MLM is a legitimate business and good
opportunity to make an earning provided the company is not a fraudulent one.
One has to be very careful in selecting the right company as to not get into
scam and instead of earning some money, money is lost.
Let us see, what all points observed can be
the warning signs that MLM is a scam
Recruitment centric rather than selling
One of first warning sign is that the
company will have more focus on recruiting rather than selling the products.
They may recruit you with the motive that you further recruit more members and
not increase selling by finding new customers. Hence the business is marketed
and not the products. In this kind of business, money is got by recruiting more
members and this is not a legitimate business. In many cases, there are no real
products even though they show many products on the catalogue.
Asks to buy heavy Inventory
In the initial phase itself, if the company
asks you to buy a heavy inventory and become ‘elite’ member or pushes you to
buy most expensive business package in exchange of the needed business support.
High Pressure
Tactics
If the company presents before you an
“outstanding” deal on which you are not given time to think or discuss with
other people including your family members then the deal is just a hoax and
fooling you into a scam. They do follow the ethics and proper code of conduct.
Pushes for paid training
If the company pushes you for a paid
training on the regular basis besides the usual training or else they do not
consider you much, then there is something fishy about it. As to successfully
carry on the business the company has to provide training and strong support
and a legitimate company will definitely provide it.
No Transparency
If you ask them questions and do not get the
appropriate answers and eventually not considered as a positive thinker or not
placing enough trust on the company, then it is surely a warning sign.
Unpleasant Job Interview
You go for a job interview but it does not
turn out to be a proper one. Meaning, instead of a normal interview process, it
is more of a publicity of the business and given a presentation of some
products. After the presentation, there is one-on-one interview which is more
of an interrogation or a pressure to join the company.
Bizarre product range:
Successful businesses have a range of good
and relevant products. If the business claims that it is highly profitable and
provides an excellent opportunity to join but has weird or bizarre products or
the product is the focus of litigation then there is something doubtful about
the success of the company.
John M Taylor has identified some questions
in his work “12 Tests for Evaluating a Network Marketing (MLM) Opportunity” as
follows:
- Were
you approached primarily on the basis of the actual value and need for the
products - or for the "opportunity?"
- Is
it likely the products could be sold successfully on their own merits
without going through a MLM distribution system?
- Does
the MLM Company focus on legitimate products of value to consumers, or
does it emphasize fleeting trends and timing, and exotic or secret
formulas?
- Can
you as a distributor make a good income for the time you spend selling the
products - without recruiting a single person?
- Would
distributors several levels above you - who had nothing to do with the
sale - receive as much or more total payout per sale (including
commissions and bonuses) from the company as you would get for selling the
product or providing the service?
- Are
the company's wholesale prices low enough to allow a respectable profit
when marking up for resale - at a retail price that is still competitive
with comparable products through other sources?
- Has
the recruiter been devious or up front in his or her inviting attempts?
- Are
conferences and training programs, audio and video tapes, etc., free of
charge (as is the case elsewhere for company sponsored programs), or are
you expected to pay for them - as another revenue source for the company
and upline?
The conclusion is that before taking a
plunge in MLM, it is very necessary to know what kinds of frauds there can be.
It is important to educate yourself before investing your time, money and
efforts to pursue a dream.
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