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Is “It Works!” A Pyramid Scheme?

It Works! sells the weight loss and cosmetic wrap products (“crazy wrap thing”). It Works! claims to be a ‘Multi Level Marketing’ company. MLMs share many qualities with Pyramid Schemes. Because they share so many qualities it can be incredibly difficult to tell if the company is a good company to join.

The US Government’s Federal Trade Commission has more information about pyramid schemes to help.

How to spot a Pyramid Scheme:

  • Large profits are based primarily on recruiting others not on the real sale of goods.
  • Recruits are forced to buy more products than they could sell often at inflated prices.
  • People at the bottom (new recruits) make excessive payments for inventory that accumulates in their basements.
  • Many schemes will claim product sells like crazy — but actually sales are only occurring between people inside the structure or to new recruits. Check to see if price is inflated.
  • Commissions for recruiting new distributors, no legitimate product or service, OR separate up-front membership fee (having a product/service doesn’t remove all danger).

How does It Works! stack up?

  • If you look carefully at the compensation plan for It Works! much of the big profits come both directly and indirectly, from recruiting others to sell the wrap products.
  • Recruits are encouraged to order inventory for auto-shipment; which could lead to extra wraps that maybe difficult to sell.
  • Returns and refusals of merchandise delivery have penalties.
  • Though there are not direct commissions for new distributors, compensation is based on the number of distributors on your team, and bonuses are paid for reaching the next the next levels sooner, each require recruitment. In this way, there are indirect commissions for recruiting new distributors.
  • There are costs to join. Inventory, and materials for selling It Works!  body wraps (“starter kit”) are rolled up and you cannot become a consultant without purchasing a starter kit.
  • The wraps offer unbelievable results, explaining all of the benefits on their site. However, their site also states: These statements have not been evaluated by the Food and Drug Administration.

It Works! seems like a Pyramid Scheme

Pyramid schemes will disguise themselves as MLM or direct sales companies, and it appears that It Works! is doing that because of the red flags above. Whether it’s a pyramid scheme, a scam, or just an unhealthy business, It Works! shares many bad qualities with Pyramid Schemes. These qualities make it a dangerous opportunity and everyone should probably avoid It Works! and all of their products.

What do you think?

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More Resources

Investopedia: What Is A Pyramid Scheme

How Pyramid Schemes Work

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