With the current economic climate, more and more people are out of 9-5 jobs, where they go to a bricks-and-mortar building, and get paid a monthly salary. In order to get by, they are looking for any opportunity, and multi-level marketing looks very promising. Previously, this was mostly the domain of housewives, who had a lot of time on their hands and would go about trying to sale Amway or Avon or Melaleuca. Basically cleaning or cosmetic supplies.
The whole field has expanded now. Practically anything that can be sold can be sold in multi-level marketing fashion.
However, just as in any other field, when there are a lot of people looking for work, there's also a lot of people looking to scam them. So what are MLM scams?
Some can just be your typical business scam. You buy a certain amount of inventory, which you sell. You're supposed to get a commission from the company.... and they don't pay you that commission. More than that, they've skipped town!
Also just another typical business scam (i.e. not confined to being MLM scams) is for the parent company to create a product that just doesn't do what it's supposed to do. A silver polisher that strips the patina off silver rather than maintaining it, for example. The company will go great guns for from three to six months, as people buy the stuff, but before the complaints start hitting the Better Business Bureau. Once the word is out that the product is no good, the company will just shrug, say sorry, and walk away, leaving both its distributors and its former customers with nothing.
The main scam that people think of when they think of MLM scams is the whole process of the downline, or pyramid, where everyone recruits distributors, but no one sells any product. The people at the top get "royalties" from the people at the bottom who need to purchase product for inventory purposes, which they can never sell.
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