Stay Away from MLM



by Luke Setzer

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Multi-Level Marketing (MLM) companies like Amway and Nu Skin are notorious for hyping their "business opportunities" and promising riches to those who "work hard" at "building the business".  However, a closer look reveals a very dark side to the MLM industry, as the following testimonial from a seasoned MLMer will demonstrate:

My wife and I have been involved with the MLM industry for 20 years.  We have built many large downlines and have come to the following well-reasoned conclusions.

We're tired of building big downlines only to see them fade away, companies go out of business, regulatory action, lawsuits, bad press, etc. Distributors are along for a ride in a cart driven by someone else.

Selling a product-based deal is fine, but the idea of marketing a business opportunity to prospects when we know the numbers is not ethical for us. In its purest form, MLM is a viable method of marketing if its focus is on products and not primarily the business. Selling the dream of financial independence with MLM is a mirage for 90+% of distributors.  The MLM industry statistics are that on average only 10% of distributors get a commission check each month. Of that 10%, 80% do not make enough to sustain themselves as a full-time income.  Industry-wide company statistics show that 90% of distributors drop out of each company within a 1-2 year period. The distributor churn rate is terrible.

Any way you cut it, MLM statistically does not work for 90+% of those involved. And those who make the big bucks are in a more elite group--usually 1/10 of 1% of all distributors.

We found that we could not ethically sell the MLM dream of financial independence for all. It is impossible. For me to get $10,000+ a month, I have to build this on the backs of all the users, consumers, and little people--the ones who buy their $100 a month of whatever and don't get a check. This money flows upline to distributors and back to the company from people who don't make their monthly qualifications.

In MLMs, you do not own your own business, you do not own the product, and you are not in control of your destiny. The company holds all the strings--product supply, computer tracking, commissions, collections, customer service, order fulfillment, publicity, compliance, public relations, comp plan, everything. All you own is a position in a long line of distributors. You do not control the product you sell, the comp plan, what the company does or does not do, the money that is paid . . . distributors own nothing other than the opportunity to sign more distributors and manage the existing downline. You are at the mercy of the company, upline, downline, media, and government.

This is why we're doing our own thing--developing our own products (books, information products), marketing, and selling. We started this four years ago. We've got no one to answer to except us. We've got control. We direct market to customers, find more new customers, nurture that relationship, and make more sales. The most important thing we've got is our customer list and that relationship and goodwill.

I would like to recommend that you check out the following links.  These pages will explain more:

What's Wrong With Multi-Level Marketing

What's Wrong With MLM--FAQs

The Zero Sum Theory
MLMer Tom "Big Al" Schreiter on MLM

MLM Watch: A Skeptical Guide to Multilevel Marketing

The Network Marketing Game
Dr. Jon Taylor, who did the
Network Marketing Payout Distribution Study

Worldwide Scam

MLM or Pyramid Scheme?

Cagey Consumer
MLM and Financial Scams Exposed

False Profits Analysis of Network and Multi-Level Marketing (MLM)

How do MLMs manage to recruit and retain enthusiastic distributors, even when those distributors lose money year after year?  A close examination of the mind control systems of cults reveals disturbing similarities between MLMs and cults.

This web site supplies a generic checklist for identifying cults:

Let's go through the list and comment:

  1. The group is focused on a living leader to whom members seem to display excessively zealous, unquestioning commitment.  In MLM, sometimes it's a leader, sometimes it's the company itself.   More often it's a charismatic individual, whether that's the company founder or an upline.

  2. The group is preoccupied with bringing in new members.  In MLM, the answer is YES! YES! YES!

  3. The group is preoccupied with making money.  In MLM, the answer is YES! YES! YES!

  4. Questioning, doubt, and dissent are discouraged or even punished.  In MLM, the answer is YES! YES! YES!

  5. Mind-numbing techniques (such as meditation, chanting, speaking in tongues, denunciation sessions, debilitating work routines) are used to suppress doubts about the group and its leader(s).  Ever been to an MLM "motivational seminar"? It's not so much "mind numbing" as it is "mind distracting". Good feelings are whipped up and lifelong dreams stimulated and then linked to the "business opportunity", as if the latter could materialise the former. Logical flows of cause and effect based on rigorous research are replaced with highly emotional but intellectually flawed mental linkages to keep the MLM recruit hooked.

  6. The leadership dictates sometimes in great detail how members should think, act, and feel (for example: members must get permission from leaders to date, change jobs, get married; leaders may prescribe what types of clothes to wear, where to live, how to discipline children, and so forth).  For MLMers, the dictates are that "thou shalt market thy product every waking moment when one is not listening to one of thy company tapes or contacting thy friends and family to recruit them into the cause. Should thy fail to do this, thou art the gravest of sinners."

  7. The group is elitist, claiming a special, exalted status for itself, its leader(s), and members (for example: the leader is considered the Messiah or an avatar; the group and/or the leader has a special mission to save humanity).  MLMers "save humanity" with their product or their business opportunity. The "bad guys" are corporate America and their foisting of JOBs (Just Over Broke) onto the American "sheep". Never mind that it's much easier to manage life on a steady JOB income than on a nonexistent or even negative MLM income.

  8. The group has a polarized us- versus-them mentality, which causes conflict with the wider society.  See above comments on MLMs vs JOBs in corporate America.

  9. The group's leader is not accountable to any authorities (as are, for example, military commanders and ministers, priests, monks, and rabbis of mainstream denominations).  MLMers dislike well-educated critical thinkers who can see through their smoke and mirrors, and FTC regulators who expect MLM companies to substantiate their outrageous claims.

  10. The group teaches or implies that its supposedly exalted ends justify means that members would have considered unethical before joining the group (for example: collecting money for bogus charities).  Unethical MLM practices include (1) outrageous income claims not achievable by "just anyone" despite their arguments to the contrary, (2) telling people to "fake it till you make it" (heard this one from a Nu Skin Blue Diamond distributor tape), (3) encouraging retail customers to use excessive amounts of product to boost resales (heard this one from another Nu Skin distributor tape).

  11. The leadership induces guilt feelings in members in order to control them.  Example: "What? You didn't make any phone calls today for your business? How are you ever going to get that new Mercedes (or big house, or quitting your job, or whatever other 'hot button' you might have)."

  12. Members' subservience to the group causes them to cut ties with family and friends, and to give up personal goals and activities that were of interest before joining the group.  Listen to some Amway tapes and learn how people have lost valuable relationships with families and friends because Amway became their all-consuming passion. Very sad. It's as if the MLM company "overwrites" the recruit's personality with its own scripting regardless of the damage such scripting may cause.

  13. Members are expected to devote inordinate amounts of time to the group.  Spend every waking moment "working the business" regardless of whether it ever makes you any money.

  14. Members are encouraged or required to live and/or socialize only with other group members.  "You must surround yourself with positive people! Negative people say, 'Be realistic'! Positive people ask, 'What is possible?' Most people die from the neck up by the time they're adults! Stay away from them! They're dream stealers!"

Based on this analysis, I think the notion that MLMs have cultish tendencies has merit. I'll be the first to admit that excellence in any endeavor requires a passionate dedication. But that dedication is usually internal rather than external. When external "authorities" begin overwriting people's identities with their own scripting, to the detriment of the people getting scripted, that's when the problems begin. I think that happens most of the time with MLMs given the dismal statistics of MLM failures.  When rigorous studies reveal gambling to be less risky than MLM, it is time to bail out of MLM.

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