I’m sure, like me, that you see these sorts of adverts all the time –
“Make millions now with just a few hours per week”
“Fire your boss, earn $10,000 per week. NOW.”
These adverts are in the newspapers, left at bus shelters, in phone boxes, plastered across the internet and spammed by email.
If you haven’t already guessed, they are promoting multi level marketing – MLM.
MLM: Has it had it’s day?
I’m of the opinion that multi level marketing was once a legitimate business model which provided a means for small companies to get their unique products to consumers in smaller towns and out of the way areas which otherwise had no access to these products. The products tended to sell themselves, and the multi level angle was a way of rewarding those who had worked hard to build the organisation. The focus, back then, was always on the product.
Today, in this internet age we live in, consumers can obtain pretty well anything they desire, with ease, and at competitive prices. Therefore, I would say that there is no longer the same need for multi level marketing as a distribution system in the way that there was before.
Perhaps that is why a large number of MLM companies now seem to focus more upon recruiting new sales people. With overpriced products, those working in multi level marketing need fresh faces in order to make profit, be it through the recruitment itself, their downline’s sales or, simply, by persuading them to buy products which can often be found cheaper elsewhere.
With that in mind, would it therefore be fair to say that all multi level marketing opportunities are scams?
With multi level marketing out-priced, and unneeded in terms of distribution, the only thing left to sell is membership, to recruits who will then look to make money from further recruitment. This, if I’m not mistaken, would define multi level marketing as a pyramid scheme and a fraud.
With products freely available across the internet, and at much lower prices, can you really believe these claims from multi level marketers that their opportunity is so great that everyone will be buying into it, or that it is the way business will be done in the future?
With almost no MLM schemes selling any kind of significant volume of products to consumers outside of the program, surely that is the proof that MLM is a thing of the past, continuing to exist solely by scamming more hapless recruits into their world?
Buying your way in
If a multi level company is based on selling products at retail, why do they ask recruits to pay sign-up fees to join? If the product is that good then the distributors will make money for themselves, and the organisation, by making retail sales won’t they?
If a signing on fee is required then it sounds like no more than one of those advanced fee email scams I receive in my inbox every twenty minutes.
Scamming you twice
Once you’ve paid your dues and joined the scam multi level marketing organisation, they may well attempt to fleece help you again.
Often, this is via the requirement to buy promotional materials or samples of the products for which you have already paid for the privilege of selling. If the organisation asks you to buy tapes and dvds for extortionate amounts of money then shouldn’t you think twice? They cost so little to produce, and are supposedly designed to help you sell the wonderful retail products to make money for the company, so why do they need to make such a big profit out of selling them to their own distributors?
Also, why should you have to buy samples when you have already paid to join in order to sell those very products?
Doesn’t that sound like a scam to you?
If you have a traditional job then your employer will train you to undertake your duties to the best of your ability. This makes good financial sense to them as it will maximise your productivity and ability to generate a good return versus your wage cost.
Why then, do many multi level marketing schemes require payment in return for their training seminars?
Surely it would be in their best interests to train their distributors for free so that they can profit from their retail sales?
The trappings of success
If you join a multi level marketing scheme and get to meet the boss, or one of the other guys at the top, then you may well see them in their plush offices, or with their photographs of holidays, boats and mansions.
Do you really think you will have these too, by pushing their products for them?
Unless you are really gifted and determined then these trappings of success will be out of your reach, attainable only by those at the top who sit back and see their minions fail and lose money whilst lining their products through their uplines.
The drop out rate for multi level marketing is somewhere around 98%. This means only one in fifty people continue in the scheme for any length of time.
Is it because they are not gifted or lucky, determined or successful? Or is it because they realise they have been duped, paying a fee for something they then realise they cannot sell?
Joining the cult
Some multi level marketing schemes are almost cult-like in their approach to marketing and doing business. Over a period of time distributors are slowly brainwashed into believing all the hype that they come out with in their attempts to gain a new sale recruit.
Negativity is not allowed anywhere within the organisation or outside of it either. On this blog, and others like it, supporters of various multi level marketing schemes will always appear to have their say, and often to rubbish the claims of those who speak out against the organisation they work for.
In fact, some are so determined that I have seen them commenting on this very site using multiple names (oops, guess they didn’t realise I know their IP addresses). Some have even said they are leaving this site in disgust, never to return, only to reappear a few minutes later with another positive comment under a different alias.
If you have a website that says anything negative about certain MLMs then you become a target. There are services out there, that specifically targeting multi level marketing organisations, offering to optimise there sites in order to outrank anyone who says anything counter to their doctrines.
A recent development is that these MLMs will post articles themselves, on unrelated websites, that will ask if they are a scam and then ‘prove’ that they are not. With clever marketing, utilising YouTube amongst other places, they then get said sites to rank well in the search engines, often spamming their way to domination over the whole first page of the search results.
Buying it yourself
Many multi level marketing schemes offer different levels to their distributors, often offering different levels of commission or other perks.
Some distributors will apply pressure to their downline, demanding that they achieve, thereby lining their products. Other lower level distributors may need their egos stroked and so they will buy inventory for themselves in order to appease one or the other, or both.
Often this inventory will be unwanted by the distributor who purchased it. There are many stories online of failed multi level marketing distributors with garages full of worthless stock.
Fake it until you make it
Purchasing inventory to gain a higher level within the organisation isn’t the only means of faking it until you make it. Within some schemes distributors are encouraged to buy symbols of status, such as cars, or to lease them.
Such purchases or leases add to the illusion that the distributor is successful and may prompt potential recruits to think that they too can make it big by joining. In reality, they just represent a further cost that may not be met from what little the distributor actually does make through the scheme.
Does giving the illusion of being rich and successful mean they are, surreptitiously, scamming new recruits into thinking they can achieve the same trappings?
If you read some of the comments left on this blog about MLMs then you may be forgiven for thinking that there are a large number of distributors out there who are making a fortune. Whilst it’s possible that some are, I am of the opinion that most are faking it until they make it and are, almost certainly ‘shills’.
These means they represent the multi level marketing scheme in question and are employed to go around the web and blogosphere, leaving positive comments everywhere and leading people into believing their way is best and that they can make huge amounts from it.
The number of times I have had to moderate comments and remove people’s email addresses from their ‘helpful’ comments can attest to this.
Refunded but not in full
Many multi level marketing companies will have some sort of refund offer, leading distributors into believing that there is little to no risk. However, they generally have strings attached, such as not being a full refund, or having terms and conditions attached. These conditions make the practice of returns nigh on impossible and can be very misleading which, in my opinion, is another indicator that it is all just a scam.
Is time up for multi level marketing?
What do you think?