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MLM Red Flags — How to Spot Them
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Common MLM Tactics & Warning Signs
| Tactic | What They Say | What It Really Means | Red Flag Level |
|---|---|---|---|
| Income claims | "I made $10K last month!" | Top 1% earner; 99% lose money | Critical |
| Recruitment focus | "Build your team!" | Revenue comes from recruits, not customers | Critical |
| Startup cost | "Just $299 to get started" | You're the customer; inventory loading | High |
| Vague product | "Wellness / crypto / AI opportunity" | Product is secondary to the structure | High |
| Urgency / scarcity | "Founding member spots closing!" | Pressure to bypass due diligence | High |
| Us vs them | "People who say no just don't get it" | Isolating you from critical thinkers | Medium |
| Social proof pressure | "Join our success community" | Manufactured testimonials | Medium |
| Passive income claim | "Make money while you sleep" | Requires constant recruiting to sustain | Critical |
FTC Income Disclosure Data (Selected MLMs)
| Company | % Earning $0 | % Earning <$1K/yr | Median Annual Income | Top 1% Income |
|---|---|---|---|---|
| Herbalife | ~50% | ~88% | $200 | $108,000+ |
| Amway | ~54% | ~84% | $766 | $120,000+ |
| LuLaRoe | ~49% | ~74% | Negative (losses) | $50,000+ |
| doTERRA | ~73% | ~88% | $0 (most earn nothing) | $60,000+ |
| Monat | ~66% | ~83% | $183 | $55,000+ |
Red Flags
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