Obvious signs to tell if a MLM business is a scam

Malaysia: 10 Obvious Signs That A MLM Business Is A Scam

There are tons of MLM and Forex schemes out there, while there are a lot of them who are actually legit, here are obvious ways to tell if one is actually a giant con job.

Most probably have had their fair share of getting recruited or persuaded joined an MLM or Forex scheme in the past, or at least heard of the horrors of MLM and Forex scams that cost victims debts that can sit up in the millions. We are here to help you tell them apart.

Contrary to popular belief, they are not all bad and some do reward substantial income to those willing to work hard. If fact I have friends who have made it and are now enjoying the fruit of their hard work at a very young age. What you need to be wary of are the ones that are out there to squeeze every penny out of you.

Not to say all of them listed below is a scam, but based on personal experience and history of such businesses, if you at least one or more listed down here; you should really do more independent research into these schemes before committing any money.

1. Intangible Product or Recruitment Schemes

'That's a business secret' OH REALLY

‘That’s a business secret’ OH REALLY

E-stocks, potential land, house, painting, and anything that does not give you anything but a promise is probably a big con job. Most of the schemes requires you to recruit to earn a commission as there’s nothing to sell, these are what we call a ponzi scheme. As these schemes becomes more popular, they started to hide behind intangible products such as e-stocks etc.

Legal MLM companies have real products, that people want to buy in order to be successful. The reason you are recruited is because they need salespeople to distribute their products or sell them. If a company does not have real tangible products, it’s more than likely a scam – if you see them, we suggest you run.

2. Suddenly Everyone Seems to be Super Successful

Scams are known to urge members to 'Fake it till you make it' to attract members

Scams are known to urge members to ‘Fake it till you make it’ to attract members

You probably have seen this – the entire gang rolls around in BMWs, Audis and even supercars like Ferraris and Lamborghinis. They brag about how this one kid who managed to buy his first Beemer after joining just mere 3 weeks ago, the other kid took his money and bought a new IWC after 2 weeks and so-on. Obviously these are extremely tempting, but if one step back and think, is it even possible for a random kid from an MLM scheme beat Mark Zuckerberg to becoming the fastest billionaire?

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I’ll tell you the truth, most of them either borrow their successes, or spend their own money to make themselves look like success stories. Most of these are not true, and even if they are, I wouldn’t think their wealth will last that long, looking at how they spend their money.

3. High Investment On Advertising

image from Rage.com.my

Popular previously, YSLM requires members to pay a huge premium to join -image from Rage.com.my

Actually, most MLMs need to be registered with the Direct Selling Association of Malaysia to be considered legal, and one of the laws dictates that joining as a member should not require anyone to purchase or hoard any products. If it requires you to purchase any large orders just to be a member, it is considered illegal and can get a lot of people in trouble. In fact most legal MLM companies have rules that prevent product hoarding in place.

So if they said you need RM100k to join, even if it is a reputable company, you are probably dealing with a rogue team, and should probably avoid them.

4. Impossibly High Returns

Forex Scams were very popular in Malaysia just a few years ago

Forex Scams were very popular in Malaysia just a few years ago

Guaranteed returns is a very sensitive statement, as there is nothing that can be guaranteed in this world. If a company guarantees you a definite return for your investment, it is probably a scam or some sort. They will even lure you with a small investment to gain your trust, because they know that once you get your money back the first time, the second time you will surely invest more – and probably get some friends to join in too, but you will soon find the company missing very, very soon.

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5. Source of Income unexplained


Mostly seen with MLM, Forex and other investment scams, your recruiter will always give very vague explanation on where the company make their money, where they invest in, or how they make the money. Forex and investment companies need to register themselves with the securities commission before they are allowed to sell their products, so if there are not, just avoid.

MLM companies that cannot explain their source of income, or how will they retain future customers should be avoided. Not only you will be will losing a lot of money, but also lose a lot of your recruit’s money, and when the company go missing, the blame is on you.

6. No Hard Work Required


The common statistical number is 90% of direct selling agents don’t make money, and end up becoming a normal consumer or quit altogether. That is because building a successful MLM business requires hard work and investment in time, probably much so than traditional businesses even, most people come in thinking of making a quick buck will quit very, very fast – and most do.

If a company claims that they can make you a lot of money without you doing anything, or your ‘upline’ will do all the work for you – they are probably lying, or this is a scam. If a Forex investment company claims that they have a super-robot that can definitely make money, it is also probably not true – else they wouldn’t even sell it to you.

Seriously, just don’t get caught in the environment, sit back and use your common sense.

7. Bold Claims


Sometimes the marketing plan or business of the company is perfectly fine, legal and can make you a success. What your problem is that these companies do not have a very good product, overstate the capabilities, or outright lie about what their products can do. The latter two is the dangerous ones, as not only you are indirectly poisoning yourself and your family, but also your potential recruits and future customers.

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Once their ‘bold’ claims are revealed to be a total hoax, you will lose your hard-earned business overnight, and probably the trust of all your family, friends, and team. It’s not your fault, but you should understand better that humans blame the person who made them go through this in the first place.

8. No Training

Legal MLMs invest a lot to train their members

Legal MLMs invest a lot to train their members

Chances are you are here in the first place, because you are lured in by the promise of good ‘passive’ income, that can be passed on for generations. What you didn’t know is before you grow your bank account, you need to first grow your attitude. A good team and company invest in grooming their recruits to prepare themselves to be rich in the future, a scam does not need to invest in you because they will probably be gone in a couple of months.

9. It’s Not Legal, But We Can Make You Rich


If you are scammed by this statement, I’d say you deserve it. If a company claims that they are using not-so-legal method to earn money, or even outright illegal ways to make money, why the hell do you think they will not do the same to you? If it’s true it is illegal and you can be caught for fraud, and if its an outright scam you have nowhere to complain because you can still be caught for fraud. Think twice.

10. It’s Too Good To Be True


Rule of the thumb, not just to MLM, investment and forex companies, but almost everything else – if it sounded too good to be true, it probably is a giant scam.

Most MLM companies create an environment to make you excited and confident, give you a sense that you will be rich and famous when you attend their talks. They understand the science and techniques behind these talks and make use of this to gain your trust. They usually will not give you too much time to think as well, as they know a sensible person will probably see through this very, very quickly.

What we suggest you do, is to sit back and THINK with your common sense, not with your wallet. If need be do some research online and judge yourself (although I’d have to say most MLM companies got bad reputation).

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