I would argue that "endless chain recruiting" is a huge red flag in and of itself in any opportunity. In too many ventures recruiting is the only true product, which leads right down the path of Ponzi/Pyramid scam. No matter the backstory of "external revenue" unless it can be demonstrably proven then the participant is opening themselves up to being scammed. By proven I mean audited financials and SEC filings, not payment proofs on You-Tube.

The 70% rule is a good metric for would be entrepreneurs in asking themselves if they personally are selling 70% of the product to people not in the opportunity. If the answer is no, then there very likely is a problem.


The 70 Percent Rule in a Nutshell.

In a nutshell, the 70 percent rule is to be found in the distributor agreements or policies and procedures of most leading network marketing companies. Its intended purpose is to prevent purchases of inventory in unreasonable or excessive quantities by distributors. As it is typically stated, the rule requires that distributors procure orders for inventory only when they have disgorged themselves of at least 70 percent of previously purchased inventory. The bottom line is that the distributor should not reorder unless product which has been previously purchased has been passed on to the ultimate users.


The Seventy Percent Rule by Jeff Babener MLM Attorney