Multi Level Marketing is a legitimate business form which uses a network to move a product (good or service) through that network. Members are rewarded for sales of the product and sales of the product in the network or downstream. Multi Level Marketing scams take advantage of some of the obscurities in Multi Level Marketing and run scams that look like businesses. While they are usually cleverly crafted there are a few things you can see early on that will tell you if it is a legitimate MLM business or an MLM Scam.
Recruitment over product
Sometimes they have no product. Other times they have a very poor product and in some cases, there is little-to-no focus placed on the product. I remember contacting someone about a product they offered but they were more concerned with signing me up as part of the network rather than selling the product to me. I later discovered this was because recruiting was more profitable than selling the product. Whichever way it happens you will see that MLM scams focus more on recruitment than a product. So anytime you see a business set up in this way, your alarms should go off.
Too good to be true
I will spend not much time on this one as it is a feature of almost every scam. Make money by doing little to nothing. Make money while you sleep. Make mega profits off a small investment. All of these are just signs that this has a scam written all over it.
High-pressure selling tactics
This is common of all scams though it doesn’t always feel that way. Sometimes it feels like the pressure is external rather than from within the organisation but you will always feel some sort of pressure to act quickly. The top sign for me is when the promoter rushes you to get to the stage where you hand over money before you have understood everything. Pay attention to how they deal with your questions.
Pressure to buy inventory
You may also feel undue pressure to buy inventory. I think that before selling a product I should at least test it to get an idea and a feel for it. Also with my experience in sales marketers tend to communicate benefits poorly and a hands-on understanding helps me pair products with prospects better. However, in the example, I gave before the person I contacted wanted me to order a large inventory, larger than I would need to test. This is another sign of an MLM scam. Pushing you to commit heavily to inventory early on. Especially where you have not established demand for it.
Poor communication
This sign you might want to take with a pinch of salt as communication, in general, is something people struggle with. Even if you narrow it down to business communicating is a struggle. So when you come across people with the other things mentioned on this list and poor communication your alarm bells should be going off. Poor communication manifests in things like not answering the question you asked, not giving coherent answers and completely ignoring your concerns.
Expensive training
Training is a normal element of MLM businesses. Paid training is a red flag in an MLM business. Expensive training is the only signal you need to run from an MLM business. My experience in accounting has taught me one thing about business relationships; always follow the money. You don’t need a complete understanding of accounting or a business to see that one training session equals or betters the income they promised you can make in the business in a whole month.
Pay to earn
Paid memberships, joining fees, sign-up fees, licence fees and any other type of fees that go out upfront in an MLM business are a terrible sign. To understand this you need to consider where the fortunes of the business lay or rather what outcome they need to succeed. When profitability on products looks low and training fees look high then it’s a no-brainer that the business would be more interested in the recruitment of members than selling products. The same goes for job or business opportunity scams that require payment to earn.
Cryptic about details
When it comes to details they should be able to explain things to you clearly. One of the best tricks I’ve seen here is to use a complicated explanation to fool people. Nobody wants to seem like they don’t understand so they pretend to understand out of pride and get sucked in. My advice; is they must make you understand. You are not dull and if they can’t explain they either don’t understand it (run) or it doesn’t exist (run).
Think clearly through each point. It may be difficult to relate to because you have personally never fallen victim to an MLM scam but perhaps you know a friend or relative who did. Think about their experience and you will see at least some of these signs. We will continue to educate about scams as often as we can here so stay with us.
