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MLM Scams: Stay Clear, or You Pay Dear

By Charles Hopkins Published 05/7/2006 | Home Based Business

Many people these days are staying away from multi-level marketing just because of the fact that they have lost all their trust. They dont know which company is genuine and wouldnt rob them of their money, and which are the fakes waiting to cheat them of their funds.

Let us get one thing clear straightaway. Not all MLM companies are frauds. There are those genuine companies which really care about you making the profit, as any of your profits would translate into their profits as well. But there are also the ones which are on the look out for easy money. They are there to dupe you, make a lot of money in a very short span, and then completely disappear.

So what we get from this, is, you shouldnt be giving up on the idea of starting an MLM business, if you have planned on it. But before you start do a thorough research of the market and stay away from the frauds. This way you will not be duped and instead would be able to generate a steady source of income.

Now, you would want to know what can be the fraudulent practices that you can come across in an MLM business. Here is basic outline of the different ways in which these companies work.

The most common way of duping the public is to ask for investments from them. A company would ask you to pay a certain sum of money in return of which they will promise to handle every aspect of your business. They would claim that once you have paid for their service all you would need to do is rest and wait for your returns they will take care of your business, from maintaining your website to tracking your prospects. At the end of the day you end up selling nothing. So you are paid nothing.

Another way of cheating practiced by these companies is on the lines of the Ponzi scheme. The basic structure of the business is the same as the previous one. But they do paint a picture of credibility in the fact that they do pay some of their investors. What they actually do is to take money from the new investor and pay their old investor. Once they start paying a few investors, more people consider it trustworthy and the number of investors increase. Once these companies think that they have accumulated enough wealth, they just shut their business and vanish in no time.

There is this third kind of way to dupe the investors where companies require you to invest a considerable amount of money on buying the products. More often than not you will never be able to sell them, and all your money is completely wasted.

There are a few basic things you should follow to guard against being cheated.

The first and foremost thing you should do is to thoroughly research any company before investing with them. You should have no doubts lingering once you have made the investment. Try to be as confident about the company as possible.

Stay away from companies making claims that sound too good to be true. Chances are your hunch is right. All the promise would come to naught.

These were a few pointers. Hope this will provide you with the basic hints you need before investing on an MLM company.