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The MLM Deception

Updated on December 10, 2016

Beware

Multi Level Marketing (also known as Network Marketing), is a term used to categorize a business whereby an individual is associated with a parent company as an independent contractor.

Some may even refer to themselves as being "home-based business franchising" or "affiliate marketing" (Strictly speaking "affiliate marketing" is nowadays reserved for "web based affiliate marketing programs").

They are compensated based on their sales of products or service, as well as the sales achieved by those they bring into the organization.

Some companies opt for a multi level marketing organization rather then selling direct to the public or through distribution to stores because it allows them to use the power of word of mouth by sales orientated people who are working on the basis of incentive.

What's The Scam?

It is important to note that not all MLM companies are scams. They may very well be reputable and have a sound business plan and an excellent compensation plan. Many people have been able to create a sustainable living from their mlm business. Others have become wealthy. Some have even become millionaires.

Yet others, the majority it would seem, have little or no success. Even when following the system.

The other factor, even in these companies of reputation, are the renegade factions or greedy individuals.

These are the people targeted in this lens. These are the people you need to look out for.

Recommended Reading

Survival of the Quickest

They may try the hard sell. They'll try and excite or even scare you. They'll tug at the emotional heart strings, appeal to your goodwill or make a convincing argument that you too will have financial freedom and live a life that many can only dream of.

It is important to remember that any decision you make should be done on your own time and on your own terms.

Don't sign up straight away. Think about what it is that you're getting into. Examine the pros and cons. And ask for as much information (free information, don't buy it) to help you come to that informed decision.

You don't have hours to make a decision. Even if it is a new start-up and those getting in early are already making huge cash rewards. A decision made in haste will cost you.

To avoid falling victim to either a shady company or an over-enthusiastic multi level marketer.

Find out how long the person who has joined the business has been in it for.

Have they already attained the riches that they are using as a carrot to get you to join?

If they are new recruits themselves there is a lot that they have to say that you should not believe. They themselves may have got caught up in the emotion (of making a lot of money) and are trying to quickly establish downlines or frontlines. they won't have all the answers that you need. they may also fear that if you go somewhere else that that other more experienced person may sponsor you (sign you up).

If indeed the first impressions of the business is to your liking and you want to research this opportunity to the best of your ability you will need to take charge of the situation. whether experienced, fresh recruit or someone in between ask for the information you need. Tell them that you will consider the proposal, but you need as much information as you can get. Is there an information night? A seminar? Can you speak to someone in their upline? Confirm to them that whatever happens if you do indeed sign up to the company you will have them as their sponsor, as they were the one that went out of their way to present this opportunity to you. but first you must get the information, process the information and then decide if it is the right opportunity for you.

Don't take any samples unless it is free.

If someone invoices you for a sample then return it, informing them that you were not informed that there would be a cost, that the impression you got was that it was free, and that you don't like a selling method that involves that kind of tactic

Is it the right thing for you?

Not everyone is a natural born salesperson. If you find it hard to sell, and many do, then you should think hard before signing up. Don't believe anyone who says that the 'product sells itself'. Because if they're trying really hard themselves to sell it to you then the product isn't really doing its job is it?

If you see a clear benefit in using the product but you don't want to sell the product, let them know. Don't fall for 'but if you're a distributor you get X% off!"

For the amount of time and effort and sales you'd have to make to gain that discount (even if it's automatic you'll still have to pay to join, possibly an annual fee, and other things that you won't discover until AFTER you join).

Do your homework. Do an exhaustive search for information about the company. Who founded it. Where. And when.

The age of the company is also important. As well as how many active affiliates it has. If the company is old it may have a disadvantage. Its exposure may have already reached saturation point.

If the company is new it of course won't have a track record. It's important then to verify who it is that is involved in the company. it may have investors. How much capital has been injected into the venture? What is customer service like? not just for the customers who use the product but for the people selling it. Because you too are a customer.

