How can you tell if a company is a multi-level company (MLM) or not? If they don’t appear on our MLM Master List, here is how you can check them out. There are new MLMs appearing constantly, and not all of them will declare their business structure up front, so it pays to be alert. This is not an exact science, and is a matter of looking for as many clues as you can, and seeing how it all adds up. Also, trust your gut.
Our MLM or Not Mountain points out the red flags for these types of businesses along the way to “Peak MLM” status. There is a more detailed list further down.
Is it an MLM?
- Go to their company website. Do any of the following sorts of sections appear on their site?
- Join our team
- Discover our opportunity
- Host a party / event
- Become a consultant / distributor / stylist / entrepreneur / rep / whatever
- Work from home
- Financial freedom
- Our compensation plan
- Income Disclosure Statement (many MLMs do not provide these, though)
- Do they have an entry on Wikipedia? Does it mention them being MLM / direct sales / network marketing / party plan?
- Are there any articles about them on Bloomberg Businessweek? Are they mentioned as being MLM / direct sales / network marketing / party plan?
- Are there any mainstream media news articles about the company? What do they say?
- What sort of language do they use? Do they talk about side hustles, home-based work, working from your phone, or amazing, life-changing, business opportunities? Being at home with your kids? Quitting your J.O.B.? Do they offer a whole ‘lifestyle’ and ’empowerment’? Financial freedom?
- Are no qualifications, work experience or training necessary?
- Is there any mention of sharing the opportunity, building a team, sponsoring, partnering, prospecting or recruiting a downline?
- Is there a requirement to pay to join, a starter kit to buy, or any upfront fee to be eligible to receive discounts, or becoming involved? Is there any mention of ‘becoming a preferred customer’? (This are all aspects of “pay to play”.)
- Check out the company on their social media. Do they use a great deal of emojis? Do their ‘consultants’ or ‘entrepreneurs’ who ‘own their own businesses’ put out lots of similar messages and posts, with similar wording?
- Do a lot of their social media and website pages have URLs with someone’s name followed by the company URL? eg JoBloggs.mlmname.com, LuluSmith.mlmname.com etc.
- Do they have membership in the Direct Selling Association in their country? (USA, Canada, UK, Europe, Australia, New Zealand, and heaps of other countries, from Argentina to Venezuela — there’s a list here)
- Do they or their distributors talk about the Law of Attraction or attraction marketing?
- Do they use hashtags like #bossbabe, #girlboss, #mompreneur, #bossmom?
- Is there a trademark symbol (™) next to their product names?
- Are they operating in an unregulated industry (eg cosmetics, vitamins, supplements, weight loss, life coaching, clothing, books, skincare, hair care, bitcoin, pet products, crafts etc)?
- Is there any discussion about them in the r/antimlm subReddit?
- Do they have vocal critics? Search for the company online, and add the following sorts of terms: MLM, scam, scheme, critic, left, ex. Look for YouTube videos about the company, especially from ex-members, critical reviews on Glassdoor, and blog posts and articles from ex-members. Look for Facebook and Reddit groups for ex-members of the company. This will bring up negative sources, and will give you an idea of whether the company has a controversial history or not. It’s worth listening to the critics.
Be aware that affiliate marketing groups can look like MLM, but aren’t. Affiliate marketing doesn’t have compensation plans, but pay their influencers or ambassador with commissions. While affiliate marketing tends to work best with influencers, some influencers are part of MLMs, so be careful on this one.
If you have more than a few Yes answers from this list, be careful. Some yeses will be conclusive (they are members of a Direct Sellers Association), and others are less clear (trademarked product names, emoji quotient). But these are the parameter we use, and if the company is being coy, the other aspects (mentions of life-changing opportunities, critical reviews, compensation plans, and buy in) will all add up to give you a clearer picture.
If they tick a lot of boxes, and they’re not on our Master List, please let us know!