Multi-level marketing, or MLM for short, is a type of business that involves the direct selling of products or services through its network of distributors. Its popularity has skyrocketed because of its promise to earn easy money without throwing in much effort. However, with its popularity, scammers and opportunists have taken that chance to expand their reach by defrauding, deceiving and misleading so many people, causing them to fear this type of business. Not that these people are entirely wrong to be scared of MLM because true enough, this industry is a favorite place for scammers and frauds. However, there are certainly numerous MLM companies out there that are true to their word and provide genuine opportunities for people to become part of the business world. This article discusses how you can avoid being scammed in the network marketing multi-level space. To look out for yourself, take note of the following indications that have red flags all over them.
No products or services
Perhaps the biggest sign of danger when it comes to networking business is the absence of a product — or one that is of poor quality. After all, a legitimate business cannot be called as such without its products or services. What’s the point of having one when they don’t have something to sell in the first place, right? So, stay away from these product-less companies at all costs!
Outrageous claims about their products
Have you ever come across a product that claims to be, say, a solution for you to lose several pounds a week after drinking it every day? Or maybe you heard one that could instantly get rid of your hyperpigmentations? Any product claims that are so far-fetched that it sounds crazy in your ears is a red flag. A successful company is committed to producing quality products and services — and these are generally tagged with genuine product claims. So, if a company wants you to sell their products — products that are too good to be true — then approach them with caution.
Good communication only at the start
During MLM meetings, many people are enticed to join a certain company mainly because of the ‘contagious excitement’ experienced when the speaker was trying to sweet-talk them into getting on board with their business despite having heard ‘outrageous claims.’ If, during these meetings, you asked them some questions but your questions only got deflected or criticized for being frank, then this could be a serious red flag. Surely, when you experience this, you’d hear alarm bells in your head telling you to bail out. A legitimate MLM business is confident with what they have so it shouldn’t be hard for them to answer your concerns and keep you informed about company matters.
Focuses too much on recruitment
If an MLM company concentrates too much on recruitment because it is the one thing that could sustain its business, then it’s another indication that you wouldn’t want to be part of their team. Prioritizing recruitment over the actual selling of the products tells you that the business could be a pyramid scheme, meaning that the basis for monetary gain is solely by recruiting members. A good MLM company should have products that are valued by the market. These products should be valuable enough to generate sales that are more than enough to sustain the business.
Demand you to stock up the inventory
In network marketing, start-up costs are normal. You invest first to the MLM business of your choice before you can start earning. It’s like investing in a franchise business, although, direct sales are way less costly. So, now that we have established that initial investments are normal, the red flag you have to watch out for is when they demand you to stock up the inventory. In doing so, it will require you to give them more money on top of your first investment. If that happens, then that is another big reason that you have to get yourself out. Sure, having a couple of stocks on hand is convenient in most situations, but it is a bad idea and investment to fill your inventory with products that you are not 100% certain that will sell.
Making a living out of multi-marketing business is not as easy as what most people think. This industry has lots of competition but most importantly, you run the risk of getting yourself entangled in the world of MLM scams and illegal pyramid schemes. To protect yourself, it is important to keep yourself informed by bearing in mind all the things mentioned above.