How to Check an MLM Company Before You Join: A Step-by-Step Guide

You can vet an MLM company in one evening, in five steps: find the legal entity and the official website, read the contract and compensation plan in full, find out who buys the product outside the structure, look into the company's history and complaints, and then compare the representative's words with the documents. If you don't get a clear answer at even one step, that's a reason to stop, not to take anyone's word for it.

Below is the order of actions: what exactly to look at, how not to be fooled, and what to do with the result. It works both for someone who has just been offered a "business" and for a leader thinking about bringing their own team into a company.

1. Find the legal entity. Name, registration number, address, director, country of registration.
2. Read the contract and compensation plan. In full, with all appendices, before the first payment.
3. Find out who buys the product. Are there customers outside the structure, and at what price?
4. Look into the history and complaints. Past projects of the executives, regulator lists, blacklists.
5. Compare words with documents. Ask your questions in writing and compare the answers with the contract.

Step 1. Find the legal entity and the official website

Start with a simple question: who exactly is behind the company? You need the full name of the legal entity, its registration number, address, the name of the director and the registration date. All of this can be checked in the official business registry of the country where the company is registered. If the details appear neither on the website nor in the contract, and the representative says "that doesn't matter", you've already got your first warning sign.

Next, cross-check the details. The name on the website, in the contract and in the registry should match, and the recipient of your payment should be exactly that legal entity, not a private individual and not an unfamiliar organization. If the company is foreign, find out who receives the money and who pays your compensation.

Look for the official website not through ads or a link in a chat, but by the address in the contract or the registry. A typical mistake is landing on a lookalike site with a similar name and an identical back office. Check how long the domain has existed and whether the site footer contains details that match the registry.

Step 2. Read the contract and compensation plan in full

Ask for the contract and compensation plan before you pay anything and read them completely, appendices included. There is a detailed breakdown of the clauses in the article on the agreement with a network marketing company, and how to read a plan without illusions is covered in the piece on the compensation plan. Here is only what to look at first.

Find answers to five questions: what exactly the compensation is paid for, what conditions you need to qualify, whether there are mandatory purchases, how to return product and get your money back, and what happens to your structure and accumulated volume if the contract ends. Separately, check whether the company can change the plan unilaterally and how you would be notified.

A practical trick: after reading, write down in one sentence the answer to the question "where does the money that I will be paid come from?" If the answer has no words like "customers" and "product", but has "new partners" and "fees", read on with extra care.

Step 3. Find out what is sold and who buys it outside the structure

This is the most important step. In its guidance on multi-level marketing, the US Federal Trade Commission asks the central question: what does the company pay for, real sales to customers or the recruitment of new participants? Purchases by participants themselves made to meet qualification requirements, rather than for personal use, are considered a sign of a pyramid. A company can sell a real product and still be a pyramid if income is built on recruitment.

A hypothetical example. A structure has 100 people, each buying $100 worth of product a month to keep their qualification, so turnover is $10,000. If none of these people buys the product for personal use and there are no outside customers, the entire turnover is the participants' own money moving up the chain. It's a simplified calculation, but it shows what to look for: the share of turnover from outside buyers.

Ask the representative how many people buy the product without taking part in the plan, whether the product has ordinary retail customers, and on what terms returns are possible. Compare the price with similar products on the market: if the price is several times higher for no clear reason, the turnover is not being held up by the value of the product.

Step 4. Look into the company's history and participants' complaints

Find out when the company was founded, whether its name has changed, and what its executives did before. Frequent name changes and past projects that ended in complaints are reasons to ask questions. Check for lawsuits and public warnings from regulators.

If you are in Russia, the Bank of Russia publishes a list of companies with signs of illegal activity in the financial market, and it includes pyramids: you can check it on the Bank of Russia website. In Kazakhstan, warnings are published by the Agency for Regulation and Development of the Financial Market and by law enforcement. Liability for organizing a pyramid is provided for by Article 172.2 of the Russian Criminal Code, and for attracting money and advertising by Article 14.62 of the Russian Administrative Offenses Code; in Kazakhstan, by Article 217 of the Criminal Code of Kazakhstan, and for advertising by Article 217-1. This is accurate as of November 2026, and you should confirm it with a lawyer before deciding: whether a specific company breaks the law is not for a reader or an article to decide.

Be careful with reviews: paid glowing reviews and paid smear reviews are equally common. How to tell genuine ones from those written to order is covered in the article on network marketing reviews. To understand where the line between network marketing and a pyramid runs, read this breakdown of the boundary.

It's also worth checking the name of the company, an executive or a representative in the LeaderPitch blacklist: you can search by name, nickname, phone number and project, and every entry is verified by a moderator. The absence of an entry is not a guarantee, but a record that does turn up is a serious reason to ask questions.

Step 5. Ask the representative questions and compare the answers with the documents

Make a list of questions and send them in writing, by messenger or email. Verbal answers are hard to confirm later, while written ones can be compared with the contract. A ready-made list is in the article on questions to ask an MLM company, and for a leader moving a team, the sequence in the piece on switching with your structure is useful.

Remember: the representative has a stake in your joining, since they may get paid for it. That doesn't mean they are lying, but their words need to be checked against the documents. A typical mistake is accepting "we'll sort it out later" or "it's just a formality" instead of a clause in the contract.

A leader with a structure needs more: written transfer terms, compensation, obligations, timeline and settlement procedure. On LeaderPitch, a project first passes moderator verification and only then can write to leaders, and the terms arrive in one format: a transfer bonus, a percentage, a fixed fee and what is expected of the leader. That makes offers easier to compare with each other.

What to do with each result: a situation and action table

The result of a check is rarely black and white. Below are typical situations and a sensible action for each.