Multi-level marketing (MLM), also called direct sales or network marketing, can be an effective way for motivated individuals to earn supplemental income. With so many MLM opportunities on the market however, it’s important to be vigilant and informed before signing on to any type of business venture.
Essentially, MLM salespeople are expected to sell products directly to consumers by referrals and word of mouth marketing. Popular MLM products include makeup, skincare, essential oils, clothing and more. When finding the right MLM opportunity to become a salesperson for, it can be tough to tell the difference between a legitimate business opportunity and a scam. By paying attention to these critical warning signs, you may be able to avoid any “too good to be true” scenarios.
Sign #1: Certain Buzzwords or Phrases Are Used
MLM businesses frequently use the same phrases and buzzwords to paint a unique picture for potential recruits. As you explore a certain MLM opportunity, listen carefully to what company representatives are telling you. For example, if you find anyone trying to “sell” you on leaving your job to work for them - you’ll likely want to say no. While a side job can be great for earning additional income, the employer shouldn’t be convincing you to make a big life change, such as leaving your current job. While not all who repeat certain buzzwords have bad intentions, look out for those who try to entice you with phrases such as “earn enough income to quit your day job.”
Sign #2: They Praise You (Too Much)
Sure, everyone appreciates a compliment here and there, but if you feel as though you are being overly praised by those higher up, consider this a red flag. In order to sell you on leaving your current job, you may find that some (but not all) MLM pitches include excessive praise, in an effort to make you feel empowered, independent and ready to be your own boss. However, if an MLM pitch makes you feel as though you could drop everything and leave your well-established career behind, you'd be wise to think carefully before jumping ship.
Sign #3: The Details Are Unclear
Thinking back on previous work experiences, the job requirements and responsibilities were clear, right? With MLM businesses, however, the important details you need to know are not always so explicit. Instead, you’ll find that the MLM rep may not state what, exactly, the opportunity is. Instead, they will use very vague phrases such as “the project.” They do this to keep you intrigued. If you find that the job details are unclear, reconsider the opportunity. It’s important to only sign up for a job where you know what you are getting into. If you ask questions and don't receive clear, straightforward answers, proceed with caution.
Sign #4: They Try to Buy Your Loyalty
If you feel like you are being persuaded with parties and elaborate gifts, this opportunity may not be as enticing as it sounds. Parties and gifts are some of the top strategies for hooking new recruits. If you attend one of these parties, you’ll likely find a lot of people hyping each other up. This cult-like energy is typically there to motivate each other to make a lot of money, rather than being a reflection of a close-knit business.
In the end, the best advice to steer clear of a MLM scam is to use your best judgement. If you notice one (or all) of the red flags discussed above, make sure you research a bit more before you make a final decision. Talk to a previous or current consultant, read reviews online and always look for the fine print.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.