MLM Plan on the Outside, Pyramid Scam on the Inside



Posted: Saturday, December 15, 2007

by
SCN Company

Back in the early days of network marketing, multi-level marketing (MLM) used to be a respectable business opportunity. Nowadays, just about all MLM programs are illegitimate scams.

Many of today's multi-level marketing programs involve some degree of deception. Either they promise unrealistic sales and incomes or they are nothing more than pyramid schemes disguised as MLM programs. A pyramid scheme is when you earn money by recruiting other people into the program with no real product or service sold. This is bad in two ways. First, you end up losing money you put into the business. Second, pyramids are illegal, and your participation in it makes it a crime. No amount of smooth talking could ever change that. Making money by signing up new distributors who make money signing up new distributors is a business opportunity that is destined to fail.

The primary tool: deception

Some legitimate network marketing programs use deception as a tool to lure the unsuspecting recruits and convince them into becoming distributors. Other programs promise huge incomes, and yet other MLM's involve products of exorbitant value. Health and nutrition networking programs are a good example of this. If you have to stretch the truth or even lie to consumer in order to sell them on an MLM, then you might want to think twice about getting involved in the distribution of its products. If you think that your MLM's products are worthless, then how can you convince others to think differently? One could argue that all networking programs are scams and should be avoided. However, without investigating what a business opportunity offers, one should not be too quick to dismiss a network marketing company as a pyramid scheme.

Traditionally, MLM programs have a reputation of being poor enough that everybody should be skeptical of anybody making the attempt to sign you up as a distributor. Research the program thoroughly before you make a commitment to sign up as a distributor. "Investigate before you invest," as the old adage goes.

If you have an MLM program in mind, check to see if the new program will hold up against the following warning signs.

Warning Signs of an MLM Scam

  • You earn money by signing up new members. If the members you sign up only make money by recruiting more members, then this opportunity is most likely a scam.

  • You are not selling a good product. A reputable network marketing company will have quality merchandise that people are willing to buy. If they are junk merchandise, then avoid this opportunity. Only an idiot would be silly enough to buy junk merchandise.

  • You are selling to distributors. If you are a distributor, why would you need to sell products to other distributors to make your money? You are not really earning money if your products are purchased by people who do not need it.

  • You are promised a huge income. As with any business opportunity, there are no guarantees for success. Therefore, there is no guarantee that you will make big money. Success in MLM or any business opportunity does NOT come to you. It comes from you. That means you have to put in lots of time and effort on your part to make your business a success. Be skeptical of programs that make promises of big money. They are most likely empty promises.

  • You can succeed if you work part-time. Network marketing is like any other business, you have to put in lots of time and effort to get results. If you do not put in your 2 cents worth, you will not make any money worth talking about. MLM is a business where you work for yourself every minute of the day trying to find new distributors or customers. If they say that you can work this business only part-time and make a full-time income, they are lying through their teeth to get you to sign up. Successful networkers never take a vacation because their business is a 24 hour-a-day job.


    • There are lots of consumer fraud schemes out there. It is up to you, the consumer, to educate yourself to recognize what is and is not legitimate. By doing so, you can minimize becoming a victim to the crime of theft by deception.

    Fabiola Castillo is an online marketer for the website NinjaCOPS SuperStore. This virtual store specializes in home security products where you can buy wireless hidden cameras, kubatons, cell phone stun guns, nunchaku, air Tasers, expandable batons, and many other self defense products.

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