Is it a legit business model?
  • What’s the difference between network marketing or multi-level marketing (MLM) and a pyramid scheme
  • Is it the shape of the business model that determines whether it’s legal or not?


The list goes on! I thought I’d attempt to answer some of the questions I get on a regular basis. A pyramid scheme (illegal) is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.

What I know to be true for It Works! Global and the It Works! Wrap is that this is not the case. While we have multiple ways one gets paid, our company strongly incentivizes this first leadership level because it speaks to the majority and not the minority. It is the rule not the exception that people can attain this level of success quickly. With that said, once one reaches this level their goal instantly become to help others reach this level.

Network marketing (legitimate, legal business model) is a strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other salespeople that they recruit. The concept behind network marketing is a distribution model that allows a company to sell their products directly to the consumer. Choosing to use a word of mouth approach (networking) instead of advertising through traditional streams. In summary, when trying to understand network marketing, distributors are paid a commission – not for recruiting new members, but for the amount of product that is sold through their organization.

To break “IT” down simply, our STEPS TO SUCCESS

There are three steps involved in building our business.

  • It unlocks every part of our compensation plan
  • Gives people a systematic way to build
  • Teaches simple action to be successful whether you are just starting or are making 6 figures monthly.


Even as I begin my 7th year with It Works! Global, I am so thankful the company rewards this basic level as I want as many people to benefit from the growth we are seeing. Very few times in life does a direct sales company grow like It Works! is growing as we speak. If I follow these steps and work in the trenches to help my new people complete their three simple steps, I don’t have to worry about my income or their income as it will naturally grow. This home-based business opportunity is not FREE or EASY money. It’s hard work, but never in my life have I seen a return like this on such a small investment. I am so excited to help people reach Diamond Status and earn the $10,000 G.O.O.D. (Get Out Of Debt) Bonus that is being offered as well as the other leadership bonus incentives that are unlocked at this level. It truly gives anyone with any background, any degree and at any economic level to be successful and the $99 initial investment is not a financial risk.

In closing, before taking advantage of any network marketing opportunity I would advise you to do your homework. The United States Federal Trade Commission (FTC) states that research is your best tool and gives eight steps to follow:

  1. Find—and study—the company’s track record.
  2. Learn about the product
  3. Ask questions
  4. Understand any restrictions
  5. Talk to other distributors (beware of shills)
  6. Consider using a friend or adviser as a neutral sounding board or for a gut check.
  7. Take your time.
  8. Think about whether this plan suits your talents and goals

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About the Author:

Kami Pentecost

Kami Pentecost

Kami Pentecost is a former educator turned entrepreneur. Today, she is a work-from-home mom, success coach, and best-selling author. Kami is a determined dreamer who loves to show people how to live the life they've always wanted!

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