In recent years MLM's have started getting a bad rep. There are almost as many scams out there as there are legitimate business models. In this article we'll go over how to identify a fake MLM scheme and how to go about setting up a legitimate home-based business.

As the schemers get more sophisticated it has become more and more difficult to spot a reputable MLM from a scam. Thankfully, with a little research, it is possible to distinguish between the two.

"Pyramid" or "Ponzi" schemes are the fakes. They require you, the business owner, to recruit more salespeople or purchase product up front. In addition, the fakes often require a sign-up fee. If you are required to sign up new members, pay for your own training and marketing materials or invest a lot of money initially you are most likely dealing with an illegitimate marketing scheme.

In most legitimate MLM companies, commissions are earned only on sales of the company's products or services.

While there are some other tests you can conduct to prove the legitimacy of your MLM opportunity one of the smartest things you can do to protect yourself is to search the internet.

Google the name of the MLM and add the word "scam" to it. If people have been burned in the past, it will definitely be listed on some scam forum. The very best thing you can do to protect yourself against fraud is to make sure you educate yourself as much as possible before entering into any financial arrangement with anyone.

So, do you want to know how to go about starting your own MLM business? As with all things that are worth doing, starting an MLM is not the quick and easy process many websites promise.

There are a few ways to go. You can become a distributor for an established MLM or you can start your own business from scratch.

There are pros and cons to both methods. For example, if you were to become a distributor for an established company that you researched and determined the legitimacy of you would have the support of that company to aid you in your success.

However, you would likely be one of many distributors competing for customers. The further down the sales levels you are, the less money you'll make. As you grow with an MLM you move up through the sales ranks. It isn't until you are close to the top that you being to make any real money.

The alternative is to start your own MLM. By being an independent business owner you get to set the rules, decide what it is you want to sell, how much you wish to share with others and only you yourself gain and handle the profits.

However, you are on the hook for the reputation of the company. Any mistakes made by your sales force have to be dealt with by you and you are wholly responsible for making sure everyone is properly taken care of.

While being your own business owner is much more profitable than being a distributor, it is also considerably more work.