Do your homework

Find out what other businesses the person has been in who is trying to sign you up. They may be able to boast about big cheques, residual income, large network, blah blah blah, but if it's an experienced network marketer they may be able to get a jump onto new start-ups, and brought over their already established network and contacts with them. They may very well have a dozen, one hundred or more people already signed up under them in a very short time. Chances are it won't be nearly as easy for you.

If you're still deciding on the idea or have decided against it, don't give the person a list of your contacts. Whether it be family, friends or co-workers. Ask for their contact details and you will hand it out to others who express an interest.

If the person is going too quick, put the brakes on. Let them know early that you will be asking a lot of questions but only after you've got the right questions to ask.

If they continue to go too quick even after you've insisted that they slow down, show them the door. If they're like this with you now how will they be when you're signed up under them? Because the more people you sign up the higher they will get. They'll be riding you hard.

There may be different entry levels. a basic package might cost a few hundred. It'll get you started. But they'll sweeten the deal with extra incentives if you are willing to part with more money (possibly thousands). this may mean more of a discount. or more reward payments based on different forms of commission. which one is best for you? you won't know this until you weigh up the advantages of each. be sure to know the compensation plan inside out. because you need to know what it means for you. as well as people you may sign up under you. and don't trust word of mouth. something usually gets lost in the translation.

An Escape From the Rat Race?

One of the benefits, at least touted by MLMers, is that unlike a traditional business you can choose who you want to work with. That may not be entirely true. You may find people to be just as annoying or rude or stupid in these MLM companies as you would in a normal job. The added 'bonus' is that everyone is trying really hard to succeed and get ahead. So some people may put on airs and graces that they have accomplished something that they haven't.

While a lot of MLM's promote themselves as a quick and easy way to make money on the side the ones that are making the big bucks are those who dedicate their every waking moment to it. Sometimes it isn't until after that you get told that 'if you're serious about this business you need to invest time into it'.

They might have meetings once or twice a week. attendance is not compulsory (though I can't speak on the behalf of all MLM's, and if there are compulsory weekly meetings the organisation may feel like a quasi religious organisation).

While not compulsory you could still be expected to listen in on a weekly phone call, have your own weekly meetings which you invite people to come and check out (so you have to do a bit of legwork rounding up these people to get to that initial meeting) and then there could be a weekly business meeting.

If you have a life, whether it be a good job, a social life, and family life then something will have to give to fit in these extra-curricular activities. And don't forget, while not compulsory if you don't attend you're not really showing enthusiasm.

"Beyond the sheer hard work and talent required, the business model inherently consumes more areas of one's life and greater segments of time than most occupations." mlmwatch.org

Other Things To Look Out For

  • Other shady practises may include the company profiting from selling instructional and motivational materials to its participants. This may be the companies biggest earner.
  • Many pyramid schemes try to present themselves as legitimate MLM businesses.
  • While it may be easier for a boss to sack someone of objectionable ethics or work practises it is a little harder to do so in an MLM.
  • Some MLM's are solely about training. To teach you on how to teach others about what they're teaching you.
  • Are you buying the product. Or are you buying into the company? If the product itself interests you let it be known. In fact the product should be the first thing you investigate before considering the opportunity of being a reseller.
  • You have time to think things through. Don't let anyone tell you differently. If they say you only have days or even hours to sign up or else you'll miss your spot in the downline then think very hard about whether or not this is the person you want to spend time with in training as your mentor. Do you need that in your life? Someone who is going to dramatise everything that is directly going to benefit themselves?

Compensation Plans

Companies have devised various MLM compensation plans over the decades.

Until you know exactly how it works, don't sign up. And don't leave it to chance to find out after you've signed up.

Notice to all MLM recruiters

I'll make you a bet. Ask your recruiter to produce the tax returns of ten people showing a profit who are not at or near the top of their hierarchy (recruitment pyramid) of participants, and I will pay you $100. If you can't do it, you pay me $100. Fair enough?

Share it here.

Please don't list referral links to MLM's, supplementary sites, team sites, or the official sites of MLM's themselves. All submissions are vetted.

