- You sign up to the service/company and become a “brand ambassador” or some other related term.
- You’re compelled to buy the company’s products ahead of time, usually at a “discount”.
- You’re then tasked to sell those products for the company, which may or may not take a cut of the profit you earn.
- You’re also compelled to get friends, families, and acquaintances to sign up as “brand ambassadors” as well, and the company often offers bonuses if you get more people to sign up to help sell the product.
Large MLM brands, such as Amway and Mary Kay, have been around for decades and have all faced numerous legal challenges (usually for fraud or abusive behaviors). Others, such as LulaRoe, Herbalife, and Plexus have gained a strong foothold in households across the country despite sketchy origin stories and ongoing lawsuits .
Even worse, many of these MLM schemes have fairly ardent supporters, but just as many individuals reporting the type of MLM horror stories that are highly indicative of scams.
MLMs are far and away one of the most common types of scams, and more often than not prey on stay-at-home mothers desperate to contribute to their household income or find financial freedom.
The companies typically promise an easy path to riches but frequently leave individuals burned out and having spent far more than they earned , or just barely making up the cost of purchasing the company’s products.
There are even websites dedicated to not just outing MLMs for what they are, but also to provide support for individuals who have been hurt by such scams.
How to avoid multi-level id schemes
By the time it’s too late, many of those who begin working for a direct selling company are out thousands of dollars, as well as friends. This is because MLM companies often push individuals to try to sell to just about anyone they can, including close friends and relatives, many of whom eventually become weary of being viewed as a business opportunity.
The best way to avoid MLM scams is to reject any offer to work with a company that wants you to buy and sell their product for them.
Helpful websites list MLM scams, so knowing the companies by name can help. This list of MLMs on the Reddit group /r/AntiMLM should be a good starting point. Simply search the list for the name of a company that you suspect might be a pyramid scheme. Importantly, if you’re unsure, simply research the company online first.
5. Requests for account information
You’re likely to have different accounts as a freelancer. You most likely have a PayPal account set up for fast transactions, for example, and there’s a strong chance that you are, or will be, part of different freelancing platforms.
Any account you have that’s tied to your business is extremely important. So important, in fact, that scammers might try to gain access to them in order to either:
- Steal access to your account for their own purposes
- Steal money from your accounts
- Hold your accounts hostage in return for a ransom payment
This is a scam attempt I personally ran into not too long ago on LinkedIn. I do a majority of my freelancing work through Upwork, where I maintain a solid rating and great reviews.
While a lot of time and effort went into building that good standing on Upwork, it could also be valuable for anyone who manages to gain access to it.
The scammer’s proposal seemed innocent enough at first. He wanted to help me earn more money. And as a freelancer, well, that’s always a proposal I’m willing to entertain. After all, many freelancers with varying skills join forces and help each other out. A writer might team up with a graphic artist, for example. It’s often mutually beneficial.