Mary Kay, Amway And Other Scams

We hate to be cynics, but we’ve found an awful lot of work-at-home deals that turn out be scams—legal perhaps, but scams none the less. If you want to make money—if you need to earn a living—Mary Kay, Amway and others like them are not the answer.

 

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Multi-level-marketing (MLM) for example, sounds like a great way to make money and meet new people. But over and over they’ve been shown to only make money for a few people at the top of the pyramid. Their ads sound great, but when you read the fine print, there’s a fee to join, inventory to buy, or lots of other out-of-pocket expenses—which, of course, is how the company or person promoting the “opportunity” really makes money.

Sadly, the people who run these scams often target people who desperately want a better income, but can least afford to gamble. The most common scams we’ve seen include telephone services, envelope stuffing, home and beauty products, jewelry, business and consumer loans, and toys. They sound great on the surface, but you’ll be hard-pressed to find anyone who can show you proof that it’s worked for them. Oh, sure, there’ll be a few people that did okay (and they’ll no doubt be filling the comments section with screams of protest), but most people don’t.

Unlike franchises, which are required to jump through all kinds of legal hoops, business opportunities, as they’re called, are largely unregulated. Ads claim you can add $3,000 to your monthly income while you sleep, for example. Yeah, right.

Unfortunately, the Better Business Bureau won’t be much help because the worst ones frequently change their name and address. So no one’s really watching out for your interests. And the fact is some of the Better Business Bureau practices should be reported to the Even Better Business Bureau (but that’s a topic we’ll have to remember for another post).

Actually, things got so bad that the Federal Trade Commission (FTC) put up it’s own web page warning about MLM scams. [Added 1/15/2011] They also host MLM – A Litany Of Misrepresentations, a revealing comment on MLM.

Our advice to anyone thinking about any work-at-home program, or any other business opportunity that claims you can make an easy buck, check your state business opportunity laws and seek advice from an attorney or accountant before you sign anything. After all, if was all that easy and lucrative everyone would be doing it, now wouldn’t they?

If you can’t afford to hire an adviser, check with a local college and university. They often have free clinics and other resources for small businesses. At the very least do a good online search, and stop by your local library and ask the reference desk to find you what they can on the industry and company that will help you make a decision.

Sorry if we sound unusually cynical on these subjects, but Kate used to run an award-winning non-profit program aimed at helping low income single mothers start their own businesses, and she saw too many women disappointed by the false claims of business, loan, and grant promoters.

Once again, if it sounds too good to be true, it probably is!

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