Multi-Level Marketing Scams are Real
A little over one year ago I was in a vulnerable position financially. I was a fresh college grad and had been moved out and on my own since sophomore year of college (and determined to stay that way). My fiancee and I rented a three-bedroom home in a suburb of Charlotte, N.C. and my sibling had recently moved in with us when he lost his job. He was a manager at a local supermarket before he lost his job and I was interning (for minimum wage), going to school full-time and waiting tables part-time.
I’m not sure if you’ve ever tried to support yourself and two other people on a waitress salary but it can be extremely difficult. My fiancee and I began looking for work other places after I graduated and I stumbled upon a local position that would pay us each $600+ a week. That sounded great! Two young adults making $2,400 each every month. What doesn’t sound great about that?
We went in for an interview and both got a job at the place. The position was a sales position, which I wasn’t thrilled about, but the owners of the company insured us that we would get paid $10/hr. plus commission. We would be selling Kirby vacuum cleaners (who hasn’t heard of those). Essentially we would be going door-to-door selling the vacuums and (supposedly) getting paid for our time.
Generally, a MLM will ask you for an initial investment and, although we did not have to pay any money into the company, we did end up volunteering a great deal of time and, in turn, losing money.
How an MLM Almost Cost Me My Home
What we didn’t know was that Kirby was not running this sales location. Also, what the owners of the company did not tell us is that if we did not make a single sale we would not get paid. We worked there for two weeks and were unable to make any sales (no one else made any either). At the end of those first two weeks we were expecting a paycheck for the two full-time weeks we’d worked.
We were paid nothing. I was not going to be able to pay my rent because I was relying on that cash to get me through (we’d spent our savings when my fiancee lost his job). It was a nightmare. We’d been roped into a huge scam, but it taught me what to look out for moving forward.
What to Look Out For With Multi-Level Marketing
There are a number of things you can look out for if you want to avoid getting into a multi-level marketing scam. Not all MLM companies are scams. Companies like LuLaRoe and Mary Kay have had great success stories. However, if you get a job in sales be sure to make note of the following:
- The initial investment. Many MLMs ask for an initial investment. LuLaRoe, for example, has a startup kit that you are required to purchase to become a consultant. If you are not confident that you can make your initial investment back, you may have encountered an MLM scam.
- Beware of commission-based positions. Although there are plenty of great commission-based jobs out there, there are some positions that are solely commission. This means that you will be working for free unless you make a sale. If you don’t make enough sales, you won’t make enough money to pay your bills.
- If there is something unclear about the job, ask. My biggest mistake with my MLM encounter was not asking enough questions. I was vulnerable. Both of us were simply happy to be employed and were happy to be able to stay in our home.
Not all multi-level marketing companies are running scams but some are. The best possible thing you can do if you get into an MLM is do your research before you make any type of investment (money or time).
Have you ever had a nasty encounter with a multi-level marketing company?
Amanda Blankenship is the Director of Social Media for District Media. In addition to her duties handling everything social media, she frequently writes for a handful of blogs and loves to share her own personal finance story with others. When she isn’t typing away at her desk, she enjoys spending time with her daughter, husband, and dog. During her free time, you’re likely to find her with her nose in a book, hiking, or playing RPG video games.