How to Tell the Good from the Bad: Multi-Level Marketing (2019 Guide)


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Written by Isaac Ericksen | Last Updated October 24th, 2019
Isaac enjoys playing basketball and going on hikes with his family.

So you want to join a good MLM, or at least learn more about the income opportunity possible through Multi-Level Marketing?

Much of the information provided to the general public is confusing and conflicting. On one hand, you have those who love MLMs and swear they make you a ton of money (but those people are paid to convince others).

On the other hand, you have those who hate them because they were either dissatisfied by a particular company's product/service or didn't make any money when they distributed.

Performing a quick Internet search reveals terms such as "scam", "pyramid scheme"', and "fraud" to describe businesses that operate using this particular marketing strategy.

This can lead to the false assumption that all multi-level marketing businesses are essentially bad.

However, the multi-level marketing model is a legitimate strategy in business operations when conducted properly by companies that use it to help sell their manufactured product lines.

But how do you know if an MLM is actually a legitimate income opportunity?

We'll show you exactly what you need to look for in a good multi-level marketing company.

What to Look for

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Income Disclosure Statement

One item for individuals to look for is the Income Disclosure Statement on most multi-level marketing corporate websites.

While these are no guarantee to the actual earnings a distributor will potentially make, it will give the consumer a rough estimate regarding income generation.

Most of the time, the first-year generated revenue is not enough for an individual to reasonably live on exclusively.

It is important for interested individuals to set realistic expectations regarding sales volumes, and to understand that it can take 3 years or more to build a substantial income.


When you research a potential multi-level marketing company, look up both customer and distributor reviews through review sites like; be sure to check with the Attorney General as well. 

Consumers want to look for a multi-level marketing opportunity that has been in the marketplace for at least five years or more.

Many companies typically start off strong when they first launch, but then falter and fizzle out when the market becomes saturated or consumer perception turns sour.

A good investment is one that is able to prove itself to be financially stable long-term in the marketplace.

Compensation Plan

Read the multi-level marketing company's compensation plan and terms of service carefully and be sure to understand all of its conditions and requirements.

Check whether the company has a minimum personal volume (PV) requirement. A PV requirement is a required monthly purchase of company product to either sell or use yourself. If this PV requirement is not met, you will not qualify for compensation. 

High minimum PV requirements are a sign of a company that simply wants to sell its product through recruitment; companies such as this are approaching the delicate line between MLMs and pyramid schemes.

Get all important information in writing, including the multi-level marketing company's refund policy.

Find out what the business expenses are, both in fees charged by the company and additional business operating costs.

Find out how much recurring costs are such as catalogs, order forms, brochures, and product samples and how often these items will need to be purchased.


Strongly consider how the multi-level marketing opportunity you are interested in will fit into your current lifestyle.

How much time must be invested weekly for success in the business venture?

Will you be able to spend night and weekends performing in-home party demonstrations?

Do you currently work full-time and how will you work this side business into your daily life?

Will this new business require constant travel?

Time Investment

It is crucial to look honestly and deeply at the amount of time you are willing to invest in a company when investigating various multi-level marketing opportunities.

Ask questions of distributors already enrolled and find out how much time they invest each week building their business.

Eliminate those opportunities that do not fit the amount of time you are reasonably willing to invest your time into.

What to Avoid

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Poor Product Quality

Be sure to understand the background of the manufactured products of the multi-level marketing company.

Some companies offer products that may be unsafe to the general public or are marketed with questionable claims regarding potential benefits. Be wary of multi-level marketing companies that make product claims not backed by independent third party scientific studies or clinical trials.

While not legally required to do so, legitimate companies will post this information to the general public on their corporate website.

Determine whether or not the products are something you are passionate enough to sell long-term.

It is not easy selling products to others that you do not truly believe in yourself.

Recruitments over Products

Avoid any compensation plan that focuses more on recruitment efforts than it does for product sales.

Companies that heavily compensate for enrolling Independent Distributors over its payouts for its manufactured product line fall dangerously into the zone of a "pyramid scheme".

Lack of Training

Many traditional multi-level marketing companies do not offer much in the way of sales and marketing business training.

Avoid relying exclusively on the limited business education the company provides.

It is critical to invest in additional training on your own initiative if you want to become successful in the industry long-term and make a substantial income.

Without this essential knowledge, individuals completely new to the industry typically fail or quit in the first three months.

Pay attention to what other distributors are saying (Not just the ones making $40k a month)

It's important to find out what experiences other people have had while being a distributor. Don't just listen to the incredibly successful ones talking on the stage.

Real people.

Those who've had to work at it, and can give you a real story of experience. These will range from incredibly awesome, to sob stories of lost opportunities.

Take your search online where people aren't trying to sell you anything and can speak honestly.

Bottom Line about MLMs

Multi-level marketing in itself is a legitimate business marketing strategy if utilized properly.

Take plenty of time to get the complete picture of the multi-level marketing company's business opportunity you want to join before making any financial investment.

Research the company thoroughly and get all the necessary information. Make sure to understand the compensation plan thoroughly as well as all the terms and conditions.

Not all multi-level marketing companies operate under illegal or deceptive means, but it can take quite a bit of deep investigation to separate the good from the bad.

We've Researched for You

We have performed numerous hours of research on many multi-level marketing companies currently available in the marketplace.

We have discovered recurring items that are helpful in determining the overall legitimacy of a particular multi-level marketing opportunity.

By knowing what to look for and what to avoid in a multi-level marketing opportunity, individuals can reduce the potential financial risk involved and set up their new business venture for success with realistic expectations, long-term planning, and a strong marketing plan in order to generate a substantial income that can be lived on exclusively.

What's Recommended

We highly recommend that consumers do thorough research of these companies.

Much of the research that you need to know about a multi-level marketing company we have done for you here at

We have separated much of the good and bad you'll find about a company.

What has your experience been with MLM's or direct selling companies? Please send us an email or leave a review on your company of choice.

The Top Multi-Level Marketing Companies

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#1 Forever Living chevron_right
9.9 Overall Score
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#2 doTERRA chevron_right
9.3 Overall Score
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#3 Shaklee chevron_right
9.1 Overall Score

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