Legit Direct Sales Company v. Pyramid Scheme

Written By Aman

Last updated 4 months ago

The table below will provide some differences between a legitimate Direct Sales company and an illegal/scam Direct Sales company (also known as a “Pyramid Schemes”).
Just because a company has some of the characteristics below doesn’t make it legal or illegal. All factors must be considered, and a determination must be made accordingly.
Below characteristics are just indicative and for information purposes only;

PARTICULARS	LEGIT DIRECT SALES COMPANY	PYRAMID SCHEME	BE
Locally Registered Entity	✔ (but not required in all jurisdictions)	✖ (won’t register a company)	BE and its associated legal entities are registered in close to 10 jurisdictions and is continuously expanding its presence.
Legality	✔ (allow individuals to own their business where all commission is based on the real sale of products and services)	✖ Illegal (mostly people exchanging money with no focus on the real product or acquiring customers)	BE is a legal Direct Sales company with legal presence in 5 continents.
Customer Support Services	✔	✖	BE has impeccable customer support services and highly trained customer support executives. Our customer support team is available 24/7 all days of the year.
Tax Registration	✔ (will have a proper tax registration and pay applicable taxes)	✖ (no registration. Most of the Pyramid Schemes also engage in money laundering and other illegal activities)	BE is registered for national and international taxation purposes and files it returns as applicable.
Real Product or Services	✔ (they invest and innovate to deliver real products and services)	✖ (Won’t have a real product, just a promise to make you rich in a short time)	BE only promotes real products and services which have a genuine market demand.
Customers can purchase the Product or Services directly from the company without the need to go through a distributor.	✔	✖ (you will need to find a distributor of the company to make a purchase)	A customer does not need to come though a distributor to buy a product or service from the company (BE).
High Expense to join as a Distributor	✖ (low joining fee or free to join)	✔ (you would be forced to pay for an expensive joining kit or startup package to even be registered as a distributor)	It is free to join BE.
Upfront Inventory	✖	✔	There is no upfront inventory requirement at BE.
Mandatory Ongoing Purchases	✖	✔	No such requirement at BE.
Contract and Legal Documents	✔	✖ (operating under in shadow)	BE has an active internal legal department and it constantly takes assistance from external legal counsel and international law firms to develop its legal documents ad contracts. BE takes its contractual and legal relationship with its distributors very seriously.
Robust Compliance and Legal Team	✔ (they have a visible legal and compliance team which actively monitors the compliance of the company as well as distributors)	✖ (since it is a scam, they won’t invest in such human resources)	BE has: 1. In-house Compliance Team 2. Internal Compliance SoP and Continuous Training Programs 3. Technology Tools to assist distributors to adhere to compliance requirements. 4. A free Compliance and Awareness Course for all its distributors.
Physical Office	✔	✖	BE has physical office in all those jurisdictions where it has significant presence.
Member of Direct Selling Association	✔ (though not mandatory)	✖	BE is a proud member of DSA (UAE).
Commission Paid on Recruitment of new Distributors	✖	✔ (a critical indicator of a pyramid scheme)	At BE, no commission or compensation is earned for mere recruitment of another distributor. Period.
Provides Return on Investment (“ROI”) type products and services	✖	✔	No ROI is either promised or provided. BE dose not deal in such offerings.
Real customer and demand for products and services in the market	✔	✖	The products and services promoted by BE have a genuine market demand. And BE has significant number of customers buying those products and services.
Company to buy back unsold inventory	✔	✖	Since there is no inventory can be purchased in purchased in advance in BE, therefore, there the question of buy back of inventory does not even arise.
Emphasis on recruitment rather than selling the products or services to customers	✖	✔ (a critical indicator of a pyramid scheme)	Although the recruitment of new distributors is inherent nature of Direct Sales business, but BE keeps emphasis on getting new customers.
The company guarantees minimum earnings without much effort	✖	✔ (a critical indicator of a pyramid scheme)	No such guarantees are provided at BE. Just like with any other business, the distributors needs to put time, effort and resources to grow their individual business. There is no quick get rich scheme at BE.