Multi-level affiliate program;
Forex MLM: Definition and famous cases
Updated: March 13, 2024
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The popularity of Forex trading continues to grow. Brokers use a variety of methods to promote the Forex markets. Forex MLM (Multi-Level Marketing) is among them. This method is beneficial for a broker because its services will be promoted by the company's clients themselves among their friends and acquaintances, and trust in them is higher than in the advertisers.
However, Forex MLM companies are not always legal. In some cases, this promotion method is used for fraudulent activities. Traders can lose money by investing in illegal services. Let's talk in detail about Forex MLM, is it legal, and how to distinguish a reliable company from a fraudulent one?
What is Forex MLM? Definition
An MLM or multi-Level marketing strategy is a method to promote goods and services through independent agents. The company’s client becomes its agent, and promotes the company’s goods or services through its sources, and gets a certain reward in return.
Forex MLM works in the same way. Brokers can offer clients favorable terms for promotion, so traders and partners will promote brokerage services with the means available. For example, you can recommend the broker to friends and acquaintances, publish an affiliate link or code on your website, blog, etc.
How do Forex MLM companies work?
As a rule, investment companies are promoted with the help of Forex MLM. At the same time, brokers can also use this scheme, especially those who have recently appeared and are practically unknown to traders.
It is important to understand that not every company is a Forex MLM. There are some distinctive features for these brokers. The features are as follows:
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Accrual of bonuses to clients from deposits made by traders attracted by them;
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Access to extra services and the program if a certain number of new clients were invited;
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Special trading bonuses — such as reduced spreads, commissions, and a lot of trading instruments to enhance trading — from brokers for traders who invite new clients.
Forex MLM companies can include multi-level marketing principles even in the bonus program. For example, prizes can be drawn among customers who have invited a certain number of novice users.
Forex MLM’s affiliate programs
Please pay special attention to the affiliate program. It is important to know that not every broker or investment program offering a referral program is a Forex MLM. At MLM, the company offers a multi-level affiliate program, including three levels as standard:
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1
1st level
users invited by the client;
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2
2nd level
partners of users invited by the client;
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3
3rd level
partners of users' partners, invited.
Payments are appropriate, from the highest level 1 and partner 1 to the lowest level 3 partner of the 3rd level.
Forex Pyramid scheme
A fraudulent scheme also originates from MLM – the Forex Pyramid scheme. Such companies work on the multi-Level marketing principle to attract as many customers as possible. But the main feature of the pyramid is that it doesn’t conduct any investment activity.
Such companies make payments to users from funds deposited by the most recent customers who form the first level. Further, clients form additional levels with their invitations. There can be dozens or even hundreds of such invitations, depending on the pyramid's popularity. Part of the funds serves as payments to clients (including bonus ones), and part of it remains with the fraudsters.
After the steady rising increase in the number of invited customers stops, the pyramid collapses because the fraudsters no longer have anything with which to pay their customers. Very soon after that, all the clients lose their entire funds. Immediately, the criminals quickly bundle up all the money that still “on the table” so to speak, and abscond. Pyramid scams often cause financial ruin to customers, both individual as well as corporate (e.g., teachers’ retirement funds).
Forex MLM cases
There are many Forex MLM companies. Unfortunately, many of them were conventional pyramid schemes. Let's consider a few examples of such companies.
Christopher Terry – MLM genius
Christopher Terry tried to forge his own path in MLM-type companies, like Amway. But ultimately, he became famous for creating a successful MLM project in the financial sector. Terry spearheaded and launched the financial organization called iMarketsLive.
It was both a broker and an investment company that offered clients an income of 10% to 25% per month. The users themselves promoted the company. They got their payments and distributed affiliate links among their colleagues and acquaintances.
The FXCM scandal prompted the development of iMarketsLive. In 2016, the broker started blocking traders' accounts and Terry took advantage of this. Together with iMarketsLive clients, he began to spread information about blocking, thereby promoting his own company. Thanks to this, iMarketsLive managed to attract a lot of new customers.
However, government regulators didn’t believe in Christopher Terry's honesty. The Belgian financial regulator immediately banned its activities in the country. French and Spanish regulators warned that the company "has shades of a pyramid scheme." In 2018, iMarketsLive investors petitioned the Federal Trade Commission (FTC) to order Terry's company to pay them $85 million in damages.
