This post is regarding what is Forex MLM.
Many people on the internet looking for Top Forex MLM Companies. Forex MLM seems a great earning opportunity, as members get high returns on investment and recruitment bonuses without much hassle.
But it is important to understand the reality of Forex MLM, before diving into it.
Are Forex MLM are genuine opportunity or just pyramid scheme fraud?
Answer of this question is important, So let’s start without any further ado.
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What is Forex MLM?
Forex MLM stands for Foreign Exchange Multi-Level Marketing. It seems similar to traditional MLM where one can join as a member.
Main aim of Forex MLM companies is to deal in forex and bring more people to participate.
Members are asked to choose a package to invest in and are promised to receive high returns on investment.
The companies tend to invest the received money in forex trading and provide returns to investors.
One also needs to bring members and build the downline to earn extra profit.
The company operates as an MLM and Forex broker, while participants are MLM members plus investors.
Forex MLM can be considered as a service-based MLM (other is product-based MLM).
We all know MLM has a bad reputation due to tons of scams happen in this industry. And if we combine MLM with Forex it becomes more vulnerable.
Hence, there is a big question mark with the legality of Forex MLM.
Traditional MLM Vs Forex MLM
| Traditional MLM | Forex MLM |
| The company and distributors mainly deal in products or product combos. | Here the members need to lend money to the company that further invest in forex trading. |
| The distributors earn more as they sell more products called retail commission. | The members earn more with higher investments called return on investment. |
| When downline purchases products, a certain percentage of commission is given to upline. | Members get commissions when they bring new investors to the downline and commission is based on the invested amount of downline members. |
Is Forex MLM legal?
Traditional MLMs are legal in most countries and Forex brokers are selectively legal under the supervision of regulators.
So What about Forex MLM?
Forex MLM does forex trading on behalf of company members which can be called an investment service. To operate like this, the entity needs to enroll under the SEC (Securities and Exchange Commission) of different countries, else it will be considered as securities fraud.
Not limited to Forex MLM, but the investment service provider has to get authorization from regulators, otherwise the company is violating securities law. These laws vary country and region-wise, but governance is vital to safeguard investors’ money and control frauds.
Forex MLM can be legal if they have authorization from the regulators. Investors must check company profiles and legal proofs, instead of believing company claims.
Most of the Forex MLM schemes have turned out to be Pyramid or Ponzi schemes that lure people to invest and end up with massive scams.
Forex MLM Scam
It was all about legality. But in reality, almost all Forex MLM are scams.
Like Cryptocurrency based MLM, Forex MLMs are looting people at a large scale and these scams spread faster than genuine MLM.
Ignoring the fact, Most MLM Forex companies are not authorized to do what they do. We are sharing some traits of Forex MLM Scams.
Guaranteed Retrun
Most Forex MLM promises an extraordinary fixed return at no risk. The foreign currency exchange market is volatile, hence it is not possible for an organization to maintain a fixed positive return.
But they promise and actually give heavy returns to early investors. How Forex MLM does this, we will share it ahead.
Lucrative Compensation Plan
Forex MLM always has an attractive and super easy MLM compensation plan.
These plans promote recruitment and every recruitment is rewarded with a heavy commission.
International trips, incentives and achievers pool are shown to motivate members, so they insanely recruit more people to the scheme.
Single Page Website
Forex MLM companies always have single or 2-3 page websites filled with bluff content.
Websites show the company as an extraordinary business and present income plan as a life-changing opportunity.
History of organization, operator details, legal proofs and all other required information can’t be found on Forex MLM’s website.
But an attractive layout of the website promising financial freedom is compulsory.
Money Circulation
Forex MLM companies do money circulation.
Actually, they do not invest money of investors to Forex Market. Instead, money of new investors is given to old investors as promised return.
Recruitment commission to upline is also part of the total invested amount by the new members.
The company motivates members to invest and recruit more, so a constant money flow can be maintained and money circulation is performed until the company wishes to escape.
It can be Ponzi or pyramid scheme fraud, depends on the compensation plan.
Due to the lack of governance on them, they function globally and operators hide themselves.
SEC of different countries can issue warning against Forex MLM scams, but it is people’s responsibility to not get scammed in greed.
Moreover, if a Forex broker seems legit and gives bonuses on referral, then check their legal certificates and authorization from regulators.
A guaranteed return promise can be a guaranteed scam.