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Ponzi Business

Direct sales, are often a business model. In this model, a person is associated with a parent as an independent company or franchisee and receive compensation based on the sale or consumption products and personal services and other members associated with that person. This model of distribution of products has grown in relevance during the last years, due to the increasing difficulty to sell to consumers, increasingly closed to the bombardment of advertising to which are subjected. Since Network Marketing is based on the word of mouth recommendation by their consumidores-distribuidores, the market penetration is much higher, since the consumer prefers to try a product recommended by an acquaintance, rather than by having offered in an advertisement. In addition, the multilevel Marketing offers a business opportunity to any of their consumers, wishing it, low investment and a dedication to part-time. For these two reasons, which in Japan and United States, 30% of the total distribution of products, is through Network Marketing. Currently, the expected Network Marketing to grow enormously, due to economic changes occurring at the global level and the possibility of expanding the business opportunity of the multilevel Marketing thanks to the development of the internet.

Companies of sales directasMuchas business sales like Amway, Herbalife, Agel, Gnld, among many others, began to support its sellers distributors with something more than the commissions of their own sales, began to give them any royalties coming from people who were invited to join the company. Direct sales are a controversial business model, and critics liken it to the fraudulent “pyramid schemes” or Ponzi schemes. Amway, often regarded as the pioneer of direct sales company, was prosecuted by the United States Department of Justice in the 1970s and establishing laws to determine the business of legal sales. Today, many direct sales businesses operate legally in different parts of the world. However, the boundary between a legal sales business with one illegal is many times.

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