Multi-Level Marketing, also known as MLM, is a scam. Yeah, I said it.
Before I get started, I know this post is likely to ruffle a few feathers. Hopefully if you are involved in MLM though, you can please let your guard down so I can give you some perspective outside of the “bubble”. Often times when you are involved in a group and everyone thinks the same and acts the same, you don’t get any unique perspective.
Also, when you PAY for something you are instantly going to defend your purchase. It is a stupid feeling when you realize that you have been ripped off and in no way would I call anyone stupid or look at anyone that way if they were part of an MLM. It is all part of the journey to success and sometimes we need to find out what doesn’t work before we can find out what works.
In this post, I am going to make some valid points that I think you are going be able to appreciate on both sides of the fence. Those that love or think they love MLM… as well as those that are bitter towards the idea of MLM because of past experiences. Either way, these are undeniable points that I am about to make.
MLM Makes You a Hustler, Whether You Like it or Not.
You are that pimp standing on the corner of the street. You are that energy juice salesperson that solicits your “scheme” to people. You are selling insurance programs that nobody has ever heard of, yet you do so because there is opportunity getting others to do as you are.
Every MLM is based on the hustle. You are told, “get out there and make some cold calls”, “call your friends and family”, “talk about it every day”, “use social media to mention something about it every day”, “check up on your downline”, “boast about how great the product is”.
This is called hustling and unfortunately it puts your reputation on the line. There is nothing more annoying than listening to someone pitch their MLM to you, often times a product they don’t even really use or they are forced to use it because of the continuity aspect of the program.
To make it in MLM, you have to hustle. You have to hustle others.
Unfortunately there is a systemic problem with MLM and that derives in the business model itself. It relies on you getting other people into the program and almost always if your goal is getting actual customers, it is convincing people to spend way too much on products. That leads me to…
Without Overcharging, There Would be NO Compensation.
There would be no feasible way to earn within an MLM if they didn’t overcharge for their products/services. Your best interest automatically has to be you “selling” people on overpriced junk most of the time, and sometimes unsafe, untested and unproven programs.
AND more often than not, it has nothing to do with the actual product. You are selling people into a scheme so they can do the same to others. Most MLM’s have a fee to join. Most MLM’s require you to purchase the product. Most MLM’s have products that are vastly overpriced to support the compensation structure of the very program.
Without overcharging for their products and without having fees or relying on recurring product orders (by the people within the program), an MLM would die out very quickly. Unlike legitimate sales models, they rarely rely on selling quality products at a good price to customers. They rely on selling people on the scheme fees so they can do so to others….and the endless chain continues until people wake up to what is really going on.
It’s a P_R_M_D scheme.
Paying for the Stevie Award, BBB or Other Credentials. They Buy Trust.
One of the most common tactics is for an MLM to work to gain authority for their product by getting “credentials” to put beside their name. There are many “awards” that you can pay money for out there.
Lots of the MLM companies get so many complaints within online platforms that they have entire teams dedicated to clearing their name. This includes paying money to the BBB to get accredited and move up their ratings. Yes, you can pay for ratings within the BBB (even if you are a totally illegitimate company). Same goes for the Stevie awards which are a completely unethical system for “awarding status” to many unethical companies.
There are many companies that have been taken out by the FTC for scamming that have also received awards of this nature. There is no due diligence taken.
Making Money Off Your Friends, That Ain’t Cool.
The most common and sometimes the only way people make money in MLM programs is from recruiting others into the scheme.
I personally know, I have been involved in MLM’s and this was unfortunately the only way I could promote it. I sold my Aunts and Uncles, my Cousins, tried to sell my friends, and of course my parents bought into my products because I thought I was an entrepreneur. I think that they committed to a program they didn’t necessarily believe in just because they felt bad for me.
You get real tired real quick of shameless promoting products/services and the scheme itself to others you know. You get tired of getting “denied” by people. And the unfortunate but natural consequence of promoting MLM and “amazing” opportunity after opportunity is that it gives them a perception of you that you probably don’t like. A schemer and a swindler.
Seriously though, thinking logically how could anyone ever bring themselves to spend $30 on a bottle of Acai juice (Monavie). The same Acai juice, if not better quality, could be bought at Costco for less than $10. Sure, you are paying a Premium…but the only reason you are is because you have to fund the scheme itself and this is done through inflated prices. By the way, Monavie has since gone out of business and was deemed a scam.
You Are NOT Building a REAL Business With MLM.
You don’t own the business. You don’t own the website. You don’t own anything other than “product” that you usually are required to buy from the company (for way more than it is actually worth).
One of the biggest fallacies with an MLM program is that you are actually building a business. Unlike Affiliate Marketing, where you are creating a website, a brand and a following (which is a business), in MLM you are undergoing a constant “hustle” cycle that requires you to always suck in that next person to your downline, shamelessly promoting the products and services to your family and friends, or even worse, have to buy the product yourself in order to remain part of the MLM…which can get very expensive.
