Question

4x "Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. They promise

consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from
any real sale of goods to the public...Multilevel marketing programs are known as MLM's, and unlike pyramid or Ponzi
schemes, MLM's have a real product to sell. More importantly, MLM's actually sell their product to members of the general
public, without requiring these consumers to pay anything extra or to join the MLM system. MLM's may pay commissions to a
long string of distributors, but these commission are paid for real retail sales, not for new recruits."
-Pyramid Schemes, Debra Valentine, FTC, 1998
How might an individual be able to differentiate a legitimate multilevel marketing program from an illegal pyramid scheme?
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x
A
If a program sells lots of product very rapidly, it is likely a illegal pyramid scheme.
B
If a program sells real products to the public, it is likely a legitimate multilevel marketing program.
C If a program recruits new members to sell products to the public, it is likely an illegal pyramid scheme.
D
If a program promises profits by simply recruiting other to join, it is likely a legitimate multilevel
marketing program.

Answer 1

A legitimate MLM program sells real products to the public, while an illegal pyramid scheme focuses on recruiting members without emphasizing product sales.

Step-by-step explanation:

The key difference between a legitimate multilevel marketing program and an illegal pyramid scheme lies in the sale of real products to the public. A legitimate MLM program sells real products to consumers without requiring them to pay anything extra or join the MLM system. On the other hand, an illegal pyramid scheme primarily focuses on recruiting members and promises profits solely based on recruiting others to join, with little to no emphasis on selling real products.

1. If a program sells real products to the public, it is likely a legitimate multilevel marketing program.
2. If a program recruits new members to sell products to the public, it is likely an illegal pyramid scheme.
3. If a program promises profits by simply recruiting others to join, it is likely a legitimate multilevel marketing program.

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