Many people have heard of pyramid schemes and wonder if perhaps Avon is one. I have even seen some posts emphatically stating that Avon is a pyramid scheme. However, according to the ” PREPARED STATEMENT OF DEBRA A. VALENTINE, GENERAL COUNSEL FOR THE U.S. FEDERAL TRADE COMMISSION” Avon isn’t even close to being a pyramid scheme.
The report defines a pyramid scheme as follows, “Pyramid schemes now come in so many forms ….however, they all share one overriding characteristic. They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure. There are two tell-tale signs that a product is simply being used to disguise a pyramid scheme: inventory loading and a lack of retail sales. Inventory loading occurs when a company’s incentive program forces recruits to buy more products than they could ever sell, often at inflated prices. If this occurs throughout the company’s distribution system, the people at the top of the pyramid reap substantial profits, even though little or no product moves to market. The people at the bottom make excessive payments for inventory that simply accumulates in their basements. A lack of retail sales is also a red flag that a pyramid exists. Many pyramid schemes will claim that their product is selling like hot cakes. However, on closer examination, the sales occur only between people inside the pyramid structure or to new recruits joining the structure, not to consumers out in the general public.” (end of quote)
Avon has been selling products to the general public for about 130 years now and certainly doesn’t force recruits to buy more products than they could ever sell, in fact a $1 order every other month is enough to keep a person as an active rep.
Avon is a Multilevel marketing program or MLM. and the report pointed out “Some people confuse pyramid and Ponzi schemes with legitimate multilevel marketing. Multilevel marketing programs are known as MLM’s, and unlike pyramid or Ponzi schemes, MLM’s have a real product to sell. More importantly, MLM’s actually sell their product to members of the general public, without requiring these consumers to pay anything extra or to join the MLM system. MLM’s may pay commissions to a long string of distributors, but these commission are paid for real retail sales, not for new recruits. ” (end of quote)
Some people will claim Avon is a pyramid scheme, even though clearly it isn’t. They may just be confused or misinformed.
” PREPARED STATEMENT OF DEBRA A. VALENTINE, GENERAL COUNSEL FOR THE U.S. FEDERAL TRADE COMMISSION”
Avon sign up at www.startavon.com for $20 with the reference code JEBY