Venture Capital Investments LLC
Venture Capital Investments LLC became one of the latest pyramids disclosed. The organization was registered in the offshore jurisdiction of Saint Vincent and the Grenadines. Venture Capital Investments LLC operated under the guise of an investment company and offered clients passive income from investments in Forex. The organization operated not only in the USA, but also in other countries such as Bulgaria, Great Britain, and New Zealand.
The company did not invest clients’ funds but merely attracted clients using the MLM scheme. Instead, the funds were paid at the expense of clients who joined the pyramid. In total, Venture Capital Investments LLC defrauded 78 clients for over $450,000.
The Commodity Futures Trading Commission (CFTC) ordered Venture Capital Investments LLC to pay a fine of $900,000 on November 5, 2020. The investigation found that the fraudsters spent their clients' funds at their discretion, buying luxury goods and cars. In this regard, the CFTC warned pyramid investors that the fraudsters may not have the funds to pay off debts and pay the fine.
Forex MMCIS
The Forex MMCIS is a rather sensational pyramid that worked in Eastern Europe. The company was registered in Saint Vincent and the Grenadines and wasn’t licensed to conduct financial activities. The company promised a yield on PAMM accounts of up to 10% per month or up to 200% per annum.
The company aggressively employed the MLM strategy. There was also a multi-level affiliate program in effect. The Forex MMCIS Group used laser-focused marketing, which included cold calling clients and contacts via social media, etc. The platform also offered an original MLM marketing method. In 2013-2014, the company credited $1,000 to the account for each trader who got a tattoo with their name and emblem.
The Forex MMCIS pyramid collapsed in November 2014. The damage from the platform's activities ranged from $150 million to $350 million according to various estimates. As of 2023, the pyramid hasn’t resumed its work, and a redirect is being made from the website's domain to a certain German company.
770capital
The 770 Capital Company has positioned itself as an investment company and Forex broker. The broker actively used MLM, offering favorable terms to traders who attracted new clients. The 770 Capital Company had an attractive affiliate program that allowed clients to get up to 15% of the deposits partners of the 1st level made. Also, the company's managers used aggressive marketing and attracted customers via “cold” calls and contacts through social networks.
However, 770 Capital turned out to be an ordinary pyramid scheme. Users faced the problem of non-payment of funds, followed by complaints. Clients reviewed that the company refused to withdraw money under various excuses, demanded to replenish the account, required insurance for the withdrawal, etc. Traders in their reviews even complained about threats from the managers of 770 Capital.
This 770 Capital entity has never been a broker, just a bucket shop specializing in separating its clients from their hard-earned money. They even threatened me, demanded compensation for some kind of insurance to withdraw my money earned by the sweat of my brow. It's good that they were closed. It's bad that I lost money in 770 Capital like many others.
As of 2023, the 770 Capital pyramid no longer exists. The broker's official website is not available.
Thanks to reviews on the Traders Union website, you can avoid dealing with fraudulent brokers and investment companies. You can check the broker that offers you cooperation here, in our rating of scam companies.
What are the main MLM risks in Forex marketing?
Cooperation with Forex MLM companies is associated with significant risks. Unfortunately, there are many fraudsters among such brokers and investment companies. Therefore, please be careful. Please check with the Traders Union before you start cooperating with a Forex MLM company. When checking, pay attention to the following factors:
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License.
A legal finance company shall be licensed by a reputable government regulator. For example, it can be regulated by the USA (SEC), Great Britain (FCA), Germany (BaFin), Australia (ASIC), etc .;
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Reviews.
You can get a lot of information in the reviews about whether the payments have been stable; restrictions or accounts or against the investment platform, and whether client accounts have been blocked, etc. You should watch reviews only on independent sites. For example, you can find reliable reviews about brokers and investment platforms on Traders Union.
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Aggressive marketing.
Fraudulent projects often call clients convincing them to invest in the platform, email them, message on social networks, etc. Honest MLM companies focus primarily on promotion through affiliate links.
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Unreasonable profitability.
The unsubstantiated promises of huge returns are among the shticks. For example, Forex MMCIS offered up to 200% per annum. Make sure that the income scheme is transparent and the rates are realistic before you start working with an investment platform or broker.
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No-risk warnings.
