- There is no real service or product. Genuine goods and services are sold to customers outside of the MLM programme. Proceed with caution if it appears that the product or service being offered is just speculative or is priced too high.
- Guaranteed high rates of return in a relatively short time frame. Avoid "get rich quick" and "exponential return" schemes even if the MLM scheme has disclaimers that it is not a get rich quick scheme. Commissions paid out of money from new recruits rather than the revenue produced from product sales may account for the high returns and quick cash in an MLM programme.
- Passive earnings or easy money. You should be careful of any opportunity that promises financial gain in exchange for minimal effort on your part.
- Participation requires an investment. In multi-level marketing, product sales are the main focus. You should exercise caution if you are asked to pay a buy-in to join the programme. no matter how small the charge is (for example, INR.100 or INR. 1000/month).
- Complicated commission structure. Be wary unless your commissions are tied to customer sales outside the programme. Be wary if the terms of your compensation are unclear and will depend on the market condition and not on your sales or your team's sales.
- An emphasis on recruiting members. If the primary goal of a programme is to get you to pay money or sign up new members every month, then you're dealing with a pyramid scheme. Be wary of any business that pays more for recruiting new members than for actual product sales.
