Spotting the Network Marketing / MLM Scam

Written by MLMAbsolute on December 25th, 2008

The potential of Network Marketing and MLM is huge. Many people have made it big with Network Marketing / MLM both online and offline. This industry is definately capable of generating high commissions and income for you.

Due to this, there are many MLM and Network Marketing Scams around, online and offline. Thus it is very important that you choose the company very carefully.

How to choose a Network Marketing / MLM company

Products

Look at the company’s products. As a rule, an excellent product is the basis of your MLM business. The product will ensure you have a stable and long term income because it will appeal to your customers and they will have repeat purchase.

Companies with no clear product are usually running on a money-making scheme and appear like a scam. In the long run, you won’t be able to sustain your income and the company may wind down due to the reduction of incomers.

Compensation Plans

Different company adopt different compensation plans based on the culture and beliefs of the company. But there is one common factor you need to compare when assessing the health of the company. That is the maximum payout on each sale.

In usual cases, the Maximum payout should range from 30%-60% per sale. If the maximum payout is 70%, that means for every $100 product sold, $70 will be given out as commissions. If the maximum payout is more than 75%, will be too much. It may be good for distributors in the short term, but in the long run, it may not be sustainable.

If the maximum commission is anything lower than 30%, you should start thinkin where did the rest of the money gone to.

Background Study

You probably want to check out the history of the company, and background before you join. A reputable company should have a good length of history in operation in this industry. And what was the company doing before this. It may not be the main consideration factor, but it is good to know.

Accreditations

Check if the company is registered with the relevant Direct Selling Association (DSA) in your country. And what other accreditations the company has to its name. The more accreditations, generally, the safer the company is to do in the long run.

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