How to Spot an MLM Scam

So that you can avoid losing money in an MLM scam, or worse, having to fight charges or going to jail for participating in one, you need to know what to look for in order to spot one. Don’t build a business first and then find out right from wrong.

Don’t become “Bubba Bait”!

The Attorney General would ask these two questions:

1) Would a logical, thinking person pay this much money for a product if there was not a business opportunity involved?

2) Does the income stop when the recruiting stops?

If the answer to the first question is “No” and/or the answer to the second question is “Yes”, then this is a SCAM.

To avoid becoming Bubba Bait, you should also avoid:

• Cash Gifting Programs – It’s NOT  a gift if you solicit it, unless you are a registered charity and you report donations.
• Any program where you receive hundreds or thousands of dollars when someone joins, and your recruits receive nothing of intrinsic value they can hold in their hands (Information is NOT a product).
• Any program paying you commissions on a monthly website fee (commissions on tools are illegal).

Further, regardless of how the compensation plan is designed, regulators consider what the distributor spends his or her time doing.

If the bulk of that time is in activities which involve recruiting, rather than on product or service sales, then it can be determined to be a pyramid.

A strong retail base (sales that are not from distributor purchases) is a good indicator of a solid company.

So the question is this:

Do you want to spend your time building a business which has some chance of being closed down due to regulatory findings? Or would you rather find a company that has the integrity and compensation plan that can ensure that you only have to build once before you attain the holy grail of MLM (Passive Residual Income)?

To learn how to weed out the best of the legitimate MLM oppoortunities, read How to Evaluate a Network Marketing Opportunity.