MLM Fraud
MLM Fraud or "mlm scheme" is what comes to most people's mind when they're presented with an mlm opportunity. Or that may be what your friends say to YOU when you tell them you just got signed up with a company...
If that is the case with you it probably means you were
involved directly or indirectly with an mlm opportunity at one point in your life. ☺ MLM Companies are not schemes, scams, or pyramids; however there are some mlm companies that give a "bad name" to other companies in the industry. If the representative tells you things like "we'll build your business for you," or "You won't have to talk to anyone," you are being lied to by the representative. There is no such thing as your business being built FOR you. There ARE ways to build a business without talking to people, but the most successful mlmer's are the ones that take time to connect with their partners and downline.
There will always be SOME mlm representatives that are money hungry and concentrate more on making money rather than helping a new rep.
Many new reps are lead astray because they lean on every word that their upline says. As soon as the company doesn't deliver on what the upline said they would do they want to label their network marketing company as practicing mlm fraud or call it an mlm scheme.
A PRIME example would be a situation where a friend of mine was involved in an mlm company where his upline promised him a certain percentage of all his teams' earnings once he got to certain level.
AND promised to get him there within a few months.
He figured out that this would get him a grand total of approximately $5500 residual income per month.
Well, after he got to that certain level he soon realized his checks wouldn't increase. What he didn't know is the customer forms fine print stated he had to have 50 personal customers / sales to qualify for that residual.
ALWAYS, ALWAYS read the Policies and Procedures of any mlm company you plan to join!
Was it the company's fault (or is it considered mlm fraud) for putting it in fine print or was it the upline’s fault for not telling the rep.
Many companies have fine print SOMEWHERE in a less conspicuous place, where you have to search to find it.
It is OUR responsibility to read each document we get.
MLM Scheme: "If You Don't Join NOW, You May Not Get In."
Regardless to what anyone may say there is no time limit to join any company.
It is good to have an upline but we have to take responsibility to invest just as much time in learning how our business works as we spend learning how much we'll get paid to sponsor a certain amount of individuals.
It is your DOWNLINE that will make you money!
Before we accuse a network marketing company of
mlm fraud
we have to know what mlm fraud is.
Fraud is defined by the Merriam-Webster's online dictionary as intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right b: an act of deceiving or misrepresenting.
Fraud is defined by West's Encyclopedia of American Law as a deception deliberately practiced in order to secure unfair or unlawful gain.
The mlm industry easily gets a bad reputation NOT because of these companies itself. It mainly has to do with lack of knowledge on the individual's part that are representing these companies.
MLM Fraud or mlm schemes could range from anyone in the company participating in false advertising, identity theft, false billing,
embezzlement
, ponzi schemes or pyramid schemes.
Some of the well-known frauds that have taken place include individuals such as James Paul Lewis, Jr. who was in charge of one of the longest running and most lucrative Ponzi schemes in US history grossing over $320 million in 20 years.
Others include Charles Ponzi who was a fraudulent investor (Ponzi scheme named after him).
Also Kenneth Lay who represented Enron Corporation being one of the highest paid CEO's in US history accused of accounting fraud.
What to Look for in an MLM Opportunity
1. Make sure the business has a legit business (company) contact number.
There are mlm's in existence (especially online) that have no contact number but expect you to join their business simply because THEY make it sound good.
You need to know that there is someone to talk to or speak with when you are experiencing a problem. It is not hard to provide a contact number but there are still those who don't provide one for fear of being contacted.
2. Do your own research as to how long the company has been in business.
This is not to say that if the company is new it is no good. Even the most successful companies were new at one point.
However, the longer an mlm company has been in business usually indicates it has a strong foundation. This is also not to say the mlm will not fail one day.
As the saying goes "Business is Business" and poor business decisions are made sometimes which can cause a business to fail.
However, the longer an mlm company is in business, the chance that it is a an mlm scheme lessens.
MLM Frauds don't last long.
If an mlm is in business for at least 20 years it is a good indication that they have legit business practices.
3. See if the mlm operates as a Pyramid Scheme.
Pyramid Schemes has money exchanging between different levels with NO products being offered. Cash gifting is a prime example of this and is actually illegal.
4. Look at the mlm company to see if it is a Ponzi scheme.
Ponzi Schemes are when money is being paid to earlier investors by new investors.
For example, if 3 people pay money to join a business this month and next month 5 people join, the money from the five people will be distributed evenly (or however the mastermind sees fit) to the 3 people who joined earlier.
There are some mlm frauds in existence and the more knowledgeable you are the better you'll be at noticing them when they come your way.
Some of the illegal practices that are common in mlm fraud include:
Remember you have to KNOW what an mlm scheme or frauds are.
MLM companies have levels you get paid on . . . that why it's called MULTI LEVEL marketing and that's perfectly legal.
However, it's when companies partake in the illegal practices above is a good indication that they're involved in mlm fraud and that's when you need to be cautious.
Related Articles
MLM Prospecting - The Most Important Part of Building a Business
What is a Ponzi Scheme?
Pyramid Scheme - How To Spot One
How to Get Backlinks by the Hundreds with Minimal Effort
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