Flags when Researching an MLM Company
1. No Physical Address or Contact Numbers
The Internet has made it simple for new home based businesses to create
a presence without having any real infrastructure or substance. While
not all mlm businesses require a physical address, those that are offering
goods or services to reps and consumers would be expected to have some
traceable location. The lack of a phone number makes it all but impossible
to pursue any customer service, commission, or other representative issue.
2. Executives with a trail of short lived, closed
companies behind them.
Every story is a success story when you hear them from a rep selling on
a new deal. But how successful can the executives of a new company be
if this is their third or fourth new mlm company in as many years?
3. The Vague Executive Bio
No company names, or other traceable details about their supposedly stellar
careers. Phrases like "Has had fifteen years of success in the Network
Marketing Industry" are meaningless without specific facts to back
it up. They may have been successful in collecting a salary check and
filling the company coffers, but wouldn't you expect them to name the
various network marketing companies they've "built from the ground
up" if all they've left is a trail of happy, successful reps?
4. The Bigger, Better Biz Opp
Repackaging a network marketing business opportunity that has failed elsewhere
does not a success story make. Sometimes a business opportunity that has
failed elsewhere is rewrapped in a new website, a new name, a new comp
plan and sold as a new, viable opportunity. Often, the failures are blamed
on poor management, etc., when perhaps it is the "opportunity"
5. Answers to Due Diligence Questions that do everything
but answer the Question
We continually run into this as we research mlm companies. Simple questions
like "Where is your corporate office" that are answered with
questions like "Why do you want to know?". Or answers about
the business stability that garner responses like "Of course this
is a great mlm opportunity, you can tell just by looking at our palatial
6. Payment Accepted by Check or Money Order Only
Eliminating the ability for reps to pay for product with a credit card
eliminates their ability to dispute charges if the company fails to deliver.
7. Offshore Address
Speaks for itself.
8. No Tangible Product
Without a tangible network marketing or direct sales product, it is difficult
to show there is something being sold to an end-user other than the opportunity
- which can be the defininition of Pyramid Scheme.
9. Minimal or Non-Existent Refund Policy
Any legitimate mlm company will stand behind its product or service. A
lack of a refund policy, or one that expires in a very short period are
often questionable situations. Others may incorporate a non-refundable
setup charge, or non-refundable Rep Kit fee.
10. Stock Hype
"We're a publicly traded company, so we must be legitimate."
New network marketing companies that "go public" before or shortly
after their launch typically do so by doing a reverse merger - acquiring
the public "shell" of a dead company. Or, a "parent"
company "aquires" the new company to add value to a traded stock.
While none of these items might individually flag an
opportunity as "Stay Away", several of them together might be
cause to take a closer look at the opportunity and do further due diligence
- if the answers are available.