10 Signs a Business is an MLM Scheme

If you are looking for a quick way to make a profit, you will definitely find the offers of multi-level marketing or MLM companies appealing. These companies use a pyramid selling scheme that involves selling products or services and earning through commissions by getting others to join the scheme.

While there are indeed stories of people succeeding in the scheme, a substantial amount of stories argue these companies are schemes that prey upon the innocent. If someone reaches out to you offering a business that promises quick money through direct sales, look for the following 10 signs to see if they are an MLM scheme:

1. “Anyone can join”

For MLM companies, they want people to think that their offer is for everyone. They would show that it is “effective” for a specific person and show that there is little investment to get in. However, if this was legitimate, how would the company accommodate everyone?

2. The Offer is Made Out of the Blue

Some MLM schemes appear out of the blue, and there will always be “someone” from your social circle who will ask about your financial status and would like to help you.

3. Fake or Low-quality Products and Services

A major sign that a business is an MLM scheme is when they don’t provide you with any product or service; if they do, it’s low quality. This is because they want to get more investors or resellers to get money to fund their operations rather than actually selling a product.

4. Make Unfounded or Outrageous Claims

MLM schemes often make either outrageous or unfounded claims to entice people to join their company to avail of these products or services. If someone gets into the scheme, the companies will ensure they will not be held liable for the sale of these ineffective products and services and make the distributor responsible for everything.

5. Use High-pressure Sales Tactics

MLM companies are notorious for using high-pressure sales tactics to prevent people from asking too many questions about the company and its products. It is a red flag if someone approaches you and prevents you from learning more about the company.

6. Pressures You to Buy Products

No matter what kind of MLM business approaches you, they will ask you to buy their products as part of their “fast track” program and keep a stock inventory. However, if you want to “earn”, you will be told that you can do so if you buy more products from them, and this can lead to bankruptcy for some even before they earn from selling these products.

7. Does Not Have a Clear Channel for Communication

Before working with any company, you should be able to ask them hard questions and get answers whenever you have doubts. MLM schemes prevent you from getting straight answers and even glossing over your issues. Some of them will not even inform you about company problems because they want you to keep on investing and recruiting.

8. Training and Resources come with High Fees

Some MLM companies create their training programs and resources and sell them to their investors, and MLM companies even charge you for invitations to their events and gatherings. A  legitimate company or scheme will not ask you for any fees for these training programs and resources.

9. Utilises Questionable Advertising

To get more people lured into the scheme, MLM representatives would promote their offers as a “job” and other similar descriptions. It is important to note that MLM schemes are not jobs as they are more of a business.

10. Gives Off an Unsettling Feeling

If someone introduces an MLM scheme to you, you may feel a sense of uneasiness right away. When this occurs, it is best to listen to your intuition and look at the situation again.

When reviewing any offer from a company, it is important to note that other schemes may also raise the same flags as an MLM scheme. It may also indicate that this home business setup isn’t really for you. Before it is too late, research to see if these companies are legit and ask yourself if this is the setup for you.

Like what you read above? Follow me now as I uncover more about MLM and why you shouldn’t join them. While you are waiting, here are some interesting articles:
Bad Habits You need to Change if You want to become a successful freelancer
Bullying at Work
SME vs MNC: What’s the difference? (Part 1)

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11 Comments Add yours

  1. aparna12 says:

    Very interesting article on MLM companies. It’s important for everyone not to get swindled by get rich quick scheme. Excellent job, Kally. ♥️♥️♥️😊😊😊. Keep up the good work.

    Liked by 2 people

  2. Gregoryno6 says:

    A former employer got hooked into an MLM, or as we used to call them, a pyramid scheme. Why did they change the name? Obviously it gave away too much! The only people at the top of the pyramid are the people running the scheme. A very small number will get close enough to touch their boots, perhaps, but the majority will struggle for little or no return.
    But I digress. The boss got caught up and he started pushing it at the customers. Funny, a lot of customers disappeared for a while… but the staff were not immune either. I was the only one who said count me out. The boss used to snigger when he was giving the spiel to the customers – this is Greg, he’s turned down the chance to be a millionaire!
    And then the scheme was declared illegal. The boss had to find something else to blather about endlessly – and don’t worry, he did.
    MSM, pyramid scheme – call it what you like. Best avoided under any name.

    Liked by 1 person

  3. MLM = ⚠️

    RUN 🏃‍♀️ 🏃‍♂️ 🏃‍♀️ 🏃‍♂️ 🏃‍♀️ 🏃‍♂️

    Liked by 2 people

    1. Kally says:

      As fast and as far as you can!

      Liked by 1 person

  4. I totally agree with your criticism, Kally! In reality only the pharao will win, und become invisble before you can force refunds. 😉 Thanks for disussing this very interesting topic, and have a good week! xx Michael


  5. Great article. To add to your points: MLMs tend to have FREE training for their teams. The costs come from paying hundreds to thousands so you can join your team members for week long trainings in another city, or from buying products you don’t need to fulfil the monthly quota.

    A lot of their success stories are from people who have a career related to their products (so that person already has a customer base), or people who know the ins and outs of MLM. This would be a team leader who finds an MLM with a great compensation plan so he/she joins the MLM and brings their team. This person becomes the story about how someone joined an MLM company and built a huge team rapidly within a few months.

    Also, with MLMs, regardless of whether their products are good or poor quality, the company has lots of proof about how their product will solve your issues and they will not mention that if there is another product out there that is better for your needs.

    Liked by 2 people

    1. Kally says:

      Thank you so much and I hope you are having a lovely restful weekend.


  6. dezbee2008 says:

    Great post. It’s really tough to look for legit job opportunities with MLM reps at bay. From what I have gathered, they blend into LinkedIn, Glassdoor, and other job recruiting sites posing as hiring directors to recruit desperate job seekers into joining their downlines, so that’s another thing (besides the usual scams) that people have to look out for.

    Liked by 1 person

    1. Kally says:

      Oh! Thank you for that alert! Scary indeed when you know that what they represent is not an actual job.

      Liked by 1 person

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