MLM Scams: Avoid Losing Money to Multi-Level Marketing

If you are new to making money on your own or in the process of a new work from home opportunity, make sure you understand multi-level marketing and the signs of multi-level marketing scams.

What is  Multi-Level Marketing?

Multi-level marketing is a term used to describe a specific business model where companies sell their products through “sales representatives” rather than directly to consumers. And these “reps” also recruit new members and are paid percentages of their sales as well.

Why is MLM bad?

- According to research at the FTC, 99% of recruited sellers lose money in an MLM venture. That means on average only 1% actually turn a profit. - A minimum of $25,000 in total expenses is required. This figure includes travel, advertising, computer supplies, giveaways, internet, phone, products, and incentives. (AARP Foundation)

The Warning Signs of MLM Scams

1. Investing a large amount of upfront money

Any “business opportunity” that requires you to invest a large amount of money upfront is suspicious. If they require you to invest hundreds or thousands of dollars, it sounds like an MLM scam.

The Warning Signs of MLM Scams

2. Emphasis on recruitment

Pyramid schemes rely more on recruitment than selling products. If the other people in the business want you to focus on recruiting others rather than selling the product, that’s a sign that it’s a scam. 

The Warning Signs of MLM Scams

3. Strong sales pitch

MLM scams rely mostly on recruitment, so they prepare intense sales pitches to get people on board. In order to keep earning more commissions, a sales representative needs to constantly find new people to recruit, and this is usually done at a sales pitch.

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