You are assigned names like “sponsor”, “distributor”, “presidential level” (and many others) which serve as nothing more than a facade as to what you actually are when you are involved in MLM. A block in the pyramid.
Think about it. A pyramid will always stand high and the top block will always be supported if there is always MORE blocks underneath the upper level. That is why the CEO of the companies tend to make 10’s of millions and the average person within the program will never be able to support the actual fees of getting involved in it.
And if you are like most, when you end up hanging up your MLM boots, you are left with drawers and boxes of “extra” product that you never used. This more than validates that you were part of the program not for the quality of the product, rather the potential opportunity if you got other people involved in the product. A backwards way of trying to do business and fundamentally, with MLM you are not creating a business.
MLM is NOT Affiliate Marketing, Period.
This is an apple vs. oranges comparison. MLM is nothing like Affiliate Marketing. Affiliate Marketing gives you the freedom to promote whatever products/services that you want, within any niche, in fact, it can quite often be the segway for you creating and selling you own products/services.
MLM locks you to ONE program. You by no means have the best interest of your audience in mind because you are always required to sell the same, overpriced, and often times unproven product to people.
Affiliate marketing is the act of promoting products to customers. It it is not the act of promoting an opportunity to others with “products” hidden inside of the scheme somewhere.
It is very easy to determine whether or not you are an affiliate or an MLM’er. If you are promoting products to others, then you are an affiliate. If you are recruiting people into your program in your downline, you are involved in MLM.
Don’t confuse the two because at the core of it, one is an ethical way to promote products in exchange for a commission (affiliate marketing) whereas the other is an unethical way to promote a product in exchange for “recruitment” fees for getting others involved in the very same scheme (MLM).
Some of the Most Epic MLM’s Are Still Alive and Well…for NOW.
There are many MLM”s out there, in fact, 1,000’s of them. There is a reason they will continue to be popular, because “some” people make money with them (mostly the company and a very small handful of people).
Here are some of the most popular MLM programs:
- Herbalife (under huge pressure by authorities)
- NuSkin (under huge pressure by authorities)
- Pampered Chef
- Mary Kay
- Avon
- Young Living Essential Oils
- Beachbody
- Origami Owl
- Stella and Dot
- Isagenix
- Nerium International
- Rodan & Fields
- Karat Bars
- 7 Minute Workout
And then there are the many MLM’s that have succumb to the very fact that they were unethical from the get go. Departures (because of legal issues) are an all too common thing within the MLM world, which sucks as the marketer because when a company goes, so does your entire business.
Recent Multi-level Marketing Schemes Shut Down By Law Enforcement
- Vemma (read post)
- Mona Vie
- Wake Up Now
- ZeekRewards (read post)
- BurnLounge
- Fortune High-Tech Marketing (FHTM)
- Global Information Alliance
- TrekAlliance
- TelexFree
My Conclusion, You Are Not a Bad Person if You Are Involved in MLM
One thing I have learned over the years is that people seeking any form of opportunity have different reasons for doing so. Money is obviously a major motivating factor and that is why it seems OK to promote MLM’s a lot of the time. If your neighbours and friends are doing it, then it must be OK. Unfortunately, there is nobody there to tell you otherwise and it takes something like this post to give you perspective.
If you are involved in an MLM, you are not a bad person. If you have been involved in many, you are not a bad person. We are defined often times in life by what we achieve and what “material” stuff we have, that is why a lot of us have an internal motivation to make money, make it fast, and make it just like the people at the top of these pyramids (whos success stories they are alway sold on).
You are a good person, with motives I respect. I also know that there are opportunities out there for you that can carry you far beyond any MLM program could ever, affiliate marketing being one of them. I encourage you to think outside of the box and think outside of the bubble if you have been wrapped up in one or more MLM’s and are having a tough time getting it off the ground.
There comes a time where the hustle is not worth it and the realization that 95% of people fail with multi-level marketing schemes simply because their motivation is based on recruitment of others (which is a constant and tireless hustle) versus offering a quality product to people that are already interested in that very product (like affiliate marketing).
I would be happy to entertain all comments, questions, and experiences here within my comment thread. I know a lot of you will have some awesome insights to share along with some opinions. I would love to hear them and I promise to get back to you!
Hi Kyle. You should have mentioned that most MLM recruits do not understand how economics and markets work. For an MLM to succeed and remain sustainable, human population, resources, and market share must be infinite. Since they are obviously not, this is why over 99% of people fail no matter how hard they work, and that only members at the top reap all the rewards. The basic pitch of recruiting just 3 – 5 people into the business, and then showing them to do the same is very flawed; the entire human population would be recruited just 14 levels down… That’s a lot of milkshakes and vitamins! Statistically, you have better odds of making money as a “professional” gambler in Vegas!
Exactly the case. MLM fails when typically when the recruitment of others into the larger scheme stops. You see it all the time and the most successful MLM you see around actually have products that customers are buying, not just those being sold into the recruitment process.
The FTC came down hard on Herbalife a few years back which rattled the industry, but changed it in a positive manner. There are now many more provisions in the MLM space that specify that a higher percentage of sales must be through the actual sale to customers outside of the scheme, versus pure recruitment revenue.
