Along the manicured streets of suburbia, the homogeneity of covenanted neighborhoods is sometime interrupted by a flier snuck in a doorway or taped to a mailbox. When those do not ask for funds for schools, sport teams, or the scouts, they might invite the neighbors to a house party. There, a cheerful hostess might sell anything from skin care products to dietary supplements, kitchenware, or jewelry (among many more). Not only that, but participants may be recruited to host the next party and recruit the next level of sales people / business owners.
Direct-selling home businesses are often derided, and incorrectly called out as pyramid schemes. But they too are businesses, and their models differ greatly from pyramid schemes or Ponzi schemes.
A direct-selling home business following the common multi-level marketing model is legitimate in that it survives by making money off its product sales. This contrasts with pyramid schemes, which reward participants solely for inducing others to join, and are illegal. Ponzi schemes, who take their name from case law, pay off investors with money from later investments. They too are a subspecies of fraud, with no economic substance whatsoever, and illegal.
Would-be entrepreneurs uncertain about an offer to start a home business will benefit from a good attorney’s insight.