Spotting the Network Marketing / MLM Scams

It is no uncertainty that MLM / Network Marketing is a huge and highly potential area to work in. It has to potential to earn the dream income you have always wished for.

Because the potential is so huge, there are many abusers of this system. Many scams are created out of the MLM / Network Marketing Platform. Thus you need to be very careful when choosing a company to join, not to fall prey into one of those scams around.

Here are some guidelines about choosing a Network Marketing / MLM company.

Products

The foundation of all Network Marketing / MLM company is having good products and/or services. Having good products will ensure repeat sales from customers, thus long term sustainable income.

Without clear product and service lines, the company may be operating on a quick money earning scheme. These are scams. In the long run, you will not be able to sustain your income and company may close due to the reduction of new incomers.

Compensation Plans

Different company adopts different compensation plans based on the culture and beliefs of the company. But there is one common factor you need to compare when assessing the health of the company. That is the maximum payout on each sale.

Typically, the Maximum commission paid out to all the different levers should be around 50-60%. Anything above 70% is good for the short term, but the company may be over paying. The company may not be able to sustain for long.

If the maximum commission is anything lower than 30%, you should start thinking where did the rest of the money gone to.

History & Background

It is not the most important factor, but it is good to do a research on the company's background and history study. Find out what was the company doing before this. How much experience does the company have in this field? A good company should be in the business for a healthy period of time. Of course that doesn't mean that a new company is not good.

Accreditations

Check if the company is registered with the relevant Direct Selling Association (DSA) in your country. And what other accreditations the company has to its name. The more accreditations, generally, the safer the company is to do in the long run.