How To Spot An MLM Network Marketing Scam
Most MLM (Multi Level Marketing) companies that advertise on the Internet are fully legitimate and reputable online based businesses. They have to be. After all, the name of the game is to recruit as many affiliates as possible, in order to make as much money as humanly possible. In this day and age of instant information sharing via the Internet and social mass media, you simply can’t afford to rip hundreds or thousands of people off. News travels fast -faster than ever before- and any company that engages in such behavior will quickly be called out and brought to account.
There are some safer ventures like setting up an eCommerce store or dropshipping. Dropshipping has become one of the most popular ways to make money online. Sites like Salehoo, Worldwide Brands, and Wholesale2b have become very popular. You can find more information about these sites at http://oranckay.net/wholesale2b-review/. Wholesale2b is one of the most popular dropshipping sites, but MLM also offers some advantages as well.
However, there will always be a few “bad apples” in the barrel that potential customers and affiliates alike need to steer well clear of. Here are a few handy tips that will enable you to identify such potential scam artists before you get wrapped up with them.
If It Seems “Too Good To Be True”, It Very Likely Is
Simply put, if you read an advertisement placed on the Internet by an MLM company that seems “too good to be true”, then it probably is. Beware of MLM companies that make inflated claims, such as enabling affiliates to make $10,000 in under 30 days. There is always fine print attached to such claims. Break out your microscope, read that fine print, and do a bit of research on the Internet to investigate the veracity of these claims.
Did The Job Interview Seem Strange To You?
If you answered the ad the company placed on the Internet, and went to a job interview, how did the interview go? Did the person you spoke with (either in person, over the phone, or perhaps through Skype) seem legitimate? Were they forthcoming and honest sounding when you asked questions about their company and their business practices? Did they evade any questions which seemed to them to be “too personal” or “top secret industry information”? The bottom line is, if the person who represents the company to outsiders such as potential new affiliates seems “dodgy”, then the company they represent may also be less than legitimate.
How Much Do They Expect You To Pay To “Buy In”?
Almost every MLM will have some “start up” costs, some of which will be passed on to each new affiliate who begins to work for the company. This is simply the way that MLM businesses tend to operate. However, before agreeing to shoulder your share of these costs, make sure you know exactly how much the amount is. Never sign any agreement without having your part of the costs clearly specified. If you do not insist on this, you may end up signing a “blank check” which the company can then cash, draining your finances completely dry.
These are only a few of the common sense rules you should observe before agreeing to work for any company. If the company makes any demands or insists on you agreeing to practices which sound odd, it is best to move on to another potential employer.
Dissecting the “MLM Scam?”
So, what’s the deal with this MLM scam? Thieves and charlatans run rampant on the internet. They take many shapes and forms…
Some are “phishing scams” where sneaky people try to get your personal information. You know that email, the one you got where your long lost uncle died in Nigeria and left $40 Billion dollars to you because you are the ‘only heir they could find.’ All you have to do is send in $500 for processing and then…
Your screwed and they are laughing all the way to the Bank of Nigeria.
Just as common, but less obvious, are the various scams on the internet that claim you can make tons of money, but in fact, they are completely illegal. The worst of these are “Ponzi Schemes.” Ponzi Schemes basically promise that a rainbow of money will flow to your house and buy you a new car when you simply invest.
They are really sneaky, and usually hide behind a product that doesn’t actually exist, and you can log into your back office and see with your own eyes how incredibly fast your money is growing.
The problem is that the money isn’t really there.
A few people might be able to withdraw their “earnings,” but if everyone tried there wouldn’t be enough money to pay everyone their money.
What About MLM? Is EN a Pyramid or a Scam?
Well, MLM does fall under “Pyramid Scheme Law,” what that means we’ll get to in a minute. Empower is certainly not a Ponzi scheme, because all of the money for commissions is from the sale of actual products, and is paid out to the affiliates weekly.
