MLM Scam Alerts | 10 Red Flags To Spot Illegal MLM Schemes (2025)

Spotting an MLM Scam company can be difficult sometimes because they mostly come with an offer which is hard to deny for many people. Your brain got seduced with all the unrealistic dreams and imaginations of wealth, prosperity, houses, cars, and exotic tours. After few months of struggle, you will then quit and the whole thing becomes another chapter of the sad stories in your life. These signs may help you in some ways:

1. Flashy & Deceptive Promotions:

The first sign of a Multi-Level Marketing (MLM) scam is that it will always try to catch your attention with deceptive or flashy advertising techniques. They will try to show you what you want to see such as nice cars, big houses, private jets or an exotic tour.

If someone shows you whatever you want to achieve in life before your eyes and convinces you that, you can have it fast, isn’t that awesome. Yes, it is and that is how a con artist takes away your $100 in 5 minutes' time. Be wise and always test the authenticity of any claim that a company makes.

2. No products or services, just schemes:

MLM Scam Company will always try to promote a scheme without a product or service and lure people with empty promises. These may come in the form of an illegal pyramid scheme or a Ponzi scheme, which is a concept of stealing money from A to Pay B.

However, while they promote these schemes, it will sound like every dream you ever had with regard to money will become true. If a company promotes a program without a legitimate product or service, it is considered illegal by the FTC and can be imprisoned for the same.

3. Lack of company details:

People who often lie always have something to hide and it’s not only about an MLM scam company. See the company websites, details and if it is not transparent to the customers, there is something wrong with the organization.

A person who is going to lie and run away will always prepare his getaway plan in advance before he cheats on others. Check the company if it’s approved by recognized government authorities and the office locations.

A legitimate Network Marketing company will always have a long history of authenticity in its service to the consumers. Beware of any such MLM companies that are too scared about disclosing any details of their whereabouts and people involved in it.

4. Emphasizes more on new member recruitment Schemes:

A Multi-Level Marketing Scam company will always reward you for recruiting more new members, in their schemes. Rather than selling a legitimate product or service, they will motivate you to bring more distributors to increase the business revenue.

As mentioned before, these scam companies will emphasize and promote a Ponzi scheme and reward you with the new member’s money. As long as the flow of newly recruited distributors goes on, they will continue the scheme.

And after the flow of newly recruited distributors stops, they will make some excuses and stop the process. After these, they somehow will manage to disappear with your money and this is how a lot of people get robbed. This is usually some kind of honey trap that the MLM con artist prepares for money greedy fools who want overnight success.

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5. Expensive & costly seminars:

A dishonest MLM scam company will always find a way to take more and more money out of your pocket from time to time. This also comes in the form of flashy meetings and seminars where they sell tickets to their distributors for an overpriced amount.

Their cunning sales techniques involve something like:

• If you miss the seminar, you will miss a lot of money

• Only 10 tickets remaining, but in fact, nobody has purchased any tickets at all

• The $100 you invest is nothing comparing to the money you will earn in future

Hey. Let’s be honest – seminars and business meetings are really great and it builds you up to be successful in a business. However if you are trying to manipulate people to get more and more money out of their pocket, playing dirty mind games, that’s evil.

Some MLM companies which are really genuine and honest conduct these seminars for Free from time to time. They need to be reasonable and honest to survive long and earn more trust.

6. Pressurized People to Buy Sales Materials:

When you start a Network Marketing (MLM) Business, you become a business owner and will definitely be investing your money. But there are many MLM businesses that pressurized distributors to buy unnecessary sales materials.

This is also one big turn-off for average people who quit a Network Marketing business. Many companies sell more and more audio CDs, DVDs, books, and other materials. These materials may be good for building new distributors however if a company is pressurizing and manipulating people, that can give a negative impact on its reputation.

If the company provides extremely high-value materials, they don’t need to pressure distributors, but they will buy it for sure. These are all must-have materials to succeed as business owners.

7. Unreasonable or overprized products:

Most products manufactured by Network Marketing companies are highly concentrated and priced above average products. Selling high-quality consumer goods are good but sometimes pricing it unreasonably high is a sure sign of an MLM scam company.

The first impression of such high-priced products is a sure turn-off for many consumers. This may destroy the trust and a long-term relationship between the consumers and the company.

8. No customer support system:

This is another true sign of an MLM scam company which shows that they have no concern for their customers. Great customer support always brings long-term trust between the company and the customers.

Having a fast and reliable customer support team always brings high consumer ratings for any company. MLM companies always deal with 1000s of distributors every single day as the business expands exponentially. A scam company will never care for their customers but to get your money and that’s all they want from you.

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9. Poor customer ratings:

A well-established and legitimate MLM company will always have a long history of consumer satisfaction ratings. This will automatically boost the sales revenue of that company on Autopilot.

For example, when you buy a product from Amazon you will always look for consumer ratings or reviews. The higher ratings it has the more purchases will happen for that product.

An MLM scam company will always have poor consumer ratings and stories of unsatisfied consumers. This is another sure sign that a company is a scam and you need to look out for these red flags before you join.

10. No system to support distributors:

When you start an MLM business, as a beginner you will need a lot of guidance and mentorship from many leaders. A system that helps new distributors to succeed is a must for any legitimate Network Marketing business.

A system can be defined as the success blueprints taught by leaders to new distributors. These may consist of daily, weekly free seminars, one on one counseling, regular product training, and personal development activities.

MLM scam companies will never have such systems that can guide you to succeed as a leader. All they want is your money and more of it, hence you will not find such things with a fraud company.

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Final words About an MLM Scam:

Based on these red flags we also can’t generalize all Network Marketing or Multi-Level Marketing are scams. There are many direct selling companies that have made homeless persons into successful entrepreneurs and leaders. And there are companies that have done miraculous healings of several diseases with their products. An MLM company with a quality product and an honest business practice will survive for decades. It all depends on the player who is playing the game and the one who gives his best will always reap the ultimate reward.