Is Network Marketing and Direct Sales a Scam?

How many times this year have you been invited by someone to “check out a great opportunity?”

Have you ever wondered if network marketing and direct sales is for real, or if it’s just a scam?

Although I have a successful and profitable business, even I have been invited to “check out,” or meet with someone, about their network marketing/direct sales business at least 20 times over the last year!

So the question is: Are they just a scam or are they legit?

As a whole, network marketing and direct sales companies are an excellent, low risk way to make decent money. And in some cases, a lot of money.

Below are some pros and cons to joining forces with these companies:


  1. Low-cost version of a franchise – These companies usually offer a partial “done-for-you” system where they provide the product, take care of payroll, some training, and in many cases, marketing materials. This is great if you are just starting in business for the first time, or if you don’t like building businesses from the ground up. All you typically have to focus on is marketing you, doing sales, and providing leadership to your team.
  2. Team Support – If you’re on a team with strong leadership (which I highly recommend), you’ll have a support structure in place where someone is financially vested in your success. They need you to succeed so they can succeed as well. As a small business owner, if I want support, I have to go find it or hire someone to offer me guidance.
  3. Low Risk – One great advantage to network marketing is you have a VERY LOW price of entry, usually a small monthly fee around $100 or so, to get in and you can quit at any time. If you decide the business isn’t for you, then you can jump ship with little financial consequence.
  4. Part-time option – You can build it part time while working a job or being at home with your kids.



  1. Small Commitment – One of the problems of being low risk or low commitment is that many will not commit to making it successful. Many will join, but the financial risk isn’t high enough to do the work necessary to make it a successful business. This is one reason why the typical network marketing/direct sales company will only see about 2.5% of their representatives making $1,000 per month or more. In a normal business, the consequences for failure are so severe, many will do their best to make it succeed no matter what.
  2. Lack of personal development and business training – This is the #1 reason why network marketing and direct sales companies get a bad reputation! I address this constantly when I coach networkers! Although there is some personal development training in the good companies, it’s rarely enough. What I find is many top leaders who “get it” are stressed out because they struggle teaching the rest of their team how to control their scarcity emotions that cripple their businesses, manage their money, or develop the necessary marketing, sales, and leadership skills to be a successful business owner. Even normal business owners have a hard time with this, unless they get some outside training. This is usually why you’ve encountered someone that “turned you off” because they were awkward about their business.
  3. Making money selling without building a team can be very difficult – Nearly all compensation plans don’t pay as well on selling retail than you would having a wholesale product that you sell for at least double your costs. As a result, you have to work a lot harder to sell only retail, and therefore, would need a team to make significant amounts of money. That’s not a bad thing because that’s exactly how it’s sold.
  4.  Too much “Hope-ium” – Many people get upset and leave network marketing because they don’t see success as quickly as they expect. This is typically because many are told the extreme success stories where “Chuck & Ginger were able to quit their jobs, pay off all of their debt, and build a school in Africa in the first 6 months.” Right? And all it takes is 3 good people to join your team, right? Wrong. I believe anything is possible, but some things aren’t probable. If expectations are set that you have to work it like a real business, then you’ll find more people will stick it out longer. The only people you’ll turn away are those that don’t want to work and you wouldn’t want working with you in the first place, right?


So is network marketing and direct sales a scam? Absolutely not! The only reason it has had a less-than-stellar reputation is because people get into the business not expecting to work, or knowing, how to run a real business.

If you have work with:

  1. a reputable company,
  2. with strong leadership,
  3. a good product,
  4. solid personal & business training,
  5. and you’re willing to do what it takes to be successful,

you can create a business as successful as any other business that you could do on your own.