When it comes to your money (or anything else, for that matter), I believe you should trust your gut.
When your gut is grumbling, think of it as a natural defense mechanism warning you to be careful.
That's what I told a reader who was being recruited for a new business opportunity.
Here's what he wrote: "I was recently approached by a co-worker with what seemed like an intriguing business venture. I, like her, am considering leaving the company to find greener pastures. She said that she had started an online business with the help of a 'mentor' and suggested that I meet the mentor. I met her at a Starbucks and the two of them talked a lot about business in general and how great their product is."
So far, nothing seemed amiss.
The reader continued: "I listened intently as they showed me how I could make/save money by ordering through my own online business and that I could make even more money if I got others to set up their own online businesses. The more businesses you help to start, the more you make. The pitch was that if I did 'x' and I got six other people to do 'x' and so on, I could quit work in three to five years."
Now here's where the reader's gut started to quiver -- as it should have.
"I was curious and asked to see the actual products they have for sale and to see the system in operation. They pointed me to [some] Web sites. I was given a few CDs and a tape, which went on and on about how great the business is and how much money everyone is making. I was told that all I had to do was come to a meeting and all my questions would be answered. I have not attended a meeting yet and may do so out of curiosity, but I am leery [about] their evasiveness."
The reader wanted to know if the business opportunity he was being offered was legit or just another pyramid scheme.
Turns out he was being recruited for a legitimate company called Quixtar Inc., the online arm of the privately held Alticor Inc. Alticor, headquartered in Ada, Mich., is also the parent company of a more well-known company: Amway.
Quixtar operates much the way Amway does. You earn income by selling consumer goods such as health and beauty products. "And, if you register others into their own businesses powered by Quixtar, you may earn bonuses based on their efforts, too!" the company says on its Web site.
Robin Luymes, manager of public relations for Quixtar, said he's sure there was no subterfuge intended in the recruitment of the person who wrote to me. "[We] try to get people together in a room to get the full story from somebody who is an expert presenter," he said.
Ultimately, what the reader was being offered was a chance to join a multi-level marketing business, an MLM for short. This type of business strategy typically promises that if you sign up as a distributor, you will receive income from your sales and from the sales of people you recruit as distributors, said Edward J. Johnson III, chief executive of the Better Business Bureau of Metro Washington, D.C.
Some MLMs are legitimate. However, others are just illegal pyramid schemes. In a pyramid, your pay is really based on the number of distributors you recruit. If there are goods and services sold, they only serve to make the business look legitimate.
