Are All MLM Companies Scams?

  • Author
    Michael Perry
  • Published
    September 2, 2022
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Are All MLM Companies Scams?

In this article, we will answer some of the most common questions asked by those who are considering signing up for a multi-level marketing company. If you’re worried that you might be misled into buying something that doesn’t provide value, then you need to know what makes an MLM business scam. These businesses often promise big results and high earnings, but in reality, they don’t always deliver on their promises.

Let’s explore what MLM is.

What Is MLM?

MLM (also referred to as multi-level marketing or network marketing) is the practice of selling products or services through personal relationships. It usually involves recruiting salespeople who have friends or acquaintances in their marketplace. The salespeople become independent contractors.

While there are many good network marketing companies out there, some of them are more reputable than others. I can’t say that all MLM companies are completely honest and ethical. If you’re thinking about joining any MLM company, you should be aware that they all try to get you to join by telling you how great it is. They will talk about the money they make, how easy it is to make, how wonderful it is to sell, or that the products sell themselves.

As I mentioned earlier, not all MLM companies are scams. Many of them are legitimate businesses that can provide you with a very good income. However, when you join one of these companies, you have to remember to do your own research. 

What Is a Pyramid Scheme?

It’s true that there are many kinds of pyramid schemes. However, most of them share a few things in common. For example, they all promise huge returns to their participants. And none of them actually deliver on this promise.

You might be wondering how you could get involved in a scheme and make money legally.

Some people think that MLMs are all illegal pyramid schemes. After all, there are some similarities besides the geometric structure.

All you need to do is to join a company. Then, you’ll have to convince other people to sign up and make an investment. The big promise is to make a lot of money. Then the main ones that make money are the people at the top.

It sounds similar right?

In the United States, one of the biggest differences is that legitimate MLM companies sell valuable products to people outside the company. These are real customers that aren’t sponsored or part of the distribution system.

High-pressure MLM Sales Tactics

Unfortunately, when it comes to money, people tend to do silly things. Sometimes it’s because of debt or the need to prove themselves in front of their team members. 

Unfortunately, high-pressure tactics make the sales rep look desperate, and it gives off a bad vibe.

In order to overcome this, distributors need to make a mental mind shift. 

If you’re a rep that has considered using hardcore sales tactics, then these tips are for you:

  1. You cannot be successful in any MLM Company if you don’t invest in yourself.

  2. MLM is a business, not a get rich quick scheme.

  3. Don’t make it seem like your friends or family must join your MLM Company.

  4. Treat your prospects with respect and realize that they do not have to be part of your team or your customer.

  5. If you feel like you or your upline are pressuring others, realize that your company is your business. It’s up to you to choose who you want to work with.

Hard to Believe MLM Product Claims

As with every MLM, most of the products sold through the MLM company don’t come close to the hype. 

Here are some things to look at:

  1. A zero risk. There is a chance of loss every time you make a purchase. Even with a money-back guarantee, there’s a chance of losing one of your most valuable assets – your time. 

  2. A guaranteed income. That is impossible to guarantee. There is no such thing as guaranteed income.

  3. A 100% success rate. There are no guarantees in life. If there was a guaranteed 100% success rate, the company would be broadcast on nationwide news outlets.

Overpriced MLM Products

There are many companies out there offering products at extremely inflated prices. But, not all of them are scam companies. In fact, some of them are legitimate companies that are providing you with a quality product at a very reasonable price. 

Why do MLM companies overprice their products even though they rarely spend money on traditional advertisements?

It’s because it creates a greater margin to spread across the tiers.

That’s one of the big reasons. It’s rare that the reason is that the product is higher in quality or more expensive to produce than competitive products. 

However, not all companies overprice their products. Do your research. Look at competing products in the marketplace and compare apples to apples.

Making Money From Recruiting People into an MLM Company

So is it illegal to make money from recruiting people into a company?

The answer is no.

It is not illegal to make money by recruiting people into an MLM company as long as you have a legitimate product and the business follows the statutes within the locations where business is conducted.

However, network marketing should not be just about recruiting. In order to build an MLM business, you must:

  • Promote other people’s products

  • Sell other people’s products

  • Train your team

  • and educate prospective customers to understand how you can help solve their problems


In conclusion, I have been asked several times whether it’s possible to earn money by recruiting people into a multi-level marketing company. The answer is yes! However, this income potential depends on the amount of effort that you put in. Making money in MLM is not a get rich scheme. If anybody tells you that you’re guaranteed success or money, move on!

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