MLM scams and how to avoid them

MLM scams in the past have made many buyers and potential network marketers extremely wary about the industry.

'Get rich quick' claims, stories of overnight successes and the unwelcoming prospecting of over-zealous marketers all adds up to a lot of suspicion about the industry.

So how do you avoid getting caught in a con or a trap?

There are some simple checks that you can do to make sure that you're getting involved with a legitimate and credible operation when you start up your new network marketing business.

Avoiding MLM scams tip 1: Do your research

Many a MLM home business opportunity - if not all of them - are suitable for part time working and because of that, and low start-up costs, people tend not to do the 'due diligence' checks that a person starting a full time business and investing a lot of money might do.

# Be a journalist, ask lots of questions

# Don't take your sponsor's word for it!

# Remember that you'll be selling to friends and family - don't tarnish your reputation by getting involved in a poor business opportunity

# Remember 'Caveat emptor' ... buyer beware!

# Use your local library, scout the internet, look at trade journals and check out the business pages in the papers.

Avoiding MLM scams tip 2: Who's running the business?

Your first point of contact with your prospective network marketing business is likely to be via:

# Your sponsor

# The company website

# A leaflet or promotional literature

So do you take their word for it when they tell you what a great opportunity they've got for you?

No you don't, you need to check out a few key aspects of the business to make a fair evaluation about the people behind this newtwork marketing business:

# Who owns this MLM business?

# How long has this MLM business been operating?

# What can you find out about the company's financial status?

# Who's behind the company and what are the credentials of the management team?

# What is it that this MLM company is offering customers?

# What are the details of their earning plan for you and how reasonable does it seem?

# What's the ethos of this company and is it one that you're comfortable with?

Avoiding MLM scams tip 3: Checking out the money

It's easy enough to recommend a few basic financial checks on a network marketing company, but what does this mean practically?

# Take a close look at some of the 'survivors' in the MLM industry, the companies that have been around for years like Avon, Herbalife and Amway and analyse the reasons for their success. Does your company have what it takes?

# Use the internet to read (credible) business articles and find out what they're saying about your MLM company

# Ring around ... ask your sponsor to put you in touch with other distributers and see what their take is

# Check out the relevant industry associations and see if your MLM company is listed. For network marketing you need to check out The Direct Selling Association and the Multi-Level Marketing International Association

# Seek advice from your local Trading Standards Office to see if they have had any problems referred through them ... they might serve as a fast-track to a potential problem.

Avoiding MLM scams tip 4: Where's the back-up?

If you started a new job with a big company, you wouldn't think twice about receiving a period of induction or preliminary training to help you do your job.

So why should your MLM company be any different?

Clearly it's going to be a bit different in network marketing - you don't get a desk, an office or share of a water cooler - but you can still ask yourself 'How much does this company care about me, my performance, my welfare and my success?'

If they just take your money and leave you to your own devices, run a mile!

If they offer an ongoing training programme, mentoring and support and can clearly outline to you your earning and rewards structure, then that's good sign.

Avoiding MLM scams tip 5: Gut instinct

How open does your MLM company feel to you - what's your gut feeling?

If it feels wrong, you've got concerns, you just don't feel right about it ... then don't get involved.

Who wants to spend time, effort and money building up a fantastic MLM business and downline, only to have the business go bust?

Take your time, do your research, listen to other people, do some reading, check out the appropriate agencies ... then finally follow your gut instinct.

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