Despite the numerous positive impacts it can make in the lives of the general public, have you ever wondered why the Direct Selling/Multi-Level Marketing (MLM) industry has a bad reputation? It is because of its shady image due to the pyramid scams in the industry.

Direct selling market space has a lot of pyramid selling models with treacherous past.

Common features found in pyramid selling models are these:

1. The promise of high and easy returns on a short period of time
2. No focus on sales of the products or services
3. Emphasis on recruiting more people to the scheme
4. More than 5 levels of bonuses and commissions
5. Overpaid top levels

Before you join a company, take these steps to steer clear of possible scams

1. Look for the tell-tale signs
2. Look at the leverage paid to the top levels. If they are overpaid, understand that the company wouldn’t survive long.
3. Study about the company and search online with words such as scams, fraud, etc. alongside the company’s name.
4. Remember the terms such as “inventory loading” and “headhunting”. When a company is dumping its stocks on the distributors asking them to buy an initial stock on their enrollment, you should smell trouble. When they offer money for bringing in more people to the scheme, stay clear.
5. Question unjust enrichment offers. In the MLM industry, only 5 levels of allowances are functionally justified. The moment a company/individual offers you much more than that, know that it is an unfair practice.
6. Understand the compensation plan. When companies pay three or more levels to the top from the actual level of sale, it means the actual seller gets less money compared to the top levels. This unfair practice can lead to the collapse of the entire scheme.

Direct selling and MLM are for people who are willing to generate jobs and change the lives of others in a better way through their products and services. When businesses get lazy and try to grow on someone else’s hard work, that is when a scam is born.

Very educating