Is an MLM a Scam – Many are and Here is How to Know

Today in this post I am going to answer the question, is an MLM a scam? The answer may surprise some people and it may even make some a bit angry, but I base my opinions on experience and research after the fact. Before I begin I just want to state, people who do a Multi-Level Marketing program are NOT scammers.

With many people looking for ways to make money from home, online marketing always comes to mind. The notion of making it big online at home is very appealing. However the problem with this kind of marketing is the fact that there are so many scam programs waiting for their next victim that know nothing about how to spot them.

Not every program is a scam but…

I am not going to make any statements claiming that all MLMs are scams because they are not. But many are and that is not just my opinion but that of a lot of other people online, several who like myself fell victim of a scam. But now I know what to look for and I will share these with you in just a bit.

I understand and expect that there will be people who will disagree with what I will be revealing. I understand because anyone who invests their money into a money making program and genuinely believes in it, does not want to hear that they were taken advantage of.

Naturally these people will defend their decision and the program they joined. I get that, because I did that myself many years ago. I didn’t want to admit that I made a mistake. I didn’t want to hear the “I told you so” statements from friends and loved ones who told me I was wasting my time and money.

It is NOT your fault!

This is why I will never call the people who are pawns in a scam program, scammers. It is the program and the one or ones who created it that are at fault, but not those who are caught up in it. Basically they got played and are not at fault for not knowing any better.

The people who create these scam programs will always play with the emotions and desires of those looking to make good money from the comfort of their home. These scammers know that even in this day and age there are people that do not know how to spot a scam, especially ones that seem legit.

But that is going to change right now because I am going to reveal the things about MLMs that have proven to be red flags that trigger my suspicious scam radar. Some MLMs are partial scams, meaning they do have some redeeming qualities and then there are some that are full on scams in my opinion.

Yellow means caution!

Okay, let me not delay in telling you how I know when an MLM program is a scam. When I do research into work from home programs to present to my readers here on this website, I first look to see if recruiting people is part of the business model. If it is, a yellow caution traffic light turns on in my head.

So then I continue to do more researching because recruiting people in an MLM or Network Marketing does not make it a scam. But if the program is a scam, recruiting people into the program is always a part of the business plan. That is the first thing I look for.

The next and most revealing part is if there is no actual physical and consumable product being sold. If what is being marketed is a sales program of some sort that basically teaches you how to find other people to sell this same program to, then there is a pretty good chance it is a scam.

Red means stop!

This is when the red stop traffic light turns on in my head. But let us say you still need to be convinced, here are other red flags to look for. If the marketing program is not up front and clear as to what you will be doing to make money or, and here is a major red flag, you make money from those you recruit, then that is a classic pyramid scheme.

According to Investopedia, “A pyramid scheme is an illegal investment scam based on a hierarchical setup. New recruits make up the base of the pyramid and provide the funding, or so-called returns, given to the earlier investors/recruits above them.”

There are many MLM companies that employ this revenue generating business model, but sometimes offer a bogus product to cover their tracks so as not to seem so much like a scam. But if what they offer is an actual tangible product that anyone can easily use every day, then you cannot tag them as a scam.

A pyramid scheme is an illegal investment scam

Is MLM or Network Marketing the best way to earn?

Even if the MLM falls into this non-scam category, it does not mean it is still a desirable business model to get involved with. What I will describe next may upset people who engage in this kind of marketing, but all I ask is for you to use reason when answering my questions.

Do you like hustling people by trying to get them to join your network of buyers or distributors? I don’t know of many people that like being hustled into buying something they know nothing about. I also don’t know many people that feel comfortable recruiting other people to do what they do.

Most people don’t like to be bothered and some just are not good at direct sales, whether face to face, on the phone or on Skype. The fear of rejection, of being turned down can be a demotivating experience. Another thing people are hesitant about is trying to sell a new unknown and most times overpriced product.

Are you selling NoWay products?

Many of you may not recognize the question, “Are you selling NoWay products” as a line used a few times in the comedy movie I’m Gonna Get You Sucka! It was a comical rip on people who take part in the multi-level marketing company of Amway, which happens to be my first experience with an MLM.

Even Hollywood makes fun of the sometimes annoying process of networking and sales. I know for me the whole network and multi-level marketing aspect of growing a business was not only difficult but not very enjoyable. Plus the fact that most times you need to buy the products before you can sell to others.

Back then it sounded logical but now that I know it is not necessary to do all of that to build an easier marketing business, I don’t turn off people with what I have to offer. Matter of fact I never have to network with any of my customers because my website does all the marketing for me, even while I sleep!

Would you buy a more expensive no-name brand?

Other than you having to convince other people to buy whatever it is you are selling, most actual products are way overpriced. I remember when I was with Amway and their laundry detergent, though good, was too expensive for the amount you actually got. I could have bought twice as much Tide for half the price.

People will always buy a known name brand over one that is not known no matter the quality

Another example is a coffee MLM company called GanoLife. The price for their coffee is sky high in comparison to the same amount of Starbucks best home-brew. Which products do you think the average consumer would want to buy? An expensive no-name brand or a brand they have heard of and trust?

