What’s Wrong With What’s Wrong With MLM

What’s Wrong With What’s Wrong With MLM
Understanding How to Overcome Objections
by Fugi Saito
What's Wrong With Multi-Level Marketing? - A Rebuttal
a.k.a. "Networking" Companies
Bad Image or Bad Reality?
"Let me tell you about an incredible ground-level business opportunity," and you are invited
to a home for "a discussion." Funny enough, you feel sick in your gut that there is some
hidden agenda or deception. "Probably a Multi-Level Marketing (MLM) organization," you
think. Suppose it is? Should you trust your instincts? Is there anything wrong with MLM?
RESPONSE
*At the URL http://www.best.com/%7Evandruff/mlm1.html#1 you will find this article. It is
my pleasure to respond to it.
This article will analyze four problem areas with MLM. Specifically, it will focus on problems
of I. Market Saturation , II. Pyramid Structure, III. Morality and Ethics, and IV. Relationship
Issues associated with MLMs. Thus, you can properly assess your "instincts."
I. Market Saturation: An Inherent Problem
Back to the Basics
A tutorial on market saturation hardly seems necessary in most business discussion, but
with MLM, unfortunately, it is. Common sense seems to get suspended when considering if
MLMs are viable, even theoretically, as a profitable means of distribution for all parties
involved. This suspension is created by a heightened expectation of "easy money," but more
on that later.
RESPONSE
*If prostitution is the oldest profession, then surely marketing is the second oldest.
Marketing is "all the steps and costs incurred in getting a product or service from the
manufacturer or service provider to the end user". Saturation has never happened. It isn't
even an inherent problem. If a tutorial on market saturation is necessary, then let's make a
"real world" comparison. The offspring from a single mosquito should cover the world in
very short order, now, has that happened? It should have since it involves the same
exponential mathematical calculations that you are using.
I believe, however, that I have found your error in your opening "paragraph" where you say
"Common sense seems to get suspended when considering if MLMs are viable, even
theoretically, as a profitable means of distribution for all parties involved". You are under
the assumption that MLM is engaged in "marketing" an opportunity rather than "marketing"
products. What you have done is like writing about the automotive industry by studying car
salesmen.
New, Innovative?
MLM can no longer claim to be new and thus exempt from the normal rules of the market
and the way goods and services are sold. They have been tried and for the most part have
failed. Some have been miserable failures in spite of offering excellent products.
Marketing innovations are not rare in the modern world, as evidenced by the success of
Walmart, which found a more efficient and profitable way to distribute goods and services
than the status quo, providing lasting value to stockholders, employees, distributors, and
consumers. But this is not the case with any MLM to date, and after 25 years of failed
attempts, it is time to point out the reasons why.
RESPONSE
*Well yes, it is relatively new compared to traditional marketing which counts it's history in
centuries. I don't know where you get the idea that it is exempt from the normal rules of
the marketplace. The one thing that is common to everyone is needs. Need fulfillment is the
basis of virtually all marketing. As to MLM's dismal record, that record is in fact a simple
reflection of most business ventures. Failure in a business venture is not the unique domain
of MLM's.
Don't Some People Make Money in MLM?
First, we will analyze the "driving mechanism" of MLMs. We will detail how they are
intrinsically unstable, guaranteed by design to oversaturate the market with no one
noticing. We will look at why MLMs can never equalize into profitability the way companies
in the real world can, so that the result will be that the organization as a whole cannot, even
in theory, be profitable. When this inevitable destiny occurs, the only money to be made is
not from the product or service but from the losses of people lower down in the organization
RESPONSE
*"Guaranteed by design to oversaturate?" There are MLM companies whose sales amount to
billions of dollars, and yet in the entire history of traditional marketing nobody has managed
to "oversaturate the market". As to the "inevitable destiny" let us examine traditional
marketing. A close example would be a price club like Costco/Priceco. You are a member
and that membership allows you to "shop" from their stores. Now the people who are
"customers" shop and buy products from those stores. Some of them shop and resell their
goods for a profit, but by far the vast majority of people in both MLM and in traditional
marketing are customers. They pay and receive a "real world" value in product or services.
They are no more suffering a "loss" than the customer of a local grocery store, or a member
of a Price Club suffers a "loss" whose profits are used to pay the overhead, salaries, and
generate a profit. For any venue of marketing to survive they have to offer a "good deal" for
customers otherwise people will vote with their feet and the venture will fail. This idea is
echoed by Dr. Charles King, Professor of Marketing at the University of Illinois and an expert
on entrepreneurial businesses including MLM.
Thus the MLM organization becomes exploitive, and many high-level MLM promoters have
been shut down, the "executives" incarcerated, for selling the fraud of impossible success to
others. Other, larger MLMs have survived by hiring large batteries of attorneys to ward off
federal prosecutors, even bragging about the funds they have in reserve for this purpose.
The unfortunate "distributor" at the bottom is the loser, and once this becomes apparent
beyond all the slick videotapes and motivational pep-talks, good people start to get a bad
taste in their mouths about the whole situation. But how exactly does this happen, and
must it always?
RESPONSE
*Please ... your diatribe about MLM can be echoed in virtually every industry. Even God's
work is not without it's Jimmy Swaggart's and Jimmy Baker's. No business is protected from
its share of charlatans, con artists and crooks.
Doomed by Design?
The first question is this: Is any company choosing this marketing strategy destined to fail,
to degenerate into an exploitive venture, regardless of how good the product is?
To see this clearly we must go through an otherwise obvious and elementary discussion of
how any business must be careful not to overhire, overextend, or oversupply a market.
RESPONSE
*Since MLM is a marketing system, your entire diatribe can be deleted for brevity's sake.
Marketing, no matter what shape it takes, is all governed by the same rules.
MLMs vs. the Real World
The basic question that needs to be asked is this: If this product or service is so great, then
why isn't it being sold through the customary marketing system that has served human
society for thousands of years? Why does it need to resort to a "special marketing" scheme
like an MLM? Why does everyone need to be so inexperienced at marketing this! Is the
product just a thin cover for what is really a pyramid scheme of exploiting others? But more
on that later.
