MLM is an unconventional business model that aims to reach customers directly and make sales. It offers a flexible environment and high potential for growth and profitability.
The allure of high profitability attracts many towards MLM business; however, it’s prudent to approach the industry cautiously. It’s because the MLM industry is not immune to fraudsters.
Which MLM Companies Should You Avoid? A Comprehensive Blacklist
Several companies promise big but never deliver. These companies have faced legal issues, consumer complaints, and regulatory measures resulting in blacklisting.
We have rounded up this blog post to save you from such companies with a list of blacklisted MLM companies. We will also delve into their practices and the reason for being blacklisted. It will help you safeguard yourself from falling victim to deceptive MLM schemes and companies.
Understanding MLM Blacklisting – Why Are MLM Companies Blacklisted?
MLM blacklisting refers to identifying MLM companies involved in fraudulent activities, unethical practices, inflated promises, or duping customers’ money.
MLM blacklisted companies drew the attention of regulatory bodies, consumer agencies, and legal systems, possibly due to consumer complaints or concerns from members or distributors.
When found guilty, these MLM companies were blacklisted and barred from doing business.
Here are the factors involved in the blacklisting of MLM companies;
- Consumer Complaints – Consumers or members are often first to face the brunt of fraudulent MLM companies. These consumers then file complaints against the MLM companies regarding deceptive practices, misleading income promises, unethical behavior, or unfair compensation plans. These complaints attract legal action leading to the blacklisting of the company.
- Legal Issues – MLM companies might face lawsuits, legal action, or court judgments following unethical practices or violations of consumer protection laws. This legal action sometimes leads to the blacklisting of MLM companies.
- Regulatory Warnings – MLM companies that have received regulatory warnings might end up on the blacklist. Regulatory warnings could be related to penalties or sanctions from government bodies over noncompliance with MLM regulations, violation of fair trade practices, or allegations of pyramid schemes.
How To Identify Fraudulent MLM Companies – Red Flags And Warning Signs
When evaluating an MLM opportunity, it’s crucial to assess a company’s credibility too. Here are red flags and warning signs you must be aware of for better decision-making;
- High Initial Investment – MLM companies that ask for high upfront investment or expensive starter kits should be avoided. These companies often tend to extract as much money from the consumer as possible and then just vanish.
- Unrealistic Profit Claims – MLM is a business that involves profit and loss both. Any MLM company that promises hefty returns with minimum effort should be appreciated with caution. If the profit claims sound too good to be true, it’s a red flag.
- Prioritizing Recruitment Over Sales – MLM companies make money with sales. If network marketing emphasizes recruitment rather than sales, it’s most likely a pyramid scheme and must be avoided at all costs.
- Lack Of Transparency – Transparency is the pillar of ethical business practices. If a company is too secretive about its business practices, sales process, compensation structure, product information, etc., beware and approach cautiously.
List Of Blacklisted MLM Companies
As the MLM industry bloomed, several incidents came to light where companies were churning profits over the expense of customers’ investments and defrauding members.
Let’s explore the top blacklisted companies;
OneCoin was the brainchild of Ruja Ignatova – a Bulgarian resident. The company claimed to be a cryptocurrency-based business that offered a new mineable cryptocurrency. Besides, the company also sold courses via the MLM business model, where members were compensated for bringing new customers.
However, it came to light the company’s token held no monetary value, and its Exchange, Xcoinx, was shut down, leading to hundreds of members losing their money. OneCoiny was then blacklisted from doing business.
Forsage made it to the MLM blacklist after being accused of duping $300 million from investors following a pyramid scheme by The US Securities and Exchange Commission (SEC). Forsage promoted the “matrix cycler program” with promises of big returns and no risks.
But in actuality, it was only a pyramid scheme, where investors only made money by luring other people to join. Soon, its unfair practices came to light, and the SEC filed charges against the company leading to its blacklisting.
3. Royal Q
Royal Q was an MLM company that remained in business for four years and made around $117 million in its first two initial years.
But underneath the surface, the company only operated a pyramid Ponzi scheme. Multiple members reported unethical business practices, after which the company was blacklisted.
Crowd1 is a classic example of making money over a high upfront investment from joining members. The company sold an “education package” and claimed to be a high-tech community marketing operation. But the catch was their product cost a hefty €109 to €2499.
Similarly, its compensation structure also shouts about a pyramid scheme where initial members were paid from the investment of the new joining members. The company ended up on the blacklist and became one of the top blacklisted companies.
Unfair practices are everywhere, and the MLM industry is no exception. That’s why heavy security and blacklisting of deceptive MLM companies become essential.
It protects consumers from falling victim to unethical schemes and promotes transparency and accountability in the MLM industry.
By being aware of the warning signs that point to fraudulent business practices, individuals can avoid potential financial loss, time wastage, and financially damaging experiences.
Blacklisted MLM companies serve as red flags that urge individuals for due diligence and thorough research before investing hard-earned money in network marketing schemes.