What is MLM fraud? Network marketing scheme

by Sunny R. Sunny

In this article, we will learn more about network marketing and understand its importance.

Even today, many people consider MLM to be fraudulent and illegal. Many questions have been on the mind of MLM since the beginning. In this article, you will get detailed information about the recognition of MLM and know the real reasons for its right and wrong.

What is MLM fraud?

First of all, let's answer this question. MLM is not just fraud and scam. MLM is a completely different industry, which we also call Direct Selling Industry.

There are a lot of MLM companies in this industry that work. Remember, the MLM industry is not a scam. Rather some companies present in this industry scam, due to which people consider the whole industry wrong.

The MLM in India is fully legal, but restricts the pyramid scheme and the Ponzi scheme . But often the pyramid scheme runs and frauds under the name of MLM.

The pyramid scheme is similar to that of MLM, but it involves selling dummy (redundant) products / services and diverting people's money into the network. Therefore, before joining any MLM company, one must find the difference between the pyramid scheme and the right MLM company. Generally, big leaders promote pyramid schemes to earn more money, which is wrong.

Why do people consider MLM to be fraud?

MLM is a legal and real way to earn money, in which anyone can join and become rich by working hard. But in many countries including India, it is still considered fraud and there are some big reasons behind it. Direct selling in India came in 1996 and since then many such cases have come up due to which people have lost their trust.

There are two big reasons why people misunderstand MLM.

1. Wrong companies

As we mentioned above, many companies run pyramid schemes in the name of MLM, in which millions of people lose money. Future Maker and eBiz are great examples of this. Which used to make people's money in the network and make such big promises, which can never be fulfilled in real.

This happens even today, but there is a way to avoid this, always check the product / service of the MLM company. If the company's product is correct and provides the product at a realistic price, then the company is right.

2. Mean Leader

The biggest reason for fraud in MLM is the mean leader. Who always see the benefit of themselves. Many good companies also have leaders who bring jobs, fix salary, false promises and people in MLM. This makes their network larger, but others do not have the right knowledge of this industry. Then they also unfairly promote the industry with these fraud leaders.

Usually, the leaders get out their work by telling the poor and the youth the scheme of motivation and getting rich quickly. While it does not say that it is necessary to work hard for 2 to 3 years in this industry.

Most people in the MLM industry, without any skill, dream of becoming rich and then abusing the industry if they fail.

Direct selling guideline

In today's time, there has been a lot of change in this industry and some good leaders are present, who want the good of the industry.

In 2016, the Government of India has issued a Direct Selling Guideline , which provides guidelines for the company, direct seller and consumer. Those who are directly and indirectly connected with this industry must read this direct selling guideline.

Apart from this, he was associated with the same MLM company, which is in the legal direct selling company list. This is not proof of the company being 100% accurate, but the risk of getting fraud is less. Secondly, the company does not have to be a member of IDSA and FDSA .

We hope that this article will be helpful for you and have learned something.

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