How to Spot an MLM Scam

There is one form of marketing that is still a little bit controversial – multi-level marketing, also known as MLM. MLMs have a bit of a bad name, and although there are many legitimate MLM opportunities, there are also many scams. But what is an MLM opportunity? How does it differ to an illegal pyramid scheme? Learn more about MLM and how to spot MLM scams below.

Want to make some money? But where do you start? First, you have to figure out what it is what you actually want to do. If you know that you love pets, for example, you could go into selling pet supplies or offering up training advice. Love makeup? Work at a beauty counter or sell makeup directly. If you don’t know what you want to do, though, you need to learn.  If all you want to do is make lots of money and get rich quick, but you don’t have a passion or something that excites you, you need to find one – otherwise you’ll never make any money, regardless of what the MLM ads might tell you. If you fit into the second category, keep in mind that MLM scams will probably be very, very attractive to you, so you need to know how to spot them.

MLM scams will usually start with a shouty advert, saying something like “Just a month after seeing the offer for the first time, I’d already made $3000 and swapped my car. Want to know how you can do the same?” The chances of that actually happening are very, very slim, but to pull you in even further, you’ll see things like interviews with successful and happy affiliates (most likely actors), cashed checks and fabulous homes and cars, all acquired with the help of an MLM opportunity.

Another way to spot MLM scams is the lack of a product. When an MLM opportunity is a scam – or verging on an illegal pyramid scheme – you’ll make your money by recruiting others to your downline. Then, they make money by recruiting others – and all the system involves is recruiting more and more people to the scheme, with each person simply making money from the fee they charge to join the scheme. When an MLM opportunity is genuine, there will always be a product. Many, many, many MLM opportunities exist with fantastic products that are sold directly to the public. The difference is that the products are the main focus of the business and people involved in the scheme can then choose to recruit others if they choose – but they can still make money simply by selling products. With MLM scams, or pyramid schemes, if a product does exist it is almost definitely as an afterthought.

Most MLM opportunities will require you to make a payment to join the scheme, but when it comes to MLM scams, you’ll notice that they don’t give you any information about the opportunity until you make the payment. You might go along to a meeting after you’ve made payment, and you’ll think that it seems like a really upbeat, positive environment. The person that recruited you will tell you that they’ll give you all of the tools needed to make sales and they’ll encourage you to sell to friends and family. However, you’ll quickly find out that it’s really, really difficult to sell to friends and family. If they do buy a token product, it’s unlikely that they’ll buy any more. And then, you have to get out there and do the hard sell on your own – making flyers, cold calling, online advertising, creating videos, blog posts and much, much more. It’s a lot of work – much, much more work than you’d think.

With pyramid schemes, and MLM scams, what you’re selling is the dream. The dream of a better life, a happier home, a large house, a wonderful car, a pool, lots of holidays… and the very idea of that dream is what makes people part with their money. But there’s a reason why pyramid schemes and MLM scams are illegal. It’s because eventually, that pyramid will topple. It won’t stay around forever and only the very few people at the top will make money – leaving you, and everyone else at the bottom, worse off.

We’re not trying to say that all MLM opportunities are bad – not at all. Many MLM schemes provide their clients with a number of fantastic opportunities and some very real benefits, like working from home, working for themselves, being their own boss and being in control of how much money they make. But if you want to go into MLM, you have to be prepared to work. Women are no longer at home all day to accommodate travelling salesmen – if they want to buy something, they’ll buy it online or they’ll go to a store. It’s difficult to convince people that they need something if they’ve never, ever thought about that product before. These days, MLMers need to do things a little differently – they need to make full use of online advertising, websites, SEO and online marketing if they want to be successful. So if you’re prepared to put the work in, you’ll definitely be a success – but you need to know that MLM isn’t easy. And to be successful in the first place, make sure that you’re not getting involved in a scam. If it seems too good to be true, it probably is.

What You Need to Know Before Joining an MLM Company

Today’s economy means that more and more people are working from home. You might have been approached by family or friends about a business opportunity and chances are, this was to ask you to join an MLM company. MLM offers many benefits but you need to know what you’re getting into before you join, so take a look at below for more advice.

Know That it’s an MLM Company

MLM companies can have a bit of a bad reputation and a little bit of a social stigma. People often have a number of misconceptions about MLMs and about the type of people that work for them. If you’re at all worried about being tarred with that same brush and if you’re at all uncomfortable with that idea, an MLM scheme probably isn’t for you.

MLM = Sales

In the vast majority of cases, MLM = sales. Regardless of what the person recruiting you into the company tells you, even if they tell you that they are sharing ideas or trying to spread the word or spread ideas, they are really trying to accrue sales. The MLM business model can provide you with the means to make a lot of sales, but at the end of the day, your success rests on how many sales you can make and how many people you can recruit to the company. If you don’t want to sell products, MLM won’t be for you. But if you’re a savvy, confident salesperson, you should find MLM a breeze.

Sell to Your Warm Market

Most organizations will recommend that you sell to your warm market. This means selling to your friends and family. They say that this is because you’ll find it easier to share your story with people that you already know as you’re comfortable talking to them. But unfortunately, this can be a problem in itself – selling to your friends often doesn’t work all that well as the selling conversation will actually be rather uncomfortable. You might actually find it easier to sell to complete strangers than you would your family and friends so just be aware that although your company might want you to sell to your warm market, that might not be the right route for you.

You’ll Need to Recruit

To make a significant amount of money in the MLM industry you‘ll not only need to sell products, but you’ll also need to recruit others. Those that you recruit under you are called your downline and you’ll often make money when someone joins your downline, in the form of a bonus. You might also take a percentage of each sale that your downline makes. Therefore, the more people you recruit, the more money you make. In some organisations, you might also make money when your downlines recruit others and so on and so on. Recruiting is more difficult, however, than selling, and it requires a lot of skills. You’ll need to sell them on the products and the company concept but you’ll also need to sell them on the prospect of joining an MLM company.