MLM Scams And Pyramid Schemes

Let me start bluntly by saying I personally hate programs full of hype that promise the moon and never deliver anything more than smoke and mirrors. The thing that baffles me the most is, no matter how many times people hear or read the old adage "it's too good to be true", they STILL fall prey to these scams.

There isn't a day that goes by where I don't see someone in a forum flogging some crappy program promising you'll retire in a year or make 30k a month within 30 days, if only you pay out X amount of dollars. Total BS.

The sales page blinds you with images of flashy cars, huge mansions and fat stacks of cash, but what you actually end up with is a dent in your wallet and being a slave to that program owner by recruiting other suckers into the program under the disguise of an "opportunity". (By the way, I own several cars, including a Porsche, but I didn't get them through ANY program. I worked hard online, the right way, to earn what I have.)

So, how do you tell a legitimate opportunity from an MLM scam or pyramid scheme? Please read this informative article by MLM attorney Kevin Thompson, as it sums up some very interesting points you should consider before joining anything: http://www.scribd.com/doc/17733330/Legitimate-MLM-or-Pyramid-Scheme-How-can-you-tell . You should read it VERY carefully and learn from it. Knowledge is power, after all, right? I'll offer my thoughts on the topic below, but all references in quotation marks are from Kevin's article.

While I'm sometimes blown away by the lack of common sense some people show with what they do online, it really boils down to greed and/or desperation. People WANT it to be true and they NEED the money, so caution gets thrown out the window. They will spend $97 on a product that claims they will make 1000's, even if the sales page itself isn't clear or makes no real sense. I read a Clickbank sales page last year that was a mile long, claiming you would get rich the easy way and never have to worry about bills again. It tugged at the heart strings with images of poor, desperate people and told of how bad the economy is and how you can rise above these problems affecting everyone. The interesting thing to me, though, is that after an hour of reading through all the hype, sad pictures and vague "proof" there was NO indication of what you were actually about to buy...seriously! Was it a program? Ebook? Software? Keys to the kingdom? Not a clue, yet the greedy and desperate bought whatever it was in droves, as it had a very high gravity score at CB. It's the magic beans everyone is looking for. Unbelieveable!

While there are legitimate opportunities, they involve working on yourself more than other people. The MLM scams and pyramid schemes, on the other hand, involve recruiting others into the "opportunity" itself to do better. As Kevin says "If the compensation plan requires you to recruit other participants in order to advance up the pay scale, it's a factor to consider...Or is success described in terms of the number of distributors in your downline i.e. if you get x people below you, you can earn $y. If advancement is explained in terms of recruitment, it's a factor...An easy example is with forced matrix plans. If a plan is 5 x 5, the only way to advance to the next level is to fill the first level by recruiting 5 active distributors".

A legit business sells products to CUSTOMERS...not to each other in the business, and that's one of the biggest factors the FTC looks into when determining what is legit and what is a scam or pyramid that should be dismantled. So, a legit company must have product to sell to customers outside of the opportunity to be legal, and training materials (including your own personal sales website the program gives to you upon joining) do not count because they are not sold to customers, and only distributors use them, so "it’s illegal if the company is paying commissions on the sales of training materials".

Many of these scams also inflate the prices of whatever products they do sell and ask their recruits to buy them as part of the requirements to keep your "business" in good standing in the program. Kevin recommends asking yourself “If there was no income opportunity associated with this product, would I still buy it as a customer?". For example, if a store sells cheap pens for $1 each to real customers visiting the store, then it's legit, but if they sell the same pens for $10 each, and only the store staff is buying them and they get a bonus compensation for recruiting other staff to buy the overpriced pens, then it's an opportunity only to get scammed.

A real example I noticed recently is for a program where the "product" is way overpriced traffic. It sparked my interest because I sell traffic myself, so I looked into it further. I'm not going to mention the program name because I don't want to help advertise it, but it might sound familiar to you. They sell 1000 visitors for the high cost of $10 (2000 for $20, etc), which is far too much. If I charged that much I'd hang my head in shame, as the going rate is $2-5, the higher range being for extra factors, like targeting, control panel, etc.

With that program the product itself is overinflated, but people are pushing it because of the income opportunity. I've never once seen anyone posting about the program for the product itself, because most people have the common sense to know it's overpriced, but it's the "opportunity" to make money that people push, simply to recruit others into it. Also, the program used to be called something else, but changed after only a short time online...yet another warning sign. Legit businesses build brand name recognition and trust over time.

Normal affiliate marketing is fine, where you have an actual product to sell to consumers. I do very well myself selling online game guides to gamers, as an affiliate AND as a vendor. That's an example of a legit way to earn money online, but the rampant MMO scams are steering people in the wrong direction and hurting the overall potential for those people to really earn a living online, like I do.

As Mr. Thompson puts it: "When fraudulent schemes masquerade as legitimate companies, it affects the reputations of all companies in the industry." It's sad to me because I know first hand what it's like to be conned online, but I also know that you CAN legitimately earn online, if you do it the right way and stop believing the hype. Are you up for the challenge???

Read Between The Lines

I want you to ask questions. LOTS of questions. I want you to THINK first and THEN react. I want you to research and read and learn and prosper. I want you to be a SUCCESS!!