I pretty much came to the conclusion MLM = Must Lose Money quite a while ago…
My question is what does it take for Affiliate Marketing to work, if it does?
To put it briefly, it seems nothing works, or it takes more time, money, dedication and mental attention that I want to expend – but its always put to me as so easy and “done for you”.
I don’t know if there’s an idea that works for me, but I haven’t quite given up…
Still, I have spent thousands just this past year, making NOTHING on affiliate marketing, expending quite a bit of time and effort while of course, I could have spent ONE thousand dollars on ONE Bitcoin and made $20 grand doing nothing!
Because of this, now I simply must look into Crypto currency of course, and stop wasting my time on fruitless Affiliate Marketing “businesses”, at LEAST for the time being…
But I wish I COULD make money at Affiliate Marketing, its just that it seems to be such scammy a failing business model where I am supposed to be spending hours on Facebook, Youtube and telling them I’m making money, when I’m really not, trying to sell people into doing the same thing…
If there is Affiliate Marketing that actually works without all that, I’d sure like to know!!
Affiliate marketing is no different than any form of sales. You, as the affiliate marketer, are working to build an audience (traffic). This is done ideally through your website, which you can build out in any niche.
The proess looks like this:
(1) Choose a niche
(2) Build a website
(3) Build content (get traffic)
(4) Recommend affiliate programs
There are over 550,000,000 products/services that you can promote as an affiliate. If you have not been successful up to this point in affiliate marketing, chances are you are looking in the wrong places for an education. If you have spent thousands, you certainly have wasted your money and if you want to get the elite training in this space, I recommend you check out Wealthy Affiliate.
Affiliates are making billions every year, this is only going to continue to go up as time goes on. If you get caught up in “what is hot” (things like crypto), expect to get burned and expect the fact that you are not going to actually be creating a real business.
Hi Kyle, I really enjoyed the assessment you have of MLM companies. I joined an MLM company once, ironically, It was because of MLM that I discovered Affiliate Marketing. Anyways, I was just getting done with work, and I went to a friends house to hang out. There were three different people I never met before, and what would normally be a normal evening of chilling with my buddy and watching tv, turned into four people trying to sell me this MLM opportunity to join World Ventures.
I decided to give it a shot as at the moment, the excitement everyone presented overcame me, but after about 6 days I came to realize how incredibly difficult it would be to get leads and sales, plus I could recognize after awhile that it was indeed a pyramid scheme.
Have you ever heard of World Ventures? I think it’d be stellar if you did a review on them, I’d love to see your in-depth opinion on World Ventures/Dreamtrips.
I have never heard of this particular program, but the presentation and the fact that the recruitment process relies heavily on friends and family and selling people into an “opportunity” is consistent with most MLM’s these days.
If a company is selling you (or in most cases, the participant of the MLM) on the fact that you can earn lots of money by building a downline and recruiting others, and as a “secondary” there are actual products to promote, then I would avoid it.
The problem is, most MLM’s rely on rebilling their own customers and participants for a great deal of their overall income so the fees just to be part of an MLM like this can be quite substantial through time. Not to mention, if you plan on selling the product to someone else you tend to have to “overcharge” as the products are inflated to support the commission structure and paying people down many different levels in the scheme.
I have been involve in of the MLM program called Tiens. Their products are based on health and nutrition and personal care products. Most of the products are innovative and rare to find like health cup for personal hydrogenated drinking water. Negative ions sanitary pads. Myself mostly promotes products not reqruiting . I even makes more money selling products. But sometimes i feel guilty and feel threatening to our business when the products of similar products comes in different companies and 3 or 4 times lesser in price. Yes you are right MLM company has to support the scheme and hence have to overpriced. Business is not sustainable or wont last long. Whats your advice ?
If you believe in the product, it is backed by actual fact and it isn’t priced out of the market to support a high commission structure and the multiple-levels, then I think you have yourself a good program to promote.
Also, if the hustle is built on promoting the products to others versus trying to recruit others into the given scheme, then I think it is definitely a viable opportunity. In saying this, you should still consider building yourself as a brand and an authority in the space (drinking water) and you can do this through platforms like Wealthy Affiliate where you can build yourself a healthy business online in ANY niche. Just something to consider.
Hello!! My friend recently accepted a “job opportunity” with Ariix and he called me claiming the opportunity for me; but he didn’t tell me the name of the company immediately or what the job was, he had a representative tell me how I wouldn’t do much for good pay which after recent research, I found it’s a red flag. I was wondering if you knew whether or not Ariix is a, I guess reliable MLM because I’ve avoided recruiters at my local malls countless times and I’m 20 years old and in college, I already have a part-time job and I DON’T want to get into anything I’d consider as suspicious. Also, my friend is a very close friend and he’s always skeptical and I just don’t want it to be that he fell for a trap without knowing it. Thank you!