No manager or trading robot can provide income without risks. Even Warren Buffett has lost during trades. Therefore, the broker or investment platform must warn clients about the risks. If the company guarantees payments, there is a high chance that you are dealing with fraudsters.
Important!
Be sure to pay attention to these factors. Only your attentiveness can save you from scammers.
Actually, is the Forex MLM scheme a fraud?
Not all Forex MLM companies are fraudsters. Multi-Level marketing by itself is a legal way to promote products, and an MLM broker is essentially no different from Amway, for example. Brokers only offer another product. Therefore, if you see Forex MLM, this is not a guarantee that you are facing a fraudster.
The problem is that MLM is a common promotion method for fraud projects. And the fact is that cybercriminals often use network marketing schemes to promote their investment platforms. It is extremely important to verify the project before starting to work with it. The risk of losing money is significant here, so beware when working with Forex MLM.
Can I earn by joining Forex MLM brokers?
Forex MLM offers the client extra income by inviting new users. However, not everything is as optimistic as it seems. The main problem is related to the fact that a lot of multi-Level marketing companies are also financial pyramids.
The risks from cooperation with such a company are as follows:
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Loss of your deposit.
Companies can only be promoted by customers who have already made a deposit. If the investment platform or broker turns out to be fraudsters, your funds most likely will not be returned.
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A waste of time and effort.
Make an advertising campaign to make money on MLM, recommend the platform, and convince the client to invest money. You may be able to do all this, but what's the point if the fraudster won't allow you to withdraw your funds?
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Reputational risks.
If you advise someone of an unverified project that turns out to be fraudulent, it will damage your reputation. If you then try to recommend a trusted and reliable company to someone, they will be skeptical about your recommendation.
Therefore, promoting Forex MLM is a rather risky way to generate income. We advise you to engage in it only if you are 100% sure that the project is real and there are minimal risks of fraud. Unfortunately, this is rare for Forex MLM companies.
Is it worth trying to make money on pyramid schemes?
Some people, even being sure that this is a financial pyramid, try to make money on it. It is not recommended to do it.
The reasons not to work with pyramids are obvious:
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1
Only participants who are lucky to be at high levels earn on the pyramids. It is often impossible to predict the level you will be on;
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It is difficult to predict the moment of collapse. The pyramid can "burst" at any moment, and in this case, you will never get the money back;
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3
There are no guarantees of withdrawal. Even if you manage to earn something from investments or through an affiliate program, there is never a guarantee that you will be able to withdraw your funds.
Therefore, if you have even the slightest suspicion that a broker or investment company is a pyramid scheme, keep away! Repeat: keep away! It is much better to cooperate with trusted and reliable platforms.
Top 3 trusable brokers you can consider
Choose a reliable broker if you’re planning to make money on Forex or multiply funds by investing in PAMM accounts. Traders Union has selected the Top 3 brokers offering good trading and investment opportunities, and are reliable and secure.
| Min. deposit | Markets | Regulation | |
|---|---|---|---|
 |
100 USD |
Forex, CFDs on stocks, commodities, futures, indices |
Great Britain, Cyprus, South Africa, Bahamas |
 |
5 USD |
Forex, stocks, CFDs on stocks, commodities, indices |
Cyprus, Belize, Australia |
 |
100 USD |
Forex, stocks, ETFs, CFDs on stocks, commodities, indices, ETFs |
UK, Cyprus, Australia |
FxPro
FxPro is a broker that has been operating since 2006.
The company is regulated in the following jurisdictions:
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Great Britain - FCA # 509956
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Cyprus - CySEC # 078/07;
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South Africa - FSCA # 45052;
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The Bahamas - SCB SIA-F184.
FxPro is a good choice for clients who plan to trade. Over 200 trading instruments and over 60 currency pairs are available to users. There is also a good range of CFDs on indices, stocks, and commodities. CFDs on futures are also available.
You can trade through the trading terminals FxPro Trading Platform, MT4, MT5. You can work either manually or using trading advisors. Automated trading is supported on MetaTrader platforms.
XM Group
The XM Group has successfully operated since 2009.
The company is licensed by:
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Cyprus - CySEC 120/10;
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Australia - ASIC AFSL # 443670;
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Belize - IFSC No. 000261/106.
The broker is perfect for both trading and investment. Traders have access to over 100 stocks from three markets, including the USA, UK, and Germany. The total number of assets and trading instruments in the XM Group exceeds 1,300.
