Monday, June 3, 2013

The MLM Test by Rod Cook of MLMWatchDog

Image representing UPS  as depicted in CrunchBase
Is your "business" based
out of one of these?
A UPS Store?
Image via CrunchBase
Rod Cook, who runs the MLM Watchdog website, has been a long-time player in the MLM scene, and he's well known for his blunt style when it comes to suspicious schemes. His website reflects its style, in that it looks like it came from the 1990's.  None of the flashy menus or such.

He has a list of 12 questions you should use to check into any MLM company you want to join. It's a good list, but there's a few items I don't agree with. Let's take a look at his test, and see what we can learn from it.

1.  SIMPLEST MLM DETECTIVE INVESTIGATION: LOOKING FOR THE BEST? Get into the "BRAIN & PUSHBUTTON" When you are look for the Best or Good MLM or Nework Marketing Company!  A friend told you that MLM Company XXX is the very best. First Look at the MLM Company’s website.  First GOOD suspect clue would be no street or city address, worse yet, only an email address, no phone number.  Then look for the pictures and names of the owners of the company.  Not having these on a website is a quick absolute reason  NOT to join. Also A GOOD TOOL in your search for a good or the best MLM - Networking company:

A. DRIVE BY THE OFFICE  - Wise, seasoned MLM distributors doing their good Due Dilligence Investigation will use Google street view to save gas.  Go to Google street maps and do a good electronic drive by!

 B. A really good clue the Picture on Google above not the same as website = run!  Address = trailer house or home?  That is a 911 = Run!

This is a good tip, though I do have one thing to add... Search the address and make sure it's not something offered by Regus as a "virtual office". In general, if it doesn't have a suite number, it's somewhat suspicious. If it does have a suite number, make sure it's not a Fedex or UPS Store.

Also keep in mind that increasing number of these shady companies are registered overseas. Cyprus, Malta, British Virgin Islands, Belize...

Then search the owner's pictures through TinEye and/or Google Image Search and/or Bing Image Search to make sure it's not some random photo stolen by scammers to look legitimate. Once I found some scammer who used picture of Pepsi's CEO as some random "testimonial" picture.

2.  RUN FROM A COMPANY TAKING ONLY BANK WIRES, MONEY ORDERS OR CHECKS: Use your MLM Detective Investigative "BRAIN." Only use a Good credit card that will accept charge backs.  Returns? Good honest companies allow refunds within 60-90 days (8 states require a year)!  It is NOT GOOD to allow deductions from your bank account unless the company passes every test on this page for a Good or the Best MLM - Network Marketing Company!

A. Money by Fedex - UPS only?  Yikes! Best Scam Time not any good MLM!  A good trained MLM Dectective will tell you the scam artists do this to avoid USPS Postal Fraud charges!   Many good MLM - Network Marketing have found that U.S. Postal mail is the best way to ship products! 

B. A PMB (private mail box) address (in a mail box store) is a good indicator of dodging USPS Postal Fraud Investigators = 911 run a SCAM!  Never for a good-best MLM Company.

Just one thing to add... Watch out for people who insist on getting paid through odd payment processors such as Liberty Reserve, Payza, Solid Trust Pay, or some payment processors you never heard of... or worse... Western Union money transfer.

Also, anything that insists "no refund" is automatically suspect.

3.  GOOD EASY MLM INVESTIGATION TRICKS: Next in your search for the Best - Good Company MLM Detectives will go to the Internet and enter the following into one or two of the major search engines:

   A. The MLM Company's name (owners too) and the word "scam". Go through two pages!  Look for  forum message comments for legitimate complaints (see D below).  A good hint is that some sites have phoney information on them.

It's standard SEO tactic now for someone to register a domain name, and also the "sucks", "scam", "fraud" related domain names just to make sure nobody else does. I've even seen a few scams that even created their own "verified authentic" websites, "review" websites, and of course, the "___scam" websites that insist it's not a scam. So you'll have to go through 5 to 10 pages of results just to make sure the comments you should be reading wasn't buried under those "white noise" SEO techniques.

    B. Then do the same for "complaints, lawsuits, and news articles archived on search engines.  In this day and age of lawsuits good MLM Companies will have a lawsuit or two.  If they have a lot of MLM lawsuits this may NOT be the best MLM - Network Marketing Company to join. Another good trick is to use the GOOGLE searchengine on this website (NOTE:, not this blog) for a good search of MLM lawsuits!  What is good about it is that it is fast and we have a good collection of lawsuits.