Just because it is your friend that is recruiting you into it, doesn’t mean it carries any level of legitimacy. That is the conventional model that MLM programs use to get reach and to recruit new people in the program. They train their distributors to recruit people through their social channels (Facebook, Twitter, Instagram) as well as their friends an family members as they have the greatest level of trust with these people.
I have never heard of this program, but I would recommend you do your due diligence before joining. If your friend is selling you on the opportunity (how much you can make) versus the products themselves, I would be a little worried that you are getting involved in something that is a recruitment based MLM versus one that is more legitimate and focused on the sale of actual product.
Can you please do research on PFA? Premiere Finance Alliance? My friend recruited me under his mentor Hermie Bacus.
Never heard of this MLM, but I will definitely add it to my growing list of companies to review.
What would you say about FLP – Forever Living Products please?
I am unfamiliar with this particular program, but I will certainly investigate this program with a future review. What I can tell you is that if you are involved and the focus is more on recruiting others into the program rather than the quality of the products/services themselves, then avoid it.
If the focus is on the products and you can create a viable business promoting those products, without having to suck others into a program/scheme, then it is fine and a legitimate opportunity.
I got into an MLM because I was desperate. I pushed so many people into joining, now they all hate me. I’m pretty sure most of my old friends from school don’t want to be around me anymore. Please, if you are financially desperate, find something else to do.
Sorry to hear about this and this is the end result of many people that get involved within the MLM world. I see it all over my Facebook, people are shamelessly jumping from scheme to scheme promoting it to their so called friends. You get so wrapped up in what you are doing and you are getting pushed by your “upline” to recruit, recruit, recruit…you forget about the relationships that you have built over the years.
If your method of making money is getting your friends wrapped up in your MLM, you need to find another means to build an income. That is not a viable one and it definitely is not going to make you any friends, rather lose them.
My wife and I started making money sharing wine by joining a wine club. If you get 3 people to sign up your wine is free each month. So if you know anyone that likes wine its a layup. It’s different from other MLM companies because it’t not beauty creams or diet pills its WINE.
As long as the focus is selling wine to others, versus recruitment of others into the MLM it is fine. If the highest % of your revenue comes from recruiting people into the scheme, then you may be doing something that could be deemed as a pyramid schemes down the road by the FTC.
In saying this, it sounds like your program has a tangible product and service (and it is wine too)! I am into craft beer, so if they ever come out with such a program let me know.
There’s a lot of really good information here. I think the unfortunate route most product based MLM companies go is really the mistake. Referral based marketing works but not at the price of charging more just to support a compensation plan. Companies should be profitable and should focus on gathering real customers. Most MLM companies focus on sell the opportunity which usually requires a large buy in. I came from a traditional business background so I knew to be sustainable you had to have real customers. Recently I moved my family to Japan to launch our new division which is completely based on saving people money on a bill they will pay forever. I started at the bottom and made it to the top by helping others to the top. I wouldn’t trade this lifestyle for the world. I’m so glad my kids have full time parents and experiences they’d never get otherwise.
I agree but it is few and far between that the money is made from selling to customers outside of the scheme itself. The focus of most MLM’s quickly becomes recruiting others into the scheme as that is where the bulk of your money is made.
The FTC, Competition Bureau and other non partisan entities are really starting to make some positive moves in this space and requiring a much higher percentage of the sales that take place to be through actual customers purchasing the products. It forces these companies to actually provide a quality product, versus a recruitment platform or worse, a pyramid scheme.
Question so if MLM advises you that you don’t have to recruit to make money but you have to sale product what is the difference of me walking in CVS if they didn’t sell items the CVS would close shop
I am sorry, I don’t understand your argument. You go into a store like CVS to buy things. That is called commerce. If you join an MLM to sell the actual product to consumers, there is nothing wrong with that. If you join an MLM with the purpose and focus of getting others into the MLM beneath you, that is when you are stepping into a grey area and where many MLM’s have been defined by the FTC and SEC as pyramid schemes.
MLM should not be compared to normal commerce, that is a poor argument and is not at all relevant.
How can you honestly keep telling people that the industry of network marketing as a whole is a scam when there have only been bad apples just like any other industry? Are you meaning to tell me that people like Tony Robbins, Robert Kiyosaki, Jennifer Lopez, and Sir Richard Branson are all scam artists? Come on man. None of these people have network marketing businesses yet they only speak very highly of the industry as a whole. You can’t keep judging every company in an industry based on the minority of bad apples involved, or by the unethical INDIVIDUALS who happen to be involved with an ethical company.
A lot of people are endorsed to speak highly of certain industries and the example of the folks that you have used, some of these people are absolutely being “paid off” every time they recommend a particular MLM or network marketing company. That doesn’t mean that there are not legitimate network marketing companies out there. There are.
They are just few and far between and there is A LOT of evidence indicating this as some of the largest network marketing companies out there continue to be investigated for being pyramid schemes, many of which are bending to the FTC, many of which will vanish and those involved will move onto the next best “opportunity”.
If your focus within your MLM or network marketing company is recruiting others into the opportunity, I would be careful. If you are caught into an “auto billing” cycle for the products within your company, I would be careful. If you are promoting products simply because those are the only products you can promote, regardless of their quality or inferiority within a given niche, then I would be careful. Chances are you are getting involved in a scheme or a scam, not a legitimate and ethical opportunity.
