Avoiding MLM Scams

By Terry Lynn - Updated on 12/30/2020
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MLM is more popular than it has ever been and there are new companies popping up left and right. MLM can be a very successful business model if taken seriously but unfortunately there are companies out there who are running scams.

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Avoiding a MLM scam is not always easy.

You’ll want to ask yourself these questions while evaluating an opportunity:

1) Are you being compensated solely for getting people under you?
2) Does the company offer a product or service of value?
3) Is the product or service ridiculously overpriced?
4) Is the opportunity the main attraction?

Does the Company Offer Anything Except for the Opportunity?

If there is no product or service in the middle and there is a pyramid like structure, then you’ve got yourself a full-blown pyramid scheme…no doubt about it. Run, run fast.

Does the Company Provide Something of Value

This is the true core of any successful business. You must be able to provide something of value. Otherwise, buyers will feel remorse and the company won’t last too long. Your customers will feel happy when they’ve received a product or service that has provided some benefit to their lives.

Is it Extremely Overpriced?

It’s known that many MLM companies overprice their offer to compensate for the commission structure. The problem occurs when the product is extremely overpriced. Keep in mind that the offer in the middle is what keeps the company from being a pyramid scam. With that being said, you can’t just run a business and sell toothpicks for a grand each just to implement a pyramid investment structure.

Is The Opportunity The Main Attraction?

What if the company does have something of value and does have something within a reasonable price. The problem occurs when people are just joining to earn commissions and the product or service isn’t so useful for the majority of those that are buying into it. I’m not a lawyer and I’m not giving legal advice here, but this business structure seems like it’s using its offer more like a front and the main intention is to shove more money into the scheme.

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