Is Network Marketing a Scam?
It isn’t that straight forward. It’s like asking, “are politicians crooks?” Some are, some aren’t.
First of all, How do you measure whether or not something is a scam? Let’s use the famous Amway case of 1979 as our yardstick.
The FTC case is called “In re Amway Corp. 1979”. The FTC found that Amway was not an illegal pyramid scheme – the business model as a whole is not a scam.
But the FTC ruled that the company had to cease price fixing, exaggerating the average income of distributors, and allocating retail customers among distributors – Scammy tactics.
The FTC advises that network marketing organizations that place greater emphasis on recruiting distributors that on product sales may be a scam.
A less quantitative measure of how much of a scam network marketing is would be the affect of the business on your relationships. Basically, use the quality of your relationships as a barometer of how scammy the tactics are. We will discuss traditional methods, newer traditional methods, and internet marketing.
Traditional network marketing methods can strain your relationships. The old-school tactics of inviting all your friends, family, neighbors and coworkers to vaguely described home meeting can hinder your social life. People feel tricked when they show up to your house to “try a new product you found” and they are ambushed by a fast-talking king-pin distributor.
Newer traditional network marketing methods work a little better, and hurt your relationships a little less. This is typically called the “sharing technique”. You share your product with friends, family, and co-workers. If they like the product, you invite them to your home meeting. At least they know why the are at your house in this case. But, people still associate home meetings with network marketing scams.
The newest network marketing tactics include internet marketing. The problem with the internet is that it is like the wild west. There are tons of scammers of all kinds on the internet – including network marketing scammers promising huge income for little or now effort on your part. This is where some of the biggest network marketing scams lie, because the scammers have more anonymity online.
To protect yourself from network marketing scams, you have to ask yourself some important questions about SPECIFIC opportunities.
Does the network marketing company reward both product sales and recruiting? Does the product appeal to enough people to support sustained growth? How does the company back up it’s claims about it’s products? What up-front investment do you have to make? How do the leaders in the organization advise distributors to promote their network marketing opportunity?
Use the FTC ruling and your judgment of how people would respond to the organization’s tactics to decide if you’re dealing with a network marketing scam.
The author contributes related topics such as The Whats Working Now Short-Cut System Review and the online network marketing training course Magnetic Sponsoring Review.