Bruce Bates   Cooperative marketing
This is an amazing request and I will add a TON to it as to date my name has never once been tarnished by any involvement with any scams (I am proud of this). Tonight is a bad night for me, but I will be sharing a LOT about this.
Nov 6th 2012 18:21   

Rehan Khatib  Entrepreneur & MLM Professional
Thank you Bruce, Fortunately, by the Grace of God Almighty, I could also stay away from such scams. The discussion here is if some experienced people can give guidance or hints to identify such programs, to stay away without naming any company. In other words, what factors one should keep in mind while participating to safeguard oneself.
Nov 6th 2012 19:21 1 Likes  

Mujeeb Rahman   Affiliate Marketer
That's a great question you raised Khatib, i am also looking for an answer to this question..
Nov 6th 2012 22:29   

Trev Pearman   IM Coach IMMACC mbr
Now for those that are interested in indentifying scams online I want you to look for Dr Don Yates Snr here on Apsense. I'm not promoting a link nor a product just go get to know what he has spent a great deal of time researching. How to Avoid Scams Online. I absolutely love what he has dedicated his time to producing so much I am an affiliate to his product yet you wont find my link here... go check his profile and what he offers you. The so called "Due Dilligence" can be often misunderstood.. the process can take weeks but you must do it.
Nov 7th 2012 03:35   

Bruce Bates   Cooperative marketing
This is a topic that is actually really important to me and I have to be in the right frame of mind to really comment on it. The truth is there are a lot of different types of scams in the world - but I think when most people refer to something being a scam or not being a scam - they are only referring to if its legally a scam.

For example if you turn on the television and watch an infomercial selling to guides on how to get in real estate and how to turn a profit - this is not legally considered a scam.It's perfectly legal to sell such products. However as most know - buyer beware - those are products that have little to know value and rarely teach anyone anything. After all if the materials really works people would be to busy making money to write a guide.

So... there are all sorts of meanings of scam... but I will address the issue of scams considered illegal based on US law - that ponzi scams, and that of pyramid scams.

First how to identify a ponzi scam. That's actually a really easy one. A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned.

This means to spot a ponzi scam, all you have to do is find out where the business profits are coming from. re they coming from the actual sales of a product, or are they coming from people paying to join the business? If the second is the case, its a scam.

As we saw with zeek rewards - having a product isn't good enough. The money generated by a company must come from the sale of the product. No one cares if a company has a product if they are REALLY only earning by getting people to invest in the business.

If you were to look at this in terms of the stock market it would be like millions of investors investing in company that never produces a product. They pay investors from the investments made by other investors in their company. A company must make money from sales - not from investors whether its private or public.

Thats how to avoid a ponzi scheme - simple dig into the product and where the sales are really coming from before joining a company.

The other type of scam is the pyramid scam. These are MUCH harder to identify as there is typically a product of some sort offered - which is where things tend to get clouded.

The easiest way to stay safe is to ask yourself this... can whatever product is being sold by the mlm be sold to the public at large or does it require they become a part of the business to access the product?

For example lets take a look at something like Avon or Amway. Right this second I can call up a local representative for either company, I can have a catalog to look through and I can shop. No business pitch, no requirement to join anything, I just give the rep my order and thats it. THATS what makes those companies legit.

If you look at one of the many vitamin mlm's that exist on the other hand what you frequently find is in order to get the vitamin, first you must join the MLM. Even if you have no interest in online business you become a representative for the company. There is no separation between the company and the product.

A prime example of this would be GDI. GDI is a domain name registrar for .ws as well as a webhosting company. The problem is you can't go to GDI and get webhosting or a domain name - without being shoved into the business. In fact the back office of GDI is designed so much for MLM marketers that anyone not interested in MLM is going to run the other way.

Its this lack of separation between the business model and the product that makes an MLM a pyramid scam (there are other reasons but this is of the biggest).

I suggest anyone really looking to study up on scams go to google and do a search for the following:

site:ftv.gov "MLM"
Nov 16th 2012 13:34   

Rehan Khatib  Entrepreneur & MLM Professional
Thank you Bruce. You have really taken pains to make the points on the subject and keep it short. Full appreciation for your honest and sincere work. This certainly would help those who really want to be cautious while looking at the opportunities!
Well Done.
Nov 16th 2012 13:51