How to Spot an MLM Scam

How to Spot an MLM Scam

MLM businesses sometimes have a problem regarding corporate image because it if often hard to tell a legal MLM enterprise from the scams, although there are lots of legitimate MLM businesses operating in many states in the U.S. and in other countries. Neophyte firms may call their operations "home-based business franchising," or "affiliate marketing."

The bad thing about MLM businesses is that larger emphasis is placed on the recruiting of sellers than the selling of the actual product. In the present economy, there is simply no need to sell consumers the overpriced products that MLM firms usually offer, and they lure other people in to securing memberships with the promise that succeeding memberships will make them unimaginable amount of cash.

So it is important for consumers to differentiate legitimate MLM businesses from the fraudulent ones. Here are some giveaways:

1. Use of celebrities to attract clients
A lot of MLM ventures in the present are attempting to associate their businesses with celebrities to give them credibility and appeal to buyers. It is important to remember that these celebrities did not earn their money from MLM businesses, and therefore clients will not benefit from it too.

2. Shelling out cash for the program
Some MLM businesses will oblige their prospects into buying into the venture as they were hired to sell the merchandise. It is a sure indication that it is a scam. If they are legitimate, there is no need for sellers to buy their own products, since it is supposed to do well on its own.

3. Purchase of sales materials
This is the scam where an MLM business will require their sellers into paying for the materials to be used by the firm for advertising. This a big no-no since companies shoule be the ones paying for their advertising, not the employees that they are hiring.

4. Seminars for training
Another sure sign that a MLM business is a scam is when they offer training seminars that actually provides little training, but dwell more on building the enthusiasm of the prospective recruits for the venture. MLM companies will require them to pay the expensive training fees, with the promise that their "investment" will pay off in tenfolds. Always remember that no legitimate firm will make people pay for their own training.

5. Rate of people dropping out of the business
The truth is, the drop out rate for these MLM programs are humongous. But of course, the promoters will not divulge the fact to prospective recruits. About ninety-eight percent of them pull out of the program, an enormous amount compared to those who actually continue on with the venture. Promoters will tell people that those minority are the hard-working, patient ones who have become immensely successful and is presently earning thousands of dollars, or even millions. But the real winners of the game are those who have the sense to drop out.

6. Brainwashing
Promoters will go on and on telling recruits to have faith in the program, and believe that they too can earn a lot of cash like their predecessors. These scams will often go great lengths to promote the products, to the point of even destroying the image of their competitors in a very unethical manner.

People who want to earn money and is planning to enter a business should always exercise great caution towards those who only want to scam money of them. Always remember that a legitimate enterprise will make sellers earn their living and not profit from them.