How to Avoid MLM Scams

Discussion in 'Network/Multi-level Marketing' started by Peace4You, Feb 26, 2011.

  1. Peace4You

    Peace4You New Member

    I wanted to write this because I know many of you have fallen victim to multiple scams. But let me begin by explaining how I approach MLM's and how I avoid being scammed. Many people define being scammed as well losing money when your promised to gain money.

    The first step to avoid being scammed is to
    1. Define for yourself what an acceptable loss is

    When you go into a casino you allow your self an acceptable expense to simply try something new. The casino doesn't scam you because it doesn't promise you anything only the opportunity to gain. When you pay to join an MLM you are paying for the opportunity to succeed.

    2. There is no such thing as a free ride
    Nobody is going to give you instant success if they tell you otherwise don't believe it. Success in an MLM means diligence and teamwork if you dont have a team its going to be an uphill battle to success- especially if you can only work on the MLM in your spare time.

    This is the most important point

    3. ONLY consider MLM's that allow you to break even less than 2 months- these are Direct Payment MLMs
    The ones that DONT pay the company first then give you a pathetic cut of the money

    Many MLM's claim that your profits "can" be huge but the keyword is "can"
    If you pay say $100 to get in and $50 every month after and you only get say $5 per referral how long is it going to take you to get ahead
    You have to remember you also have to find people willing to pay $100 to join as well

    If say you only get 2-paying customers a month maybe
    This is an automatic fail scenario especially for the part time work at home prospect

    Please consider these points on your next MLM decision
    I want everyone to succeed
  2. jonrpatrick

    jonrpatrick New Member

    good points all. Most important single thing is that for $10-$30 a month (depending on program) you can have a six-figure income - but you must treat it seriously, actually WORK, and continually build your skills and grow.

    RICH4NURICHE New Member

    Peace4You, that is the common problem that has plagued the industry. For ever one person that feels they were "scammed" (with the exception of those who really were) there will usually be one person who could'nt understand the compensation plan much less explain it to someone else, the prospect. Many have never heard of a financial or profit and loss statement. We need to change this in order to thrive in this industry to benefit us.
  4. Peace4You

    Peace4You New Member

    Yes I agree RICH you have to understand what your getting into compensation and all. The program has to be "right" for you. You have to be passionate about it. But you also have to understand how deliver it to new affiliates and not give them half-truths so to speak by bloating potential gains and not expressing realistic gains for say the average recruit who has likely ZERO marketing experience. Unfortunately much of the advertising for MLM's doesnt explain the effort truly involved to be successful.
  5. abdncwithlj

    abdncwithlj New Member

    Sorry to be direct about a company-- I don't know if that is taboo or not--

    But what do you think of Amway? I was recently bought in and am curious.

  6. lionshare

    lionshare New Member

    I joined Amway through their Quixtar edition, back in the '90s.. didn't stay long, primarily because I like to keep it simple. MLM comp plans, by and large (incl Amway's, at that time) are anything but simple.. they are designed, in my experience, to keep the most revenue possible in the hands of the people upstairs.

    Hint on comp plans: If it's a 'binary' plan, back away slow and move on! Binary plans require "balance" to a left leg and right leg.
    This has one purpose and one purpose ONLY: To keep the MOST revenue possible in the hands of the people upstairs!

    Another way I like to keep it simple is to not attach myself to any company that offers a huge catalog of products, requiring a good rep to possess encyclopedic knowledge on said products!

    That said, Amway is undeniably a force of commerce, and a Granddaddy of MLM, period. Good luck to you.
  7. talfighel

    talfighel Silver Member

    The key in this business in to get more and more customers.

