Scam? Pyramid Scheme? How to spot a good opportunity!

I am sure that like me you have had either a friend, a relative, or someone you don’t even know pitch to you a program, a service, or some kind of opportunity with the potential to make some good extra money. On the surface it sounds really good but we first ask ourselves, is this thing genuine? Allow me to give you some guidelines to be able to determine which opportunities are genuine and which are simply a ruse to steal your money.

Explore and Research

Firstly, in order to determine whether an opportunity is worth getting into, you must do your research and find out as much information you can to make your decision. Closed minded people have never been successful. You must have an open mind, but be aware of the red flags which will be discussed, and look out for them as you explore.

Find out who is behind it

This is pretty straightforward, if you cannot find out who is behind the product, or company then it is a major red flag that you should probably stay away. If someone is not willing to visibly put themselves behind their product or company then why should you have confidence that they even believe in what they are selling. If you visit their website and can’t find a name, a location or even a decent about us page to provide information about the company and the founder(s), then my advice is to decline the offer.

Determine the Main Selling Point

Are they trying to sell you on the product itself or on how much money you can make by referring it to someone else? This is of critical importance and it is here I will give you my understanding of what a pyramid scheme really is. We all know the shape of a pyramid, where the people at the top would make the most money and the people at the bottom feed the money to the people at the top. Well, that’s pretty much life. Look at any organizational chart in a typical business and that is how it is. You won’t leave your job because of this would you?

The operative word in Pyramid Scheme is “Scheme”. A pyramid scheme is a concept in which there isn’t an actual profitable or beneficial product or service but your success relies on your ability to recruit others. If the company has most of their emphasis on the referral program or compensation plan then it is a red flag that the actual product or service isn’t really valuable. The product or service must be able to stand for itself and should by itself be able to justify any money, time or effort you need to contribute.

Determine how the company profits

I always try to figure this out when I am met with an opportunity. If you buy into any opportunity how does the company benefit. If it is not obvious how the company profits then it is a red flag that there is some fishy business happening.

Look for Reviews and Testimonials

Search online for reviews from people who have tried the product already. Look for both positive and negative reviews and use your judgement to determine how valid the review is. For instance, someone might buy a product, not read the instructions, misuse the product and then leave a negative review. If you did proper research you should be able to spot this.

Trials and Money Back Guarantees

Based on what kind of opportunity it is, you might even get a free trial period in which you can test the service, product or system to see how it works before you determine if you would like to go all in. This is a positive sign that the company is legit. If a trial period is not provided, they might give a money back guarantee after a limited period of time. This is another positive sign. Of course, with the money back guarantee you want to make sure the company is trustworthy so the above tips will help with that.

These are my tips from my experience in looking into and participating in some of these opportunities in the past. Allow me to give you 2 examples you can use to help determine how legit an opportunity is.

Examples

Some years ago I was introduced to a company that offers products to help you make money trading forex. I was easily able to find out who was behind the company and look him up to see what he was all about. There were quite a few reviews, mostly positive. I was very impressed by the large amount of information showing how to use each and every product and there were webinars available to demonstrate the use of these products. There was a compensation plan but it was never made the focus of the site. I considered this a legit opportunity and got in and I was correct.

Let us now contrast this with another opportunity I was told about just a week ago. If you do not know, Cryptocurrencies are a big thing now, the chief of which is Bitcoin. Well for this opportunity this is how it goes. You purchase, 0.0035 Bitcoins for about $10 USD. Then you pay this into the system to earn Level 1 status. You get three people to do the same. When three people have joined under you, you earn 0.0035 x 3 which is 0.0105. You pay 0.0075 into the system to qualify for Level 2. Now you have to get those three persons to do the same as you did to have a total of 9 persons under you giving you 0.0035 x 9 which is 0.0175 and it goes on and on. Now what do you notice about this that is different to the previous example? Well in this example, the focus is the compensation plan. Your success is directly dependent on your ability to recruit others. There is no actual product or service that you buy. You just pay money into a system to allow you to recruit more people into the system. A system like this qualifies for a pyramid scheme!

Conclusion

So these have been my thoughts and opinions on how to differentiate between legit opportunities and a pyramid scheme. I would love to hear your thoughts and opinions on this and feel free to share any other tips that I may have left out. If you have to only take one thing away from everything that I have written it is to simply ask yourself one question when trying to determine a legit opportunity. If there was no referral program or compensation plan would I be interested? If the answer is no, you are most likely looking at a scam. If the answer is yes, it might be something to take a chance on.