Then there are times when someone famous is paid to endorse a product making it seem as though the MLM company or product is legit. Sometimes this tactic works and then sometimes it doesn’t, like the MLM scam that Donald Trump endorsed in 2009 selling vitamins. Hundreds of people lost thousands of dollars in that scam.

This is yet another reason why starting your own business in the multi-level and network marketing space can be a bit risky and a turn off for many people. All forms of a new business are difficult at first, but when the what and how you sell makes the process of making money harder, it is very discouraging.

The high prices do not mean high quality

Why are the prices for products sold more expensive in comparison to name brands of the same type? Is it because they are of better quality? Nope, that is not why. The reason the majority of MLM products are expensive is so the sales of said products can support the compensation plan for its members.

This means that you are forced to offer and sell products or services, to people that need to be convinced that what you are selling they need to have. Like I said at the beginning of this post, you are basically a hustler. In order for you to make money you have to hustle others to buy into your offer. Is that the type of business you really want to do?

Then you have some so called “100% Hands Free” and “Done For You” programs that claim you will not have to do anything because they will drive traffic to your business. DO NOT fall for this Pie-In-The-Sky offer. Terms like this often turn out to be scams. Also avoid those in pre-launch like the GoFounders and ONPASSIVE scam.

Do you want that reputation of always trying to hit up your friends and family to buy your products or buy into a dream? Talk about a great way to lose friends. Really – think about that and seriously ask yourself, can you live with always having to hustle and recruit people to do what you do just so you can get paid? Does that sound like fun?

There is a Fun and Easier way to make money

How would you like to offer products that people have actually heard of and want? Not only is this an easier way to make money, because you do not have to convince people of the quality of the brand, but it is also fun! How is it fun? It is fun because you get to decide what that product is.

Another reason for it being fun is that you do not have to purchase any of the items you end up selling. And the fun and easiness doesn’t stop there! You will have no need to directly interact with any of the people who buy what you are promoting, which also means you will not experience any rejection.

Everything from the convincing to the buying from your customers, all takes place on your website 24 hours a day from people all over the world. There is no need to recruit people or convince them to buy expensive items and services they have never heard of or trust. And this kind of marketing is free!

Get paid by Apple, Best Buy, Amazon and others

Instead of meeting up with people in person, on the phone, or online to pitch to them why they need to buy what you are selling, set up an easy website and let it work for you 24/7. Promote products that are sold online from major retailers like an iPhone or iPad, a Samsung flat screen TV, or a PlayStation 4.

Perhaps you recently took a family vacation to Disney World in Florida and saved a lot of money on a family travel package. Did you know you could promote that too on your website and make money from everyone all over the world? Making money in this way is far more fun and easy than a no-name brand product no one wants.

This kind of marketing is also free to join. Companies like those listed above and all of the thousands of others with an online presence do not want your money to market for them. All you need is a website or blog to promote what THEY sell. You do not do the selling, just market your promotion.

This is a $12,000,000,000.00 per year in sales industry!

Yes, this form of marketing, which is called Affiliate Marketing, is a Twelve Billion Dollar per year industry in sales that does not require you to recruit anyone or sell products and services to people who are not interested in something they know nothing about. Promoting Starbucks coffee will get you a sale quicker than trying to sell someone some GanoLife coffee.

Think of how it would feel to make full-time income without having to approach people and sell them something they have never heard of or recruit them to be a hustler like you. Think of how it would feel to know that you can make money even while you sleep. Real online affiliate marketing can give you that.

Another nice thing about affiliate marketing other than the ease of the work and it’s always free sign up, is the ability to choose how many different kinds of affiliate programs you can belong to and make money with. When you have your own website, the sky is the limit on what you can earn per month. The graph below shows just how popular affiliate marketing is compared to MLM.

As can be seen in this graph, Affiliate Marketing is far more popular than Multi-Level Marketing

Beware of Greeks bearing gifts

A lot of the MLM and some network marketing scam companies, have hijacked the name “affiliate marketing” and applied it to their less than honest approach to marketing. Two programs I have done reviews on My Top Tier Business, also known as MTTB & MOBE, and DS Domination, have adopted their version.

But it is easy for those of us who do real affiliate marketing to see that their versions are totally bogus. With them, they charge members to be an affiliate. But with real affiliate marketing membership is always 100 PERCENT FREE! If you ever see an affiliate program charging a fee to join, do not join them!

Even the affiliate marketing training program Wealthy Affiliate, that I promote on this website, will pay up to $11.25 per referral to any Free Starter Member that signs up for their free program. Don’t you think this is a much better way of making money online from home than by way of an MLM?

Why don’t you give affiliate marketing a try? Not only is it free to join as many affiliate programs as you want, but the online training to get you started is also free at Wealthy Affiliate University. This free opportunity could be the opportunity of a lifetime. All you have to do is try it out and give it your best shot. If you have any questions please leave them below.