How to Avoid Scams on Multi-Level Marketing

Thanks to the world of internet advertising, hundreds of opportunities have popped up that allow individuals make money online. A prevalent method of making money online is the multi-level marketing scheme.

Multi-level marketing schemes are marketing programs that use independent markets to sell products. For every product you sell, you receive a cut of the profit in recognition of your efforts. Amway, Avon, and Tupperware are just some of the examples of companies that operate authentic multi-level marketing schemes.

However, because the internet is open to both the honest and the dishonest, there are also pyramid schemes that hope to take advantage of the structure laid down by MLM (multi-level marketing) schemes to try and MLM scam individuals. These pyramid schemes lure you in with the promise of future income but never with anything to show for it.Let’s take a look at the ways of identifying a pyramid scheme and how you can avoid falling for one. But first, let’s examine what a pyramid scheme is.

Pyramid Schemes – What are they?

Before we begin identifying the signs you need to look out for, we first need to explain the concept of a pyramid scheme so you can easily differentiate it from legitimate MLM programs.

Pyramid schemes are typically illegal institutions that work by having members pay a fixed sum before they can join the program. Once you pay your fee, you’re automatically a recruiter. Pyramid schemes use recruiters to increase the income they get from their members feed.While there are some pyramid schemes with an actual product, the primary objective it sells to its members is more often recruitment. Recruiting offers bonuses and advantages so the more you recruit, the more you get for joining the scheme.The reason why pyramid schemes are unsustainable and end up failing is that they have nothing to sell, so there’s no generation of income. The only source of profit they get is from new members joining in and sooner or later; the recruitment well will dry out.Pyramid schemes rely mostly on the relationships of their already existing members to grow. Members are convinced to invite family and friends to participate as well. Sadly when the recruitment dries up, it can cause relationships to tear and strain as the new members feel the existing ones cheated them. Knowing how to identify a pyramid scheme remains the simplest way of avoiding this scam.

How to Identify a Pyramid Scheme

No matter how hard they try to hide it, pyramid schemes always end up leaving tells. Here are few that can help you figure out if it’s real or you’re being set up for a scam.

1.      The major focus is on recruiting

If the focus of the program seems to be on recruiting and not on sales of any product, then that’s a red flag. If the focus is always on getting more team members, then you should be wary.

2.      Little or no training

If there’s no training being offered, or your questions are being brushed off, chances are it’s a pyramid scheme. Furthermore, if the training focuses on how to be a better recruiter, and is never on real business tips and techniques, then you’re probably looking at a pyramid scheme.

3.      Added pressure to pay for more

Pyramid schemes always have higher packages with bigger bonuses that they keep urging their members to buy. If you’re feeling pressured to move to a “business” or an “elite” package, then you’re looking at a pyramid scheme

4.      Appears too good to be true

Like most things in life, it looks too good to be true, then it probably is a scam. If they’re always going on about their fantastic product, or how fast it can make you rich, then you’re probably being scammed.

Ways to Avoid Falling for Pyramid Schemes

It is always better to be safe than sorry. So, whenever you come across a multi-level marketing program, and even if they don’t show any of the signs of a pyramid scheme, you should still tread carefully and take some time to find out about the program before committing. The easiest way to differentiate an authentic multi-level marketing program from a scam is to examine what they offer. If it appears too good to be true, then it probably is. Chances are, it’s a pyramid scheme trying to appeal to victims using their need for money.

Also, before committing to any program, even if you think it is legitimate, you should always seek out more information about the company. You can carry out an online search to see if there are any suspicions of it being a pyramid scheme. You can also check their local office, fair trading, or any other commercial institution to check if the company is legitimate or not.