Got your attention? Good! By now I KNOW you've seen 100's or even 1000's of websites shouting at you about how you can get RICH online if you just do what they tell you to do. They make it sound so simple. Just join their free site and you'll be rolling in the dough a day later. Well, I hate to tell you but it ain't gonna happen. They use what we call hype to get your blood pumping and your adrenaline screaming to action in the hope you'll join them, spend some money, and make THEM rich. You won't get rich yourself and, most of the time, THEY aren't rich either. It's the hype talking.

I've always been honest with everyone in saying that, to make ANY money online, requires patience and a LOT of hard work. Those who tell you otherwise are LYING to get you to join under them. For the record, I myself am NOT rich. However, I DO make a living working at home. I've been doing it for 7 years now and I work at home for myself, using the ideas I share with you in this blog. I make a decent income and it's enough that I no longer have to work in the "rat race" for someone else. I also have a nice home up on a high hill by the ocean (see photo at bottom of page taken from my front lawn). I do fine on my own, doing what I do.

I mention all this because some of you are STILL getting sucked in by the hype of those flashy websites. As I surf around forums and click sites I see 1000's of hyped up claims that never amount to anything. There was one today saying I'd make a "cool million" just by reading emails. Wow! If it was really THAT easy I don't think anyone would ever go back to work again! We'd all be millionaires!!

So, what's a poor surfer to do? Read between the lines. Don't be distracted by the hype. THINK about what you are reading and see if it makes sense. A million for reading emails? Nope.

I'll leave you with an example I read 2 days ago of a site run by a self-proclaimed internet success "guru". I don't want to give too much info to identify the site, as I'm not here to slag the marketing hype of others, but I just want you to be aware of what to look for. I was sent a message through Adland of a "great" free eBook on the mistakes others make online. Curious, I read it and this "successful guy" wrote about how well he was doing. He had a pic of him with his fancy car and house. He said that I, too, could be as successful as him. He certained LOOKED successful in the photo and information presented.

However, upon closer inspection, I noticed a pattern. He was claiming to be making that "six figure income" we hear about all the time, yet he was clicking for ad credit on a FREE site. He claimed to be bringing in over $100, 000 a MONTH! Heck, if I was making over 100k a month, I could afford to market myself with a full page spread in Time magazine! I could afford to advertise ANYWHERE I wanted.

Also, he kept saying you need to work hard and focus on just ONE program to get rich. He kept repeating that he only uses ONE program to make over 100k a month. After reading several pages of his eBook, he gave a link to this one program which, of course, was his. Now, I'm not saying we don't all promote our programs, as I do too, but he claimed that one program is all you need, yet had several of his own affiliate links plastered throughout the pages. If he's making 100k from just one program, why is he trying to make a few cents off an affiliate link to someone else's program site? Makes you wonder, doesn't it? Read between the lines...

No Such Thing As Passive Income!

I know you've all seen LOTS of ads screaming at you about the joys of "passive income" and how you can make huge truckloads of money in your sleep, and I hate to be the bearer of bad news, but it's all a LIE! They are just trying to scam your lazy side. A big part of why I started this blog was to expose some of the crooks out there, while also showing you how to actually BENEFIT from their schemes. Many of us want something for nothing, or at least to make money with the least amount of work, and that is the weakness that the scammers prey upon.

Truth is, anything you do is going to come at a cost. If you want to be a free member of a site without paying anything, then be prepared to click endless links or read bottomless junk mail until your fingers virtually bleed, in exchange for perhaps a few pennies per hour for your time. Never underestimate the value of your "sweat equity"! Your time is worth MUCH more than a few cents an hour, but you just have to be made aware of that. Working from home seems easy when told you just have to view some ads or emails, but it NEVER pays off in any real income payoff.

There was a time, during the internet boom of a few years ago, when all you had to do was throw up a few banners on a site and then go to bed while the money rolled into your bank account. However, any honest and REAL internet entrepreneur will tell you that those days are LONG GONE! These days, in the so-called "web 2.0" period, a person has to WORK really hard to achieve any degree of success. There have been so many scams out there over the years that now people are more wary of buying anything online unless it's from a trusted online establishment, and your small affiliate page with your smiling picture on it just won't do.

You now have to go WAY beyond that. You have to assure your potential customer that you aren't going to rip them off. You should be comfortable yourself with any affiliate program you associate with and, no matter what they tell you about your "warm market", do not spam your friends. If you are promoting a program you truly believe they might want to look at, then send to them a personal friend email asking how they are doing and just mention the program as an aside as something they should look into. When you send a bulk spammy email to everyone, including your friends, it seems impersonal and they will feel insulted, and you don't want ANY potential customers to feel that way.

Keeping all that in mind, technically you CAN make money while you sleep, but it's not really "passive" after you consider the endless hours you need to put into making it all work. It's the work you do when NOT sleeping that will make you money later on. I DO make a living working from home, but I also work sometimes 18 hour days to make that happen, and you should be prepared to do the same thing if you want to be truly successful.

I participate in and maintain 73 different websites and affiliate programs, and that requires a great deal of effort in terms of time and organization. I don't intend to make an exhaustive list of all the programs I'm involved in here as, truthfully, many aren't worth the effort and I participate mainly as an experiment so I can report on the "good, the bad and the ugly" to you here in my blog. I stick with a program long enough to determine if it's crap or if it's worth pursuing, and then I report on it accordingly. Those programs that make it to this blog are the ones that have been tested to have at least SOME benefit to the average user. That may be in the form of FREE advertising (ie. WebCentreSurf or the like) or in REAL income that can make you a living working from home (ie. Degree Brokering). What you choose to do is up to you, but, as always, I wish you the all the best!