RESPONSE
*Well, if MLM is so bad, let's see who is jumping on the bandwagon. This information comes
from the May 1994 issue of "Success" magazine. Off course we have the grand daddy of
them all Amway which does billions of dollars of business all through Network Marketing. In
the 1970's MCI and Sprint grabbed huge marketshare from AT&T as MLM's. Yamanouchi,
the big Japanese drug manufacturer bought Shaklee. ServiceMaster has a MLM division
called Quality Service Network. Princess House is an MLM household goods venture of
Colgate Palmolive. Applied Electronics of Hong Kong started Quorum. Primerica, the Fortune
500 giant now MLMs through their purchase of A.L. Williams, the US' largest Insurance
agency (and an MLM). Dainippon, a mere 7.5 billion dollar Japanese conglomerate has
created an MLM division called Earthnet. Gillette owns Jafra that competes against the
billion dollar Mary Kay organization. Discovery Toys competes against Toys "r" Us to the
tune of 93 million, Rexall Drugs and Fuller Brush are now MLM. The following is a small
sample of the companies that provide goods and services through MLM companies -- AT&T,
Avon, Bausch & Lomb, Bell Atlantic, Bell South, Campbell Soup, Chrysler Corp, Coca-Cola,
Corning, Fieldcrest Canon, Ford Motor Co, Fruit of the Loom, Bte, Ge, General Mills, General
Motors, H.J. Heinz co, IBM, Litton Industries, Motorola, NCR, Quaker Oats, Sharp
Electronics, Texax Instruments, Whirlpool Corp, Xerox Corp Zenith Electronics.
Now the question that begs to be asked is why most of these companies, so successful in
the "customary marketing system that has served human society for thousands of years",
would turn to MLM?
From Contracted, Protected Distribution . . . to Mayhem
Imagine that Wendy's became suddenly possessed by the idea that "everyone needs to
eat," and opened 4 Wendy's franchises on the four corners of an intersection in your
neighborhood. Who would benefit from this folly? The consumer? Certainly not the
franchises; they would all lose. Wendy's corporate? Perhaps temporarily, by speculative
inventory sales while the unfortunate franchises were under the delusion that they could all
make money. But in the end, the negative image of four outlets dying a slow death would
likely offset the temporary inventory sales bubble. Even the most unreflective of the hapless
franchisees would think twice about doing business in such a manner again. This is why
real-world distributorships and franchises are contractually protected by territory and/or
market.
Again, the simple fact is that even the most successful products will have partial market
penetration. The same is true for services. Demand is finite, and to overestimate it is
catastrophic.
So why are MLM promoters obscuring this? Who is in control of the supply "knob," carefully
and skillfully managing the size of the distribution channels, number of salespeople,
inventory, etc., to insure the success of all involved in the business? The truth is chilling:
Nobody.
Imagine trying to write a computer model of how MLMs work, and you will see this point
most vividly. An MLM could never work, even in theory. Think about it.
RESPONSE
*I guess you've never had an MLM organization have you? Instead of waxing on in theory, I'll use my own
organization as an example. There are hundreds of customers in my organization, at any one time only about 10%
of those customers will actually go out and create new customers. In any given month about 50% of them get
commission cheques because they have people in the organization below them. The correct analogy in your above
illustration is a single Wendy's franchise store creating more customers - not opening up more stores. It's not about
getting a bigger piece of the pie, it's about making a bigger pie. I love the customers in my organization. Most of
them do not want to build a business, some of them for years have enjoyed the benefits of better, safer, cheaper
product in their homes. Our income is dependent on providing those kinds of products to the customers. Just like
everyone who shops at Costo/Priceco does not buy wholesale so that they can resell the products at retail -- most of
them buy for their own use only.
The People Machine
Chernobyl had a control system that failed. MLMs have
no control mechanisms at all.
Where is the "switch" that can be flipped in an MLM when enough sales people are hired? In
a normal company a manager says "we have enough, let's stop hiring people at this point."
But in an MLM, there is no way to do this. An MLM is a human "churning" machine with no
"off button". Out of control by design, its gears will grind up the money, time, credibility,
and entrepreneurial energy of well meaning people who joined merely to supplement their
income. Better to just steer clear of this monster to begin with.
There is simply no way to avoid the built-in failure mechanism of MLMs. If a company
chooses to market this way, it will eventually "hire" (with no base pay and charging to
join) far too many people, with attendant losses inevitable for all involved.
RESPONSE
*Again the gross misconception. It's not about hiring sales people, it's about creating
customers. It's about marketing.
II. Pyramid Structure
II. Pyramid Structure: An Organizational Problem
The Un-Pyramid
For most MLMs, the product is really a mere diversion from the real profit-making dynamic.
To anyone familiar with MLMs, the previous discussion (which focused so much on the fact
that MLMs are "doomed by design" to reach market saturation and thus put the people who
are legitimately trying to sell the product into a difficult situation) may seem to miss the
point. The product or service may well be good, and it might oversaturate at some point,
but let's get serious. The product is not the incentive to join an MLM. Otherwise people
might have shown an interest in selling this particular product or service before in the real
world. The product is the excuse to attempt to legitimate the real money-making engine.
It's "the cover."
Intuitively, we all know what is really going on with MLMs. Just don't use the word
"pyramid"!
RESPONSE
*First off, you have yet to prove that saturation has ever happened. If that is what dooms
MLM then name me one MLM that has saturated the market... ... ... ... I'm waiting.... ... ...
I don't know who you've been talking to but very often the product IS the incentive to join
the MLM. Since the backbone of any marketing program is the customers, good products at
a reasonable price has been one of the "success factors" for many MLM companies. If it ain't
a good deal for the customer, it simply ain't a good deal. As you have pointed out, there are
as well "opportunity driven" MLM companies. Most of those suffer from a 90% attrition rate
simply because the "customer" did not get the "promised" product. I've seen the same
attitude in a computer store. Does that doom the entire computer industry?
The US sell about $5.5 Trillion in goods and services. MLMs even if you stretch the numbers
might represent $40 billion. Now when should we expect the doom to happen. The collapse
due to "saturation". MLM doesn't even account for 1% of the total goods and services.
As to your warning not to use the word "pyramid" how about using the word correctly.
Pyramid is a noun, in this context it is used to describe the apparent shape of a hierarchical
structure. This structure is the most commonly used organizational structure in the world. It
is the form of the organization and can be found in politics, the Boy Scouts, the Catholic
Church and the Mafia. Form does not determine legality or illegality -- function does. That's
why you have pyramid schemes, pyramid selling schemes, and pyramid selling or as it is
more commonly referred to MLM or Network Marketing. Schemes, scams and cons are
illegal because they are schemes, scams and cons - not because they assume the form of
pyramids.
Pyramid schemes are illegal lotteries. Gain is not determined by random chance or skill, but
rather by position in a hierarchical structure. Generally this involves money or a monetary
equivalent. They are illegal because they are not fair.
If product is involved it can still be illegal if the following practices are evident. Lying about
typical earning potential. Paying people to recruit others. Requiring people to purchase
commercially unreasonable amounts (loading) Requiring people to purchase products at
commercially unreasonable prices Failure to provide the right to return products at
reasonable commercial terms So, product can be involved, and yet it can be an illegal
scheme.
