From essential oils and vitamins to skin creams and leggings, MLMs (Multi-Level Marketing schemes) often sell products we use and enjoy in our everyday lives. The difference is, these products tend to be overpriced and kitted out with claims that far exceed their capabilities. On top of this, some of the worst MLMs only offer products as a cover to avoid classification as an illegal pyramid scheme.
To protect yourself and your loved ones from wasting time and money on MLM scams, keep an eye out for the following red flags:
1. Product claims that seem too good to be true
By now, you’ve probably used enough “wonder products” to know that the promises made in ads and on packaging rarely stack up in real life. However, some MLMs take wild claims to a whole new level. This is particularly a problem with MLMs in the health and wellness niche. If people are claiming they cured everything from diabetes to dermatitis with the products, be wary.
It’s also important to note that statements like “FDA recognized” can mean nothing more than that they’ve submitted paperwork to the FDA. Even FDA approval doesn’t necessarily mean much as the product or device may not be approved for everything the company is claiming.
2. Recruitment is prioritized over product sales
If you’re told that product sales are all well and good, but developing a large downline is what will really start bringing in the money for you, this is one of the biggest red flags that you’re looking at an MLM scam. This is the classic pyramid scheme model with products tacked on as a way to create a loophole in the laws against this business model.
3. You hear a lot of buzzwords and mantras
In MLMs, buzzwords and mantras are, on the surface, used to hype people up and encourage them to “be their best.” However, these easy catchphrases end up being used as thought-terminating clichés. These are employed by gurus of all kinds, from cult leaders to entrepreneurial scam artists. They are neat little phrases, usually with a positive spin, that can be used to shut down anyone questioning the business, the product, its sales tactics, or its leaders. In short, they are coercion disguised as positivity.
4. It’s expensive
Whether it’s inventory, training, or both that you’re expected to invest in, most MLM scams tend to insist on pretty big investments. Of course, this might come after you’ve simply purchased a few products to use yourself or after you’ve been invited to a few free events. However, when the time comes to take the step into “business ownership” (aka being an unpaid salesperson who definitely does not own their own business – despite what they tell you at the meetings), there’s a big price to pay.
You may also find that you must restock a minimum amount each month, regardless of whether you’re making sales. This has left many people in desperate financial situations. Want to check for yourself? Search on Amazon or eBay to see whether other unfortunate “entrepreneurs” are trying to offload their accumulating stocks at less than the purchase price.
5. The business model has your head spinning
If you’ve been shown countless diagrams and documents that are supposed to make the business model and earning potential clear, but you’re feeling like you must be stupid because it makes no sense to you, this is a massive red flag. You’re not stupid. The business model is convoluted for a reason. If it was simple, you’d be able to see that your chances of earning the equivalent of a minimum wage from this “opportunity” are insanely slim.
These aren’t the only MLM scam red flags, but they are the most worrying. If you’ve noticed any of the above, it’s worth doing further research or avoiding the “opportunity” altogether.