Based on recent events, I say KaratBars is a scam.
The state of Florida has launched an investigation into KaratBar mlm operation.
The Netherlands, Canada, Namibia, and even Germany, the home of Karatbars, have issued warnings calling the company a pyramid scheme.
When an mlm company is under investigation, it is not good news.
Affiliates and supporters of KaratBars argue that it is not a scam. It is a legit business opportunity.
Who should you believe?
If you are planning to join KaratBars mlm, you might want to read this KaratBars review to understand the risks and rewards of investing with this company.
Tired Of Scams And Pyramid Schemes?
KaratBars Review Summary
Business Opportunity: MLM
Annual Revenue: $55 Million
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What Is KaratBars?
KaratBars is a financial investment company that offers people an easy way to invest in gold and cryptocurrency.
The company promotes and sells investment products through a network of over 800,000 Affiliates operating in more than 140 countries.
This German mlm company starts operation in 2011 offering investors a convenient way to invest in gold, as little as 1 gram.
In 2018 KaratBars launched its own cryptocurrency, KaratBankCoin (KBC), gold-backed crypto.
At the time of writing this KaraBars review, the company is headed by its founder, Harald Seiz, with estimated sales revenue of $55 million.
KaratBars provided little or no financial track record regarding Affiliates’ earnings. There is no income disclosure statement (IDS) for this company. This should be a warning for anyone interested in joining this mlm opportunity.
I’ll discuss the importance of an IDS report later in this KaratBars review.
I strongly recommend that you carefully evaluate and compare KaratBars mlm with other home-based business opportunities before joining.
You can use My #1 Business Opportunity to make a comparison.
How To Join KaratBars?
You can join KaratBars as a customer or an affiliate.
Only affiliates are allowed to promote and sell KaratBars’ investment products for commissions.
The process to join KaratBars is simple. You can apply online for a free account using your sponsor ID, or you can request the company to assign you a sponsor.
KaratBars claims that you don’t have to purchase an investment product to become affiliates.
However, if you want to earn all the commissions outlined in the compensation plan, you must be a qualified affiliate.
You can easily become a qualified affiliate by purchasing one of the four business packages, which I will discuss more in the next section of this KaratBars review.
KaratBars is not a free mlm opportunity.
Now, let look at the investment required to launch your own KaratBars home-based business.
How Much Does It Cost to Join KaratBars?
KaratBars offers you 4 options to join the affiliate program, which the company calls Business Packages.
The most expensive package gives you a higher rank and better commissions.
Here are your costs to join KaratBars:
- Bronze Business Package – €150 ($167)
- Silver Business Package – €707.22 ($785)
- Gold Business Package – €1509.44 ($1,674)
- VIP Business Package – €3041.66 ($3,375)
The price of these business packages will fluctuate with gold prices because each package comes with a small amount of gold.
- Bronze – 0.1 gram gold
- Silver – 1.1 gram gold
- Gold – 2.1 gram gold
- VIP – 3.1 gram gold
So, the cheapest to join KaratBars is $167, and the most expensive is $3,375.
On the day I write this KaratBars review, January 31, 2020, the price of 1 gram gold is $51.08.
Above is the initial investment, you need to meet the monthly sales volume to maintain your rank and earn commissions.
I will discuss the detail of the monthly sales volume requirement in the compensation section of this KaratBars review.
One thing that I hate about mlm is the monthly sales volume. This is designed to force you into paying the products.
Why do you have to purchase or sell a certain number of products to earn commissions? With Affiliate Marketing, you earn commissions on every sale, no such thing as monthly sales volume requirement.
To understand why mlm opportunities require a monthly sales volume, you should read our discussion on MLM vs. Affiliate Marketing.
KaratBars Compensation Plan Overview
KaratBars claims that affiliates have 7 options to make money.
However, we all know that there are only two options to make money with mlm opportunity: selling products and recruiting people to join your team.
KaratBars uses both Unilevel and Binary compensation structures. When you sell an investment product, the commission is calculated using the unilevel. For team residual incomes, binary compensation is used.
You must be a qualified KaratBars distributor to earn commissions. You can become qualified by purchasing or selling KaratBars’ investment products.
Every time you spend €2 ($2.22), you earn 1 point toward qualification. €100 ($111) gets you 50 points.
I will discuss the important points of the KaratBars compensation plan below. To see the full version, just click on the link to download a copy.
Make Money Selling KaratBars Investment Products
The commission rate will be determined by your rank achievement.
KaratBars offer between 0.5% to 5.5% on each investment product that you sold.
You can look at the table below to determine qualification and commission rates. New affiliates, Distributor rank, start out with a 0% commission.
Here are the leadership qualification requirements.
I will say this, you will not make a lot of money selling KaratBars investment products.
If you want to become successful with mlm, you must recruit others to join your KaratBars business. Because the bulk of your income will come from people in your organization purchasing the products, downline commissions.
Make Money Recruiting Others to Join KaratBars
All KaratBars affiliates are required to purchase products if they want to earn commissions.
The more people you recruit, the more money you earn. This is how mlm works.
