How to Know an MLM Scam

Afraid of being tricked into blowing your cash on a pyramid scheme but still want to try out MLM? MLM or multilevel marketing is an appealing business opportunity to many people. What makes it different from other businesses is that you don't start entirely from scratch. With MLM, a company will be supporting you,like in training, and supplying your products. Not all MLM opportunities are legitimate, however.

Pyramid schemes, which do not involve actual products in their operations, are passed off as MLM business propositions. They depend instead on the recruitment of people without selling any actual products. So how exactly can you tell a scam from the real thing? How were you recruited? Did you start out as a customer, or did someone talk to you directly about the opportunity? The ethical way to bring in more people is by building your downline from your customer base. If your customers like the product, they'll be curious and try to get more information from you about it, which would naturally be your cue to launch into an introduction of your business.

Be cautious if people talk about the opportunity and try to get you to sign up at the outset. Try investigating your upline, including the person who introduced you to the business, as well as the founders. Is your friend reliable? Is he/she the type of person who would misuse your trust? Is he/she willing to tell you about how much he/she has made so far? Have the founders of the company been successful in their other businesses? What is being sold? Is the product good? What's the competition like? Do you think you would be able to sell the product with enough effort? Believing in the product you are selling is important, since even if you practice doing your sales talk countless times, your lack of confidence in the product will still show.

You won't convince anyone if you aren't convinced yourself. Are you required to pay a significant amount up front just to become a distributor? Legitimate MLM companies do not ask for large start-up costs. Also, is the company willing to buy back unsold products? Real MLM businesses usually do. When will you start bringing in money? Some scams try to get past this by saying that it takes months to show a profit. With real MLM businesses, you should be able to regain what you shelled out after just several weeks, or a month or so. Is the company doing some advertising and publicity of the products to increase the awareness of potential customers and help create demand? What restrictions are there regarding advertising (e.

g. web sites, flyers)? Although MLM companies vary with respect to advertising policies, it might help for you to pick a company based on how competitive you are. Also, if the company doesn't seem to care much about the demand for its products, don't sign up. Does there seem to be more emphasis on getting more people to join than on the actual selling of the product? The differences between a pyramid scheme and a real MLM business opportunity can be traced back to the focus. While scams bank solely on recruitment to show fast profits, MLM companies have actual products to offer, and focuses on selling them.

Get as much information on the company as you can, including its business and marketing plans. Talk to people who have experienced working with the particular MLM company, as well as those who are familiar with the products being sold. Listen attentively during the recruitment meeting for anything fishy, such as making extremely large amounts of money within an unbelievably short span of time. The answers to these questions vary from business to business. Just because you get a suspicious answer for one of these questions doesn't mean that the company in question is automatically trying to weasel money out of you.

What matters is that you go over these questions carefully so that you may know what to watch out for, and eventually make a well-informed decision regarding something as important as setting up your own business. If it's success you want, you have to be sure you know what you're getting yourself into, and believe in it.

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