Identifying MLM Scams

The Multilevel Marketing (MLM) business offers unlimited income potential to anyone who is interested. It has been reported that MLM is a multi-billion dollar industry which offers all types of opportunities to the members.

As such, it is very common for anyone who is looking for more quality time to work at their own pace to enter into an MLM business. If you are not careful, you might just fall into a scam because not every promise is always fulfilled. So before you become a victim and waste your money on every MLM opportunity that comes your way, take some time to learn about those that came about but cheated people off millions.

How to know if it is a scam?

First of all, you must be aware that even the biggest and most renowned companies could be running a scam. An MLM company can be listed in Bursa Malaysia and still try to victimize its members of millions. So you need to be careful and not believe everything you see or hear.

Take note that the government of Malaysia (and almost every other government in the world) does not allow any pyramid schemes. What then does a pyramid scheme entail?

Below are some pointers:

  1. When you are required to ‘invest’ a certain amount of money without obtaining any tangible goods or services.
  2. When you are required to find members without some sort of product or services. Your members are then required to ‘invest’ further. The more they invest, the more they are ‘supposedly’ got back.
  3. When you are required to purchase products uncontrollably and unreasonably through a commitment which you might not be able to finance.

It is very important to note here that pyramid schemes are sometimes camouflaged as MLM businesses by unscrupulous companies. If you feel that the product or service is not up to mark and that the company is merely changing hands (buying from one supplier and selling to you), then there is a case to be concern here.

Ultimately, be wary of what the company wants from you. Obviously, it is about money but if you are not getting what your money’s worth, then there is no reason to invest a single sen into it. In most cases, there will be evangelists who will be trying to talk you into investing and some which could even tell you to get your friends and families involved.

Research Research Research!

Always remember that not everything which is new and ‘revolutionary’ is good. Do your homework before entering into an MLM business. Check out if the business or brand has won awards. Find out about these awards on whether they are legitimate. You can follow these guidelines:

  1. What is the origin of the company? Is it listed in the country of origin?
  2. Who is the founder? Is the person a professional or just any Tom, Dick and Harry?
  3. What is the product sold? Are they manufactured by the company itself and goes through international standards for quality and processing?
  4. How long has the company been around (both in its country of origin and in Malaysia)?

After that, check out the compensation plan. If it is all about getting members, then you need to be careful. If you can actually earn profits from getting new members and selling the products, then it could be a sound investment.

We cannot blame them because there have been too many cases of scams and brands that started out promisingly only to be found as bogus later. If you have the money to invest, you would surely be extra careful because you do not want to lose your hard-earned money to some cheat.

Identifying bogus companies

The general rule of thumb is that NOTHING IS TOO GOOD TO BE TRUE! And this is referring to the profits (returns) and the benefits of the product. See if they tick the following boxes.

  • Legit – Is the company registered with DSAM (Direct Selling Association of Malaysia) and the CCM (Companies Commission of Malaysia)?
  • Membership – Is the company only about recruiting members and does not focus on the products? Do they tell you all about recruiting members when you meet them?
  • Products – Is the company not selling any tangible product? Is the company selling a product which you have not heard before? Is the product abnormal (like placenta) but has thousands of benefits?
  • Transparency – Is the company very secretive when it comes to technology, history and other company information?
  • Easy money – Are you promised easy money without needing to work hard?

Fully utilizing Stemcells Technology as a cheating tool

Any company that promises you big returns without needing to work very much would surely be lying to you. A company with no product and only sells services would surely be doubtful. One such company was recently reported was PythoScience with the product Double Stem Cell.

The company claimed to have the approval from the Drug Control Authority and sold their products through the MLM scheme. Members were seen driving luxury cars and this attracted a lot of new members. Eventually, the Ministry of Health declared that it was all false. The bigger issue really is, they played around with your money and then they are gone. Just like that!

Miracle Mattress?

Make no mistake about it, people make mistakes when it comes to investments all the time, but wouldn’t it be better if you had more control of your money and was not groomed to part with it? Would you pay up to RM10,000 to RM20,000 for a mattress which is claimed to have ‘miracle’ powers?

Enter the Electric Potential Thermotherapy Mattress. They will provide you with demos, videos of how good the mattress is but basically, it is just the PLACEBO effect where it creates some form of illusion that it works for you.

Banking on your Placebo

Make no mistake about it, people make mistakes when it comes to investments all the time, but wouldn’t it be better if you had more control of your money and was not groomed to part with it? Would you pay up to RM10,000 for a mattress which is claimed to have ‘miracle’ powers?

Enter the Electric Potential Thermotherapy Mattress by AMLife. They will provide you with demos, videos of how good the mattress is but basically, it is just the PLACEBO effect where it creates some form of illusion that it works for you.

Cancer treatment products

Recently, a company that went with the name Riway started selling the Purtier Placenta which comes from a type of deer from New Zealand. Many from the company claimed that this product came with some very miraculous benefits including being able to treat Stage 4 cancer. Yet again, the power of belief played a huge part in the ‘success’ of this company.

If it could treat cancer, why aren’t the hospitals using it? In fact, they even claimed that their deer placenta product could help to treat other illnesses including arthritis, diabetes and depression!

Other known bogus products

Those above are just some of the prominent cases of bogus MLM companies who are out to do a hit-and-run with your money. You might come across many others like:

  • Forex Scams – Investing into Forex through a pyramids scheme has been quite popular recently especially among those who are gullible for fast returns. FX United is a prime example that saw many investors lose their money through the MLM scheme.
  • Oxygen water by SITO (Selangor International Trading Organization). They sell oxygenated water and claimed to be part of the state government too.
  • Investment Schemes – One of the riskiest among all as they are all about investing your money into some form of plan without any tangible product. They will promise you high returns but will close once they get enough. Swisscash is a prominent example of this scam.
  • F & B – You are asked to invest into a cafe business. You will not be involved in the operations because they just want your money. This happened with Island Red Cafe and Steven’s Corner.

Money Games MLM Companies

You would have come across a lot of companies offering ‘unlimited income’ through their network marketing models. This is often referred to as MLM (Multi-Level Marketing) companies where they have all types of unique and creative ways of helping you earn an income. Most of these MLM companies will promise you ‘unlimited’ income but you have to be careful not to be cheated into such scams as not all MLM companies are legitimate.

So how do you identify if an MLM company is legitimate. The most important factor that you need to consider with MLM companies would be on their products. A company will be doubtful if they are not selling any tangible products. If they are only asking you to invest money and that they don’t have much to sell, then you must be careful.

No legit products

There are MLM companies which talks a lot about income and such but seldom deliberate on their products. No doubt they have products to sell, but when you attend their talks and gatherings, nothing much is being talked about the product. This means that they do not put any emphasis on their products.

To know if a product is credible, you can always check the background in terms of origins, manufacturing and research. Many unscrupulous MLM companies source for cheap products through local OEM manufacturers and then claim to have a product to sell. They usually have very little idea of what their products can do. When products take a back seat, the company is not interested in selling them at all.

Keyword used by scam companies

Another rule of thumb that you can follow is that scam MLM companies usually use the word ‘Global’ in their company names. This is to create an illusion that the company is worldwide or international. Although not all MLM companies with ‘Global’ in their name are doubtful, if you come across any of them, it would be best to carry out a background check before investing any money with them.

Ultimately, the most ideal thing you should do before investing with MLM companies is to learn more about them before starting. If their products are among the best in the industry and had won awards, you can always verify them.

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