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[Rod Nichols Company: Yoli Blast Cap Technology Contribution Level: 4]

Let's all weigh in on how you recognize a scam versus a solid network marketing business. I'll lead with the key one for me: The company must have a viable product that people would buy even if they weren't involved with the business. Okay who's next?

Rod Nichols
Author, The Twelve Power Secrets for Network Marketing Success
www.RodNichols.com
Founding Distributor with Yoli
www.StartABlastCapBiz.com

[Mark McCullagh Contribution Level: 2]

The company must have a viable product that people would buy even if they weren't involved with the business.

That's key for me too Rod.

Another one: they must have a track record of always paying their distributors on time, every time.

- Mark

[Dave Kotecki Company: Life Force International Contribution Level: 5]

A dead giveaway is that it's touted as great by the federal government.
Take social security for example...

But seriously folks, what is a scam?
Dictionary says it's a fraud.
Please name an MLM company that was investigated and the owners indicted for running a scam.
Anyone? This is a serious question. Have there been many?

I think of "scam" as a keyword used to drive traffic by invoking fear in the reader of the ad.

I recognize scams by the fact that they come in an email, usually from Nigeria. Most of the time they are about some bank account, and for whatever reason, they need your bank info to free up lots of money. Stuff like that.

[barbie Figueroa Company: Team Beachbody Contribution Level: 2]

A dead giveaway is that it's touted as great by the federal government.
Take social security for example -

Dave, that was funny!

I guess I've been pretty lucky not to end up in an MLM Scam, but I've been in companies that have gone belly up. I agree that they have to have a stand-up product or service, and checking out the amount of time that the company has been in business is a good indicator as well. Too many fly by nights in the industry. I cringe at the word - Pre-Launch! I've seen so many of them tumble to the ground before they even really get out the gate.

Barbie

[Rod Nichols Company: Yoli Blast Cap Technology Contribution Level: 4]

Another one is that the company can't pay you to recruit other people. That makes it a pyramid scheme. Now, if you sponsor someone with a product package and earn a commission, that's a different story and that's what you'll find with a solid network marketing business. The key here is that this product must be something of the same value (or greater) than the amount paid and once again it must be a product that people would buy even if they weren't involved in the business.

[Peter Arnold Contribution Level: 3]

Hey Rod:

Good question, as in this grim economy, we're seeing a "flood" of new SCAMS out there right now.

I think the two you mention up front are probably the KEY ones.

Here are some other areas I would be also be concerned about, personally...

-- If there was NO contact information provided (address, phone number, e-mail address, etc)

-- if there was NO background history on the company / owners / management provided

-- if the emphasis was almost entirely on RECRUITING (and therefore, 'self-consumption' of products by Reps, via mthly Autoship) -vs- RETAIL SALES and CUSTOMER acquisition

-- if they were aggressively promoting the MONEY side, with reckless INCOME claims, etc

-- if they were preaching - NO selling - NO recruiting - NO effort (WE will do it all for you)

----------------------------------------------------------------------

The above would at least be RED FLAGS to me, if not indications outright SCAMS.

Excellent thread.

Sincerely / Peter A.
http://www.PeterArnoldOnline.com

Peter Arnold, CLU, CFC / Founder
Business Achievers Academy / Canada

[Chris Tryon Contribution Level: 4]

Red flag #1, no posted phone number that you can call during regular business hours and talk to a real "live person." Also, when you log into the company website and it is "still under construction."

I tried to think of a couple that weren't already mentioned.

[Rod Nichols Company: Yoli Blast Cap Technology Contribution Level: 4]

Another red flag for me is any time I hear people talking about making big money without having to do any work. Who else has a red scam flag?

[Jan Shimano Company: ASEA, LLC Contribution Level: 3]

I received a phone call yesterday from someone who was with a Company that was going to provide me with 75,000 fresh targeted leads for $5,000 and they were going to provide some amazing service for me. I took the information down and the person did his best to get me to commit on the spot but I told him I would look into it and he could call me back in about two weeks time.

As soon as I was off the phone I started to investigate the Company because he had walked me through a little website while I was talking to him. He said the Company had been in business for 12 years.

Well, when I searched them in Google looking for some feedback the only reference I found for them was the actual small website (very unprofessionally done with very little information). I could find absolutely no reference to them on Google, Yahoo or MSN.

I called the office back (yes, they did have a phone #) and asked the girl a question. She said I would have to talk to the person I spoke to earlier and she put him on the phone. When I started to grill him about details and the fact that they had no presence on the web at all, he got very defensive, said he was very busy and got off the phone very quickly.

The truth is that this man sounded very nice on the phone. He wasn't really pushy but he did attempt to get me signed up right away. I wasn't too suspicious about that because I suppose any good salesman is going to go for the sale ASAP. Was he a professional scam artist....I don't know. All I do know is that there is no way I will be doing any business with that Company.

Since I have developed a presence on the Web, I have been receiving calls practically daily from people trying to get me to do business with them. It's getting to be a bit of a pain.

I am reluctant to mention the name of the Company in a Forum such as this but if anyone would like to know the name you can e-mail me at janshimano@gmail.com and I will let you know.

[Richard Bravo Company: Life Force International Contribution Level: 9]

The new ones can be pretty convincing, so I'd say your intuition and experience has to come into play.
If you get a gut check right away, your mind maybe trying to tell you something.
I'd say use common sense, but as we all know it's not very common, which why I think so many are had.

Something I've learned in my short time on this earth is...
If it's too good to be true, it usually is.

On the flip side, there's a plethora of information, good and bad, a lot of it ill conceived, but non the less, I say simply do your homework. Again, being naive and jumping in blindly is probably the #1 factor with most people being takin for a ride by these clowns. They thrive on lazy minds. (for the most part) People looking to get rich quick are pretty easy to take advantage of. The rest are probably true victims of unethical slime balls.

For me over the years most of my close family and friends have kind of made a habit of talking to me first when they hear about something they got in an email or heard on tv or whatever. 99% of the time I've been able to show them what the "red flags" were and once they saw it they were like "oh yeah... ewwww, that doesn't sound right does it?"

So for those in the know like many here in the network my advice would be to make sure and reach out to your circle of influence. Next time aunt Betty forwards you an email about Microsoft paying people for forwarding emails, take the opportunity to "respond to all" and enlighten the group.

(Hint, hint... this actually draws your "warm market" closer to you on a professional level - you can figure out the benefits of that for yourself )