Network Marketing Or Pyramid Scheme

When he signed up to be an independent associate for Pre-Paid Legal Services Inc., Cameron Brickey thought network marketing was an easy way to make a buck. Several weeks and $800 later, he thought otherwise.

Brickey heard of Pre-Paid Legal, a network marketing company that provides affordable legal services for low- to middle-income individuals and families, while attending a job fair last October. He borrowed money from his girlfriend for the membership fees-three payments of $50-and another $300 to $400 for the starter package and other required tools, which included business cards, stationery, flyers, training materials, and handfuls of DVDs, videotapes, and books that explained the particulars of the company.

Working 20 to 30 hours a week, Brickey says he participated in mandatory conference calls with other Pre-Paid Legal associates to talk about sales and ways to generate more business. He also says he held in-home presentations to try and sign up new customers, placed flyers at the public library and on parked cars, and passed out business cards in front of the neighborhood grocery store. But three months after joining and with virtually no income to show for it, Brickey was ready to call it quits. "I'm really frustrated with the whole thing. ... I was in an income crunch and I was trying to be positive and give it a chance."

The Real World of MLM Whether it's lack of sales experience or bad luck, many people fail at network marketing, or multilevel marketing (MLM), as the industry is also called. And while many MLM companies are legitimate, others-better known as pyramid schemes-prey upon the unsuspecting. Determining how much money you can really make and identifying the schemes can sometimes be bigger challenges than selling the products or recruiting people into the network.