Multi Level Marketing – Always A Scam?

MLM

That’s Multi Level Marketing.

Personally, I am not a fan of it, but I know many people who are. There are hundreds of stories online about people who either lose money by joining MLM companies, or who struggle to make an income of any kind of value. Equally, there are a select few people, with the right qualities, who persevere and go on to make vast fortunes from multi level marketing.

So, in order to keep a balance, I decided to take a closer look at MLMs –

Reasons to become involved in MLM

Do you remember a Letterman show that featured Donald Trump?

When asked how he would make another fortune if he lost everything, Trump replied that the first thing he would do would be to join a network marketing company, because he believes it is one of the easiest ways of making money.

Genuine multi level marketing companies always feature one or more products. When you join as a seller you may be required to pay a fee which then entitles you to sell on behalf of the company, earning a commission on every sale.

If you think about it, this could be considered a franchise opportunity, but with a mere fraction of the start-up costs.

There is also the opportunity to earn via referrals. Sign someone up and you can earn a percentage of their commissions too. In some MLMs you also get the opportunity to earn from their referrals as well.

Therefore, if you can sell the products as well as the thought of the opportunity to others then you can earn a considerable amount of money not only from your own personal selling efforts but from those of your downline too.

Whilst I don’t like multi level marketing, it is true that many such companies have been in business for a considerable amount of time. Would this be allowed by the likes of the Federal Trade Commission (FTC) if the organisations were in any way shady?

Reasons NOT to become involved in MLM

Some multi level marketing companies are an out and out fraud. In fact, they are not really mlm at all, they are pyramid schemes. In such instances, no-one really cares about any products, it’s all about earning through recruiting. Obviously, as the pyramid expands the opportunities for recruiting at lower levels diminish and so it is always true that those at the top prosper at the expense of those at the bottom.

In other cases, it is not so much the company, but it’s agents – some will push new recruits into buying inventory way in excess of what they currently need, just to secure their commission upon it.

In other MLMs, the structure is set up such that directors mentor new recruits, but some are too lazy to do so.

Why some people fail at MLM

Not all failure in multi level marketing can be attributed to the organisation. Sometimes those who join have to take some of the blame for not realising the following –

  • MLM can lead to high income but some see it as a get rich quick scheme and don’t work at it
  • Some people have no business sense
  • MLM is about networking – if you don’t have people skills you are doomed to fail
  • Some people fail and leave, not realising that our failures can lead to future successes

Conclusion

Hopefully this has been a quick and balanced view of multi level marketing. It certainly isn’t for me, but it is the route to riches for some people.

It would definitely be unfair to label all multi level marketing opportunities as scams – many are, some are not, and it would be fair to say that I make a point of looking out for the bad ones to write about more than the good ones.

About Lee Munson

Lee's non-technical background allows him to write about internet security in a clear way that is understandable to both IT professionals and people just like you who need simple answers to your security questions.

Comments

  1. Hi Jon I was out

  2. I am checking if my gravatar works…been breaking my head over this

  3. displayed

  4. i dunno why my pic is not displaced

    • I’m sure with MyBlogLog that it is linked to your website and, as you don’t have one… no picture!

    • If you can work out how to do it then you can add yourself as a co-author of one of mine to see if that works.

      • But i have nothing to “author” about!

        • Become a pirate… see if you can add yourself as co-author of my pirate site. You don’t need to actually do any writing, just have an association with a site.

          If you can add yourself then just enter that web address when you comment next and I think it should work.

          The other alternative is to use http://www.gravatar.com in which case you won’t need anything more than your email address.

          I need to go for half an hour now as I am trying to finish my next post – Medical Transcription scams.

  5. You will soon with your personalitty

  6. I don’t like it.I don’t like socializing in the net.
    Of course other than with “SCAMTYPES”

  7. Hi! I like your facebook profile.But I wont stay there for long I will soon delete my account

  8. I noticed that it wasn’t keeping up with us..

    I am sure that I did break it… Just as long as you know that if I did, it was by overcommenting not by some malicious code

    BELIEVE ME, I wouldn’t know the first thing about how to implement something like that. As savvy as I like to think of myself, the world of hacking, sneaking, etc. are so far off my scope it would be embarassing if it weren’t for the fact that those things are somewhat looked down upon!!

    jb

  9. you are right, and i am 😳 quite embarassed, must change both as soon as I get home.

    I always appreciate the link love coming back, and don’t doubt it for a second… I am just so new at this that I feel like I am stumbling through a haunted house at night. I keep opening doors that lead to hallways with more doors and those doors open on halls with more doors… It is still quite overwhelming. And of course this is for me a hobby as well so there is never any guaranteeing how much time I will be able to devote.

    Thanks for the heads up though, I had forgotten about those until this conversation.

    jb

  10. good point, I typically do this anyway, as outright plagiarism doesn’t sit well with me!!!

    I suspected that about the duplicate content and what not, but did not know that both parties stood to be potentially penalized.

    thanks

    • Yep, it could be both.

      I noticed that with the article you guest posted and Kim’s comments you had copied them in their entirety.

      It would be better to link here with a summary, especially as I hope you know that I’ll return the link love wherever it is appropriate to do so.

  11. Oops, I guess you are not back on yet.. did you set this to auto-post? or are you eating dinner?

    Either way, this is a great presentation of the opportunity and potential pit-falls in a very concise article. Thanks (as always) for putting your thoughts down for us to digest!

    Do you mind if I post this on my MK site? With a link, stumble upon, techno, del.icio.us, etc…of course.

    Let me know :)

    jb

    • You are spot on – gotta love auto-post :)

      As for using the article, sure. However, when using articles you find elsewhere you should always put some of your own writing before and after, or paraphrase, as a pure copy will be deemed duplicate content by the search engines. This would leave one oe the other, or both of us, with a penalty to our ranking for the article.

  12. Welcome home!

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  1. […] Typically, that has nothing to do with the products or services being offered by network marketers, but more to do with that type of business model. […]

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