Nine (9) simple questions you need to ask to avoid an MLM pyramid scheme

By January 11, 2018 No Comments

At some point in your life, you must have been invited to join a multi-level network marketing company, (MLM) just like me. It’s impossible to scroll page or two on your social media networks without seeing something like:

“ONLINE BUSINESS OPPORTUNITY!!! (Work from home!) TIRED OF BEING BROKE?? NEED AN EXTRA INCOME?? Learn how you can earn an extra Kshs.20 000-Kshs.50 000 and more weekly. Proper training is offered.  Contact me today and learn more and start earning (urgent!) NB: Interested individuals should be within either Nairobi or Eldoret”.
Does the above  ring a bell?

Joining a multi-level or network marketing (MLM) company is a legitimate way to earn money and become rich. But I’m sure, like me, you know a lot more people who have lost money and failed miserably in this kind of business opportunity. This venture is not without greedy people who are just out there to squeeze your hard-earned money from honest individuals like you.

There are many factors that affect one’s potential for MLM success, and one of them is not choosing the right network marketing company that suits your skills and capabilities. However, before joining a multi-level marketing venture, you should perform due diligence to make sure that you are not getting yourself into trouble.

We have compiled a list of ten questions that  you can ask you recruiter to check the legitimacy of what you are about to get yourself into.

1. What product are you selling

All legitimate businesses sell a product (or service). This means the moment that your MLM sponsor says that there’s no need for you to sell anything, then RUN AWAY!

2. Can I make money without recruiting anyone?

The answer must be yes, because you should be able to make money through commissions paid on the sales of their products. Besides, it’s easier to continuously sell products than to continuously recruit people.

3. Is it possible for me to make more money than you?

New members of an MLM company should have the same income potential as older members because this means the compensation plan is fair. The intent should be to sell a product and not to sell a position.

4. If I have no down lines, is it possible to make as much money as someone who has down lines?

Downlines refers to the members you have recruited or who have joined the program after you did and whose sales or referrals also generate income for you. Again, the answer must be yes. You should be able to earn as much from simply selling products, as someone who is more focused on recruitment. Be sure to have your recruiter do the math in front of you – if they can’t then RUN AWAY!

5. If everyone stops recruiting, can everyone still make money?

The answer should be yes because everyone can just focus on selling products. The strength of an MLM company is business duplication which when removed, should simply transform them into a traditional business model, and not crash down in flames.

6. Does your product have fair market value?

Your recruiter should be able to explain why their product costs that much. Make sure that the price is not unreasonably bloated, whose only purpose is to channel the sales commissions for the uplines, or those who are above you in the network.

7. Why would non-members want to buy your product?

There should be a compelling reason for people to buy their product, especially for those who do not want to become a member. This is a test if product movement and income can be sustained if recruitment stops.

8. Do they have a product return policy?

Pyramid schemes often rely on people buying packages of their useless products only to find out that they are unsellable. Then when the people contact the company, they point to the ‘no returns’ policy in the contract. Ask them what the process if someone wants to return or get a refund for an unopened or unconsumed product purchase. If the response is vague, it might be the best time for you to take off!

9. Is the company sustainable?

Stable businesses depend on a cycle of production, marketing, and sales. Money goes out and comes in. If money only seems to be coming from people inside rather than outside the business, it is not self-sustainable.

Besides asking your recruiter for the company’s legal documents, history, compensation plan, physical offices and all other questions that I’m sure they have well-rehearsed answers to, give them the ten questions above.

Observe if they will be confident in their replies, or fumble with obvious lies. If it’s the latter, how about RUNNING AWAY?