Are you in an MLM Scam?

There are a few tip-offs that you might notice if you're involved in an MLM scam.

1. You aren't marketing a physical (or virtual) product. Every company must be marketing a product. You can't be selling an opportunity to make money, and if that's what you're doing, watch out because you're probably in a scam!

2. You can't find any information on the owners of the company. Perhaps they aren't the real owners or they're using a fake name. It is important to do a little research so you know who you're dealing with!

3. You aren't marketing a product that brings value to customers. This is a problem because (despite the obvious that people won't continue to purchase products from you), if you aren't marketing a product that brings value, the point of the company probably is probably to market an opportunity. If this is the case: see point 1!

4. The MLM Scam promotes that they are legal because the wording in their plan is such that it's legal! (aka cash gifting.) Although technically it may be a legal company...but who in the right mind wants to build a business based on sending strangers "gifts" of money?? Also, if you're not satisfied with your results, there's no getting a refund here because you can't demand your money back (who are you going to sue? You're sending CASH...how are you going to prove that you sent the cash anyway?)

5. If your network marketing company is 5 years or older, it is most likely not an MLM scam (this isn't always true!). The government will normally find out if a company is a scam within five years, but there are always ways to get around it, so be careful! If it's under five years, it's not necessarily a scam...but if it's over five years, it could be too!

If you want to be sure to avoid being part of an MLM scam, there a few key points that you should pay attention to before you get started. The most important point to be aware of is that the company you're thinking about joining should market and sell a product that is physical (or virtual) and actually brings value to people. What you want to be sure of is that your company isn't marketing an opportunity. If you're only marketing an opportunity, this is a big cue that you're probably part of a scam!

Another thing to avoid is network marketing companies that are only legal because of a couple words in the business plan. So, pretty much, what the company is saying, is that it's a scam EXCEPT these couple words make it legal. What I'm referring to here, is a cash gifting program. The only reason that these are legal is because technically you're sending a "cash gift" to your enroller. So, you're sending a gift (as if it were your grandma's birthday) to a stranger. And, if you aren't satisfied with your results you can't get your money back! First of all, you can't prove that you sent them money, and then you can't prove how much you sent!

There are a lot of MLM companies that avoid the government when they're running a "MLM scam." There are many laws governing the rules and regulations of the network marketing industry, but there are some tiny loop holes that, sometimes, a MLM company can get through. Usually, however, the company is exposed by an associate that is taken advantage of. Usually a person will contact the attorney general of the state they live in, and then the AG will take legal action against the company.

The question is: how does the MLM scam get off the ground in the first place? After all, there have to be certifications the company has to receive before being allowed to run a business. Some network marketing company leaders are very good at masking the things in the business plan that create the problems and make them a scam. Another thing that a lot of new MLM businesses do is create a legitimate company. Then, however, after a significant amount of time passes (it could be 6 months or a couple years), the company starts making small changes "to benefit the associates." This could be changes in the compensation plan, changes in marketing rules, etc. After awhile, the problem hits. All the small changes create a MLM business that is no longer in compliance with the law, thus creating a MLM scam.