For over 17 years, friends would knock on my door to get advise on an MLM. Normally, that is a tell-tale sign of an impending pitch, however each of them knew I was about to put their program through the meat grinder. I will try to be as simple and straight forward as possible.

Turn the application over and look for these words “No Purchase Necessary”. Don’t see them?
     A: Beware.

Look on the face side of the application, are you required to buy a company’s product or service to join?
     A: Shred it.
(Note, a reasonable application fee or back office fee is ok. Product Purchase requirement is a Red Flag)

Is the Representative strong arming you to buy the “OPTIONAL” Product Pack?
     A: Tell him to get lost. You don’t want to be part of this guy’s sales team.

If product purchase is optional, make your decision. Do you need the product, will you use the product, can you sell the product, is it more product that you will use or sell in an average month?
   Is the Business NEW?
   Is the Corporation behind it NEW?
   Is their MLM Software in place?
   Is their website live?
   Is their product packaged and ready to be shipped?
   Is the company Founder/President/CEO named?
   Can you walk into the office and meet the corporate team?
   Is the company registered to off a Business Opportunity in your state?
   Is the company registered with the BBB?
   Is the Product NEW?
   Is the Product Food Based or Nutritional?
   Do they have FDA approval?
   Do they have Doctors or Professionals endorsing who you can verify?
   Do the ingredients or dosage create health risk?
   Is the product needed on the market?
   Is the product consumable?
   Is the product fairly priced when comparing to stores?
   Do they have current inventories of 20 times the current membership of the company and ability to sell, deliver, and restock five times as much within a 30 day period?
    A: Many companies struck the perfect product, in combination with tremendous growth.

A delicious low fat brownie introduced to a company with 1,000 members could sell/buy 1,000 x Dozen in first month. If recruitment occurs of customers and sales reps, the next could have 10,000 x Dozen.
Imagine the manufacturing facility that must rapidly increase it’s production in such a short period.
Staff, floor-space, equipment, raw ingredients… it is not easy........

http://mlmscamornot.wordpress.com/2011/06/08/how-to-spot-an-mlm-scam/