The purpose of advertising – whether it’s TV, radio or newspaper – is about persuading people to purchase a product. It’s called the power of persuasion, and many businesses have turned their backs on traditional modes of advertising in favor of friends, co-workers, neighbors and relatives.It’s called multilevel marketing, commonly referred to as an MLM. There is a fine legal line that exists between it and pyramid schemes.Susan Harris, who works primarily at the Falcon Safeway’s customer service counter, became involved in the last year with an MLM called Synergy WorldWide.”My sister bought me a bottle of this stuff called DNA cream and told me, ‘I want you to use it on part of your face and one of your hands for two-to-three weeks and see if you notice any difference.'” Shortly after, Harris’ co-workers and family noticed a difference, and she continued to use the product. When she heard a story from one of her co-workers in the Safeway pharmacy about how Synergy WorldWide had helped a diabetic customer, she decided to get involved.Synergy WorldWide is a U.S.-based company that promotes skin care and health and wellness products. It was originally started in Japan, but by 2003, the company grew to include offices in Singapore, Australia and Korea.According to Synergy WorldWide’s Web site, the corporation is “already a multimillion-dollar company and has grown over 1,000 percent in the last 18 months.”Is Synergy an MLM or a pyramid scheme?According to the Better Business Bureau, Synergy WorldWide has a fairly clean record. “They have a satisfactory record,” said Carol Odell, CEO of the Colorado Springs Better Business Bureau. “(There’s been) one complaint in the last three years and that was regarding a refund or exchange issue.” It has since been resolved, she said.Odell said the best way to determine the difference between an MLM and an illegal pyramid scheme is to determine what the company is selling.Amway and Mary Kay are examples of well-known MLMs.”Multilevel (operations) usually have just a small start-up cost, while the pyramid schemes take more money … you are required to find others to sign up in advance, and lots of times there is nothing to buy,” she said.Harris said she buys $120 worth of products each month from Synergy. “They send you whatever products you want, and you can sell that or you can use it yourself,” she said.Although pyramids are illegal, they are often presented as MLMs, Odell said.The U.S. Securities and Exchange Commission explains on its Web site: “In the classic ‘pyramid’ scheme, participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.”In other words, there may be no product whatsoever.There is a product with Synergy, and Harris is comfortable with it. “I’m 45 years old … I’ve seen all the things that have come and gone,” she said. “I just know this stuff works, and I’m going to keep using it and if somebody I come across wants some, I’ll sell it to them. But I’m not in it to make money.”But many people are in it to make money, and there are watchdog organizations trying to protect their investments.MLMWatch.com cautions readers about getting involved in MLMs, especially those dealing health products. According to the Web site, “Nearly all MLM companies selling health-related products exaggerate their value, and the vast majority of people who become distributors do not make significant income.”Odell suggests that people research an MLM and make sure it’s legal before they commit. “First of all, I would talk to several people who would not be making any money off of it to see if (the product) has really worked,” she said.Odell’s suggested questions:
- What exactly is the company selling?
- How easy is it for other people to sell?
- Do you feel comfortable selling the product?
- Who are your customers?
- How will they keep this business going?
