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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There are many ways to determine the difference between a legitimate direct selling company, such as Avon, Mary Kay, Tupperware, or Amway and an illegal pyramid scheme.

Learn how to tell the difference yourself by watching expert MLM Attorney Jeff Babener’s new video From a Legal Perspective: The Difference Between a Pyramid Scheme and Legitimate MLM.

And, to learn more about how to spot the red flags that often occur in the MLM industry, read the articles “Is This a Pyramid or a Legitimate MLM?” and “Network Marketing Legal Issues.”

You can also Run, Learn and Get Lost at MLMLegal.com.

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