It’s hard to tell if Du North is a pyramid scheme… and that’s not a great sign.
Du North Designs sells leggings directly and through distributors. Most of their business and their stated business model is “Multi Level Marketing.” MLMs share many qualities with Pyramid Schemes but are a bit different. Because MLMs and pyramid schemes are so similar it can be hard to tell them apart.
The US Government’s Federal Trade Commision has more information about pyramid schemes to help us track this down.
How to spot a Pyramid Scheme:
- Large profits are based primarily on recruiting others not on the real sale of goods.
- Recruites 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 occuring between people inside the structure or to new recruits. Check for inflated prices.
- 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 Du North stack up?
- If you look carefully at the policies for Du North distributors get bonuses, from recruiting others to purchase inventory.
- Recruits are encouraged to buy thousands upon thousands of dollars of merchandise to join Du North and stay active.
- It’s not possible to directly sell the merchandise without first purchasing an expensive ($99+) “starter pack.”
- Du North says the clothes are worth more than they are. Check out ebay.com for Du North for current market pricing by checking sold listings.
- There are direct commissions for new distributors. The amount of inventory purchased by recruited distributors determines the bonus. You can get more money if the new recruits buy more. None of the compensation bonuses listed depend on any sales only inventory purchases.
- There are costs to join. Du North packages and sells initial inventory, website access, and materials for selling in a “starter kit.” You cannot become a distributor (get a website, do direct sales, etc) without purchasing one of the starter kits.
- You cannot remain active to continue online sales or recruit without purchasing at least $300 in inventory each quarter (no matter how much is actually sold).
- Du North does have policies to avoid too many distributors in one area, but there are many exceptions (previous direct sales/MLM experience, request waiver, etc).
Yes, Du North probably is a Pyramid Scheme
Pyramid schemes will disguise themselves as MLM or direct sales companies. It appears that Du North Designs is doing that because of the red flags above. Whether it’s a pyramid scheme, a scam, or just an unhealthy business, Du North shares many bad qualities with Pyramid Schemes.
To recap, these qualities make it a dangerous opportunity and everyone should probably avoid Du North Designs.
What do you think?