How to Uncover a Multi Level Marketing Scam
Although stupidity is contagious it still amazes me that I get so many comments in defense of multi level businesses that I tear to shreds in some of my reviews. However, simply using a bit of common sense and viewing a mlm opportunity, not with the thought of how much money one can make but rather looking at the mlm opportunity from an actual business perspective will lead my readers to arrive at the same conclusion. Here is how I uncover multi level marketing scams and hope you do the same before investing your time, money and energy into a losing endeavor. You may already be involved in a multi level marketing scam but have had the wool pulled over your eyes. If this is the case, read the below and get out now before it’s too late.
1. What is the product or service being offered. Is it a viable product or service? If you were not looking at the opportunity to make money but rather as a consumer would you purchase the product or service?
2. Can you test drive before you buy? When going into a brick and mortar business a person will take many factors into consideration. What is the level of competition, is my price point in line with my competition, how much do I need to spend on marketing and how many sales must I make before I can not only recoup my marketing costs but also turn a profit. Any company asking you to buy before you try is a clear red flag. After all, would you buy a car without test driving it first?
3. What is the price of the product or service? More often than not the price of the product is more expensive than comparable products or services in the marketplace. This is for good reason and a well known tactic used in the multi level marketing industry. A high price point is supposed to make it seem that the product or service is that good when in reality the only reason the price point is so high is to assure that the company has the revenue to pay level upon level down while still turning a hefty profit.
4. Is the multi level marketing company comparing itself to a well known and very successful company? More often than not a mlm company will attempt to make a comparison to a highly successful and profitable company. Comparisons to web based companies such as FaceBook, Twitter and LinkedIn is not uncommon. However, you as the opportunity seeker are to use a bit of common sense yourself and attempt to make a logical comparison on your own. However, this comparison should not be made to the successful company the mlm wants you to compare. Do a bit of research and make logical comparisons of your own.
5. Does the MLM company disclose that they are an actual MLM? Although many companies are multi level marketing companies many want to stay away from the term “multi level marketing” and instead will come up with a few different terms with regard to their compensation plan. For example, infinity commission, multi tier compensation, viral compensation plan. The bottom line is if the company is offering commission on top of commission on top of commission it is indeed a multi level marketing company.
6. How credible is the company and how long as the company been in existence? It is not uncommon for a failed multi level marketing company to close it’s doors only to open in another from sometime later. A credible company will post a corporate address on their website. A credible company will disclose who the owner or partners of the company are. Having to resort to a who is domain search only to find the domain has private registration is a clear red flag and an indicator that this business exists not to make money legitimately but to rip people off under the guise that the company is legitimate.
7. Can you lose your compensation depending on performance? Sure pay a one time registration fee of $100, an additional $10 a month for “tools”, additional money for “training” and have to hit certain performance goals before climbing the ladder. This is all very common in the multi level marketing industry. However, one thing that is somewhat common is the company have the legal authority to eliminate all of your compensation should you not be able to sustain a certain performance level regardless of your previous success or how much money you have made for the company. Many people will state that if you are in sales and do not perform you can be fired by your company. Absolutely true but did you pay your company for the opportunity to sell for them or were they paying you? There is not an infinite amount of people to sell to. Multi level marketing companies exist in order to make as much money as they can in as little time as they can. No matter the product or service there will be a saturation point that makes it near impossible to maintain a high level of production. The company making a ridiculous requirement to sell or else means stay far and away from that mlm company.
8. Is the mlm company constantly trying to stay in touch with you? If you’re constantly getting requests for conference calls, receiving “success” emails and emails to upgrade your account or purchase additional goods run away! The company wants to remain in constant communication to assure that you continue to stay involved and continue to be an additional revenue stream for them. They know there scamming you but want you to feel that they care about your success.
9. Does the company want to charge you for training? If any company want to charge you a fee in order to “train” you run away. The training may consist of online videos in a members area, a training guide or a combination of the two. Keep in mind that every person who pays for the training is going to attempt to implement that same exact thing that you are. Not only are the viable companies in your space competition but every other person who is involved with the company. If the company truly cares about your success they will not charge you one red cent for training. A mlm company attempting to charge you for training is simply padding their bottom line.
10. Super awesome events! Does the mlm company constantly release online videos selling the company and talking about how much money you can potentially make. Does the mlm company want you to attend any sort of gala or pep rally. A common practice of mlm companies is to hold large events where everyone is standing and clapping about how super awesome the company is. Of course these events are often recorded and placed online to not only assist in recruitment efforts but to keep those already involved motivated. Sure this event may look awesome and have 500+ people in attendance but the reality is you don’t know who those people are, how long they’ve been involved and how much money any of them are making. Out of the 500+ people 300+ could be brand new recruits.
As you know or can tell from the above I am no fan of multi level marketing companies as there are more fraudulent companies in existence and more that go out of business rather quickly while very few legitimate multi level marketing companies exist with even fewer having a track record of 10 years.
Of course, multi level marketing is not illegal and can be used to not only run a successful company but create successful representatives as well. However, I have yet to come across a new multi level marketing company that appears to have any sort of legitimacy and the successful mlm companies are overly saturated. Instead of trying to make a go of it in a new or existing mlm company you would be much better off making a go of it in your own business.