Have you ever been requested to pay money to make more money? If so, then you should immediately have your red flags raised. Multi-level Marketing (MLM) is the name of one such organised scheme. How MLM Is A Scam – Hidden Secrets Revealed is the perfect guide to help you understand and avoid a company selling you a pyramid scheme.
The multi-level marketing schemes are, most of the time, a forerunner to a scam. Obviously, legitimate MLM businesses exist, but most Pyramid Schemes run their illegal business by posing as an MLM. So unless you are making an off-the-counter exchange, handing in money beforehand is not intelligent.
Basic Principle Promoting MLM Scams
Lots of schemes thrive on the promise, high profits in return for an upfront investment. They pretend this investment price is a small price compared to the overall result; you’ll likely be able to make. You may have learned of them as pyramid selling or network marketing, or even referral marketing. Despite this, giving it cool names does not make it any less of a scam.
How Are They Utilised?
MLMs are schemes used as direct sales strategies, which means products or services are not offered through a retailer.
Therefore, these companies require a large workforce to engage in such a trade. That’s why they convince you into being a part of it and further convince others to join, offering high rewards. You will be acting as a commission-only sales agent. It’s more misplacement of words than an actual business strategy.
What Is A Pyramid Scheme?
A Pyramid Scheme is massively dependant on recruiting more and more people to feed those at the top of the line. The ones they have recruited to work under them are termed “downlines.”
Unfortunately, identifying illegal schemes may take as much as twelve months before being closed down.
In the meantime, victims already caught up in the scheme continue looking for recruits to improve their chances of earning. Such schemes are aptly named as nothing other than a Pyramid Scheme.
The alignment operates on a similar level to the Ponzi Fraud Scheme, where both use new investors funds to pay the earlier backers. The irony to those caught up and more likely lost money is bittersweet. And more so if they are left in debt.
How to Recognise a Pyramid Scheme?
The factors of recognising such schemes can be challenging to identify. So below are a few pointers that may assist.
Building a Team: The Emphasis of team building is squarely focused on recruitment, not products. A centrepiece of such certainty is evidence of a Pyramid Scheme. Therefore, it will be wise to direct your focus elsewhere.
Sounds Too Good To Be True: Many times over, you’ve heard the saying, “if it’s too good to be true,” then it more likely is. Pyramid schemes around this same theory promise massive earnings, and learning opportunities are all red flags.
Call to Action: Be wary of upfront demands, especially if it comes with a time limitation. Things like “Act Fast”, “Don’t Assume”, “Get Started Today.” They are warning bells ringing loudly. Ventures, though slight or notable, need to be investigated thoroughly. It is your money at play. So decisions, no matter how time-limited an offer may seem, requires your considered time.
MLM niches are a portion of a more widespread market and are defined by their uniqueness. Such as preference or identity that form part of a much larger market.
MLM Niche Markets Cover The Likes:
- Home Care Products
- Dietary Supplements
- Essential Oils
- Personal Care Products
- Nutritional Products
There are, however, viewpoints in the MLM industry that promote the business as an outstanding job prospect.
Product Claim: Many claim products contain things such as “Anti-tumor” and “cardio-protective” properties.
Indeed, this may be the case in some instances, yet many products are not even FDA approved.
What’s more, certain products may contain excessive lead, which may cause serious health issues.
Businesses supporting misinformed standards pose a severe risk to general health and maybe dishonest schemes.
How Does Multilevel Marketing Work?
MLM is a sharing action marketing plan, with the set-up containing many layers of commission overrides. It offers the chance to become immersed in a method for distributing products to consumers.
There are thousands of MLMs worldwide, and the principle behind multi-level marketing is to excite those looking for extra income.
It’s a plan direct sales companies use to target vulnerable individuals with accessible income opportunities by being part of their workforce selling their products or services.
Lots of MLMs are legal. However, the Federal Trade Commission (FTC) has investigated marketing companies for decades and has discovered many legitimate yet dubious practices, such as running pyramid schemes.
Businesses that treat the law with contempt are usually running a scam operation. And are mistreating people most exposed financially by luring them into a false belief of large pays.
- Life-changing quantities of income
- Flexible working hours
- Full-time income for part-time work
- The ease of working from home
And they are only a few of the false opportunities used in advertisements.
They use diverse and far-reaching selling methods to overwhelm selling points by convincing the wary they are a well-known and respected brand.
What Is The Pyramid Scheme Success Rate?
The Federal Trade Commission (FTC) reported that success is not guaranteed, no matter how many rewards they promise you. And, according to the FTC report, you are more likely to lose money.
Furthermore, capabilities or how hard you work doesn’t come into the equation. It’s more a question of how good you are at being deceitful.
I’m not entirely sure of the specific figures; nevertheless, more than 85% eventually lose more than the original investment. And that’s sad, yet true.
