MLM Frauds - How to Avoid Them

Abraham Lincoln said "You can fool all of the people some of the time, and some of the people all of the time. But you can't fool all of the people all of the time." I sometimes wonder whether it was prophetically written for all those scam filled home-businesses, and Multi-level Marketing Companies mushrooming all over the place.

While network marketing is one of the best models of free enterprise, scamsters have created a bad name for this system of enterprise by exploiting the loopholes in the laws in every country in the world to rob people legally in the name of Network Marketing or MLM's.

Here are a few tips on what to look for and avoid in selecting your MLM opportunity.

Avoid binary and forced matrix schemes as they are pyramids which will only benefit the persons at the top. A good MLM plan should allow you to surpass your sponsor or seniors in the hierarchy as well as in incomes if you work harder and produce more results.

Look for good quality products when you chose an MLM. All business and commerce is based on exchange of fair value by way of product or services for money. If there are no products or only a token product sold as the kit it cannot be legitimate.

Following from the above any company focused on recruitment and paying for recruitment directly or indirectly is not legitimate business. It is only money circulation.

If the cost of entry is high and the start up kit is loaded with products, it is a clear warning signal. They may be aiming for one time sale at the time of recruitment itself. The entry cost should be very low with only the business manuals and a few samples.

Check what the annual renewal fees are. There should ideally be no renewal fees and if there are it should be negligible.

If the stress on the business meetings is on income testimonials, you should ask for percentage of people making such incomes. Good companies do not focus on income testimonials as the ability to earn incomes vary from person to person.

Multi Level Incomes are a reward for your hard work in promoting and creating sales volumes through personal and group business of your team. So look for companies focused on direct sales of high quality products. Beware of companies focused on recruitment.

Knowledge is the key not to be defrauded by scamsters and illegal pyramids. So check out these resources for learning more if you want to start a home business through the network marketing route.

www.wfdsa.org

www.mlmwatchdog.com

www.bbb.org/alers/scams.asp

The truth is there are no over night millions to be made in any legitimate home based business. It needs dedicated work for a year before you can see those mega bucks. In the first year unless you are extraordinary you can make money only in hundreds not millions.

If you are very consistent with your MLM or Network Marketing opportunity for a couple of years, the momentum picks up and you may see big earnings.

Then you can relax and enjoy your promised dream life of leisure and riches. Till then you have to work and work pretty hard for a couple of hours every day at an opportunity that is legitimate, a company which is in business for at least 5 years plus in the business and with unique, high quality products.

R.G. Srinivasan is a Certified Trainer, Writer and Author with more than two decades of managerial experience. He also writes a regular blog on home-business resources which you may check out at http://www.home-businessresources.blogspot.com for online marketing tips, resources, opportunities and online promotional strategies