Hi Kyle
I’ve been reading about MLMs for a while. Is UNICITY also a pyramid scheme? Is it a scam too?
I am unfamiliar with Unicity, but I will do some investigation for you Amanda. You can read about some of the most apparent signs above in my article, but if the people promoting the article are selling you on the idea of making money, rather than the quality of the products or even what the product is and how it benefits the customer you will be selling it, I would recommend you avoid it.
Look at the company and their products, not the opportunity. If you cannot get past the quality of the products or it all feels like a bunch of hype, these are “tell tale” signs you may be getting involved in something that you don’t want to be involved in.
I like a lot of points you brought out. I had been involved in Amway as a young married person. We put in a lot of effort. But like you said Grandma was the best customer. So that fizzled out. Over weight problems hounded our family so, I was a sitting Duck when Herbal Life came along. After some research and found out it was not really Herbs only and that it was over priced! I was absolutely against MLM . I mean I was like,” I will NEVER ever promote an MLM,”. 10 years later someone in the family had a skin condition that was VERY bad . Nothing worked.
At our wits end we listened to a respected friend that has this Monovie juice, supposedly from a rare berry from South America. No it didn’t help GRRRR! it was the last straw. After reading the label I realized we were drinking 90% plus grape juice. Yes you guessed it. SOOOO If it even looked like it MIGHT have a MLM smell I would never sign my name again.
Fast forward .
We were in South America and needed a very low salt index fertilizer because of the heat, to foliage feed our corn. Some friends of mine were in the Conklin business doing and applying commercial roofs. They explained that the Conklin Company had fertilizers with very low burn potential. But I would not sign on the line because I though it was a scam like those of years ago. But I really needed the fertilizer and the price was fair at wholesale. so I used it. It was super amazing what we could do with it. When we came home for furlough I helped these some guys on some of their roofs. I again was impressed on the quality of the products. Some of my farmer friends were interested. I did tell them the products are awesome and the ROI is phenomenal, BUT STAY AWAY FROM THE MARKETING SCHEME!
Some people got involved and made very successful roofing and farming businesses. Because of these 4 people opening accounts I was invited to spend time with the Owner of Conklin, Mr Charles W Herbster . After 3 days he gave me a vision that blew me away. Here was a man interested in Direct selling to individuals. with one of the main criteria for our products. The consumer MUST be the greatest winner. If the product does not produce $3 for every $1 ( Wholesale) spent on average, it is not deemed a product for our company. Many are even better. for instance our AMP D seed treatment at retail, costs about $4.50 for a corn grower to use. Conklin says we get and average of a little over 8 Bushel per acre increase on average…………..
Well I got Virginia Ag Extension to do a test plot. they did a four repetitions for accuracy. From that the average data came back as 12.7 Bushel per acres increase over the control plots. side by side. that is one thousand percent ROI. It Conklin has been in business for many many years , like back in the 60’s. most people are whole sale customers only buying factory direct with no desire to be in the sales side. The products themselves make the income. A small percent like me promote them use them and sell them retail if that is what someone wants. Or set up whole sale accounts.
So is it an MLM? not sure possibly, but the consumer is ALWAYS the greatest winner ! One of my growers gains 3 tons of corn silage per acre when using , Amp D. His ROI is a few thousand percent. I don’t have to call him when it is time to order! I was a hard case, but I don’t think all MLM’s are the same. Do the smell test. If it sounds like a get rich quick scheme get away! But this one can make a fair living. And my customers become my friends.
If the consumer is the winner in any program and the products and services are fair market value, then the product is a good one (regardless of how it is sold).
If the emphasis of the program is recruiting others into the program to sell the service, then you are likely going to be sitting in a constant grey area with your scheme (and you may be doing illegal activity yourself).
I believe Monavie is now out of business for false/misleading advertising practices and Herbalife just went through a very significant battle with the FTC where the rules on MLM were radically changed as a result of that case.
Kyle
After 17 yrs of trying, testing products & companies of MLM companies, your right on. Your not a bad person for trying to better yourself, you are led to believe theres is when 95% of people who join fail, by design.
95% of people fail by design, meaning that they lose money within the opportunity. That is normal in the MLM world and for some reason that has become accepted as being acceptable.
You list MLM companies that have been shutdown for being illegal. Shall we make a list of conventional businesses that have been shutdown? Exactly, we’ll be here forever… Every industry has its bad apples, I think it’s unfair for you to put a bulls eye on MLM. But you love pushing affiliate marketing… here’s the truth about AM:
1. Most push products they’ve never even tried. I think that some MLMs forcing you to buy the product is actually a good thing. How can you convincingly sell something you’ve never tried yourself!?
2. I was part of an affiliate network that promoted untested, unproven health products through an affiliate link and/or landing page. I had to leave because the amount of chargebacks and schemes by using IBO’s to avoid the 5% chargeback limit given my Merchant companies were getting way to unethical.