Of course, there is a slim possibility you’ll make it to the top. I must add, however, it equates to 1% of the total membership scheme (so making it are thin indeed). And at what cost? Sure they are earning sizable sums of money, but it’s a legacy of the grassroots members.
MLM How Does That Work?
Although considered by most folk, MLMs are a form of Pyramid selling. At the same time, that may be true in some instances, even though some operate a very legitimate business.
Those running a dodgy scheme usually operate using a Five-Step Approach.
Face To face Approach: A current member will proposition you with the claim they have an excellent business opportunity they’d like to share with you—red flag number one.
Member Title Name: Everyone in the pyramid scam has a title, another way of making you feel necessary. But they are, using an elaborate technique, selling the concept to you. You may be even invited to a party at someone’s house, where you will meet other mentors and a bunch of other MLM participants—red flag number three.
Preview Pack: The business requires you to purchase a starter pack. And YES, at a heavily discounted price. You’re sold on the idea, so without thinking twice outcomes the wallet. The journey of losing money has just started. And so does all the upsells that follow—red flag number four.
Recruiting Pressure: Soon after joining, pressure comes to bear on recruitment with enticing phrases like passive income, running your own business and residual income. They are just a few of the lines they’ll trot out as they know the importance of playing mind games in a way that will have you thoroughly convinced you’ve made the right decision. They know you’ll then commit for sure. No matter the reasons—red flag number five.
After all, this is supposedly a “business opportunity”, isn’t it? Maybe.
On the flip side, are all those hollow promises achievable or near impossible?
When you consider ultimate success equates to 1% of the total membership scheme. Scary numbers. Right? Assuming 1%, that right, 1% of total members end up with vast sums of money.
MLMs have survived for quite some time, but their outreach has increased with the extensive use of social media. It’s no secret, the world shifting towards a digital era, MLMs have also started using digital platforms.
Platforms Such As:
TikTok: Taken over most social media, the MLM scammers quickly moved to promote on the platform. However, the material is misleading with basic decency and are quick to backtalk when someone calls them out.
Cold Messaging: Are messages that are scripted and are always worded to entice you into the scheme. Often, the statements are from old friends or colleagues. Nonetheless, best to understand their intention and treat them with caution.
Zoom: Call meetings are introduced when you are a little more involved. Meetings are posted as training sessions, but, in reality, they are nothing but pressure techniques.
Advertising: If a company has newspaper and magazine endorsements, it doesn’t necessarily mean it operates above board. Some promote with a facade of false truths. Look deeper into what’s beyond the front page cover.
There are others likes Facebook, WhatsApp, Instagram and more. Best to familiarise yourself with the many forms they use and their financial impact on you.
How To Avoid MLM Scams
No matter how careful when evaluating an MLM, there most likely will be something you’ve overlooked. But, at least taking some discreet action always is better than nothing at all.
Here Are A Few Pointers Worth Considering:
Be Aware: This is the first key to safeguarding yourself and your money. Study reviews and search various platforms. No doubt, you’ll find different pieces of material on avoiding scams. So, use it to your advantage.
Researching: Put aside emotion when considering any MLM. Be clear with your research, and make informed decisions based on facts alone.
Researching can be time-consuming. However, it’s far better than losing your hard-earned.
Further to that, you’ll more likely, in the long run, prove your effort to be worthwhile.
Consistent Reasoning: Reasoning and consistently will go a long way in helping you arrive at a rational and sensible outcome. For instance, you’ll recognise the cover-up used to snare victims. Also, conscious of the payment and recruitment cycles they adopt.
Discover First Hand Experiences from Others: The internet shares other peoples first-hand experiences and is available for all to see. Scammers have nowhere to hide these days, especially those operating a dodgy operation. Learn from their experiences, as it will save you lots of money and embarrassment.
Don’t be fooled or convinced by others. Never let anyone influence you that it is legitimate just because this company has been here long enough. MLM Scams exist because they find shortcomings in the system to get around the law. You have nothing to benefit from such schemes apart from being a commission-only sales agent.
It should be noted, MLM uplines benefit most from downline sales. So, don’t go in with your eyes closed, or you’ll pay dearly for the lack of due diligence.
Furthermore, be mindful you will more likely be getting tutored by someone just as innocent as you.
Direct Selling: face-to-face trade of products or services where they are only available through direct contact. Never are they seen on the shelves of bricks and mortar stores.
Mind you. There are many legitimate direct selling businesses that, by their self-integrity, operate lawfully.
As a consequence of the multitude of scams operating, sourcing genuine ones becomes that much harder.
Affiliate Marketing: is a marketing system in which a company pays the affiliate for business generated from the affiliate’s marketing campaigns. In particular, you’re rewarded financially for producing a specific result to the retailer or advertiser. In other words, it’s the result of a sale. Apart from this, some businesses may reward you for generating direct leads, free user trials or app downloads.
Affiliate programs are free to join; besides, you don’t have to bother about costly startup costs.
A performance-based system. And, done well, you can go from the beginning to a profitable online business of making you a good commission.