(Also known as network selling, direct selling, or multi-level marketing)
1) Never agree to go to an interview without getting a company name. Once you have the company name, you should research it on the internet. If you can’t find them, or anything about them, or if they require that you purchase costly inventory, then that raises some red flags. Check with your local Better Business Bureau and state Attorney General about any business that seems fishy.
2) Who pays your salary? If it is straight commissions then be suspicious. Is the company putting their money where their mouth is? Check that there really is a product, that it is a reasonable price, and that it is something which would be possible to find a market for. If the commissions are mainly for recruiting others to do the same thing as you, or for selling to others within the network, that is a pretty sure sign of a pyramid scheme.
3) Do they claim to have some secret plan/connection/relationship/method which you are unable to verify? Pyramid schemes are illegal, but they aren’t the only type of business that is illegal. Make sure that you understand how a business works and how it makes money for the various people involved. This is just one step in making sure its legit.
4) Business is not a matter of “faith”. Many pyramid schemes continually ask their members to “keep the faith.” They are continuously “pre-launch”, yet they never actually launch. If their best argument is that you should have faith, then don’t stick around, you can go to church instead.
5) “Earn your bread by the sweat of your brow.” It might not sound as alluring as promises of making thousands of dollars with little or no work, but you’ll find that “real” business opportunities actually require you to work. In return they offer you some sort of reasonable compensation. If there is an exaggerated compensation advertised, or if it “only takes an hour a day” then it is highly unlikely that this is a legitimate business.
For more info on pyramid schemes, check out the Federal Trade Commissions website.