Had a bad experience? Got a good link?

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    • blestman lm profile image

      blestman lm 

      5 years ago

      I don't know too many people who have not had a bad experience, including me. It's sad.

    • WebMarketingPro profile image

      WebMarketingPro 

      6 years ago

      Great lens. And yes, I've experienced some of these things myself. The most aggravating one was to discover that the people who had recruited me into an organization where I didn't make a penny but paid more than 1k altogether had left the organization without telling me. Can you believe that! Actually happened more than once!

    • lyvette profile image

      lyvette 

      6 years ago

      Interesting post. Like anything else if you work hard and sacrifice this business model may work for some. Never worked for me - didn't like pushing products on family and friends - selling sub par or marginal products or selling stuff to people that they really don't need just to make a sale. Certainly didn't like being forced to recruit others to do the same.

    • profile image

      goldrushdirect 

      6 years ago

      Great Lens. I may even point my prospects here. Working only with legitimate, reputable companies, I really appreciate articles like this that break down the differences between scams and legitimate opportunities.

    • ae dc profile image

      ae dc 

      6 years ago

      I have earned a lot through MLM. Network Marketing SUCCESS = Right Company + HARD WORK. It's NOT a get rich quick scheme. Don't expect to earn heaps of cash just sitting*

    • tonyb65 profile image

      tonyb65 

      6 years ago

      I wish I could have read this excellent lens 20 years ago. I tried several MLM schemes and could never get any to make me any money. I also wished I had thought of asking my upline or one of the so called stars to show me the tax returns of some of the so called high earners.. Interestingly 20 years on none of them are still in MLM.

    • PedroMorales1 profile image

      PedroMorales1 

      6 years ago

      "Someone who is going to dramatise everything that is directly going to benefit themselves?" This observation is so right on. I discovered the truth about MLM after some time looking into them. Luckily I never invested much money in any. The health products of some MLM companies are very good. But I do not believe they are so unique. I have found similar products at a lower price, though still somewhat costly at health food stores.

    • profile image

      fullofshoes 

      6 years ago

      fabulous information. wish I'd had something like this to read when I got scammed about 10 years ago... live and learn...

    • CrossCreations profile image

      Carolan Ross 

      6 years ago from St. Louis, MO

      Even those who DO treat their MLM as a business and take it seriously (few do) often fail. Been there and done that... It is true that they are NOT all a scam, yet a business model with flaws that make it truly difficult to get off the ground and even harder to keep it UP there. My favorite part of this lens is this comment... "Ask your recruiter to produce the tax returns of ten people showing a profit who are not at or near the top of their hierarchy (recruitment pyramid) of participants, and I will pay you $100. If you can't do it, you pay me $100. Fair enough?" Won't happen and great way to cut the hype.

    • profile image

      AlleyCatLane 

      6 years ago

      Interesting article. Lots of good information. I have been pressured a number of times to join such organizations over the years, but fortunately had the good sense to walk away.

    • profile image

      ukdestinationguide 

      7 years ago

      For most people who get hooked on the MLM dream, it becomes a nightmare. Unless you treat it as a full time job, and are prepared to work extra long hours ( not the extra few hours a week you are told when you signup) to grow a team of people which need constant attention and constant recruitment, you will have little luck in making a regular full time wage out of the business. If your new to home based business, I suggest you look at other types of opportunities. For more information on my experience in MLM, take a look at this link Agel Scam

    • profile image

      projectfeasibility 

      8 years ago

      It is true that all MLM (Multi-Level Marketing) Companies are not scam but scammers exist there. I found some guys gained good money but many more guys just lost some money.Thanks for sharing nice lens.

    • profile image

      AngellaRaisian 

      8 years ago

      MLM's,like any business are a lot of work. But if they cost you money to participate - forget about it! I'm OK with being part of one that's free, but not if the only money you make is off your downline's membership fees.

    • profile image

      squidooit 

      9 years ago

      great lense and very eye opening.

