Companies that use network marketing have had a history of being in a negative spotlight. Some of them seem to be on the verge of being a pyramid scheme. However, usually it has been just a few companies who have given the entire system a bad name. If you look at companies like Avon, you will see a system that works very well and leaves many people happy. However, controversy over companies like Amway has given many people a misconception. What exactly was the problem with Amway, and what other network marketing companies have been in similar situations? Read on to find out.

Amway’s business model has been under a fairly large amount of scrutiny since its beginning. Perhaps the most infamous incident was when the Federal Trade Commission looked into some of the things that Amway advertised. They found that in order to entice prospective associates into becoming involved with the company, Amway would blow the possible profits way out of proportion. The FTC pointed this out, and Amway was quick to change the advertisement to a more reasonable amount that could actually be achievable for the average associate.

One strange thing you will notice about network marketing companies is that they almost always seem to be selling health products with drastic results promised. Upon further examination, you may also find that they rarely back up claims with actual scientific studies. Network marketing companies seem to rely more on personal testimonials than anything else. If one customer notices that the product seemed to help, he will be likely to tell his friends how amazing it is. This creates business for the network marketing company, and allows for them to make more sales based on just 1 happy customer.

What separates a legitimate network marketing company from a scam? Usually the scammers will have a reward plan that looks more like a pyramid scheme than anything. A legitimate network marketing company will look more like a franchise than anything, with all of the different associates selling products for a share of the profit. Pyramid schemes and Ponzi schemes have systems in which the associates are not rewarded for their sold products, but rather for the number of new associates that they recruit. These not only never work, but they are also illegal.

Many people are opposed to the basic principles of network marketing, feeling it is an unfair way of getting a product more sales. The internet is home to literally hundreds of sites that are anti-Amway or anti-network marketing in some way or another. They all offer valid arguments for why the programs are unfair, but at the same time the fail to address the network marketing companies that seem to be doing fine. If you are trying to decide whether a certain company is trustworthy or not, you would do best to search for the experiences of others who have been involved. You will be able to see if they are predominantly positive or negative, and make your decision from there.

Brian Hackett, CEO
MLMNetworker