There are so many Multilevel Marketing, or MLM, opportunities available that it has become increasingly difficult to determine which are legitimate and which are borderline illegal scams. The first thing to understand that a pyramid scheme is on that counts on recruiting others into the pyramid as the sole source of income without offering any real product or service. These types of schemes have left countless people taken for millions of dollars and are so sketchy that law enforcement has made them illegal to operate.



As a counter to law enforcement's involvement, numerous variations of MLM plans have been created to had the fact that they are, indeed, pyramid schemes. If you are careful, there are signs that will tell you if a multilevel marketing opportunity is legitimate and can really (and legally) make you money by selling real products. There are five main questions to ask when considering a MLM business opportunity to tell if it is legit:

1. Is there a real product being offered at a reasonable price?

2. Is there enough information available for you to make an informed decision?

3. Is there training provided for the product?

4. Are resources provided to help you make product sales?

5. Is recruiting people below you optional and not a requirement?

You will commonly see an MLM system that offers product sales, but these products are just to create a facade of being a legitimate MLM. When the company requires that the distributors buy products to be eligible for commissions, then it is likely that they are borderline legitimate. If they require recruitment of downline members before being eligible for sales commissions, then it definitely is not legitimate.

Any information or literature promoting the MLM opportunity needs to tell enough about the product, the sales and commission potential, and a sells approach to allow anyone to make an informed decision. Typically, the pitch focuses on how much the distributor can make. Consider it a big red flag if there is a picture of an alleged sales person standing in front of a Malibu mansion with a Ferrari. Chances are the car was rented just long enough to drive to a fancy neighborhood to take the picture.

The product should always be the main focus of the information, as well as marketability, competition, and pricing. Look at the product and consider if you would buy it at the price it is offered and think of how many you might be able to sell.

The MLM organization should offer support and resources to make selling their products as easy as possible. Many people are willing to pay more for quality products and if a company is offering top-notch merchandise at a competitive price, it may be promising to join.

Recruiting is common in the multilevel marketing business, but it should not be mandatory. If a company demands recruits before they will pay commissions on your sales, it is not worth joining. Also, if it is stated that the commission on the first or second sales got to the person who recruited you, stay away. Commissions you earn should belong to you, not the next person up the line.