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An MLM watchdog is an individual or other party that monitors the activities of MLM businesses to ensure that consumers and the general public are protected from the results of this type of business. An MLM, or multilevel marketing company, is a company that recruits through a “downline network” where independent salespeople work through commissions. Some specific aspects of the MLM business are subject to abuse by those who create the companies.
Federal agencies are closely watching the business setups of MLM and similar companies to see if their growth strategies constitute an illegal “pyramid scheme.” Pyramid schemes exist when the payment method and overall business plan is likely to end in business collapse and cash consolidation by those who received money from recent customers. MLM watch groups help provide more information about a multilevel marketing business plan.
MLM watchdog groups also scrutinize the claims that MLM companies make about their products. MLM business environments use a wide range of products to generate income, but many of them have been known to make exaggerated claims about their product lines to generate interest. Independent sellers often want to cash in on inflated claims to recruit more sellers.
In order to make multi-level marketing activities transparent, an MLM watchdog could purchase “sales kits” from an MLM company and investigate how that business generates growth. When the business is based on commissions for new members, this can raise a red flag for those doing the research. The business may fall into an illegal category.
MLM watchdog groups also post news stories online or in print that reveal how multi-level marketing companies work. Part of proliferating MLM businesses with a bad business plan is targeting those who don’t understand the workings of a typical MLM setup. MLM Watchdog can provide consumers and job seekers with helpful tips on how to find real jobs and not scam type MLM jobs. Job seekers can often be convinced to represent an MLM company that may not have their best interests in mind, and increased knowledge of multi-level marketing business models helps the underdog in the job market avoid being scammed. MLM founders and core team.