Is MLM a scam or not?

An MLM company is a network marketing company in which the commissions paid to associates/distributors on sales of the company's products or services are divided between multiple levels of distributors.

There are also some network marketing companies in which they're not.

Both are variations of "direct sales" companies, but of course there are also thousands of other direct sales companies, worldwide, which have nothing to do with network marketing at all.

Here's the "hierarchy" ...

- Direct sales companies, some of which are ...
---Network marketing companies, some of which are also ...
-----MLM companies.

The exact legal classifications can vary (but actually surprisingly little) from country to country, but that's a general overview, anyway. What does vary a great deal between different countries is the process of licensing, registering and regulation of companies according to whether they're MLM companies or just network marketing companies.

LOL! You might want to PM me then. I am a very successful MLMer that belongs to a company with an excellent product needed and sued by everyone (but geographically limited). We do not even have to buy the product to earn commissions.

Not all MLM companies are scams. I belong to two of them that are not, one I've been in for years. I have seen several that are. You just need to do your due diligence.

I love MLM (and network marketing) because you can leverage your time. Once you have built an organization, you can get the same or more earning and still have time to run other things. MLM is very part time for me (less than 4 hours per week, sometimes much less), yet earns me 1/4 of the total money bring in. I spend 60+ hours a week on my SEO/web design business for the other 3/4 of my earnings. Hour for hour, MLM does better, and the products are a good value for the consumer.

With that said, there are plenty of MLM companies that are a scam.

Here are a few things to watch out for:

1) Never join a company that requires you to recruit people in order to earn a commission. In all cases of MLM, you will make more money if you recruit people, but under no circumstances should you be required to recruit someone to be eligible for commissions.

2) Your pay should be based on sales not recruiting. It is one thing to earn a bonus or to receive a higher commission for recruiting people, is something else to be paid for. Legitimate network marketing companies, whether MLM or not, pay for selling products or services, not for recruiting people.

3) The product or service that the company offers speed of good quality, at a competitive price. The reason an MLM company can pay high commissions is because almost all of their advertising costs are eliminated. They pay their affiliates after a sale has been completed, rather than paying an advertising company hoping for sale. Because of this, they can sink what that advertising budget would have been into commissions for the sales force. An MLM product should never cost more than an equal quality product sold by other means.

4) Before joining any MLM company, you should talk to the customer service department and make sure they are responsive and actually answer the phone. Talk to affiliates other than the one trying to recruit you and make sure the general consensus is that they are happy and satisfied with the company and its products. Do your due diligence.

5) This is a little less reliable test of whether BM alone company is a scam, but you can search for any BBB complaints or check the AG office to see if any civil or criminal complaints have been filed. Not all such complaints are legitimate, but if there are lots of women is certainly a sign that there may be a problem.

6) Read all terms of service and conditions and know ahead of time how the product or service can be marketed. Most of us here on the Warrior Forum a relatively proficient at Internet marketing. Many legitimate MLM companies have restrictions on how their product or service can be marketed, especially when the Internet. Some of them do not even allow you to have a website or blog until you've reached a certain love with the company. Make sure that you are able to market via the means allowable by the company before signing up.

I hope that helps. There are lots of legitimate MLM companies, but you need to do your own research to make sure that the one you're considering joining is not a scam.

My statement was geared only toward MLM Opportunities, i would agree thought that most Self-Employment opportunities are just down right scams period. I would say 90% of them all are. However it really depends on where you find the opportunity and your ability to weed out the scams from legitimite opportunities. Any business where you have to pay to get the information to get in is probably a scam. I cant think of one that has ever been legitimate. Of course this is a broad statement so you are free to disagree. Im speaking in generalities rather than specifics so take it as such.

I have a friend who does MLM. He has been doing it for over a year and even gave up his full time job to throw everything at it. If you didn't know him you would think he was making millions the way he lives his life in public, but in private to myself he has told me he hasn't made a penny. After recruiting around 14 people he has only been paid around $700 because the people in his downline just cant be bothered, and there lies the 'problem' You have to work at it, just like in IM, if you sit back and wait for the riches to come to you then you will be waiting a very long time.
This, coupled with the never ending meetings and travelling to try and recruit new people does not appeal to me at all, but is it a scam? Probably not but its the same as everything else in life, there are winners and losers at every level and sometimes you just need a little bit of luck, something which my mate could do with a huge dose of!

