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Beware of MLM Scams - No Opinions* Only Facts*

Posted by smartindians Saturday, 20 August 2011

You might have seen frequently about MLM scam in Newspapers and Televisions. Some people are in the habit of loosing their hard earned money with these scamming MLM companies.
How many times have you been approached by a neighbor, colleague, friend, a family member, who said "Let me share you about an incredible business opportunity" and you are then invited to their house or a meeting hall for sharing the business plan.

Till not yet experienced? - wait...  one day sure you too will get this experience.
Now the question is "What can you do to defend yourself  from these Mlm scams & frauds in India?".
 
Very Simple! There are only two ways.
  • 1."Better to stay away from all other earning opportunities except your current job or business or profession and lead a compromised  life as it is". 
                                                        (or)
  • 2."Involving yourself only into genuine legitimate mlm companies & business opportunities. If you know which one is genuine and legitimate,  you are safe & protected".
Tips for Choosing a Right Network Marketing Business in India

The advantages of having a network marketing business for your life are tremendous. This business rewards the succeeded net worker with time freedom, financial freedom & on-going passive income. 

Network Marketing can be a great way to make a Passive IncomePerhaps, one of the most attractive aspects of network marketing business is the extremely low barrier to entry. 

If you were to consider starting a normal traditional business, you'd be talking about some sort of office space or shop space, one or two employees at the very least, some kind of inventory, maybe renovations, and lots of other expenses.  

The Network marketing, on the other hand, actually allows you to start a business at an extremely less cost and You don’t have to spend money and time developing your own product, setting-up show-room, or getting government formalities etc. Of course, you have to pay for certain things, like a small registration fee while joining, purchase of products at discounted price , purchase of optional tools that will help quick start your business.
 
If you join the right company, you can earn a steady flow of commissions every month without a lot of extra work on your part. Once you've decided  to pursue an additional career in Network Marketing in India, your first & most important work is in finding a genuine company with which to associate yourself.

How to identify a Good Company ?

The following tips can guide & help you choose the Right company that are right for you
  • 1.Is the Company an IDSA member?.                                   
The "Integrity of the company" itself be the first thing you should check. Integrity means a steadfast adherence to a strict moral or ethical code. Skip this first step, If you choose a company, which is a member of Indian Direct Selling Association  (IDSA), as it was already tested & also the company has pledged to abide by and uphold the IDSA Code of Ethics is designed to protect both customers of the products and those who market the company’s products & services. Idsa recognized Direct Selling Companies do not fall within the mischief of "The Prize,Chits and Money Circulation Schemes(Banning Act) 1978" 
  • 2.Is it a product based business opportunity?.
In India, money circulation schemes are  illegal & banned through "The Prize,Chits and Money Circulation Schemes(Banning Act) 1978". Every business transaction needs a product or service, otherwise you might be placed in the victim row one day. Apart from law, If you want to build a Huge & Strong network for life, better choose a company, that have high quality products range in FMCGcategory. Fast Moving Consumer Goods (FMCG) are the products which are used or sold quickly. It creates you ongoing passive residual income, once the network is built. In India, the FMCG sector have a high potential growth rate of more-than 50% every year. The FMCG market is already the fourth largest market in India & the best in Indian Direct selling market. What makes the potential for FMCG is the low operating cost, stable distribution networks along with the fast growing population, which the industry regards as a potential market. Amway, Avon Beauty, Herbalife, Hindustan unilever, Modicare, Oriflame are some of the major Fmcg companies involved in Indian direct selling industry
  • 3. Is the Sales & marketing Plan attractive?.
Join a company that pay two-tier or multi-level commissions. One of the most important things when considering becoming distributor with any direct selling company is to understand their commission pay structure. In One-tier or Single level commission pay structure, you'll get paid  a certain percentage of the sale generated by you only. But Two-tier or Multi-levels commission pay structure enables you to not only earn commissions on your own sales but also on the sales of  people who you introduce to your network. It is possible to make a significant amount of passive income from this two-tier type of commission pay. Please refer the sales & marketing plan of the company.
  •  4.Are the products attractive & quality with the scope of repeat sales?  
Join a company that offer a line of products so that you can always have more chances of earn  huge commissions when your customers & your team customers come back and purchase other services or products. Also check that products are manufactured in India.
  •  5.Does the company gives you business knowledge?.

Join a company that offer their distributors a great marketing support & product trainings at free of cost.
Product trainings, Success seminars and Business meetings are often offered to provide consultants with support and guidance. With some companies your sponsor, the person who brings you in to the company may be your sole source of training and support. If the company offers training, your sponsor may offer addition support above and beyond what the company provides.
And above all , 
  • 6.Is there any standard system to support your business? 
Join a company which is supported by proven successful country-wide educational support system. This system helps you to learn & grow your business network & also enables you to expand your business in other states, cities, & towns with out leaving your place. We have learned that having the right systems are important in network marketing. However, in Network marketing, it really needs to be a simple system. Because you need to be able to duplicate what you are doing to your team members. While you may not find this system from the company itself, be sure and discuss it with your sponsor and others who have been successful. Your sponsors success is directly relative to your own - so believe, your sponsor or upline leader is the right person to shares his/her tips.
Direct selling companies like M/s. Amway India, M/s. Avon Beauty India Private Ltd., M/s. Herbalife, M/s. Oriflame, M/s. Tupperware India, M/s. Surinder India have obtained necessary government approval from Foreign Investment Promotion Board (FIPB).

According to the Indian Direct Selling Association (IDSA), there are three fundamentals to a legitimate direct selling business. These are:
Low entry barrier: When distributors sign up, sales kits are sold at cost. There is no other investment required and distributors are not forced to buy training material or sales aids. This is because companies should not be dependent on selling the business opportunity alone, nor should they resort to merely selling sales aids at exorbitant prices while awarding commissions.

No inventory loading: Direct sellers make money by simply booking orders, not committing to a substantial investment that may cause financial distress to the distributor subsequently. You should be able to buy, say, a single sachet of shampoo, if you think that's all you will be able to sell.

Low exit barrier: Protection is given to distributors who may want to get out of the business.
Check out these fundamentals before you sign up for a distributorship. Or you could lose money, your valuable time. And yes, don't give your friends the feeling you are meeting them only to push your products. Or you could lose your social bonds.


The bottom line is, if you want to live like a Prince or Princess in a fairy tale, then use common sense, work hard and work smart to achieve your goals.
I wish you all the best in life!
Hopefully looking forward for your valuable comments and suggestions !  
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