"You see, if you can convince 10 people that everyone needs this product or service, even
though they aren't buying similar products available in the market, and they can convince
10 people, and so on, that's how you make the real money. And as long as you sell to a few
people along the way, it is all legal." Maybe. . . .
But the way to make money in all this is clearly not by only selling product, otherwise you
might have shown an interest in it before, through conventional market opportunities. No,
the "hook" is selling others on selling others on "the dream."
Math and Common Sense
MLMs work by geometric expansion, where you get 10 to sponsor 10 to sponsor 10, and so
on. This is usually shown as an expanding matrix (just don't say "pyramid"!) with
corresponding kick-backs at various levels.
The problem here is one of common sense. At a mere 3 levels deep this would be 1,000
people. There goes the neighborhood! At 6 levels deep, that would be 1,000,000 people
believing they can make money selling. But to whom? There goes the city! And the MLM is
just getting its steam going. Think of all the meetings! Think of all the "dreams" being sold!
Think of the false hopes being generated. Think of the money being lost.
RESPONSE
*Here's where the commons sense fails. You are quoting an ideal situation. While what you
present is possible it is not probable. There has never been an ideal situation that exists as
you have pointed out, and yet even without the ideal situation, people still can succeed in
MLM.
It Will Fail??? It Cannot Fail???
Nothing irritates a die-hard MLMer more than the preceding argument. If you point out the
absurdity, for example, that if "the pitch" at an Amway meeting were even moderately
accurate, in something like 18 months Amway would be larger than the GNP of the entire
United States, listen closely for a major gear-shift: "Well, that is absurd, of course. Not
everyone will succeed, and so the market will never saturate."
Well, which is it? Are we recruiting "winners" to build a real business, or planning by design
to profit off of "losers" who buy into our "confidence"?
RESPONSE
*Well I'm a die-hard network marketer, and I'm not irritated. I always thought marketing
involved getting a product or service from the manufacturer or service provider into the
hands of the end user. The more customers you have, the more of the marketing dollars
you can get. I certainly don't need all the customers in the world to be successful. Just
some. I know that one out of 10 customers will also create more customers and one out of
100 customers will be like me and create a lot more customers. If the product is good, and
the price fair, I'll keep the customers.
During "the pitch," anyone can make it work. "It's the opportunity of a lifetime." "Just look
at the math!" But mention the inevitable saturation and the losses this is going to cause for
everyone, and then you'll hear, "Of course it would never really work like that." "Most will
fail," you will be told, "but not you, Mr. Recruit. You are a winner. I can just see it in your
eyes."
RESPONSE
You must have been to some pretty wild opportunity meetings. It is impossible for everyone
to "make it work". If the business requires selling than you have to deal with the fact that
only 40% of the population has the aptitude to sell, and only 10% has the ability. As to who
will "be a winner" I've never been able to tell at all. Heck, I'm a management consultant
and I've had probably 4,000 people work for me in the last two decades and I can't guess
who has "the stuff".
If you are a starry-eyed recruit, it will grow as presented. If you are a logical skeptic, then
of course it would never really work like that.
But the dialog usually never even gets to this. The fact that the MLM is in a mad dash to
oversupply is largely chided as mere "stinkin' thinkin'." Expert MLMers know how to quickly
deflect this issue with parable, joke, personal testimony, or some other sleight of mind.
New Solution: A Retarded MLM
Some modern incarnations of MLMs attempt to address this particular problem by limiting
the number of people you can sponsor, say, to 4. But the same geometric expansion
problems exist; the failure mechanism has just been slowed down a bit. And now there is
the added problem of even more unnecessary layers in the organization.
The claim that an MLM is merely a "common-man" implementation of a normal real-world
distribution channel becomes even more absurd in this case. Imagine buying a product or
service in the real world and having to pay overrides and royalties to 5 or 10 unneeded and
uninvolved "distributor" layers. Would this be efficient? What value do these layers of
"distributors" provide to the consumer? Is this rational? Would such a company exist long in
a competitive environment?
RESPONSE
* In the "real world" how do you think Brokers, Wholesalers, Jobbers and retail stores get
paid? I know of Brokers that never handle the product, and I once had a Sales Manager who
got paid and in a year he never called on a single account, he was paid a part of the
commission that we earned. Paul Zane Pilzer, author of Unlimited Wealth says that
"distribution represents 85% of the value of goods at retail". There is no magical place
where the money comes from. It was built into the market value of the product. Traditional
marketing exists on those same dollars distributed in an ever narrowing hierarchy of levels
up to the manufacturer. The trick is to get paid more than what you spent.
My stores do about 100,000 transactions per month. I certainly don't do the transactions,
but I still get paid a portion of those transactions. So does the rest of the management
team. In fact, I get paid even when I don't go to work. Insurance agents get paid multiple
times for a job they only did once. Song writers and book authors can get the same kind of
payments. My mutual fund investments earned me over 40% last year and I didn't do a
damn thing. Looks to me like a lot of companies pay for people that are not involved in the
process.
Confidence Men and the Shadow Pyramid
The age-old technique of "con men" is to create "confidence" in some otherwise dumb idea
by diversion of thought, bait, or force of personality. The victim gets confidence in a bogus
plan, and in exchange the con man gets your money. MLMers are very high on confidence.
Since the brain inevitably intrudes itself into the delusion that an MLM could ever work,
spirits drop and attitudes go sour. But this depressive state can itself be exploited. As
doubts grow when the MLM does not do what recruits were first "con"fidenced to expect,
then a further profit can be made keeping the confidence going against all common sense.
Thus, a parallel or "shadow" pyramid of motivational tapes, seminars, and videos emerges.
These are a "must for success," and recruits are strong-armed into attending, buying,
buying, and buying all the more. This motivational "shadow pyramid" further exploits the
flagging recruits as they spiral inexorably into oversaturation and failure. The more they fail,
the more "help" they need from those who are "successful" above them.
RESPONSE
*In some organizations, not in all of them. Again a broad generalization and the slippery
slope argument rear their ugly head. Besides MLM is not the only venue that uses those
kinds of products. Traditional marketing is also used as a venue to hawk those kinds of
goods with the same results.
So, MLMs profit by conning recruits up-front with a "distributorship fee," and then make
further illicit money by "confidencing" these hapless victims as they fail via the "sale" of
collateral material.
RESPONSE
*Paying for recruitment is illegal. The sale of products or services to the end user and
generating commissions from those sales is standard operating procedure in most
businesses.
Special MLM "Job" Offer: A Losing Proposition
Would a rational person, abreast of the facts, go to work selling any product or service if he
or she knew that there was an open agenda to overhire sales reps for the same products in
the prospective territory?
