Why Multi Level Marketing is a Money Laundering Business

Why Multi Level Marketing is a Money Laundering Business

MLM or Multi Level Marketing has been around for many years, and everyone knows someone who was talked into joining one of these “passive income business opportunities”. Over the years, however, MLM has quickly gotten a bad name for itself because of the dubious sales techniques and the false claims made to new recruits. The question remains, however; is MLM really a scam?

Identifying MLM Sales Strategies

The basic idea behind MLM businesses is to set up a chain of clients and distributors to sell products and services or recruit new members into the chain. In essence, this type of sales strategy is a sound one, but there are some inherent differences between setting up chains of distributors to make a profit and collecting money from new recruits who are then forced to sell products and services that are expensive and unpopular. Does your recruiter make his or her money from your sign-up fees? Are you required to get others to join to make a profit? If you answered yes to these question, the MLM business you are about to join is a scam.

The Expense of MLM Products and Price Fixing

Price fixing is a major problem with MLM businesses. As each new distributor joins the business, they are provided with a list of products that they are required to sell, and you will be able to separate a legal MLM business from a dubious one simply by analyzing the costs of the products and services. Prices that are fixed, inflated and will not sell well to the general public are signs of a scam and not a good business opportunity. These prices need to be inflated so that those on the higher rungs of the chain will make money, but these ventures end up failing very quickly, and those that bought into the idea are left to wonder where their money went.

Selling Directly to a Consumer VS Multi Level Marketing

Marketing directly to the end consumer is a safer, more effective way of starting up a business, and you do not have to deal with all of the “warning signs” and marketing schemes associated with fraudulent MLM businesses. The words “passive income” are all too convincing to the average person, but it takes hard work to set up a new business, and anyone promising anything less is bound to be looking to put a hand in your back pocket.

When you are marketing directly to a consumer instead of involving yourself in a chain of distributors, you will be able to set your own prices and ensure that the quality of the products and services you sell are high. Do not be fooled into thinking that MLM businesses are simple, quick or efficient ways to make money; it is the products and services that will make you money, and if they are too expensive, of a low quality or involve paying fees for the “privilege” of selling them, you are bound to find yourself red-faced and wondering how you fell for this type of scheme at all.