Fraud Tip of the Day - July 5
Multi-Level Marketing Tips - Warning signs and red flags to be on the lookout for
Multi-level marketing is very attractive because it offers wealth and independence for a relatively small up front cost. The product or service is usually new, a revolutionary medical break through, offered no where else, etc. Multi-level marketing is a way to sell goods or services through distributors. These plans usually promise that if you sign up to be a distributor, you will receive commissions - not only on your sales of the plan's goods or services, but also on the sales of the distributors you recruit.It is very easy to become a distributor. You don't even have to have a lot of knowledge about the product or service being sold. Most distributors hear about the product through "Opportunity Meetings", from friends, or through "Business Opportunity Shows". Many people initially join in order to purchase their own supply of the product at a discount.
There is a simple question to ask the promoter when considering a MLM distributorship. Can I make money by just selling the product? The promoter may say that the real money is in sponsoring new distributors. That's OK as long as you can still make money without sponsoring others. If it looks like the only way to make money is to sponsor others, walk away.
Take a close look at the product. Is the product unique? Can people purchase the product or something similar in local stores or at a cheaper price? Can the claims be substantiated? How many real customers are available to you (friends, family, size of community)? Do you believe in the product with a passion? Would you be willing to pay the retail price even if there were no business opportunity involved?
Take a close look at the company in general. Have your accountant or attorney obtain such things as a Dun & Bradstreet report and a credit history. Do a litigation search. Check the local and home city and state Better Business Bureau and the attorney general's office in both the local and home state. Check them out with any Multi-level Marketing or Direct Marketing Organizations.
Take a close look at yourself. Hype and glowing reports aside, are you a salesman? No product sells itself, no matter how great it may be. Is it something that your customers (i.e., friends, family, co-workers which is where you will begin) will want and can they afford it? Are you the first person in your area to be offered the distributorship, or are you well down the line? Are you basing your decision on common sense and research or on hype and glossy brochures?
Multi-Level Marketing Tips:
- Avoid any plan that offers commissions for recruiting additional distributors.
- Beware of plans that ask distributors to spend money on high-priced inventory.
- Be cautious of plans that claim you'll make money through continued growth of your "downline" instead of through sales you make yourself.
- Beware of plans that promise enormous earnings or claim to sell miracle products. Ask the promoter to back up the claims with hard evidence.
- Beware of shills - decoy references that promoters pay to describe fictional success in earning money through the plan.
- Don't pay or sign any contracts in an "opportunity meeting" or any other high-pressure situation. Take your time to think over a decision to join. Talk it over with your spouse, an accountant, or a lawyer, or a knowledgeable friend who isn't involved in the business.
