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What Is an MLM Watchdog?

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  • Written By: A. Leverkuhn
  • Edited By: Andrew Jones
  • Last Modified Date: 23 June 2014
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An MLM watchdog is an individual or other party that monitors the activities of MLM businesses to make sure that consumers and the general public are protected from the results of these kinds of enterprises. An MLM, or multilevel marketing business, is a business that recruits through a “downline network” where independent sales people work on commissions. Some specific aspects of MLM businesses are prone to abuse by those who create the companies.

Federal agencies look closely at MLM business setups and similar companies to see if their growth strategies constitute an illegal “pyramid scheme.” Pyramid schemes exist when the method of payouts and general business plan are likely to end in a breakdown of the business and cash consolidation by those who have collected money from recent customers. MLM watchdog groups help to provide more information about a multilevel marketing business plan.

MLM watchdog groups also look at the claims that multilevel marketing businesses make about their products. MLM business setups use a wide range of products to generate income, but many of them are known to make inflated claims about their product lines in order to create interest. Independent sales people often want to profit from inflated claims to recruit more sellers.

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In order to effectively make multilevel marketing activities transparent, an MLM watchdog may buy “sales kits” from a MLM company and investigate how that business creates growth. When the business is based on commissions for new members, this can set off a red flag for those who are investigating. The business may fall into an illegal category.

MLM watchdog groups also post news online or in print that reveals how multilevel marketing businesses work. One part of proliferating MLM businesses with a bad business plan is preying on those who may not understand the workings of the typical MLM setup. The MLM watchdog may give consumers and job hunters helpful tips about how to find real jobs and not MLM scam type employment. Often, those who are looking for work can be talked into representing an MLM business that may not have their best interests in mind, and more knowledge about multilevel marketing business models helps the more vulnerable part of the job market avoid getting ripped off by unscrupulous MLM founders and core staff.

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suntan12
Post 3

@SauteePan - I think that people get so excited about the prospects of earning money from home that they fail to do the homework necessary in order to see if MLM selling is for them.

People forget that it is a business opportunity and not a job and often they find that they can’t make it work because they did not develop a marketing plan to get their name out there.

They are still thinking that this is a job, when it is not. It is a business opportunity that requires a lot of initiative to become successful. You really have to network and talk to everyone about the business which is hard for some people to do because they didn’t realize how much work was involved and many people take rejection personally which is why they fail in a sales opportunity.

The ones that are successful in an MLM business are persistent and let rejection roll off their backs. These people could work with any opportunity and make it work for them because they have the tenacity to make it happen.

SauteePan
Post 2

@Anon109599 - There are definitely a lot of MLM selling opportunities, but I think that you have to be careful and investigate each company that you are interested in aligning yourself with because not all MLM systems are profitable.

You really have to consider the type of product or service that you are selling and how much you can realistically make. A lot of these companies make these claims that many of their sales representatives make all kinds of money, but in reality a small portion of them do.

In fact, I read that most people that are part of a MLM downline only earn about $2,000 a year. I don’t know who can make a living on that kind of money. You really have to look at the MLM reviews posted online and talk to people that have experience with the company to see if it is worth pursuing.

anon109599
Post 1

multi level marketing seems to be a very potent model in supply chain management especially in the present competitive market economy.

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