Multi-Level Marketing (MLM) today would be called a new business model. And we're talking about quite a new business model. Most people didn't encounter it until the 1990s, although it was around in the '80s and even in the '70s. But it didn't really grow to this ubiquitous, everywhere phenomenon in America. You can't find a family today that hasn't been solicited to join one of these. But essentially, it offers you two opportunities to make money. One, it's a sales company. And that's its core business allegedly, that you have a large number of consumer sales people. And they sell the product to friends, neighbors and many others and now, many others online.
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The estimates in Table 1 below are based on our careVegasful analysis of reports published by the MLM companies themselves. These extraordinary loss rates were derived by removing typical deceptions from the reporting of these recruitment-driven MLMs1. Before forming your own conclusions, you are urged to perform your own research and calculations based on actual company data, which all MLM companies should provide for prospects.
Almost any product or service could be sold through multilevel marketing, including health, beauty, and fitness products that aren't available on store shelves. Apply a healthy dose of skepticism before buying or selling products advertised as having "miracle" ingredients or guaranteed results. Many of these "quick cures" are unproven, fraudulently marketed, and useless. In fact, they could be dangerous. You may want to check with a health professional before using them — or selling them.
Find — and study — the company's track record. Do an internet search with the name of the company and words like review, scam, or complaint. Look through several pages of search results. You also may want to look for articles about the company in newspapers, magazines, or online. Find out:
1. how long the company has been in business
2. whether it has a positive reputation for customer satisfaction
3. what the buzz is about the company and its product on blogs and websites
4. whether the company has been sued for deceptive business practices