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Is Multi-level Marketing a Scam?

Filed in Popular by on October 19, 2015 4 Comments

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When it comes to making money online there are various business models and anyone can choose the type of business they think is the right for them.

I’ve been involved in online business over the past few years now and I feel I can shed some light on this subject to help those looking for a real make money opportunity but not sure which business model to choose.

In this article I will examine multi-level marketing (MLM) business model and will answer the most frequently asked questions: Is multi-level marketing a scam? Is MLM a wise choice to make money?

At the end of my article I will provide a list of some MLM programs and explain briefly what they are all about so you can understand if MLM is for you.

 

Major aspects of MLM that describe this business model in the best way

Are you a sales person?

First of all, I would like to say that not all MLMs are scams. Some of them have been around for many years and some people are happy with this model either because they have a good experience in MLM type of business or they are big fans of this type of business model.

I don’t want to mislead you in any way and want to be objective. MLM is not for EVERYONE. It involves a person-to-person direct selling and you have to be aggressively active. If you are not a sales person this business is probably not for you.

 

Their products are always expensive

When it comes to MLMs in most cases you have to pay a certain fee in order to join MLM company. Also, in most cases you are required to purchase some products and in most cases they are very expensive compared to similar products available on the internet.

In this case you have to be really convincing in order to convince someone that your expensive product is really better than a similar one available on the market. Do you think it’s easy? I don’t think so. People do their own research and make their own decisions before making a purchase.

Just an example, if you join an MLM program Wake up Now you have to buy energy drinks for a much higher price than those similar ones available on the market at a lower price.

The same strategy you can see in other MLMs. Is it reasonable? Of course, it does make a sense only if you make a commission. But most people won’t buy expensive products from you.

 

No quality training

In most cases Multi-level marketing companies don’t provide any quality training and even if they provide you have to pay a lot for it while you can get a much better training on the side for a much lower price. In some cases this type of training from MLM may cost you thousands of dollars.

 

Unrealistic claims

In most cases multi-level marketing companies make unrealistic claims as if you could make a few thousands of dollars in a few days and unfortunately most people fall for these type of false promises. Very often they even guarantee you success that you will make a certain amount of money in X amount of days.

 

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No explanation

In most cases they never explain how the process will look like and you don’t know what you are going to do within MLM program until you pay them. In my experience I can say that if you don’t have this kind of info you’d better stay away from the program.

 

You have to be annoying

In most cases when you are involved in multi-level marketing you need to be annoying and promote “amazing” products to your friends, family members, neighbours etc., because you need to build a downline in order to make money.

A friend of mine is involved in MLM and is promoting some kind of a super secret health product that cures cancer and all diseases. I always try to avoid him because he is really annoying with all his promotions. This is how MLM promoters work.

 

You can lose everything in a second

Most multi-level companies collapse very fast and if it happens you will lose all your business. That’s why, it’s always better to choose a legit make money program other than MLM to be able to build a sustainable business that will work for you and your family for years to come.

 

Recruiting is your new profession

Another fact is that most MLMs are not profitable simply because like I said above, they in most cases are selling the same products available on the market but for much higher price and that’s why they can’t compete with other companies.

The only way to dominate or stay on the market is to teach their members how to aggressively recruit others and get them to join an MLM because if they join you and buy the same products you will make money off of them.

And remember that their products are overpriced because those that are at the top need a lot of money to compensate their members on all levels. That’s why most MLMs are mainly focusing on recruiting others so their members can make commissions off of their downline.

Not all MLMs can get the required number of members and that’s why the collapse very fast and their members lose thousands of their invested money and go to other MLMs. This is a fact that most MLMs, almost 90% are unprofitable or collapse in the first few years.

 

Under pressure

In all MLMs there is always a sponsor or a supervisor involved in the chain which is good on the one hand because often times they are very helpful and try to help you because they are interested in your success.

BUT you shouldn’t forget that in most cases they are interested in selling you more and more products.

You should keep in mind that the main goal of your sponsor is to make more commission through you and that’s why they will be doing their best to persuade you that the products are of super quality and you MUST buy them.