  C. Another good trick check who registered the website domain of any new company claiming:  amazing, incredible, proprietary, never seen before in the universe, revolutionary, products, services or technologies! Check for the domain lookup (WEBSITE NAME). MLM Companies with good offerings would register a name 6 months to a year ahead of time (shows good planning).  

The date is a good point. However, earlier or later date does not add any credibility.

A lot of these shady deals use "private registration" where the domain is registered through a proxy so the WHOIS records show nothing useful.

   D. A warning on MLM due diligence for MLM Researchers for good MLM's!  There are sad sites and forums that are unfairly negative toward all MLM - Network Marketing companies.  Ignore these "Anti -MLM Zealots" and only look for appropriate information.  A good MLM Detective will ignore 99% of their B.s. in their search for A Good or "The Best" MLM Company.

There are people out there who believe ALL MLM are illegal. They are just as ideologically dumb as the people who believe ALL MLM are legal. There are legal ones, and there are illegal ones. That's why we're giving you the tools, such as what really separates pyramid schemes from Multi-level marketing, so you can make up your own mind.

4.  GOOD SECRET DUE DILIGENCE TOOLS: and are good Internet  tools because it can show you how much traffic a Best or Good MLM Network Markeing company is getting,  by individual hits.  The person you talked to may be ignorant themselves.  This trick for finding the Best or a Good MLM only 1 out of 10,000 know about.  If the traffic is headed down?  A GOOD indication? Under 2000 hits on a decreasing curve and this is supposed to be a Good or Best MLM Company?  Tell the person bye!  Go to or to see their traffic

I do not agree with Rod Cook on this one. Both are easily manipulated through botnets and viral buzz marketing. This is best used as a negative signal (i.e. low traffic? forget about it!)  It should not be used to justify the legitimacy of anything. Many scams, including TVI Express, have tried to use Alexa ratings as "proof" they are going strong.

5. NOT GOOD A LOT OF NUTRITIONAL PRODUCT HYPE – Not a good or the best MLM! Raise the dead? Live 130 years NOT THE BEST OR GOOD MLM Network Marketing Company? Cure Cancer (which is an illegal claim for any nutritional)!  If not a nutritional skip down to next good due diligence for MLM Detectives.

A. Get a list of the MOST critical ingredients in the MLM’s nutritional product and put them beside your computer. B. Go to the U.S. Government National Institutes of Health nutritional research website PUB MED.  Go to Pub Med after you read the next two sentences!  or just Google PUB MED.

B. Look up the major ingredient(s) by entering its name in the search box . A very Good or some of the Best MLM - Network Marketing Companies may have sponsored a study.  Pub Med is Good because it shows the research, good bad or the ugly!  It can give you some good clues.

      C. Read through the scientific studies.  Some may be complex, but the END sentence usually gives you a good idea if the study was a Plus or Minus for the product.  Read over at least 10 articles use a piece of paper to keep track of studies like this Study #1 Good   Study #2 good   #3 What did they say? (or just What?) Study #4 Good  Study #5 Bad.   Make your own judgement if the MLM - Network Marketing nutritionals product is Good or Blah!

Actually this is a good tip for all sorts of things, but it's MOST useful for nutritional stuff as the stuff is governed by the FDA (somewhat). If there's a test for the ingredients, it'll be in the PUBMED.

This also get a bit depressing for some as they'l find that there is virtually NO validation of effectiveness for virtually ALL of the dietary supplements on the market. In fact, most of them are woo that are BARELY justified (you'll have to take some wild leaps of logic). The fact that a company have sponsored or not sponsored a study may or may not indicate ethical problems. Just keep it in mind.

6. A GOOD NEXT MLM DETECTIVE DUE DILLIGENGE RESEARCH:  MLM Detective "PUSHBUTTON" Google Better Business for the city where the MLM-Network Marketing Company is located. The BBB national home page will let you enter city and zip.  Most BBB reports are free (THIS IS GOOD).  You are looking for the number of complaints the BBB has NOT resolved. If there are over 2-4, hold off joining FOR A GOOD WHILE, it very well could mean problems.  MLM Dectectives don't overly trust BBB reports but we the can be good  Indicator whether an MLM Company is good or bad.  If there are a lot of complaints the MLM - Network Marketing Company may not be the best choice.

This is where you need to be careful, as many complaints may be registered against a particular agent with his or her "storefront" or "business", instead of against the MLM itself. This is best used as a "negative" filter, in that companies with too many complaints should not be considered any further.

