How to Tell if You Fell For a Multilevel Marketing Scam


Compared to most business operations, the most misunderstood concept is network marketing or MLM (multilevel marketing). Direct sales are a viable way to start a home business in a faster, more cost-efficient way. Before agreeing to or signing on with a direct sales company, make sure that you are looking to see if the company is looking after your best interests. Keep yourself safe by recognizing the following warning signs:

Products and services are low-quality or non-existent

  • There are quite a few red flags that can warn you of bad business or financial opportunity, but the biggest one has to be the lack of a product. A program that pushes recruiting over the actual sale of a product might be a pyramid scheme, which you want to avoid. You want to find a company that is focused on building its customer base in order to sell more products, rather than those that claim to be interested in “building a team” or membership.

If you see this, consider it a red flag, and move on if flags continue to pop up. Any MLM business with a good foundation will be focused on getting products and services to consumers. Building a team is an essential part of that, but income will be based on the goods that are sold by that team. Therefore, you want to make sure that they are stressing that rather than putting most of their effort into the recruiting itself.

Product claims are unsupported

  • Unrealistic claims are often seen in wellness companies where reps boast that their products will work miracles. This kind of outlandish hype is a huge red flag, no matter in what industry. This includes direct sales. A successful business is made up of quality products that sell and can realistically prove its claims. If the company you are considering joining has products that seem like they are too good to be true, you should be wary. The last thing that you want is to be tied to a faulty or illegitimate product. Make sure that you are seeing action with the business you are thinking about signing with.

Pressuring sales tactics are used

  • When it comes to direct sales, a good opportunity is a good opportunity, no matter when you come in. When it comes to MLM, however, you would be much better off with a company that has been around for at least five years, rather than just going for a startup. Any representative that puts effort into helping you learn more about your company, communicate with others, and stay in the loop is worthy of checking out. You don’t want to work with someone who tries to do otherwise.

Programs are fee-based

  • Keep on the lookout for fast-track programs with a fee or a company that pressures inventory or requires any additional investment. This practice was what necessitated a law to be made which requires MLM companies to buy back inventory so that their workers are not in debt before they even learn about the company and its processes.

Communication is poor

  • If a company you are trying to work with cannot manage to get back to you about business subjects, you have a cause for concern. When it comes to business, you want someone who will keep you updated and informed. In order to be successful, it’s important to have good support and training from your MLM business. This is why having good communication is important. Everything should be on the table and communication should always be solid before you agree to sign on with any company.

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