So what about the pyramid scheme thingy?
Well, just because MLM falls under “Pyramid Scheme Law” that does not mean that it is a pyramid scheme. EVERY company with an MLM/Network Marketing structure falls under pyramid scheme law. All this means is that they have to follow a certain set of rules to make sure that they are not a pyramid scheme.
The MLM follows these rules.
The only way that anyone ever gets paid is through the sale of products. Magical money does not appear out of thin air and land into your bank account when you join Empower.
The MLM is a network marketing company because you will get paid from your downline when you join. Basically this means that rather than earning money from a sale you make one time, you can earn a percentage of sales that are made by others you recruit that are also making sales.
It’s basically exactly what a business owner does. Business owners hire employees so that they can make more money back into the business than they are paying the employee. The only difference is that no affiliates in a network marketing industry are employees, in essence, they are business owners that have the right to recruit other business owners, and to get customers.
One of the pyramid scheme laws is that you can’t make money from recruiting someone else as an affiliate. Well, MLM passes this test, along with all of the others. There is a $19.95 per month affiliate fee that an affiliate needs to pay if they want to sell the MLM product line. No commissions are ever paid out from the affiliate fee.
You see, the affiliate fee is not a product. The only way that you will make money in the MLM is when you sell a product, or when you benefit from building a team and earn a percentage of what your team is producing.
That’s it, period.
There are of course other pyramid scheme laws, but the MLM is doing everything that they can to make sure that they are compliant with all of them. They have lawyers that are familiar with MLM/Pyramid law that check and double check the system. MLM has a full compliance department on their corporate staff in Tampa, Florida.
The interesting thing about MLM is that the owners and CEO are not just striving to meet pyramid scheme law, they are striving to EXCEED it.
One of the MLM founders, David Wood, said it best:
“We are doing everything on our part to make sure that we won’t just be around next year, but that we will be here to pay you commissions for the next 100 years.”
MLM corporate gets to deal with the lawyers, you get to deal with making sales and earning commissions – sound fair?
What the MLM Critics are Saying
Whenever you do something big like Empower, there are always going to be critics.
The MLM certainly has critics. Here is the short list of what many of them are saying:
- Nobody makes money with Empower
- MLM is a Pyramid Scheme
- David Wood is addicted to hookers and wets the bed
- They are based in Costa Rica so they can hide from the government
- MLM is a scam
- MLM is a Ponzi Scheme
- MLM is a cult
- There are no real products with MLM
- I went to an event and most of the members smell bad
…I could go on, but lets just play ‘Captain Obvious’ here for a minute – it doesn’t take a genius to realize that this list is ridiculous. Clearly, I made some of those up, but I did so to illustrate a valid point – most of the ridiculous negative claims that people are making against the MLM are fairly stupid.
I’m not saying that you should love the MLM. Joining the MLM is not the right decision for everyone. It does take work; it takes you and your organization selling products to make money. Results vary, and there is no promise that you will get rich when you join.
Yes, tons of people have earned commissions. There are individuals that have made millions of dollars in commissions, and tens of millions have been paid out to the affiliates in the short time they have been in business. Most of the members smell good, and MLM LLC is actually based out of Tampa, Florida. That ridiculous rumor was only started because one of the company owners, David Wood, spends most of his time in Costa Rica where he lives with his local girlfriend and newborn son.
The MLM is not a scam. It is a legitimate business, and if you want to make money with it, you can – you just need to join a good team and learn to sell the products. Speaking of the products, they are awesome, and they are designed to teach you how to market and make money online.
The MLM Society
Our “secret society” MLM team is currently accepting applications. We are experienced marketers, we are serious about our success, and about yours. We are only looking for reps that are serious about their business, that are willing to listen, and that are hungry to make money.
Sound like you?
Great, if you think that you ‘cut the mustard,’ then click on the application button, fill it out with your best information, and one of our leaders will be in contact with you soon to help you get started.