    The real key to success in MLM is to recruit leaders under you. It is pretty much the same online with affiliate programs. You become a vendor and the best way to make lots of money is to recruit plenty of affiliates who will promote for you. The more affiliates, the better for the vendor.
  8. DonaldGreen

    DonaldGreen New Member

    cool post. like it!

    i specially like the comparison with casino. never thought about it but it is true [​IMG]
  9. ThinkBig

    ThinkBig New Member

    The bottom line is that succeeding in any MLM is hard work, but it can be done. Pick the right company and go for it. Expect 3-5 years of constant building before the good residual money starts to come in. By good, I'm talking 10K/mth.
  10. queenbliss

    queenbliss New Member

    Hi all-- i'm new to this board-- i work from home mostly but meet with clients at a rented studio. like many of you, being in business for myself i can pretty much structure work around how i work best and if i want to pick up another skill or provide another product, its not super difficult to do. a few years ago i was at an event that had many vendors and i purchased product from one in particular which i really like. recently i was invited to a party where this product would be sold so i started researching because altho i'd like to buy a piece or 2, i'd like to actually offer this product to my clients. well, turns out it is an mlm co. i got turned off because i do not want to push sales on people an push recruits.

    i've been reading the posts ob mlm's and i'm a little confused by statements that say "in order to make money you have to recruit" and other statements that say "if the company relies on sales rather than recruits, that's a good company."

    i plan to give these guys a call and then check out for myself -- so far i have to tell you, i was invited to 2 parties offering the same merchandise and from the evite responses, these ladies are lucky if they get 1% attendance. so i'm not too keen on the party thing.

    any advice?
  11. katereber

    katereber New Member

    talfighel: The key in this business in to get more and more customers.

    The real key to success in MLM is to recruit leaders under you. It is pretty much the same online with affiliate programs. You become a vendor and the best way to make lots of money is to recruit plenty of affiliates who will promote for you. The more affiliates, the better for the vendor.
    Some thing I can't understand, in other words MLM is a pyramid networking? Please correct me if Im wrong..

  12. needs2stop

    needs2stop New Member

    katereber: Some thing I can't understand, in other words MLM is a pyramid networking? Please correct me if Im wrong..

    Yes, you are building a "downline" team below you which has a geometric expansion pattern, similar to a pyramid.
  13. auditt05

    auditt05 New Member

    Yes its a pyramid, but it should be a LEGAL one.
    How to know if its legal ? It has to have a product involved to be so. Doesn't have to be a Tangible one though.
    Otherwise its illegal, because then you are just buying nothing for a profit onwards.

    If you are reviewing an MLM to pursue or work for, just figure out first
    Will I be able to market this? If the company is good, thats not the answer to this question. You might be better marketing something thats best for you, but not the best on the benchmarks.

    Ping me for any additional advice [​IMG]
  14. needs2stop

    needs2stop New Member

    Say I start an MLM myself. I charge you $250 to join, which INCLUDES the product my MLM offers. That product is an online training package, which includes things like ebooks and printable training materials which you get access to on my site when you join. My product is not a tangible one as you say. But it is nonetheless a product, albeit a digital one. Could even be considered a service too, since it's for an online training course essentially. Then I tell you to recruit others to join under you and purchase the same product.

    This is an example of an actual legal pyramid scheme I know about. It's just a ponzi scheme which lures people in and uses a token product to evade the pyramid scheme illegalities. The "product" is basically just some webpages and cheap ebooks that anyone could find for free other places. The scammer "packaged" these to appear to as though they are the service he provides. But he is really just a ponzi scam artist who suckers people in online and then refuses to refund their money once they realize that it's nothing more than a scam.

    Scam artists in America at least can use this tactic to set up pyramid schemes legally. Usually they eventually get shut down, but not until the scammer makes off with a lot of innocent people's money.
  15. auditt05

    auditt05 New Member

    Now I agree with you a 100% [​IMG]
    Great Review... Keep it up
  16. ThePhoenix

    ThePhoenix New Member

    It's so ridiculously easy to avoid being scammed. Don't join a new company, join one that has some level of establishment and a history of progress. Of course you need to make sure the market is not saturated for it, like with Avon or Amway, but otherwise it can work out very well.
  17. ScottCofer

    ScottCofer Member

    Great points ThinkBig and ThePhoenix ....

    Many people say/feel that they were scammed, when actually they talked to 4 people that said "no" and they quit. Of course, you can hear them say "MLM is a scam" on their way out the door.

    MLM is a business, and as such it takes some up-front research to find a good, stable company to work with (much like franchising). Then once you decide, it takes consistent, hard to work over an extended period of time to produce substantial results.

    No magic ... just work.

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