The XM Group trading terminals are the classics MetaTrader 4 and MetaTrader 5. You can also use trading robots. Moreover, the XM Group allows novice traders to get extra deposit bonuses. The company's bonus policy is admirable.
Admiral Markets
Admiral Markets (Admirals after rebranding) began operations in 2001.
The British company provides financial services under the following licenses:
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Great Britain - FCA # 595450
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Cyprus - CySec # 201/13
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Australia - ASIC AFSL # 410681
Admiral Markets offers wide possibilities for investors. The broker offers to trade real stocks in 15 global markets, including the USA, Great Britain, EU countries, Japan, and Australia. Most ETFs are also available to investors. The broker is also good enough for trading, as it provides access to Forex and allows you to work with CFDs. The total number of assets and trading instruments at Admirals is over 3,500.
Trading on Admiral Markets is carried out using the MT4 and MT5 terminals. There is also a proprietary mobile application that allows you to trade stocks. Admirals also enable clients to generate extra income through an affiliate program. Unlike MLM, the program is single-level and the income from invited users depends on the invitees’ turnover in lots.
Expert’s opinion on multi-level marketing
Multi-level marketing is a very common occurrence in the financial markets. Brokers and investment platforms often use certain multi-Level marketing elements and sometimes they even build their strategy around it. Forex MLM is completely legal in and of itself. Almost anything can be sold through multi-Level marketing, and broker services are no exception.
However, MLM is very popular among fraudsters, also, and it is a prime tool to pull on the emotions of anxious traders. Criminals motivate clients to spread information in any possible way, persuade them to invest large sums, and promote unrealistic earning. In this case, people often avoid caution and then lose their money.
First, check the company before investing in Forex MLM and promoting such companies. Licenses, positive reviews, and valid hassle-free payments are the touchstones to build trust in an investment platform or broker. Always be careful and think critically. No one can protect you from Forex scams except yourself.
Andrey Mastykin,
Author, Financial Expert at Traders Union
FAQ
Is forex an MLM?
No, forex is not MLM.
What is MLM in trading?
MLM is multi-level marketing where products are sold directly to consumers through sales representatives. MLM uses empty promises (financial independence, easy enrichment, etc.).
Is forex trading a pyramid scheme?
Forex trading is not a pyramid scheme, but this activity is associated with high risks.
I often receive calls from promoters trying to persuade me to invest in a platform. Is this normal?
No. Even Forex MLM rarely imposes its services by cold calls and daily contacts on social networks. The more intensively they try to impose services on you, the higher the possibility that you are facing fraudsters.
The project indicates that it has an offshore license. Should I believe it?
All reputable brokers are licensed by official regulatory agencies. However, such companies, in addition to offshore documents, are licensed by well-known world regulators. Please be careful. If there are no such licenses, it could be a fraudster.
If a broker requires you to invite friends to the project as a condition to having access to its product, is that suspicious?
Only brokers can set terms for gaining access to products. However, be careful if such terms exist. Check out your broker thoroughly.
The broker indicates a license number, but there is no document on the regulator's website that confirms the license. What should I do?
Fraudsters often publish false document numbers in the hope that traders or investors will not check further. It is most likely fake data if there is no corresponding information about the license on the regulator's website.
Team that worked on the article
Alamin Morshed
Contributor
Alamin Morshed is a contributor at Traders Union. He specializes in writing articles for businesses who want to improve their Google search rankings to compete with their competition.
Over the past four years, Alamin has been working independently and through online employment platforms such as Upwork and Fiverr, and also contributing to some reputable blogs. His goal is to balance informative content and provide an entertaining read to his readers.
His motto is: I can dream or I can do—I choose action.
Jeremy Flint
Contributor
Jeremy Flint is an MBA graduate and freelance finance writer primarily emphasizing content creation for wealth managers and investment funds. A former U.S. Army officer, he brings strategic vision to content development and tactical analysis to stock picking and economic assessments.
He’s been obsessed with the markets since he was a teenager and is passionate about spreading financial literacy by using his expertise to break down obscure market concepts for retail traders. His main focus areas are fixed-income investing, alternative investments, macroeconomic news, and the oil, gas, and utilities sectors.
Mirjan Hipolito
Cryptocurrency and stock expert
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.