The popularity of social media platforms like Instagram has led to a boom in multi-level marketing businesses (MLMs). These typically present themselves as ‘home business opportunities’: a chance to make cash from your couch by selling products.
Salespeople are typically recruited by friends and contacts. You may see someone start posting on social media about how they’ve ‘become their own boss’ by signing up to sell products for a company – and they’ll be encouraging others to sign up too. Products are often related to health and wellness or beauty/personal care.
MLMs are not necessarily scams. Some companies operate perfectly legitimately on this model, bringing in self-employed reps to sell a legitimate product. Although it can be hard to make a living this way, it’s certainly a genuine job.
Unfortunately, though, it’s easy for scammers to replicate the same business model. Some MLMs are remarkably similar to pyramid schemes – which means they’re less focussed on actually selling, and more interested in bringing in new recruits. The catch is that those recruits will then be pressured into paying hefty membership fees or investing in large amounts of products. They’re unlikely to make much money themselves, but they’ll be lining the pockets of the company owners.
Not sure if an apparent home business opportunity is right for you? Here are some things to look out for.
Low quality or unbelievable product claims
One of the key differences between genuine self-employed sales opportunities and multi-level scams is the existence of a genuine product. If you have doubts about what you’re being asked to sell, then that’s a big red flag. Companies that appear to be more focussed on recruiting more reps than actually selling a product should be avoided. On the other side of the coin are those companies that claim to offer some kind of miracle beauty product or health cure. When the supposed product benefits are outlandish and unbelievable, it’s probably a scam.
Too much pressure from existing salespeople
Excessive pressure to come on board is never a good sign, because it implies that the person that you’re talking to is getting their income from expanding the company rather than from making sales – again, this is a key indication of a pyramid scheme.
Even worse is the pressure to buy up large amounts of stock ready to sell. Although you should expect some start-up costs, you shouldn’t be expected to pay a fee for privileged membership, or to buy up more stock than you’re comfortable with.
Too good to be true
We all know the saying: if something seems too good to be true, it probably is. That’s definitely the case here. Becoming a self-employed sales rep is hard work, and it will take a lot of time and effort to make a small but steady income. There’s nothing wrong with this, but when companies try to promise you guaranteed income for little effort, there’s something amiss.
And finally, if you’re still unsure about whether an opportunity is genuine or not, search it on Google. Many MLM scams are well-known now, and you can find plenty of reviews – or warnings – from people online simply by searching the company’s name.