THE OPPORTUNITY TEST

Were you approached primarily on the basis of the actual value and need for the products -- or for the "opportunity?" If the latter, the program may be actually a pyramid device for enriching the company and a small group of upline distributors.

Another red flag to look for is promoters who talk of "getting in on the ground floor" or "riding the wave" of opportunity. Usually, the bulk of the income in these cases is already locked in by the founding distributors in the pyramidal hierarchy.

THE MARKET REALITY TEST

Many NWM recruiters point to the huge growth potential of their programs without considering the normal dynamics of supply and demand. Without adequate controls, saturation in any given market may soon be reached -- at least in peoples' minds.

Ask if the company allows unlimited recruiting of distributors with no territorial protection or other provisions for preventing market saturation? If so, you may be buying a ticket for a flight that has already departed. You could be left holding a bag of empty promises and a worthless ticket.

THE PRODUCT TEST

Review the products offered and ask yourself:

Is it likely the products could be sold successfully on their own merits without going through a NWM distribution system? If nothing comparable is on the market, find out why.

Does the NWM company focus on legitimate products of value to consumers, or does it emphasize fleeting trends and timing, and exotic or secret formulas?

Are products of consistently high quality, and do they carry a buy-back guarantee? Are orders filled and shipped promptly? And are manufacturing and expiration dates printed on consumable products?

Can all product claims (such as health claims) be backed up by reliable research?

THE COMPENSATION TEST

Can you as a distributor make a good income for the time you spend selling the products—without recruiting a single person? Or is the commission paid by the company for selling the products so low that you have to recruit a downline to earn a significant income?

Would distributors several levels above you -- who had nothing to do with the sale -- receive as much or more total payout per sale (including commissions and bonuses) from the company as you would get for selling the product or providing the service?

If the latter is the case, the emphasis is on income from a downline of distributors you would have to recruit, not on the sale of products. Even though such a NWM program may have escaped prosecution as a pyramid scheme, it may still be a de facto pyramid scheme.

Your odds of success in such a program will not be favorable. While a few distributors at the top of the pyramid will be rewarded handsomely, as many as 99% of distributors beneath them will come away empty -- most actually losing money, after subtracting expenses and product purchases. Also, in some programs, your quitting merely enhances the income of your upline -- because income from your downline "rolls up" to those above you.

Don't fall for the line that it takes months or even years for most businesses to show a profit and that if you just "work hard and hang in there" you will make lots of money in this NWM program. Be aware that in other comparable settings, sales distributors usually show a respectable income within a couple of months, or they turn to something else.

Ask distributors who have been with the company for two or three months if they are turning a respectable profit -- after operating expenses and product purchases are subtracted. If not, they are only fattening the pockets of their upline.

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