Difference between Legitimate Network Marketing and Illegal Pyramid Scheme

How To Differentiate between a Legitimate Network Marketing company and an Illegal Pyramid Scheme?

	Network Marketing	Pyramid Scheme
Corporate image	Well reputed	Poor reputation
Management philosophy	Providing long term quality products to match customers’ satisfaction.	Obtaining short term large profiting before wrapping up.
Corporate strategy	By encouraging proper balancing of retailing and sponsoring to create a sustainable network.	Focus on recruiting new members to increase network.
Profit and reward policy	Profits derived from retailing of products. Fair and just reward based on individual organisation’s retailing and sponsoring efforts.	Profits derived from recruitment fees. Based on seniority and recruitment of new members which some times tie in with mandatory product packages for the distributorships.
Company lifespan	Sustainable for more than 20 years.	Less than 10 years.
Joining criteria	Small fee for a starter kit without having to purchase any products to start the business. Fully refundable after a cool-off period.	High sign-up fee plus packaging some products to kick-start the business. Non-refundable. Cool-off period unreasonable short (less than 7 days).
Product category	Consumer products, consumables, wide range, repeat buys.	Narrow range or single line of products, no repeat buys.
Pricing	Reasonable and competitive in the market.	Unreasonably high or undeterminable.
Product guarantee	Full money back guarantee for consumable products for reasonable return period (more than 30 days).	No money back guarantee or unreasonable return period (14 days or less).
Service and support	Responsible and responsive support.	No service and support.
Company employee restriction	Employees are not allowed to join as distributors and do retailing.	Employees can recruit and retail.
Assurance to distributors	All distributor roles and responsibilities, rewards and rights are clearly spelt out and adhere to DSAS regulations.	No such assurance.
Distributor training system	Focus on training both retail and sponsor activities such as sponsoring skills, leadership training, products training, rewards system training experience sharing.	Focus on recruiting new members. Over claim in income levels.
	Team meetings based mainly in homes and private venues with public conference venues as occasional support. Set-up is professional yet practical.	Only held within company premises or specific locations organised by the company. Set-up usually lavish and for the purpose of attracting new members.
	Retailing and sponsoring activities can be conducted almost everywhere.