Unfortunately, the reputation of the network marketing industry has been terribly marred by the number of frauds and scams out there.
You need to be viligant and alert against possible frauds and scams.
So how to do it?
Here’s a list of a number of low-tech and high-tech ways to find out if a network marketing opportunity you are looking into is a possible fraud or scam.
Is there an address?
Look for a real legitimate address. Don’t settle for a phone number or an email address. Go to their website and check for a real street name, building number, with city and post code. If you can’t find all of the above, then be very suspicious. Also, another clue is the lack of pictures or names of the company’s executives. Definitely be suspicious if you can’t find that either.
There is an address but what kind of address is it?
Okay, maybe you found an address with a city name and post code but look carefully at it. Is it a real street name or is it a PMB? A PMB is a commercial mailbox establishment. This is a big tipoff that the company is probably not legitimate. They don’t even have a real post office mailbox to receive their mail.
How are they asking you to send payment?
Are they allowing to send a payment via regular mail or are they insisting that you send them payment via Fedex or UPS or some other express delivery company? If they are, then you need to run away quickly because the chances are very likely that this company is a possible fraud or scam.
Spy on them courtesy of Google Earth
Yes, that’s right. Practice being James Bond and use the most hi-tech means at your disposal to get the advantage, use Google Earth to spy on the location of the supposed MLM company via satellite. What kind of location is it? Is it a trailer house or a real office? Does the location even exist? Can you see any signs of a real company at work?
Use Google to do an advanced search on the company
Go to Google advanced search and input the name of the company with the owner’s name plus the word “scam” and see what results you get. Go through, at least, two pages of results and analyze any data that comes up. Do the same with forums. Go through all forums, looking for messages, complaints about the company.
A word of caution though! Be objective in what you are analyzing. Some people enjoy just “bashing” network marketing companies and opportunities. Sort out the “bashers” from those who are giving legitimate complaints and voicing real concerns.
Also, include as part of your research, a check on the name of whoever registered the website domain, especially if it’s a new company claiming new revolutionary proprietary technologies, products, or services. Go to www.whois.net to look up the domain. Companies that have legitimate offerings would work on a project for more than 3 months and their executives would register the domain name first.
For faster research, use Alexa
Alexa.com shows the web traffic to a site. It ranks the company according to how much traffic they get to their site. Generally the lower the number, the more traffic to their site. The some of the oldest network marketing companies such as Quixtar or Mary Kay generally rank around 6,000 or 7,000 on Alexa. That’s considered a top ranking.
Be aware to keep it in context though. A new company that has only been in operation for 120 days might get an Alexa ranking of 340,000 and this would be considered “good” since the company is relatively new. However, for a 5 year old company to get this kind of ranking would be considered horrendous. A 5 year old company should have a much lower ranking than that on Alexa and it would be wise to keep away from that type of company.
Take a close look at the details
Maybe you don’t want to engage in all of this research even though it would be wise, there are still ways to spot a fraud or scam if you look closely at the details of their policy.
Do they allow you to pay with a credit card that accepts charge backs? If they don’t, run! What about returns? Any honest company will allow refunds on products returned within 60 – 90 days. If they don’t, then you need to walk away.
Do “common sense” research
Don’t get excited by the money, use the company’s products or services first. If the product or service excites you, then go for the money. Spending some to test a company and their offerings first is a wise way to spot winners from losers, possible frauds or scams. Also, try sharing or selling the products yourself to test how others react to them as well.
How much is the startup fee?
The general rule of thumb agreed upon now is that it shouldn’t cost you more than $500 to start. In fact, this is taken so seriously that in the Unites States, 21 states have made it state law and two states have made the startup fee even lower, $200. So be very wary of high startup fees. It is generally not a good sign of a trustworthy network marketing opportunity.
Check for official complaints lodged against the company with the local government of the city where the company is located.
You’re keeping an eye out for the number of complaints and how many are unresolved. If you find a number higher than 3 – 5, hold off on joining. This could indicate serious problems.
Be sure to go as high through the ranks of all your local government branches as you can to find any official complaints, lawsuits, or unresolved cases lodged against the company.
Be discerning about the marketing language.
Yes, run away from all those ads promoting “hot” companies, “get rich quick” opportunities, anything that sounds too good to be true probably is too good to be true.
If you see capital letters or exclamation marks to lend the promotion an air of urgency, this is a sign of “false legitimacy”. Also, disclaimers that read, “This is not a pyramid scheme or scam”. The fact is that legitimate companies don’t contain such claims.
Yes! Read the fine print in the contract even if you need a lawyer to help you.
This fine print is enforceable in a court of law and it constitutes part of the contract. You shouldn’t sign it if you are not 100% comfortable with it and if you need to pay extra to a lawyer to help you understand it, consider that insurance against being scammed out of all your money.
Investigate and ask questions about your comp plan.
Understand that thing like the back of your hand. Engage the help of an expert if need be to help you analyze it. But don’t overlook the importance of understanding how you’ll get paid inside and out. What’s the sure sign of a faulty comp plan? If your comp plan only pays for signing up new people and not for the sale of products and services, you need to walk away fast!
Use all of the above suggestions to protect yourself from being involved in a fraud or getting scammed. You don’t have to implement each and every one but implement, at least, the 3 easiest and most common sense ones to you to stay protected and safe.
Source: http://www.mlmtipsandadvice.com.au/network-marketing-company-fraud-simple-techniques-protect-scammed/
Emma Watson Evanna Lynch