This "dream" became reality in Orange County, CA in the mid 1970's, where it was hard to
find anyone interested in buying Amway products who wasn't already a distributor.
So, as the saying goes, "Get in early!" This is a rationalization on the level of "getting in
early" on the L.A. looting riots. If profit from the sale of products is fundamentally set up to
fail, then the only money to be had is to "loot" others by conning them while you have the
chance. Don't miss the "opportunity," indeed!
RESPONSE
*If an opportunity is valid, it is as valid 10 or 20 years later. A little research will satisfy that
question.
Where is the money coming from for those at the top? From the sucker at the bottom . . .
as in every pyramid scheme. The product could be, and lately has been, anything.
RESPONSE
*The product is everything.
The important thing is to exploit people while the exploiting is good.
III. Morality and Ethics
III. Morality and Ethics: A Problem of Greed
Moral Riddle: What Is Ever-Present but Universally Condemned?
While issues of morality and ethics can be tricky to discuss, materialism and greed are universally condemned by
every major religion, and even by most of the irreligious. This does not mean people are not materialistic or greedy;
in fact, the common ethical call to not be so is strong evidence that we are.
RESPONSE
*As I have previously pointed out -- Jimmy Swaggart, Jimmy Baker, want a few more added
to that list. Morality or the lack thereof, is not confined to MLM. It pervades every aspect of
humanity. To deny that it exists is wrong, and to confine it to a single industry is also
wrong.
For most people, this means if we are going to be materialistic or greedy, we would rather
not be obvious about it. Thus, Madison Avenue has subtle, highly polished ways of appealing
to these vices without being heavy handed. We don't mind so much . . . as long as it is
"veiled." This hypocrisy, while sad, is the status quo. So, Madison Avenue is trying to be
ever more subtle in appearing not to be manipulating our immoral "bent" towards greed and
materialism.
A Blatant Appeal to Materialism and Greed
Not so with the MLM crowd. Pick up any brochure or videotape for an MLM and you are more
than likely to see a cheesy, obvious, and blatant appeal to greed and materialism. This is
offensive to everyone, even die-hard materialists. Typical is an appeal to "the American
dream." Usually there will be a mood shot of a large new home, a luxury car, a boat,
perhaps a beautiful couple boarding a Lear jet, and so on.
While this need not necessarily be part of the MLM approach, it usually is.
RESPONSE
*We live in a free enterprise capitalistic society. It has it's faults, but I wouldn't trade it for
any available options either real or imagined. The appeal to more, better, bigger, status,
etc. is fundamental to virtually all advertising. Beyond the basics of nourishment, warmth,
and water everything else that is bought and sold is fueled by some other motive other than
basic survival. When wants are perceived as needs, then business flourishes. ANY business,
why do some people buy Cadillacs and some buy Escorts, after all, aren't they just a mode
of transportation?
Such a transparent appeal should make people suspicious. "Why the bait?" "Are they trying to
'get my juices going' so that my brain turns off?" "Couldn't they show people doing more
wholesome things with the money they make?" "If this is really a legitimate opportunity, why
not focus on the market, product, or service instead of people reveling in lavish materialism?"
But we have reason enough to know, having read this far, why the distraction is needed.
Unbridled greed suspends good judgment. When the eyes gloss over in a materialistic glaze,
common sense is a stranger.
*I prefer to believe that people are not sheep. That given ALL the facts that
they can come to a rational judgment. The con artist existed long before MLM
was conceived. They exist in every business INCLUDING MLMs.
Besides being cheesy and offensive to our sensibilities, this is not a big deal for participants,
right? But consider that all companies must have control over the way they are presented to the
public. Thus, an MLM has the right and obligation to dictate what material is used. Otherwise
any agent could say whatever he or she liked about the nature of the company, causing obvious
problems. Again, it would take too much time to audit and approve each individual's idea for a
presentation where the goal is mass marketing. Using "boilerplate" presentations affords the
added benefit of consistency. This is basic "information quality control."
The net effect is that the MLM rep is "stuck" with the company-approved video, brochure, and
presentation outline.
*Hmmmm, I wonder what other companies take that same approach. Insurance
sales, real estate, telemarketing, door to door sales people, fitness clubs,
hawkers at a carney, advertising sales people, investment counselors, want me
to go on? That list alone could double the article.
"Not Me, I Would Never Stoop That Low!"
In 1991, some distributors in the MLM FUND AMERICA began to produce their own, improved
sponsorship material. They were summarily fired, which did not please them since many of them
were founding members who had "gotten in early" and had many kick-backs due them.
Later the same year, by the way, the Founder of FUND AMERICA was arrested for having
generated some 90% of revenues selling "distributorships" versus product . . . making it clear
that this particular MLM was little more than a pyramid scheme.
*Schemes, Scams, and Cons pre-existed MLMs. Unsavory business practices and
illegal activities abound. The FTC maintains a great database and website. Go
there, see how many of the business that have been fined and charged are MLM
companies. By far the vast majority come from "traditional" marketing. There
is more crime, more illegal activities, more cons, more scams, and more
victims from traditional marketing methods than there has ever been from
"bad" MLM companies. Does this mean that traditional marketing is inherently
bad?
I recently had the misfortune of having to charge one of my staff with theft,
does that mean all of my staff steal? I've charged customers with
shoplifting, does that mean all of my customers are thieves? That's the
problem with slippery slope arguments, you assume that the part represents
the whole.
Job Opening: Salesperson of Sin!
Do you want to be involved in the blatant promotion of values contrary to your belief system?
In most MLMs you will have no choice. You are going to have to sit through meeting after
meeting after meeting after meeting. You are going to be "motivated" to coerce your friends and
family to hear "the pitch." This is the way the "dream" is planted and fertilized. Get used to it.
If you are a materialist, you only have to get over the cheekiness of the presentation. But if you
do not wish to promote such ideas, if you consider them sinful, then this puts you at the focal
point of a moral dilemma. Do you wish to be a salesperson for materialism?
Do you know of any sales people who don't want to gain from their efforts?
Lack of Information Quality Control: An MLM Incentive?
On the flip-side of the issue of being stuck with the sponsorship "pitch" is the fact that the MLM
organization is otherwise loose, to say the least. This is part of the appeal to many, to "be your
own boss."
But in practice this leads to loony product claims, many of which are deceptive and some of
which can be positively dangerous.
*And all which can be illegal. Deceptive advertising claims - does
traditional marketing suffer from the same problem. Maybe check out the FTC
site and see.
Hyperbole is a given in an MLM. When inexperienced salespeople are turned loose to sell on full
commission without supervision or accountability, what else could happen?
