How can you notice the difference between a legitimate MLM opportunity and one of those network marketing scams or pyramid schemes everybody has warned you about?
How do you know the difference between a firm that is worth your time and one that isn’t? Let’s take a look at a few of the highest rates MLM programs too because these scams.
Network Marketing Scams Defined
MLM compensation plans, a. k. A “network” or “matrix” marketing, are a strategy of selling goods or services thru a network of independent contractor, distributors or direct sellers. Amway is one of the largest, most well-known network marketing firms. They have millions of active distributors worldwide and produce yearly sales in the billions.
Back in 1979 “network marketing” was put on the stand when Amway underwent an FTC investigation in the United States. Based on the 2008 court judgement in the United Kingdom, every single fraudulent claim was dismissed.
In short, the FTC found Amway not guilty of being an illegal pyramid scheme or just another one of those network marketing stings because “distributors aren’t paid to sign up people and have to sell products to get bonus checks, and the company was committed to buying back its distributors ‘ inventory overstock.
How to Spot Network Marketing Scams
In a bonafide network marketing opportunity, commissions are earned only on sales of the company’s products or services. Commissions can be paid on both wholesale and retail sales. But no money could be earned from hiring other people as a distributor. Put simply, you can’t make a cent from sign up fees. If a company pays out on a sign up fee, probabilities are it will fall into that feared network marketing scams class as it then becomes an illegal pyramid or ponzi scheme.
Safeguarding Yourself Against Network Marketing Tricks
Every year there are countless hundreds of new network marketing corporations launched worldwide. Like most small businesses, a lot of them will not survive a complete year in business. Others will drop by the end of year 2 and only a few will still be around by the end of year five.
Protecting yourself against one of these fraudulent network marketing scams might be done by getting behind a business that has a track record and is immune to legal ramifications from their compensation strategy. You’ll be able to checkout online for a list with the leading 25 MLM organizations that qualify:
* They have a legitimate multilevel compensation deal
* They have been in business for over a decade
* Their website has good Google positioning (PR1 +)
* The website has an Alexa ranking
* The business appears in Google trends
By taking part in a business that has established a track record of staying in business you decrease your risks significantly.
Nevertheless, even the criteria listed above has nothing to complete using the probable achievement you’ll have in such a organization. So now you understand the traps, and are much better equipped not to fall in to the dreaded “network marketing scam” category.
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