Is Network Marketing Just Another Scam?

is mlm a scamI’ve been in and out of network marketing businesses over the past decade or so, and I get asked this question a lot:

“Is network marketing a scam?”

While I don’t believe it’s a scam (which I’ll explain in a second), I’m personally  not a big fan of it for my own income generation. I truly believe it has to be something that you enjoy doing if you’re going to succeed (as with anything). But it’s far from being a scam. It may be a little saturated, but I can safely say it is a legitimate business opportunity in most cases. It really varies depending on what company you’re working with. In general, you want to make sure the network marketing business you choose to join meets several criteria:

#1: The company has legitimate products and/or services for sale. If you join an MLM where the only thing you get paid for is sponsoring other people, then that’s a big red flag. Legitimate businesses have real products and services to market and sell. Without products in rotation, you’re probably involved in what’s called a “pyramid scheme.” (More on that later.)

#2: The company has a well-thought-out compensation plan. There are various types of compensation plans. The main ones are Binary, Forced Matrix, Uni-Level and Breakaway. Some comp plans even offer a combination of sorts. You’ll need to research and figure out which plan will work best for you and be most lucrative in terms of building your biz. In any case, make sure you thoroughly understand how it works and how you can expect to get paid before joining and committing to build the business. (Unless you simply plan to be a product user.)

#3: The company has been around for a while and has a good reputation. The last thing you want is to experience massive success in a company within its first 2 years and then it goes out of business. I’ve known people who have worked as part of the corporate staff for MLMs that simply disappeared within the first year or two. I think the statistic is something like 90-95% of network marketing companies fail in their first year…

While there are perks to joining a company that’s brand new and unsaturated, there are obvious advantages to joining one that has been around for a while and has a great reputation among current and past associates. Realize also that some associates will bash a company simply because they did not succeed at building the business or suddenly decided that they didn’t like the products. Read every review online carefully and decide what seems to you to be most credible before making an informed decision.

Is network marketing a pyramid scheme?

As discussed above, some MLM companies may, in fact, be pyramid schemes if they don’t sell legitimate products or services. However, network marketing itself is not a pyramid scheme, generally speaking.

Think about it this way: if you work for a company in Corporate America, who typically makes the most money and has the most prominent position? The CEO, right? And who typically makes less than the CEO? The people who report to him. And who typically makes less than the CEO’s direct reports? The people who report to them. It goes on…

The people on the bottom tier of any company usually make less money than the people on top. If your definition of a pyramid scheme is a structure in which the people on the bottom make less money than the people on top, then Corporate America is, by definition, a pyramid scheme. In fact, the opposite is true in network marketing. Everyone has unlimited income potential, and in many companies, the people underneath you can actually surpass your income level if they work the business harder than you do.

As with any business, network marketing works if you work it! Personally, I did not enjoy MLM and decided not to work it, which is why it did not work for me. I have full confidence that if I enjoyed it and decided to act on that enjoyment, I could have been very successful in network marketing.

My overall impression is that no, network marketing is not a scam. If you have more questions about this subject and would like to know more about the best network marketing opportunities out there, get in touch!

Leave a Reply

Your email address will not be published. Required fields are marked *