Since MLM organizations are notoriously flash-in-the-pan, one has to wonder why any new
company would choose this flawed marketing technique. Perhaps one of the things to consider is
that the MLM organization can effectively skirt the Federal Trade Commission by using wordof-mouth testimonials, supposed "studies" done by scientists, rumors and other
misrepresentations that would never be allowed to see the light of day in the real world of
product promotion, shady as it is.
*Sorry, word of mouth doesn't absolve an individual from prosecution. And the
practices you mention are engaged in by traditional retail marketing
individuals as well. Remember the root word of advertising is "Avertir" to
warn.
Thus, the MLM has evolved into a "niche": It can be used to sell products that could not be sold
any other way. An MLM is a way to get undue credibility by exploiting people's personal
friendships and relationships via "networking." This is an intrinsic moral difficulty with MLMs
that will be expanded in the last section.
*Actually, if you examine MLM companies and the products that they carry, you
will find that the majority of products they market are available through
traditional marketing as well. Some are brand names available through a
number of sources.
MLM Sales Technique: Rumors, Slander, Libel
Hyperbole is not limited merely to product claims, however. When MLMers turn to their
competitors it can get ugly indeed. Some of the most outlandish rumors of modern history can be
traced to MLMs. In recent years, for example, the international rumor that the President of a
major real-world corporation was a Satanist, and that the logo of his company contained occult
symbols, was traced to specific Amway distributors. These were successfully sued in 1991, but
the rumor persists. And how much else of the MLM negative "sales pitch" is fabrication or
outright lie? Not all the negative selling claims are as scandalous or widespread as the previous
example, but the MLM culture produces so much of this stuff it would be hard to prosecute it all.
Again, what else could be expected from people thrown into an oversaturated sales market on
full commission and no accountability?
Negative selling is not unique to MLMs, but MLMs have a unique legacy of fostering a culture
of credulity -- of bizarre "gossip-as-fact." After all, this is a friend telling me this!
Telling lies about people or groups is slander. Systemic slander is legally termed libel, and is
illegal in most civilized countries. Slander is a sin listed next to murder and adultery in Biblical
texts. But how will you know when you become the slanderer by repeating what you heard in an
MLM meeting?
*I guess the same ignorance will prevail when people use Biblical texts to
show that women should be subservient, and Negroes are inferior. It's funny
what people will use as justification for their their bizarre "gossip-asfact" information. After all it was the preacher telling them this. Slander,
lies, mis-information isn't the privilege of MLM. The world is full of "used
car" and "used car salesman" stories.
Great Men?
Another morally questionable practice that is not intrinsic to MLMs, but seems axiomatic, is the
pent-up idolatry of the leaders. This is particularly silly in the case of most of the new MLMs -where the MLM marketing "executives" habitually are criminals.
*Habitually? Boy is my upline going to get a kick out of that one. Of course,
I know that that can be true, but again - In traditional marketing hasn't the
same been proven as well? In fact, can you tell me an industry that isn't
scandal free? The Banks, S&L's, Large Corporations, Government, The media,
The entertainment industry? How about religion?
In FUND AMERICA, the "approved materials" showed what a great man the founder was,
depicted the depth of his management experience, showed him in mood shots, etc. It is easy to
swoon in admiration of such a powerful, visionary man, dedicated to bringing this wonderful
opportunity to common Americans like us.
It turned out he was a criminal fugitive from Australia, where he had been run out of town for
doing the same.
While it is tempting to think this is the exception, it more and more has become the rule. MLM
executives are famous for getting off lightly when caught, and getting right back to it when they
get out of jail.
But you would never guess it from the company material. Great men all.
Yep, sounds just like the profile of most of the white collar crime in
America.... It's really too bad you can't get all the bad guys to have their
foreheads tattooed.
Pride and the Secret Closet: Vanity and the Way MLMs Grow
"Mr. Prospect, now you aren't required to buy more than 3 product units, but why bother joining
unless you plan to succeed? Besides, all of our products are 100% money back guaranteed."
"Hmmm . . . . To ask for a refund, then, is to admit defeat. Others appear to be doing O.K. at this.
I'm no failure! Perhaps I should go to another motivational seminar, or strong-arm and alienate
one more friend to join. I wasn't fooled! I'm no failure!"
So, the "inventory" and "sponsorship kits," never viable, collect dust. They become a pile in the
back closet or attic, a trophy to pride being unable to admit that greed seized the moment.
Yep, sounds just like the profile of most of the business that are started in
America.... It's really too bad life doesn't come with a guarantee.
Innovative Marketing or Organized Crime?
It is generally agreed that to mislead people in order to get their money is morally reprehensible.
It is labeled "theft" or "fraud," and those who do it should be punished. No one is naive enough
to suggest that you can't make money at it. Crime can pay, at least temporarily.
Back to the Pyramids
Pyramid schemes are illegal. They are illegal because they are exploitive and dishonest. They
exploit the most vulnerable of people: the desperate, the out-of-work, the ignorant. Those who
start and practice such fraud, should, and increasingly are, being punished for their crimes.
But add a product for cover, and call it an MLM, and people are willing to swallow that it is
legal. Is this true? Really? Who says so?
*Who says it's legal? Gee, the same people who define anything as being legal
or illegal. The courts.
The Feds vs. The MLM Gang: The Other Side of the Story
It is a fact that a few large MLMs have survived against the best efforts of law enforcement
officials to shut them down, spending millions of dollars to protect, lobby, and insulate
themselves. But the same could be said for any organized crime. It is difficult to stop once it
becomes so large.
*Either the companies were not successful and failures as you have stated, or
they were successful and made money and can afford to spend millions of
dollars to protect, lobby and insulate themselves. You can't have it both
ways.
And MLMs look so legitimate to the public, so decent. So many nice people are involved.
Surely, it can't be illegal! The people lower down may even defend the very organization that is
robbing them, hoping that they might get their chance to make "the big money" later.
*I'll remember to tell the people at Safeway that they are robbing me next
time I go to pay for my groceries.
But if it looks like a duck, walks like a duck, and quacks like a duck, it probably is a duck.
Unless it is an MLM, and then it is NOT a pyramid.
The Feds generally see it differently.
*Actually they do see a big difference in a pyramid scheme and MLM. In
Canada, pyramid schemes fall under SEC 206 of the Criminal Code. (the one
that deals with illegal lotteries) MLMs fall under the "Competition Act SEC
55 and 55.1. the part of the law that deals with business.
People can make money in an MLM, undeniably. The moral issue is: Where is the money
coming from? Selling product? Then why not sell the same product in the "real world"?
*Why not split up the marketing dollars amongst people instead of
corporations. Who would derive more benefit?
But everyone knows that the real incentive is the pyramid aspect, and the product just the excuse
to make it legal, or at least the MLM promoter would like you to believe it is legal.