 

Complex compensation plan

Some MLMs have very complex compensation plans and I think they are not fair. Just an example, if you buy a package Z, you can make a commission only if someone buys the same package through you. If your referral buys another package through you, you won’t make a commission.

In my opinion, it’s wrong because if you someone joins MLM company through you, buys a package and you don’t make a commission while the company does, do you think it is fair? Such compensation plan is very common to most MLM companies.

 

Can you be at the top of a Pyramid

People that are at the top of MLM scheme and have tons of referrals make the most money and that’s true. Those who join, buy expensive products and fail to build a downline for themselves, fail to make any commission and finally quit.

That’s the main problem with MLM schemes and that’s why I never recommend anyone to join MLM companies.

 

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MLMs don’t offer any real value

Why most people don’t like Multi-level marketing is because instead of focusing on selling quality and useful products to people or providing some sort of a helpful service, MLMs focus on building a chain of recruits that will help you earn a commission.

That’s why If you plan to join a program do some research before to find out if the program is going to teach you how to build a real business or your task will be just recruiting people in your downline, and if so it means you are going to get involved in MLM.

 

U.S. Securities and Exchange Commission and MLM

U.S. Securities and Exchange Commission has outlined all major aspects of MLM and this organization gives you a warning that clearly says that you should avoid pyramid schemes because they always collapse eventually.

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Can you be successful with multi-level marketing?

  • Yes, you can, but most people fail to succeed with MLMs because:
  • Most MLMs don’t live up to their promises
  • You need to spend lots of money on expensive products and trainings or simply to have the right to promote them
  • Most MLMs fail to provide quality support
  • I think if most people fail with MLMs, there are many complaints about them and U.S. SEC and Exchange Commission warns you, there is a good reason to stay away from all MLMs altogether.

 

Examples of Multi-level marketing companies

As I mentioned above, at the end of my article I wanted to mention quite a few MLM programs so you can see real examples and see for yourself how they work. Not all of them are scams, but the truth is that most of them are scams or very poor products with poor support.

Very often they are closed down due to many complaints or legal issues. I’ve reviewed some of them and so far to be honest, I haven’t found any good and reliable program to be able to recommend it. In general, I’m not a big fan of MLMs and I prefer affiliate marketing, i.e. building a business based on my passion and interest.

Some MLM programs I’m going to mention have been closed down recently. All of them, even those that are still functioning have been added to my not recommended list.

If you take a look at them you will realize that though some of them are not scams, they are not worth the time simply because there are much better alternative programs with a good reputation (not MLMs) and providing more freedom in terms of being financially independent.

 

Empower Network – the hottest MLM scam that has been around since 2012. The program is still functioning but there are thousands of complaints and that’s why I added it to my scam list.

Wake up Now – another MLM program with a complex compensation plan that has been around for a number of years. It has been shut down recently due to many complaints.

Motor Club of America – an emergency roadside assistance service that has been around for many years. They are not a direct MLM company but they use some of MLM strategies in the process. The program is not a scam but is by far not the best make money program out there.

Zeek Rewards – another biggest scam in the history of internet. It was owned by Rex Venture Group LLC. It was closed by SEC (Security and Exchange Commission) due to many complaints and legal issues.

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My Online Business Empire – It follows the same pattern, i.e. promoting overpriced products solely for the sake of high commission. The program is a scam in my opinion, has a lot of upsells, lack of support, makes too many false promises and there are many complaints about this program.

Strong Future International – Not a scam, but not recommended either. They make unrealistic claims and promise you 6 figure income if you follow their recommendations and there are many complaints about SFI.

 

Some other not recommended MLMs:

Pure Leverage – Many complaints

Done for You Profit System – Unrealistic claims and many complaints

My online Business – Unrealistic claims and association with MOBE

Secret Success Machine – another MLM that promises you to make $41.000 a week.

