This is a question that might take one thousand pages to answer. You will find endless articles and videos at www.mlmlegal.com and www.mlmattorney.com on differentiating a legitimate direct selling company from a pyramid scheme.

Key features of a legitimate compensation plan include a program which offers quality product/service at a reasonable price, which is purchased by ultimate users (of end-consumers), who use the product/service and who purchased it because they want it. The product stands on its own in the marketplace as opposed to purchases or payments that where the predominant intent is merely to buy into the program. Pyramids are characterized by bogus products (think wishes and prayers), high investment from consultants to buy-in to the company, inflated pricing, inventory loading and where the primary intent of the compensation plan is to cause individuals to pay money for the right to qualify for the program, causing others to do the same and so on.

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Our next Starting and Running the Successful MLM Company Conference takes place October 22 and 23, 2015 in Las Vegas. View our conference flyer and speaker list online. Participate in our Innovation Campaign for your chance to receive TWO FREE TICKETS to attend our next conference.

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The matrix compensation plan is one of many different types of compensation plans used by direct selling companies.

How do I create a compensation plan that guarantees to be legal? This is a question that might take one thousand pages to answer. You will find endless articles and videos at www.mlmlegal.com on differentiating a legitimate direct selling company from a pyramid scheme.

A legitimate compensation plan program offers quality products/services at reasonable prices, which are purchased by ultimate users, i.e. who use the products/services and who purchased products/services because they want it and because it stands on its own in the marketplace. As opposed to products/services that are purchased where the predominant intent is merely to “buy into the deal.” Pyramid schemes are characterized by bogus products, high investments, inflated pricing, inventory loading, and where the primary intent is to cause independent business owners to pay money for the right to qualify, and they recruit others to pay money for the right to qualify, and so on.

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Our next Starting and Running the Successful MLM Company Conference takes place February 27th & 28th, 2014 in Las Vegas. Call 503-226-6600 or 800-231-2162 to register.

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