*Some might, I don't, and I know a lot of people who would say the same
thing. The real incentive for the company I represent in Network Marketing is
their products. There are any number of companies who feel the same way. Just
as in ANY business, there are the bad apples as well. You are making a
blanket statement that I KNOW does not apply to many MLM organizations.
Marketing a product does not necessarily make it legal either and for some of
the large manufacturing companies it is not an excuse, it is their livelihood
to provide quality products to satisfied end users. No marketing plan has
ever won awards, but some of the products that are currently being sold
through MLMs have. And some of the MLM companies have received awards from
organizations like the BBB, and recognition through publications like Fortune
500, INC 500 and Success Magazine.
The Mob and the MLM: A Stretched Analogy?
Talk to a mobster, and he will tell you that he is "merely misunderstood in his benevolent
intentions." "We are just trying to 'build our business.'" "It's all a conspiracy to make us look
bad." "The Feds are out to get us because they are jealous or afraid of our new way of life."
"Why, look at all the good we do!" "We are looking more legitimate every day." "Here's a
statement from a famous DA that the Mob is really a good organization and no harm ever comes
from it." "We've even got a minister to endorse us now!"
*As far as I remember "Organized Crime" has never been made legitimate, and
subject to regulatory legislation dispite their "misunderstood benevolent
intentions" and the high price lawyers, and the lobbying efforts and
political connections etc. Or did you just forget that point in your analogy.
Propaganda and MLM Expansion
The MLMers of the 90's are starting to sound a lot like the gangsters of yesteryear. In an era
where management science and the law generally condemn the MLM, they've "got their own
experts," from academia or law, who are "on the payroll." Confidence, remember, is key.
*I have a blast from the past for you. Back in the 1950's some companies like
McDonald's and Midas Muffler decided to grow their businesses in a different
manner. Rather than shelling out millions of dollars to build and operate new
stores, they let independent franchisees do it for them.
This "new idea" was attacked by the media with exposes featuring destitute
families who had lost all of their life savings through these "schemes". The
Attorneys General in state after state condemned the new marketing method and
some Congressmen actually tried to outlaw franchising entirely. So now, 40
years later what do we have. Franchises accounting for 35% of all retail
sales within a highly government regulated industry. Does this story sound
familiar?
Regardless of all the vehement denials, MLMs are all to some extent pyramid schemes, and
pyramid schemes are illegal. Sure, some are "getting away with it," but so did the Mafia for
decades. It is hard to stop a juggernaut, especially one that has taken such pains to look
legitimate and misunderstood, that is highly organized, and that has so much money from its
victims to propagandize, lobby, and defend itself. And so the exploitation goes on.
*I didn't realize that you were a lawyer, that's a very profound legal
opinion.
If you are a lawyer, then you are not a good one since pyramid schemes
(illegal lotteries) are very well defined.
Take a look at traditional marketing. A candy bar manufacturer sells it's
product to 4 regional brokers. Those 4 regional brokers then sell the
candybars to 10 state or provincial candy wholesalers. Those 10 wholesalers
each sell bars to 10 local warehouses, and those 10 warehouses now sell the
product to 10 jobbers who sell the products to 20 retail stores where the
product is sold to 100 customers who eat the candybar.
Now the manufacturer, the brokers, the wholesalers, the jobbers and the
retail stores all make money. Draw this out on a piece of paper and tell me
what it looks like. A PYRAMID! Now draw out how the organizations look like
in those places. ANOTHER PYRAMID! Man oh man, we got pyramids all over the
place.
The candy bar probably cost about $0.06 to manufacture and the customer might
have paid $0.89. The $0.83 represents the cost of marketing that product. (By
the way, this "traditional" mode of marketing products is the prime culprit
contributing to inflation.)
The only difference between traditional marketing and MLM is who gets paid
the marketing dollars. That's it. There's nothing magical about that.
If these guys show up in your neighborhood, you are either "in" or "out," family or target, friend
or foe. Suspicion rules the day; everyone has an "angle"; greed supplants innocence. The
"neighborhood" is turned into a marketplace, and may never recover from the blow.
The ethical questions remain: Are MLMs a morally acceptable way to make money? Are they
even legal?
*If a customer gets a product that they need or want from a store or they
choose to get a similar product through a Network Marketing company, and the
quality is the same, or better -- and the price is the same or better -where is the ethical consideration. Is this legal? Yes it is. FTC said so in
1979.
MLM Proselytizing: Beneath Begging?
If money is needed that badly, why not simply ask friends and family for help rather than taking
money from them under false pretenses -- and also selling them a bill of goods? By "sponsoring"
them, you have not only conned them and profited at their expense, you have made them feel
like losers -- since they are not able to make a success of the hopeless MLM concept.
*When I shop at my local grocery store I pay money and get groceries. Some of
that money goes to pay the staff and management. Are they not profiting at my
expense?
Once seen, only the morally blind, or consciously criminal, could continue in such a "business."
But wait, perhaps you could sponsor . . . your mother!
*The foundation of business -- any business is to provides goods and services
at a profit. Are you suggesting all business people are criminals? My mother
is a member of my retail stores -- is there a problem with that? She also
orders products through our Network Marketing company. She gets better
cheaper and safer products than she would get at the grocery store or drug
store. What is so morally reprehensible about that?
There are also customers in her downline so she gets a commission cheque
every month from people who were going to buy the products anyway, they
simply chose to buy them from a different store. They pay less money, get
better products, and choose to shop at this store month after month after
month. Neither I or my mother call these people up and ask them to order. The
do so because they prefer to use the products that my Network Marketing
company has to offer.
They certainly don't do
commission cheques they
who is morally blind or
I'll give you names and
yourself.
this month after month because of the tremendous
get -- they do it because they like the products. Now
a conscious criminal in this scenario? If you want
phone numbers and you can call the customers
Moral Inventory
By way of review, the prospective MLM initiate has to face and resolve these ethical issues:
1.
2.
3.
4.
5.
Do I want to be involved in encouraging people to be more materialistic?
Do I want to sell a product that perhaps couldn't be sold any other way?
Do I want to be a part of an enterprise famous for slander, libel, and rumor?
Do I want to be a part of a company that may employ criminals as marketing experts?
Do I want to make money off my ability to convince people that an unworkable
marketing system is viable?
6. Do I want to be involved in a marketing scheme that is defined by a technique regarded
in many countries of the world as illegal?
If you can answer these questions "yes," training is available . . . . But remember that God is
watching, even if you never get "successful" enough for the Feds to notice you.
*If you answer no to all of these questions, you can still be watched by God,
the Feds and still engage in the business of MLM at whatever level you choose
to be.
IV. Relationship Issues
IV. Relationship Issues: An Experiential Problem
Learning the Hard Way
MLMs grow by exploiting people's relationships.
