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Avoiding MLM Scams

Aug 17, 2007
MLM or Multi Level Marketing offers loads of business opportunities for a business owner, distributor and a consumer. There have been many popular myths on MLM. Some of these myths include the potential to earn mega-dollars for little or no effort on the part of the distributor. This is far from the truth.

MLM as a multi level marketing system works well for business expansion. The chain of distributors gets the business in return for commissions. The consumers can get a better deal by buying at wholesale prices when they become distributors themselves.

The whole concept of MLM is based on the very basics of the term "business". Under the system of MLM, goods and services are distributed via various sublevels in the form of distributors and reach the end-user consumer via this chain of distributors. This system is providing extra income opportunities to thousand of distributors all around the world. Statistics reveal that in the 50 states in America and in over 100 countries world wide, the business model of MLM is successfully functional.

If you are a distributor and looking for a business opportunity using the MLM structure you may want to look into online MLM options.

To work effectively in an online MLM model, you just need to exercise a bit of caution before venturing into a program. This saves you from fraud which is prevalent in this business. Look into companies that have a proven track record. Companies that are debt free and that have been successful in using the MLM structure as their business model for a considerable period are good candidates to consider. Being part of a reputable company ensures your profits and potential loss are kept at minimal risk.

Here is a list of things you can do to ensure your opportunity is not a scam.

1) Contact the Better Business Bureau (www.bbb.org), the State Attorney General's office and the Federal Trade commission (www.ftc.gov or 1-877-FTC-HELP) and at no charge you will be able to check the records of the MLM companies and will get some great tips about how to safely evaluate them. Each country has similar organizations if you live outside the U.S.

2) Check Google and other search engines for "company name + scam" and you will find out quickly if there are complaints.

3) Check out home business message boards and scam.com for bad reviews. Obviously, there are always a couple of people that didn't make money and want to blame the company. Do proper research and you will quickly know which distributor had a legitimate complaint and who was just plain lazy.

4) Go to www.mlmwatchdog.com and see if any problems are posted there.

5) Ask your attorney to review any documents before you sign them.

6) Present the entire program to a trusted friend and see what he or she thinks. Take their advice under consideration. You never know, if the company does turn out to be legit, then that friend is a great first recruit.

7) You should be focusing on selling products or services and not recruiting more distributors. If this is the case, proceed with caution and at your own risk.

8) Be leery of requests to make large purchases up front.

9) All MLM's, just like any type of business, require work. Beware of false promises of easy money making schemes. Beware of guarantees such as "everyone is making money with this automatically."

10) Do the math for yourself. Have a trusted advisor, friend, accountant or attorney check you and make sure that the payout plan is actually feasible.

11) You don't want to sell products or services with false "miracle" claims to them. Actually try to promote the products and services yourself to make sure that you like them and WANT to promote them first and how they work.

Keep in mind that this type of business is not for everyone. If you are a self-directed person who is full of enthusiasm, online MLM may be suitable for you. You will certainly be your own boss in this venture. The personal qualities needed to succeed in this business are similar to that of being an entrepreneur. The challenges of an MLM business are dynamic and a self directed person would thrive in such a business model.

Lastly and certainly not the least, this business allows you not only to work from home but also when traveling. You can easily do business using a laptop and an internet connection. If you are person on the go this could turn out to be a profitable venture as your potential to earn is related to the flexibility that the business model provides.
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