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Online Businesses -Is The One You Want to Join Legal?
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Online Businesses -Is The One You Want to Join Legal?

By: B Jae

Honest people looking for a way to make money often fall victim to online business schemes before they know what they are getting involved in. The number of online businesses is growing everyday as are the number of illegal businesses on the Internet. Fortunately, there are telltale signs that can tip you off to a possibly illegal business scheme before you become involved in it.

When you look at the business, check to see exactly how you will be making income. If the income source is from attaining new members, it is a plan or concept based business. This means that the only way it can sustain itself is from recruiting new members. If this is the only source of income it is probably an illegal Multi Level Marketing business.

Most dubious MLM schemes online are savvy enough to cover themselves by selling a product. The product itself may be just a loophole they are using to avoid being called a pyramid scheme. That in fact, may not be enough to cover themselves. If the product is obviously over-priced and if the purchasers are only “distributors” or members, chances are good the business is going to be investigated at some point. Selling products mainly to members is a red flag for suspicious business practices.

In Canada, according to the Competition Act, Section 55 and 55.1 overview, deceptive practices of MLM and Pyramid schemes include:

a) Representations relating to compensation without adequate disclosure of income received by typical participants.

b) Recruitment bonuses (head-hunting);

c) Required purchases as a condition of participation in a plan;

d) Inventory loading; and

e) Inadequate or non-disclosed product return policy.

In the United States check with The Federal Trade Commission to see guidelines.

The fact is that governments from many different countries are starting to crackdown on Internet businesses that they consider illegal. You may be an honest person hoping to make some money but if you’re involved, your part of the problem. Learn to identify what makes a MLM or online business suspicious and/or illegal.

Article Source: http://articlenexus.com

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