3. AM uses copy writing tactics…. aka “SIZZLE” … this is no different from what MLMers do offline.
Conclusion: Just like any industry AM has its good apples and bad apples. In the case of AM, I think there are actually way more bad ones. I think, you sir, have a huge beam in your eye and are trying to remove a splinter from ours. Read the Bible for some context on that one. This comment likely won’t make the cut but whatever.
Yes, I list MLM companies that have been shut down because they were deemed as being a pyramid scheme. I agree with you, there are good apples & bad apples in any industry but there is the tendency to go “unethical” when you are operating or promoting an MLM scheme, which is why there is a proliferation of companies that get taking out in the MLM space every year.
An affiliate marketing company cannot be a pyramid scheme or a ponzi scheme. There is the requirement for multiple levels for this to be the case, which is why I have pointed this out. This article isn’t about conventional business, it is about MLM and the drawbacks of being involved in such schemes. The problem is that most people don’t realize they are involved in a “rogue” one before it is too late and by virtue of these sales schemes that are deemed illegal, you as a distributor are also participating in illegal activities (without knowing it).
In response to your few points here:
Force feeding people to try products so they can spam their social networks stating how great the products are (simply because they are trying to recruit others into their scheme) doesn’t exactly exhibit ethics. As for recommending something, or not recommending something, as an affiliate or other agency…this can be done without owning that product.
The same way as someone at an Apple Store or at Best Buy can recommend a product to you based on KNOWLEDGE and insights. They help you choose the best product, which is unlike MLM that focuses on selling you only their product and nothing else. In other words, people within MLM are naturally forced to promote an inferior product and state it as the best, which is actually incredibly unethical.
Then as an affiliate marketer, you shouldn’t promote that. That is the great part about affiliate marketing, you don’t have to tie yourself to products that you don’t believe in and that are low quality. Your goal is to help the greater public get the BEST products at the BEST prices. Something that cannot effectively be doing within a multi-level marketing scheme.
Again, some affiliate marketing companies are illegitimate and I cover these on my website as well. That is the key here. It is not an argument as to whether or not they do it, so you can do it. If it is unethical, it is unethical.
Selling garbage products based on the “sizzle” when they have very little value is unethical, regardless of whether or not you are involved in an affiliate program or an MLM scheme. MLM’s naturally need to do this because they are forced to promote ONLY products within their MLM (typically).
I agree with Kyle. People should want to buy MLM products, not be forced to buy every month for any income. Bad apples are everywhere but not the reputation as MLM has become. Ive been in MLM for 12 yrs b4 i left for good. Using outdated methods 95% doesnt work. No ROI makes people leave, period.
Hey Kyle, I was actually a MLM’er before I joined WA. When I first found the opportunity, I thought it was great because I wanted financial independence and I wanted to provide for my family and I thought it was “the way.” I was very naive (I had barely turned 19 when I was recruited, and at a Target!).
I did it for months before I got tired of trying to sell the people I knew and even hurting my reputation by seeming like just a salesman. I clung tirelessly to this dream, because my motivation was my family, I went out to shopping malls and would prospect for hours, getting denied 98% of the time. I figured this couldn’t be the only way, I mean just look at all the ways different millionaires have made their money, right? I wanted to try new things and that ultimately led me to WA.
So I wanted to ask you Kyle, I don’t know if someone might have mentioned it, but what do you think of Primerica? I’ve noticed they vehemently defend themselves as not being a pyramid (I don’t believe they are) and they have more 6 figure earners than any company I believe. Sadly, it seems they have other pyramid-like qualities (selling to friends, recruiting), but their prices actually lead the industry and they tend to be against other pyramids/MLMs. Is Primerica any different from these other MLMs you mention?
I actually have a story in relation to this MLM. I was at a hotel in Toronto and I could tell there was a conference taking place. I overheard people that were trying to recruit newcomers into the program and all of the profits available while I was working in the lobby, and this went on for hours and there was (a) no mention of the product/service (b) no mention of the company. The entire focus was centered around recruiting others and boasting about the opportunity.
I am sure there is more to it then that, but the moral of the story is whatever product they do promote, it wasn’t touted as the reason for people’s success by the higher up distributors that we pursuing the newbies and hyping it up. I had to actually go over and check out the sign at the conference room to realize that in fact, it was for this company.
This is the sort of behaviour that definitely concerns me with ANY program. Smoke and mirrors and focus on the sizzle, never any substance of the actual steak.
Thanks for sharing your story and your concerns about this MLM scheme, they definitely may be valid here.
Great article. I’ve been trying to gather more information on MLM stuff. Now that I am running my own business and involved in the works of big opportunity, oh my do I keep getting pitched on MLM!
It’s quick and easier money for the people on the top. However, it’s hard to maintain and very unethical.
My business is finally taking off because my service is super valuable! I’ve no problem giving my clients bonus work with an affiliate program because they refer people to me! I don’t understand why people do MLM! Real Business is a tad bit harder, but as I am experiencing once you get your first wave of customers, you have no problem getting more! People do the promotion through word of mouth FOR me! Because they love my service!