Once you are eligible to earn commissions, here are your options to make money from your downlines:
KaratBars offers a generous 10% commission on each new business package that you sold.
You also earn commissions when your team members sold a business package.
KaratBars pays 3% on the 2nd level and 2% on the third level.
Remember, every new affiliate must purchase at least one business package to be eligible for commissions.
As a sponsor, you want your recruits to purchase the most expensive package, the VIP Business Package for $3,375. This is the highest commission you can earn.
This is the easiest option to earn commissions.
Dual Team Bonus
The team bonus is determined using a binary structure.
KaratBars claims this is not a binary system. But when commissions are generated based on two teams’ sales volume, 1 on the right and 1 on the left, it is a binary structure.
When new affiliates join your organization, each is assigned either to the right or the left team. Their sales volumes are pooled together to calculate your dual team bonus.
You earn a dual team bonus when one team generates 50 points of sales and the other team generates 25 points of sales. It doesn’t matter which team, left or right.
The payout is determined based on the business package that you have purchased at the time of joining KaratBars.
If you purchased a
- Bronze Package – Dual Team Bonus is €40 ($44.25)
- Silver Package – Dual Team Bonus is €50 ($55.31)
- Gold Package – Dual Team Bonus is €60 ($66.38)
- VIP Package – Dual Team Bonus is €80 ($88.50)
I hope you can see that the KaratBars compensation plan is designed to encourage affiliates to purchase the most expensive business package to earn the best commission.
There are other commissions and incentives which require more qualifications. These bonuses are not the main options for you to make money with KaratBars. If you are interested in learning more about them, I suggest reading the compensation plan for more information.
Up to this point, you must understand that the KaratBars compensation plan was designed to convert you into a customer, purchasing investment products to maintain rank and earn commissions.
Can You Make Money with KaratBars?
Yes, you can make money with KaratBars. But I don’t think you can make a good income selling KaratBars investment product.
When I invest in a business, I want profits, not just making money. You can make money selling anything.
The question for us an investor is, ‘can we make a good profit owning a KaratBars mlm business?’
The answer to the question above is a big mystery since KaratBars doesn’t publish an Income Disclosure Statement (IDS). Without the IDS report, it is impossible to know exactly the affiliates’ average annual income.
MLM company that does not publish the IDS report is a Red Flag. It suggests KaratBars is hiding the truth from us.
You don’t need a copy of the IDS report to know that 99% of mlm affiliates make little or no money.
Because mlm compensation plans are designed to sell products, not to help you build a successful business.
Is KaratBars a Scam?
Yes, according to the Netherlands, Canada, and Namibian authorities. KaratBars is a scam.
Even without the authority warnings, you must carefully evaluate every mlm opportunity before investing.
The risk of starting a new business is losing all your investments. With KaratBars mlm, this risk is very high.
You are responsible for researching, studying, and investigating KaratBars before joining.
Many people join mlm because they believe in the marketing hype. This is not how you evaluate an mlm opportunity.
The right way to evaluate an mlm company is by analyzing the financial documents and/or reading KaratBars reviews.
Reviews that discuss the risks and rewards starting this home-based business.
As the owner of an Online Business Review, I have evaluated hundreds of home-based business opportunities, and when the government warns you about a business opportunity, you better listen and stay away from it.
Is KaratBars A Pyramid Scheme?
KaratBars promotes itself as a non-mlm company.
However, many countries call KaratBars a pyramid scheme and warn their citizens against investing with the company.
I have my own method of determining a pyramid scheme.
The best way to tell a pyramid is by looking at the compensation plan.
MLMs that reward members based on recruiting activities are considered a pyramid scheme.
Under the KaratBars compensation plan, you make money when your team members purchased KaratBars products to maintain rank and qualify for commissions.
KaratBars affiliates directly make money from recruiting others when new members are forced to purchase a Business Package. More people join your team, the more money you will make. This is how you build a pyramid.
You don’t have to agree with me that KaratBars is a pyramid scheme. But you can’t deny that the best way to make money is by recruiting affiliates. Once they join the team, they have to purchase a Business Package to qualify for commissions.
Is KaratBars Worth It?
I say KaratBars is not worth it to invest.
After carefully studying and reviewing the KaratBars mlm opportunity, I see the company is dealing with too many investigations and legal problems with the authorities. You don’t want to be a part of this.
Let me ask you this,
Do you know why you want to start a home-based business?
To earn extra money from home, to be your own boss, or to achieve financial freedom?
And to make money, we invest in a PROFITABLE business!
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I don’t care what the company calls itself. KaratBars is an mlm company.
The company uses the mlm strategy is to recruit people as affiliates, then require them to purchase a Business Package to be eligible for commissions.
The truth is, not many affiliates make money. You must continuously recruit new people to grow your team. This is not easy.
After recruiting all your friends and families, what’s next?
If you hate sales or recruiting, like me, then you will have a hard time building a successful business with KaratBars.
There are other home-based business opportunities that do not require face-to-face selling or recruiting.
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I hope my KaratBars review answers your question, is KaratBars a scam?
Until next time.
Please share your own KaratBars experience below.