Avoid These Top Five MLM Scams

MLM is a reliable business opportunity and a legitimate business model.  However, due to some MLM scams, the networking industry got tainted with a bad reputation.  If only people were given the opportunity to choose wisely and know how to sort the legitimate MLM Company’s from the possible scams, doors to make good money would have opened for them.  MLM or multi level marketing is really a means to distribute products and at services.  It is a sub category of network marketing wherein representatives work to build a down-line while selling unique products or services.  It is actually a very good avenue to start a small business.

The most infamous MLM scam has gone on since the 1970’s.  It is called the pyramid scheme.  This is an illegal operation that basically offers huge amounts of profits for every investment made to their program.  The most important thing to look out for is if they push for the actual sale of products or services to sell.  In the pyramid scheme, they do not.   The problem with this scheme is that commissions are paid as new recruits or down-lines come in.  However, when the last person fails to recruit anybody, everything stops and crumbles down to the ground.  This MLM scam that lures people in by presenting it as a small business opportunity with huge potential involves money paid in without seeing money for the products and or services. 

Another popular MLM scam is called the Ponzi scheme.  It is very similar to the pyramid scheme.  It also offers the same enticing entrepreneurial start to those who would want to have a small business.  The biggest differentiating factor is that the Ponzi scheme literally has no products to neither push nor sell.  It shall of course promise large returns if investments are made to their program.  The problem here is that the company only takes the new investments to pay off the members who joined the program earlier on.

People should be wary of MLM companies that make promises that sound legitimate by presenting some intimidating formulas on how commissions can be earned.  Most of these companies are only after the money and will surely just take it and run.  So they should be on the look out for MLM opportunities that are more interested in recruiting members rather than selling products.

On the other hand, they should also beware of companies that require or influence them to purchase a huge amount of product stocks or inventory before any selling can proceed.  An MLM scam like this would often push out back ordered products to new recruits or a small business or even worse, sell out the products and disappear the next day, never to be heard of again.

MLM scams would often make outrageous claims and promises about their products.  Their advertisements and promotions are ridiculously exaggerated.  And as they say, if it sounds too good to be true, it most probably is.  These bloated claims are common to MLM scams that promote supplements with nutritional value.  So before venturing into a small business selling supplements, be sure to do a background check and a little research on the product.  There is no harm in knowing about the product and double check on the credibility of the seller.