Uncle Bill has a very special opportunity he wants to share with you...

The holiday season is a time for family... a time for friends... a time for conversation... a time for you to get roped into a "special opportunity."

Did Uncle Bill ever approach you at a gathering of family and friends to tell you he wanted to share an opportunity with you? Or did he walk up to you and say that he had just started his own business? (And you were probably dumbfounded because you couldn't think of any type of business that Uncle Bill was qualified to run.) What about an invitation to come hear a great motivational speaker? Or an invite to a meeting, the substance of which Uncle Bill wouldn't tell you... but he would say that you would be really interested?

All of these are typical come-ons when someone has become involved in a multi-level marketing scheme. They go by different names – MLM, network marketing, dual marketing, direct selling, binary plans, and many others. They'll tell you "this company is different," but it's really not.These "business ventures" are usually more properly termed product-based pyramid schemes. Everyone knows about pyramid schemes – participants pass money up the pyramid and the person at the top gets rich. MLMs have a similar concept, but they skirt the laws against pyramid schemes by hiding behind products.

These products (or sometimes services) are generally overpriced. They are billed as something revolutionary or different or of a much higher quality than what's out there in the stores. But that's all hogwash. The products are high-priced because the MLM companies must pay commissions to all the levels in the pyramids.

And there are only a select few in the pyramid who make the real money. They're at the top. The MLM representative will sell you the dream and tell you that you could make it to the top too. Yet millions of people before you have tried and failed, because the MLM system is set up in a way that guarantees the failure of almost everyone.

The holiday season is the time for giving, not for taking. Don't let Uncle Bill or someone like him take your money (or your time!) with one of these MLM schemes. Run, don't walk, the other way when he tries to corner you and tell you about this wonderful opportunity.

In future posts, I'll tell you more about MLMs and the real story behind these companies that falsely claim you'll find financial freedom with them. They are selling dreams, and the reality is that more than 99% of people who join these companies lose money. Stay tuned!

Forensic accountant Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations through her company, Sequence Inc. Forensic Accounting. The Association of Certified Fraud Examiners honored Tracy as the 2007 winner of the prestigious Hubbard Award and her first book, Essentials of Corporate Fraud, will be on bookshelves in March 2008.
Read Full Story