That's true, the people who join the last lose all their money. They won't have anyone else to sell to.

I really feel for you, Tsnyder, in these threads.

You're in the exact same position here that I'm in, in "article marketing threads" (except of course that you do have rather longer-standing success in your industry than I do in mine! ).

In all these threads, such a high proportion of the responses are ill-informed, misguided, prejudiced and just plain wrong - on so many different levels - that it must sometimes seem as if it's not even worthwhile trying to correct all the misinformation?

I admire it and I respect it, but I don't know how you do it.

Anyway, you have my "vote" on the subject, and I'm glad you're here.

Personally...

..Tysnyder..it's not a goal is the first step..you must've misunderstood that
it's a way to start building a downline for the majority of people taken the
worry of how and when and where do I start..

If you have not tried it why knock it..I don't see to many people making money.

Maybe just maybe trying something different can have a more beneficial outcome
in life!

__Rey

P.S. Of course, it's about building a team automatically..

MLM is definitely not a scam.

People can and do make good money... however, your post is misguided when you say that people own a marketing business.

You don't control the prices.
You can be terminated at any time for any reason.
You don't control the product.
You don't control the company's branding and marketing message.
You are not building any kind of asset that you control and can sell. (Yes, some people talk about selling a downline but in the real world this rarely happens and is not a common practice like selling a business)

How can you honestly and ethically tell someone that they will "own their own home based business"?

If you were to argue that affiliate marketing is not owning a business either then I would have to agree with you. But the fact is that if you have an affiliate site that does consistent income every month, that has value and can be sold like a business.

Also, affiliate marketing is much easier to generate significant and consistent income... Once you do the initial work, it can be very passive.

In MLM, you are constantly trading time for money. Yes, residual income is what is promoted but anyone who is doing big numbers is likely working a lot of hours on a weekly basis.

I do agree with you however, that MLM is something that the masses can plug into unlike internet marketing which can be more challenging to an average person with no experience.

No because most full-time affiliates are smart enough to diversify their affiliate promotions. They promote MANY products from MANY advertisers using VARIOUS promotion methods. Therefore their risk is minimized.

Most affiliates also understand that this risk exists. Whereas most MLMer's put all their eggs into 1 company's basket. And it's usually against the terms of the MLM company to join more than 1 company! So it's not like they could diversify even if they wanted to! If the company goes under for reasons beyond their control, bye bye income. Time to find the next miracle juice or super vitamin to promote and hope your team still trusts you enough to join you in the next "opportunity."

Yikes! I wouldn't want to associate myself with an enormous group of "non-capable" people.

So they aren't capable of reading business books? Do they have a learning disability? Or are they just lazy?

A "turn-key business opportunity." That's what makes me cringe.

I'm not suggesting anyone remain an employee. Heck, I'd rather do MLM than be an employee. But just look at your options when you're looking to build a business.

Again, my whole point is that MLM is NOT a "scam" but it's not the BEST way to make a LOT of money. That's all I'm saying here.

Good advice.

Bearing in mind, of course, that just like backlinks, there are "do-follow Warriors" and "no-follow Warriors".

Maybe in theory, but IF a person is somehow rewarded for recruiting people, THEN it stands to reason that their focus will shift in that direction - REGARDLESS of whether or not it's the company line.

Yes, I'm well aware. BUT...what counts as "very small". Even if there is a dollar limit, that doesn't say EXACTLY what they have to give you for your buy in.

The law, when it works, can only go so far. The idea that the law somehow makes MLM okay doesn't make sense to me. I only mention that because you have mentioned laws about MLM a few times. It's a straw man argument anyway.

A. Some say MLMs are scams.

B. There are laws that regulate MLMs.

C. Legal MLMs follow the law.

D. Therefore, MLMs must be okay.

At least that's the underlying message I'm reading into it. But that's only an assumption, which could be incorrect.

All the best,
Michael

Shoot me a PM if you'd like to learn the business from
someone who knows what he's talking about and is a great
teacher of the business.

Tsnyder

Sheesh ... I thought I was pedantic. It's a business model.

I have to say I'm with you all the way on that post, Michael.

Are you trying to say these companies are not legit?