*So do Bridal Shops, marriage counselors, and the guys working at the
tabloids.
High-Pressure Selling -- Reserved for Pyramids Only
When it comes to selling product, MLM sales reps are probably no more aggressive or
obnoxious than ordinary salespeople.
*You need to read Zig Ziglar's book on selling to get a perspective on just
what selling is all about.
But when it comes to getting you "signed up" as a "distributor," the MLMers get pushy and
deceptive beyond the boundaries of polite social norms.
*You don't judge the automotive industry by the car salesperson. You are
talking about the unsavory practices of some people encouraged by some MLMs.
We had a waterbed place in town that had the same attitude displayed by its
sales staff. I found one that was not that way. My choice -- My decision -my research. My due diligence.
Remember, an MLM is defined by its rewarding people to recruit others in Multiple Levels.
*Nope, Illegal MLMs pay for recruiting. Legitimate MLMs pay people
commissions for product that is sold to the end user. All legitimate MLMs
have a money back guarantee, if you don't like, want, or need the product,
you can send it back.
"Mother, Let Me Tell You About a Fantastic Opportunity . . . "
Even ex-accountants are willing to practice the crudest of high-pressure selling tactics, at least
when it comes to "signing people up." The end justifies the means, when it comes to getting
people to come to the "meetings," where the objective is to get a materialism frenzy going at
high pitch through a slick speaker or video. The reasons for this "confidence building" should be
obvious by now, but here we are considering the relationship cost associated with the "success"
of the MLM.
The above title is meant to be absurd. Most people, no matter how jaded, would not foist such a
con on their own mothers. Even if people don't know the specifics of what is wrong with MLMs,
intuition often warns us: "Don't tamper with that relationship." The first marks for recruitment
are the gullible -- or the "expendable" friends. But successive moral compromise, experience,
and desperation . . . may yet lead to "good old Mom."
*Guess who insurance people are first encouraged to go talk to :-)
Never Admit You Are Wrong
Many have left high-paying jobs to "pursue their dreams" in an MLM. Having been conned so
dramatically, they do not easily admit defeat.
*Well there is no accounting for stupidity -- that too is not the exclusive
domain of MLM
Counting the Cost
Many readers will share the experience of observing MLMs divide families, friends, churches,
and civic groups. Lifelong friends are now "prospects." The neighborhood is now "a market."
Motives change, suspicions rise, divisions form. The question is begged: "Is it worth it?"
*Actually more division in our family has been the result of funerals and
wills than MLM. Death is simply not worth it, next family get together I'm
going to talk everyone into banning death.
The First Church of MLM
Especially nasty is the church situation. Will the pastor join? If not, he will take a dim view of
MLM proselytization at church functions; animosity will rise, factions will form. You are either
"in" or out. If the pastor joins, then those who are not "in" will feel a little uncomfortable in this
church.
*Then don't do it in church. Last time I checked this was still a free
country.
Trust Your Instincts?
For most people, thankfully, the MLM experience usually ends in very quick financial failure
and is then sidelined. Two possible responses are: 1) being embarrassed about participation, or 2)
becoming even more intractable when the MLM has failed. You will find the latter chasing after
the latest "get rich quick" scheme with similar results. "If we could have just sponsored so and so
-- they have so many friends -- we would have made it."
*For most people the getting into a traditional business for themselves
usually ends in a very quick financial failure and is then sidelined. Should
traditional business then be tarred and feathered as you have done with MLM?
Disease Alert: Beware of MLM Blindness
Apparently, it is difficult for gung-ho MLMers to see how they look from the outside. They can
watch lifelong friendships unravel, churches and civic groups poisoned, the avoidance of friends
and family, etc., and never see that the MLM was the cause.
Business failure of any type is traumatic on the relationships involved, but in most small
businesses there is at least the chance of success. And this is never the case in an MLM, unless
"success" can be defined as profiting off of the failures of others.
*First off, you can do an MLM business without ever talking to friends and
family.
*Secondly, like any business you are more likely to fail than you are to
succeed. You make failing at something some kind of disease to be avoided at
all cost. The chances of succeeding in MLM are about the same as succeeding
at any business. Does this mean that people should not try? Is Babe Ruth
remembered because he struck out more times than he hit a home run? What
about Thomas Edison's failures, or Col. Saunders failures. How are these
people remembered. Failure is the natural consequence to trying to succeed.
Success is in fact based on failure, something that you seem to have omitted
in your diatribe. Fortunes have been lost in failure and regained in success.
That's life, not MLM.
As well, non-MLM real-world businesses that offer products of interest to friends, family, etc. -such as insurance agents and small retail shop owners -- seem to be more circumspect in dealing
with personal relationships in all but a few rare (and grievous) cases. But the MLMer is
recognizable by duplicity of friendship overtures, overbearing glad-handling, full-time
prospecting, outrageous initial deception, and social callousness. This is no accident, but rather
sheer desperation. For the active MLMer is in a hopeless bear-trap -- with hubris as one jaw and
oversaturation the other.
And so the MLM relationship "bull" tramples through the relationship "china closet," blindly
ruining precious and valuable things. Some never pull out of this, figuring the coldness they
experience in their emotional lives is due to some other cause than their MLM participation.
*What you are talking about is a mode of operation that is foundational to a
lot of commissioned sales staff. My real estate agent was my best friend when
I was buying the house. Since the i's got dotted and the t's got crossed, I
haven't seen him since. You're talking about a situation that is not unique
nor the exclusive domain of MLM. You are talking about business. In my retail
operations my family and friends can buy exactly the same product from my
competitor at exactly the same price. They don't, they get it from me. Is
there a problem with that? My family and friends can get similar products
from traditional retail outlets at the same or more expensive than the
products that they get from my Network Marketing company. Many of them choose
to get the products that my Network Marketing company has to offer. Is there
a problem with that?
The Aftermath
One can't help but wish that the "neighborhood" could be like it once was. But an MLM storm
has blown through, ruining valuable relationships with no regret or conscience. And brace
yourself, another one is coming. Perhaps it is in that smiling face appoaching you, or in that nice
letter you just received from a "friend"?
What goes unnoticed to the MLMer is that when the neighborhood is turned into a marketplace,
something precious is lost . . . which is not easily regained.
This aspect of the MLM experience should not be underestimated, and the reflective reader
would do well to think twice about the value of friends, family, community, and church
fellowship before joining or continuing in an MLM.
*Better yet, go do your own research. I'd like to suggest two books.
