Every company is selling something. They are selling goods or services. In any company the strength of the business is driven by the quality of the product they are selling. So when looking at a network marketing business take a good hard look at what product is being sold.

If there isn't a product being sold, that is the number one red flag. Some companies are really just hollow shells of a company. They make money by charging people a fee to join the company. They promise great salaries based on how many other people will join. These are called pyramid scams and are illegal.

There should be some product that is being sold in a network marketing company. If a person is interested in joining a company's sales force, they should be really aware of the product. Is it something worthwhile? Are people going to want to buy the product? It would be advisable to avoid getting involved with a company whose product is not valuable.

2. Recruiting

Most network marketing or multi-level marketing companies have some sort of recruiting system. This is not necessarily a bad thing. Having more salespeople makes more sales and makes more money.

It can be a problem if the majority of the money in a company seems to come from sign up fees for recruiting. Take a look at how new salespeople are brought into the company. Be sure that they are not promised unbelievable salaries. Let's be real, if it sounds to good to be true it always is.

Sometimes the company doesn't come right out and say "sign up a lot of other people for our company and we'll pay you a bunch of money." It is usually more discreet, something along the lines of "new sale people have to buy twelve cases of our product for $200 before they can join the sales team". The sign up fee of $200 is pretty hefty. It is usually a bad sign to have to pay a lot of money up front to get to sell a product.

Another key to the recruiting process is this: were you a customer first or where you approached with this "opportunity"? Enlisting a loyal customer is usually a better sign than someone promising a great salary. Customers already believe in a product and would want to be involved in distributing it. A salesperson who is selling the product will recruit customers. A salesperson who is selling the "opportunity" to make a lot of money is more likely to be trying to scam someone.

So be wary during the recruiting process to avoid network marketing scams.

Overall, it is easy to avoid network marketing scams. Keep in mind that if it sounds too good to be true, it probably is. Make sure that there is a good product for sale and be watchful during the recruiting process. Don't get involved with a business that seems to be more interested in finding other sales people than actually selling their product. There is some good money to be made in the world of network marketing despite the negative image that these businesses often carry; a person should just be cautious of the scammers out there.