The customer should always come first. In MLM, the CEO comes first. I hope to see it become illegal in my lifetime, so sad watching brainwashed acquaintances fall down the wrong path… While I find insane degrees of success, my friends are still hustling. While I am focused on getting my first few employees, they still are working hard. It’s sad- both angers me and saddens me. I guess this is the world now, one of many paths, and sticking to the honorable one continues to bring me massive rewards….
It is really hard to go anywhere these days, in particular within the social media world, without getting pitched on the next latest and greatest MLM. Whether it is some sort of weight loss product/gimmick, insurance scheme, or a straight up pyramid, there are many different MLM’s that we are becoming accustomed to being pitched at us these days. This is not to say some MLM’s are absolutely legitimate and put the customer first, but they appear to be few and far between these days.
That beautiful part about affiliate marketing is that you can offer the best product at the best price to the customer. You can offer them what they want and what they need, versus pressure sales and forcing a customer to buy what you WANT them to purchase. That is one of the biggest differences between affiliate marketing and MLM, not to mention as an affiliate marketer you can promote over 500 MILLION different products and services, everything from Apple products to your latest skin care products.
Everyone is also on the “same” level with affiliate marketing, you are not focused on recruiting people into a scheme, rather you are focused on recommending products and services to people that they actually need.
I am thinking two I was looking @ are MLM. One is one called the greenbox & the other is legal shield. Is there anyway to do chat?
I have never heard of Greenbox, but I do know that Legal Shield is an MLM company. So yes, it would fit into that category because it has multiple levels within its commissions structure and compensation plan. I hope this clarifies for you here Michelle.
Kyle, do you think that Melaleuca is an MLM? I have used their product for years and love everything I use but I never really got into the business end of it. Their product is less expensive than purchasing at the store and the products are top quality, but to build a business you have to recruit customers and then a % of customers become business owners. So a little bit like Pampered Chef maybe.
Melaleuca is an MLM, yes. There are multiple levels to their marketing, the reason I know is that I personally know people that have been involved in this program. Is it a scam, I actually think Melaleuca has some really high quality product and those selling within this MLM actually do put focus on selling product versus recruiting people into the program, definitely legitimizing it.
But if you are going to promote this business online, you would want to choose a specific niche/category to brand yourself within and within your website you would be able to promote many different products, not just the MLM that you were involved in.
Oops the usual ignorance about MLM. If it was so bad how come it has not been banned by governments around the world?
There is ample evidence that you DON’T have to go after your warm market to be a success.
The products are often unique and many companies have customers only ie people who love the products so much that they take them month after month WITHOUT getting involved in the business.
You really need to get educated about this business that is massive and growing around$178 billion the movie industry is $88 billion
A few things here Peter:
(1) Because something makes money, doesn’t mean it is ethical. That is a very “tired” argument that many MLM’ers have, many of which are making this argument prior to their company being dissolved or being deemed as a pyramid scheme by the FTC/SEC. If you steal a purse from an old lady (which is in essence what many of these schemes are doing), you are making money. Does that make it OK?
(2) Most people go after their “warm” market. This has gone from contacting your friends and family, to “social media” spam. Log into Facebook, Twitter or Instagram these days and you will get blasted consistently with “mlm offers”. This is the new “warm” market and it is actually ruining the quality of social media. I sense a significant crackdown on this by major social media platforms.
(3) Unique, not typically. I have never seen one that is unique. There are 500,000,000 products on Amazon now, all with more cost efficient (and reputable) than products that are available within MLM programs and to call them unique, is definitely over-reaching. If you provide me with a truly unique product that is great value, more cost efficient and has a better brand/reputation than what is out there, I would be happy to hear it.
(4) People love products, because they are forced to love the products. If they don’t use the products and say they love them and they are “life changing” it surely would be much more difficult to promote this same product/opportunity to the next person would it not? Manufactured love in many cases, I don’t deny there are some very good in the MLM space, but generally speaking there are much cheaper, more effective, more trustworthy alternatives.
The thing I hate the most about mlm companies which I have experienced myself is the way they try to convince you to join by using very tricky emotional/drama influence tactics. These people belong in Hollywood on a filmset. For example: during a business presentation the whole room goes in tears because someone lost 15 pounds and found the love of her life. It’s just hilarious. The people who have been in mlm know exactly what I’m talking about. I have to say that there are some mlm companies that have some pretty damn good products, talking about nutritional supplements. However it’s always super expensive and not affordable for the average person to keep using on a regular base which makes it hard to sell. Most of the times you’ll find very much the same products on sites like iherb, vita cost, amazon, etc. WAY cheaper.
I have seen the same ones you are referring to, a matter of selling the sizzle not the steak. It is purely marketing. As you have stated, there are definitely some great products out there in the MLM space, I would never argue that point.
But purely based on the fact that there is such much overhead within any scheme of this nature because there are a lot or mouths to feed within the compensation model, the products have the tendency to be very expensive within MLM schemes (and some would say drastically overpriced).