Crazy Cash Club – promises you $16.000 the very first day upon joining the program

Inner Circle Riches – another poor product promoting MOBE

Millionaire Marketing Machine – a classic MLM scheme that requires investment up to $20.000

 

Final word on Multi-level marketing

If you take a look at all these MLM programs you will see that the majority of them are either scams or not recommended. Whenever I don’t recommend a program it’s because:

1. The program makes unrealistic claims and promises you wealth in X amount of days

2. Due to many complaints about that program

3. It requires a lot of investments, up to a few thousands of dollars and in most cases there is no a money back guarantee

4. It doesn’t provide quality support

All these cons are common to most MLMs that I’ve seen so far. This leads us to looking for a better alternative with a better product and support and with more realistic approach.

The program that fits this criteria must be reputable, should be around for many years and should have no or very few complaints which is normal because there is no perfect program. I’ve been involved in internet marketing for a number of years and I know quite a few programs that fit this criteria.

Here is my review of legit make money programs and you can choose any of them. I’m a premium member of one of these programs and recommend this program because I can vouch for its quality.

You can read about it below and ask questions and I will be happy to help you out. The program is free to try and you have nothing to lose. Give it a try and let me know what you think.

 

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About the Author ()

My name is Rufat. I'm the founder of Your Income Advisor. My goal is to help others succeed online, by exposing scams and reviewing top rated products. I can help you start your own business online

Comments (4)

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  1. Stephanie says:

    Thank you for the wonderful and eye opening article on MLM schemes. I agree with everything you said in this article. Many MLM programs are pyramid schemes, not all, but many are. Pyramid schemes are illegal in the US and they do eventually break down. You have to be a pushy and as you said, annoying, salesperson to make MLMs work and you have to have no consciousness about selling products to people that are available on the market and for much less. I had a co-worker who worked for Arbonne and she was very pushy and tried to push your product to other co-workers in the office which is unethical if you ask me. She was taking time away from other staff doing their paid jobs to listen to her spiels.

    I was once suckered into the Herbalife MLM which has been accused of being a pyramid scheme. They recently paid millions of dollars to settle the case action lawsuit against them, but I was pressured by someone from Herbalife for a while until they finally went away. They wanted me to spend over $4,000 to buy their products and then work to recruit my friends and family to also do the same. I love my family and friends to want to do this to them or to anyone else for that matter. I was pressured not just by him but by his upline to put the money on my credit card.

    Thank you again for the article. I enjoyed it very much.

    • Rufat says:

      Thank you for your comment and I’m happy you found it helpful and informative. Yes, you are right, that’s the nature of this business and I remember as one of my relatives was in the same way annoying trying to push their products to our family. It’s really unethical and I don’t like MLMs. They always push their mediocre products for a much higher price and try to convince you that you have to buy their products within 6 months at least for the best results for your health. That’s a total BS in my opinion. It’s really good that you have some experience with MLMs and understand what I’m talking about here. It becomes clear why you have to be a strong sales person when involved in MLM business. It’s because there are always alternatives to MLM products for a much lower price and that’s why you have to be strong in order to convince people to buy your stuff.

  2. Jesse says:

    Great article on is multi level marketing a scam. Most of the people always judge every single multi level marketing businessess as a scam but there are some more legit ones out there. Or is there? I remember that at some time my friends were part of a legit MLM corporation but cannot remember the name of it. As you seem to be an expert on this could you share your opinion are there any legit and not scammy multi level marketing companies out there that can make profit and not just rip peoples money? Thanks a lot and hope to hear from you soon!

    • Rufat says:

      I agree Jesse. People tend to call every opportunity a scam while it’s not. In general, MLM model is not good and I think it’s a scam. But not every program that is involved in MLM business is scamming people. I always try to be objective and don’t want call everything a scam because if I do so I will get comments from visitors that will share their positive experience with MLM and I will be in a favourable situation. Anyway, MLM is not a good model when it comes to making money online and most people fail when they join MLM program. And MLM is not for everyone because it requires good sales person experience. Regarding legit MLMs I can name a few of them that I remember. Motor Club of America is not exactly MLM but their they use some MLM strategies. Forever Living is also legit. But there are problems with each of them I wouldn’t join any of them. People that are involved in MLM business are very annoying because they always try to push you their product and I don’t think people like to be pressured

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