MultiLevel Marketing - The definitive Guide to America's Top MLM Companies
published by "The Summit Group" 1227 West Magnolia, Suite 500, Fort Worth,
Texas 76104 ISBN 1-56530-059--9
Wave 3 - The New Era in Network Marketing by Richard Poe. Published by Prima
Publishing P.O. Box 1260BK, Rocklin CA 95677 (916) 632-4400 ISBN 1-5958-501-3
You'll find that these "industry experts" provide facts, information, and
cautions devoid of the evangelical zeal and sales rhetoric so often
associated with virtually all business opportunities including MLM.
Summary of What's Wrong With Multi-Level Marketing
1. MLMs cannot provide goods and services to consumers efficiently and consistently,
being "doomed by design" to oversaturate.
2. "Multi-Level Marketing" is really a pyramid con-scheme made quasi-legal by the
presence of a product or service.
3. The moral concessions necessary to be successful in an MLM are difficult to swallow
without significant compromise of the conscience.
4. Friends and family will either: a) join and be mad at you later for conning them, or b)
resent you now for trying to exploit your relationship with them.
Summary of What's Wrong with Dean's Article
1. Saturation doesn't exist. It never has. Billions of dollars of goods and
services are currently being marketed through MLM companies but this
represents a very small part of the potential market. Many traditional
retailling companies are now using MLMs to market their goods and services.
MLM is neither inherently good or inherently bad in the same way that any
business is inherently good or bad.
2. MLM, while still a relatively new industry, is highly regulated . MultiLevel Marketing is recognized by the governments of all of the States in the
USA and the provinces in Canada. If they have "perpetuated" some kind of
fraud on these governments, then I'd worry about the governments. Franchising
had it's problems in the 50's MLM is shared an almost identical fate in the
early 80's
3. Morality and conscience are not compromised if one engages in "Due
Diligence". This means that proper research and information provide the
ability to determine the facts. In this instance the head should outweigh the
heart in a "business" decision. You might just want to give it a try, after
all the odds are better than winning the lottery that you will succeed.
4. Man, oh Man -- all of your friends and family must be sheep. When I do a
presentation I do not make the assumption that I am going to enroll anyone. I
simply do not have that power over people. I simply show them what I have
got. If they decide to join, great. If they choose not to join, so what -they are still my friends, they are still my family. If anything happened, my
life was enriched by meeting more people who have become friends as a result
of my MLM business. I am very careful in the companies I choose to represent
and foundational to that is the idea that "if it ain't a good deal for a
customer, it ain't a good deal" because my success is dependent upon having
lots of customers, and a few builders who are creating more customers. To
that end, my MLM business is no different than my 18 retail stores where I
have hundreds of thousands of customers, and only hundreds of staff.
About the only thing that I agree with in the article is the marketing
strategy employed by some organizations and some MLMs to "market the
marketing plan". The attrition rate of many companies is directly related to
this type of strategy since most people will not get the "promised product"
(the money). In essence they become unhappy customers and unhappy customers
are certainly more vocal than happy customers. I am pleased to note that
after a 10 year association with the industry a ground swell developing
amongst new companies where product and customers is becoming the norm. I
have seen the movement of some of the larger companies away from the concepts
of being inventory movers to end users.
As MLM moves out of it's infancy it grows, changes and with technological
changes it develops. It is wrong to point fingers at any industry based
solely on the bad experiences and practices of some of its salespeople.
Stories about bad salespeople abound in business, all business. As I have
pointed out traditional marketing and MLM operate the same way, the only
difference is who is being paid the marketing dollars. MLM can be a rewarding
experience at whatever level an individual chooses to participate in from
customer, to retailer, to wholesaler, to broker. Each level brings with it
additional responsibilities and requires additional skills. It is not for
everyone, but then no business can make that claim. Do your research and find
a company that suits you -- don't you change to suit the company.
Internet Links for Further Anti-MLM Research & Information
Sidney Schwarz's "Amway, The Untold Story" at http://www.teleport.com/~schwartz
*Actually Sidney's articles are Anti-Amway, not Anti MLM. (Hi Sidney)
US Government USPS on Employment Schemes, including Distributorship and Franchise Fraud,
Phony Job Opportunities, and Multi-Level Marketing at
http://www.usps.gov/websites/depart/inspect/emplmenu.htm, or direct to the MLM warning at
http://www.usps.gov/websites/depart/inspect/pyramid.htm
*A couple of very good sites. I recommend them highly because they help you
identify the "bad guys" from the "good guys". Why didn't you include the FTC
site. They are the ones engaged in policing MLMs.
Better Business Bureaus (BBB) Scam Alerts and Information on Multi-Level Marketing Plans at
http://www.bbb.org/pubs.html#scam
*I suppose that you'd be really choked to find out that some companies in
this industry have actually received awards from the BBB.
Class Action Suit concerning Multi-Level Marketing under the RICO (racketeering) act, at
http://www.teleport.com/~schwartz/suit.htm
*This is still Sidney's site re: Amway. You can go to the FTC site and see
all of the "other" companies that are listed as being "bad boys", you'd be
surprised at some of the names there.
Pyramid Scams & Chain Letters, from the Skeptics Dictionary (and related links) at
http://dcn.davis.ca.us/~btcarrol/skeptic/pyramid.html
*YES, get rid of the bad eggs, it is much better for the industry. Legitimate companies would
like to see these people out of business as well!
A pro-MLM article of interest is "The History of Multi-Level Marketing" at
http://www.primenet.com/~magrath/history.html. [As a note of clarity, remember it is not
"looking like" a pyramid that is the problem, it is BEING ONE -- and MLMs BY DEFINITION
reward people to recruit others in "Multiple Levels." While the author is correct in pointing out
that some are technically illegal while others are allowed to operate in the US, they all suffer
from the same congenital defect -- the MLM idea itself.]
For an overview of news articles, legal problems -- including the Procter & Gamble case against
Amway for spreading the "Satan Rumor" -- and discussion of the "cult" aspect of MLM groups,
see http://www.ex-cult.org/Groups/Amway
A pro-MLM Lawyer gives an opinion on what constitutes a "legal" MLM scheme in the US at
http://www.ultimate.org/nehra/legality.html
*I'm not sure whether Gerald is what you might call a pro-MLM lawyer anymore
than you can say a criminal lawyer is pro-crime. He is a lawyer who
specializes in MLM. BTW it can't be legal and be a scheme. Scheme is the word
generally used for the illegal stuff.
*I've heard there are websites that provide information on how to build bombs
as well.
*You should also take a look at Len Clements "Marketwave" at
http://www2.networkmarketing.com/networkmarketing/marketwave.html
*Oh, You forgot MLM Online at http://www.cybercity.dk/users/ccc4864/home.htm
and the MLMBBS
Dean Van Druff's E-Mail at vandruff@best.com.
Rebuttal from Fugi Saito
E-mail: fugi@oanet.com
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