Why would I use your protein powder when the industry leading protein powders are much less, ones that are backed by industry experts and their expertise is protein powders. Same with any type of supplement or product. Why this product, versus the “expert” and highest rated ones in the industry. That is my main dilemma and argument with most MLM’s.
I was involved 25 years ago in an MLM scheme selling NSA water filters. I lost a small amount of money (a few hundred pounds) before the penny dropped that I had essentially become a brain-washed member of an extremely cynical cult: one which sets out to make its fortune for the top 5% by creating a sales force who are the primary consumers. In short the company hierarchy is selling its product and making its fortune in the full and hence cynical knowledge that 95% of its recruited salesforce is the end user customer – and as you implied of a product that few believe in and which is exorbitantly overpriced to fund the ‘compensation’ scheme.
It remains my view that all MLMs should be outlawed – end of!
There are lots of MLM companies out there that only survive because they push the “recruitment” side of their companies so much. You will often times find that those involved in such schemes are those that are “tricky” or remain very quiet about what they are actually selling.
You have to email them or private message them on Facebook for more information. That sort of elusive marketing by the distributors almost always means it is an MLM based primarily of recruitment of others into the program, versus the sell of the product itself.
Hey,
Great article. Just a quick question…
Do you believe that there is any line that determines whether a MLM business is legitimate or not? I work for a MLM, and none of the employees buy the product, have great commission rates, as well as acquiring access to training and sales support.
I’m curious to know, if you believe that MLM businesses are bad for everyone? OR only particular ones that require investment.
One of the easiest ways to tell is if the focus is on recruiting others into the program itself or it is selling the actual product. Also, would you buy this given/product or service if it wasn’t part of an MLM (ie, it is high quality), or is the only reason that people are buying the product is because of their involvement in the MLM itself.
I think if you use these two rules you will find that there are many illegitimate (yet legal) MLM’s out there, along with some that truly have some quality products.
Hello Kyle,
Thank you for all of your knowledge. A friend asked me to join World GN to sell the Helo Bracelet at the executive level. He mentioned that there’s an opportunity to make a lot of money, but after looking at a lot of YouTube presentations, it feels like a pyramid scam to me. Have you heard of it and your thoughts? Thanks again!!
If it feels and sounds like a pyramid scheme, chances are it might be. Many of these programs are masked with all sorts of “facades”, but in reality the only money is made within these program through the recruitment of others into the program and tying those involved into autoship type purchases.
Good article. I would like to see these types of companies shut down but I guess many operate within the law. All MLM companies show you glitzy compensation but I think less than 1% in each company ever make anything substantial. Most just lose money buying the product…buying marketing tools.. MLM is a very poor choice to make money and if you know anyone that wants to join one of those companies, discourage them from doing so. And many of these companies will tell you that they are not MLM… They will say they are direct sales.
Many of them actually don’t operate within the law, the law takes time to catch up to many of these so called MLM’s. There is absolutely a subset that are completely legit and have great products, but there is also a mass of unethical, pyramid style schemes out there that are representing themselves as being multi-level marketing (when they are not).
Great insight, my friends have been targets of such MLM schemes and feel sad for them as they think they are building a great empire by hustling. One of them is Herballife and she has convinced her boyfriend into buying the products and call them her clients. Another friend got brainwashed into a scheme which sell similar high energy tabs and he only talks walks and sleeps about it without much success, poor thing.
And recently I have been approached by a Kyani distributor which is also one of the pyramid like schemes as well, have you heard of Kyani? they are all over social media and are really pushy.
I have read a lot of news on herbalife and their ongoing conflicts with the FTC, but I think their case being so public and their agreement with the FTC being so public, I think the rules of operating an MLM are slowly shifting to something that is much more legitimate across the board with more concise rules.
I think there is still a bit too much grey area out there, but over time and as the FTC and SEC go to work on these types of cases it will have a positive impact on the MLM and consumer industry as a whole.
LOL I couldn’t help but laugh throughout this entire post because it was so true and am guilty for being apart of it trying to promote energy drink products. A friend came from out of town for a conference/awards ceremony at the fanciest hotel in the city and invited me to check it out and got caught up with all the bells, whistles and cheering and signed on. It was a decent and tasty product but felt like more of an embarrassment when talking about it trying to promote and and revived no support from anybody in the up line after signing up and was told to just do more of the online training which didn’t really offer any value other than how to be manipulative and take advantage of people that are in financial struggle.
I am very thankful to wealthy affiliates and the community for all the quality training and support and for proving there truly are good marketing systems that work when people are willing to put in the effort for success.
It can absolutely be a cult mentality, all the cheering within the crowd and we need to remember that 97% of those people aren’t making money. They are being sold on the people that get to go up on stage, which are the limited few that are higher up in the scheme…which most will never have any chance of achieving.
The MLM’s with great products survive, the ones that base their success on “rah rah” conferences and the recruitment of others into the program will eventually see their demise, either through an FTC/SEC takedown (if their operation is illegal) or simply running out of people to fool into the scheme.