The fascinating world of MLM is sometimes an illusion. It cannot always glitter. There is a darker side to every shiny facade. MLM can change the lives of people in a good way and in a bad way. In this piece of writing, we are going to explore the darker side of the network marketing business model and how it challenges people in different ways.

MLM is known by different names. It is the direct selling of a product or service to customers through the sales representatives of a particular company. In most cases, MLM has the power to change your life for the better. It offers amazing opportunities for those who dream of owning a business and being a champion of it. Although, some companies make fake promises to their customers and make them prone to failure. Therefore, it is crucial to understand the unethical operations, fraudulent schemes, and violations of the existing guidelines that are taking place in a direct-selling organization. Before uncovering the details of banned MLM companies, let’s examine the underlying causes for their ban.

Investigating the factors that led to the prohibition of MLM companies

• Exploitative recruitment patterns in MLM



Some MLM companies use the tactics of manipulation to strengthen their recruitment process. They often make false and fake promises to individuals. These promises may include financial freedom and unrealistic income claims. They target people who are financially backward or in a disadvantageous position.

• The similarity in pyramid schemes



Pyramid schemes are illegal business models that exploit people and their money. Some MLM companies exhibit the characteristics of pyramid scheme structures and those are actually disguised as MLMs. How can we differentiate between a network marketing business and a pyramid scheme?

Network marketing predominantly focuses on product sales rather than the recruitment process. The products will be of high quality and meet customer demand. On the other hand, pyramid schemes are more about the recruitment of people and the exploitation of their investments. The deceptive nature of pyramid schemes and their eventual collapse can lead to financial losses for the participants.

• Financial crisis



MLM companies typically require low-cost investments when joining the network. But in some cases, companies have hidden costs and fees associated with joining the network. There is a high chance of financial risk and the possibility of success is minimal for the majority of the participants.

• Reduced emphasis on the actual product



Genuine network marketing companies focus on product sales. However, scam enterprises have relatively lower importance attributed to the product. These fake companies sell low-quality products at higher prices. They often shift their attention to various aspects, such as recruiting a maximum number of people to the network sidelining the product.

The success of most of the MLM companies is up in the air. Some fail to recruit enough members to operate and they vanish into thin air all of a sudden. There are many fraudulent activities happening in network marketing companies.

• The similarity in pyramid schemes



Pyramid schemes are illegal business models that exploit people and their money. Some MLM companies exhibit the characteristics of pyramid scheme structures and those are actually disguised as MLMs. How can we differentiate between a network marketing business and a pyramid scheme?

List of major blacklisted MLM companies

• Crowd1



Crowd1 comes at the top of the list of blacklisted MLM companies for its operations in the Ponzi scheme. The company was founded in 2019 by Stereos Piscopianos and Jonas Werner. It uses the marketing strategy of buying and selling educational packages. It is found that they exploit the money of individuals and use it to pay the former members of the organization.

• Primerica



It is one of the reputed MLM companies that has laid the foundation for 45 years. However, the company has been facing criticism for its operations. It provides banking and insurance services to customers who belong to the middle class.

• Onecoin



Onecoin is a cryptocurrency network marketing company that was established in 2014. It is estimated that it was a cryptocurrency-based Ponzi scheme. They could not fulfill their promises of Onecoin blockchain technology and meet the requirements of their customers. The company was forced to shut down in 2017.

• Meta Force



Meta Force was created by the founder of Forsage, which was a fraud company. The Meta Force was associated with promoting affiliate membership and did not offer any quality products.

Conclusion

Besides these companies, there are several online MLM scams that are involved in illegal and fraudulent activities. Before entering the MLM business, it is vital to confirm the authority and services that a network marketing company provides. Not all MLMs are bad, But there is definitely a shadow behind MLM ventures. Try to figure out the red flags, such as gaining more profit with zero investment and risk, investing more money, and earning double.