7.  A GOOD THING WATCHOUT FOR:  An email solicits you to a "HOT" VERY BEST MLM, Party Plan or Network Marketing Company!  The Good or Best MLM Companies forbid spam.   Home based business notes and good Other things:

  A. Look for exclamation marks and capital letters used to lend legitimacy or urgency!  Beware of disclaimers such as “this is not a pyramid selling scheme or scam” (legitimate offers don't contain such claims). Don't believe promises of fast wealth.  No really good or best Network Marketer would do this because a good MLM would ban the Distributor.

  B.  If you feel, see or hear "Get Rich Quick!” Run! If it sounds too good to be true, it usually is! MLM - Network Marketing takes work, like any good Home Based Business.  Your best Good MLM bet is a plan for work that you can have a good time doing!  If you are having a good time it is not work!

Here's where you need to be careful as you may not be told the truth up front. Some companies pretend they are not MLM but they certainly are. They may use funny terms like "concentric rings" or "ripples" instead of "levels" to disguise their true business model. And Ponzi schemes can pretend to be business opportunities, such as Pigeon King Intl in Canada.

8. MLM, PARTY PLANS & NETWORK MARKETING GOOD COMMON SENSE:  Good! Don’t let the money over-excite you!  Use the MLM Company products or services being sold first!  If they are good and excite you, then look at the money.  You should try sharing and selling the products/services to do a good job of testing them out.  Spending some money to test a company and their offerings is a wise thing to do for most good home business operators. And remember the GOOD thing about a GOOD network marketing company is if you don't like the products after your good test you can return them and with most GOOD MLM-Network Marketing Companies get 90% of your money back in 90 days!

Good advice. Any one who concentrate on the opportunity first, and the product / service second is doing it a**-backwards. This suggests either he's not trained properly, or there really is no product/service worth marketing.

9. GOOD TO DO READ THE FINE PRINT IN THE MLM CONTRACT:  MLM Detective "BRAIN." These are the Enrollment Agreement or Terms of Agreement plus Policies and Procedures.  These all together are a business contracts, enforceable in a court of law. The Distributor Rights Association says they shouldn't be too  to be long.  Don't sign if you don't feel comfortable about the contract or that even Good & the Best companies have? Get someone to talk  talk to you about the contract.

If they won't show you the contract to study for a week and consult with your friends / family / attorney, or tell you there isn't one, run!

10.  GOOD TO DO THE FOLLOWING RESEARCH FOR GOOD AND BEST MLM - DEDICATED DIG:  Check with the Attorney General in the state where the company is located.  Be very brief with your email or phone call and stick with asking, “MLM Company XXX is located in city in your state, do you have complaints against Company XXX?” A complete list of Attorney Generals is in  MLM WatchDog complaints library.  It is a good research reference.

This is another reason you should NOT join an INTERNATIONAL company. Who are you going to check if it's not in the country you're familiar with? They should at least have a branch office in the country you live in. Else you should forget about it.  (And make sure the office is a real one, not a virtual rent-a-mailbox.)

11.  COPY THE PAY PLAN AND ASK GOOD QUESTIONS:  Then find a good expert to analyze it.  
    A.  If it only pays for signing up new people and not sales of products/services - run! = not good!
   B.   There's a copy of my super good Pay Plan book on Amazon.  Search for my name by author - Rod Cook. No, this is not a shameless promotion for my book. My book is the only one with big pictures, diagrams and detailed to help both the new person and expert.  MLM Watchdog ethics let me say it's a good book!  Plus my book has a good whole chapter on avoiding Pyramid Schemes.  Rod Cook MLM WatchDog.

If they don't show you the comp plan ahead of time or tries to change it on you every few weeks, or if it had a history of a new comp plan every few months, run!

12.  A aggravation of mine is "wham bam" MLM recruiters that sign up a newbie throw them a sales script and are gone in a cloud of dust.  So you need to find out what tools and training they have that fits you and you like-love. You want Automatic Selling Devices so you aren't wearing yourself out making cold sales pitches.  If you click on one of links like below you will see what I mean by ASD's you need (Automatic Selling Devices) to make friends so no sales pitch!

Good advice. The "wham bam" MLM recruiters, aka "bungee" or "drive-by" MLMers don't treat their downline as an asset to be taught and nourished, but instead as cash sheep to be fleeced when possible for otherwise, should remain unseen and unheard. 

All in all, a solid set of advice, useful on almost ANY opportunity, not just MLM. 

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