How to Avoid MLM Scams

[David Sandusky]

Rob McNealy with Startup Story Radio has a particularly strong dislike for Multi-level marketing companies coming from his position as an advocate for entrepreneurs and independent living. He finally did a show dedicated to the topic.

His guest on 12/29/2007 was Dr. Jon Taylor with the Consumer Awareness Institute. (podcast on Startup Story Radio)
Dr. Taylor did significant research on MLM business and post the information on his website www.MLM-TheTruth.com

Most fascinating to me was his data for the vulnerable being recruited, religious groups and MLM demographics similarities and why law enforcement is not involved.

I like this topic and, like Rob, want to hear your story. I also want people to do what ever they can to be successful in an area of passion. MLM pitchers don't have that passion accept for the dream - I think it is fake motivation.

Why do I care? I am hit up to get involved in MLM distribution channels way too often. Whether I know of the company or not, I can tell it is a MLM because they are hiding something? They are pitching what is sexy to them -the car/lifestyle/running own business. Not the products. The MLM creators are genius (I am not impressed by the way) -- they saturate markets one person at a time and get people to pay them for the opportunity to sell to safe targets (friends and family). If the typical MLMer trying to make a living put the same effort towards thier own business, they would see the difference.

It is the only sales pitch that consistently does not seem ethical - regardless of the business products or services. So do your due diligence Dr. Taylors 5 Red Flags will help with DD) and determine if the sales distribution channel is right for you and your goals. Ask yourself if you are selling products you are proud of or recruiting? Either way, there are better models for you to make more money and not have to hide what you do.

Understanding various sales commission structures designed to motivate people to produce, I don't see the logic in a system that promotes passive income in a typical MLM structure. Then it occurred to me, a MLM participant is not a sales person or business owner. Than it made sense to me.

A number of my family and their friends are involved with MLMs. For them it is not about the $; it is about the gathering and sharing products. That is not a bad way to socialize and stay active.

[David Sandusky]

Originally Posted by PartC

A number of my family and their friends are involved with MLMs. For them it is not about the $; it is about the gathering and sharing products. That is not a bad way to socialize and stay active.

I think this is the target audience for many MLMs, PartC. Thanks for the comment. The companies get sales through the small family room gatherings.