    • stephaniehut profile image

      Stephanie Hutchens-Greger 

      9 years ago from Port St. Lucie

      Great lence. I too am in a MLM company. The products are great, but if I want to keep making a little money, I really have to keep on top of things, and keep following up with people. As well as telling people about my products every day. There is a lot of leg work involved

    • profile image

      Rich_Girl 

      9 years ago

      Great lens and very informative.I've been involved in an online marketing since I was freshman in University.I've been doin' it for 13 years now.

    • profile image

      tinksmagic 

      9 years ago

      My favorite now is how they pitch it as "Not MLM, we do LEGS". HA!! A pyramid is a pyramid no matter how few or many "legs" it has. Affiliate marketing online is legit, and you do not necessarily need a downline to make money. Just promote yourself and keep all of your commissions and profit, you should have to share it with the parent pyramid or pressure others to use your products that you are only using because Mama MLM says you have to to make money.

    • Trioman profile image

      Trioman 

      10 years ago

      Thank you so much for letting everyone know that not all MLM companies are scams..Very informative lens. Keep up the great work!Marc

    • Darla Dixon profile image

      Darla Dixon 

      10 years ago

      Excellent work! 5*'s. All your pages are great. There should be a way to just instantly give 5 stars to all your lenses. :)

    • blue22d profile image

      blue22d 

      10 years ago

      Great lens. I like the clarity in which you have presented your information. My husband and I were involved in a MLM years ago. We made some money but for the most part we lived, breathed the whole business. I was shy at the time and it wasn't my cup of tea. I felt like we were in a "social club" not a business. In any case, you have presented an excellent picture. One really needs to do their homework before getting into any "business". My rule of thumb is that, if they pressure you, you just say, "If it is that good, it will be around next week".

    • profile image

      MLM_with_Integrity 

      10 years ago

      Enjoyed your lens.A huge number of people dismiss MLM outright as a scam, and 6 or 7 times out of 10 they’d be right. Whether they can tell the difference between a scam and legitimate deal, or not. That’s unfortunate. The other 3 or 4 times, they could be passing up the chance to make good money and exit the rat race. But, we believe what we believe. The MLM industry has done little to help itself, instead leaving policing of it to the AG, the FTC etc…and that makes it very tough going for the believers. Having the tools to tell the difference is all the difference.

    • profile image

      WrinkleCreamSpecialist 

      10 years ago

      I never liked the idea of mlm marketing to be honest. I thought it was illegal?

    • profile image

      krisManuel 

      10 years ago

      Hey Glen, great lens. 5*It is true. MLM companies are just like people...there are good and bad ones out there. Some of the MLM companies comp plan are just ridiculous that's why they fail.Your picture under comp plan is a binary and probably the most fairest way to go because whoever works the hardest, gets paid the most.Isn't it true that it's the same structure as a corporate job? You have the ceo, vp's, regional, managers, employees. The difference is when you work harder than someone else you get paid the same.Alot of people have had bad experience in MLM that's why they say it doesn't work. But can you imagine if you had a bad experience in a relationship and it didn't work out and you say no more to relationships :)Anyways, hope it all makes sense.-kris

    • teamlane profile image

      teamlane 

      10 years ago

      Nice work Glen. When we get a call from a friend we haven't heard from in a long time to "have dinner together," we immediately think MLM! Sure enough, 90% of the time the scenario rings true. :o(

    • profile image

      Miriam2008 

      10 years ago

      Good Job Glen, I agree wholeheartedly. I think mlm as a business model makes sense, but people have to make an informed decision about what they are getting into. Your lens gives people some great tools to use in making an informed decision. Like in any business, hopefully people will have a passion for the product, honesty & integrity in their work.

    • profile image

      JoeCrawford 

      10 years ago

      Great Lense. MLM is definately an alternative route and thank god there is one. As I am probably one of the most unemployable people on the planet... Hence I havn't had a job in over twelve years. I built two traditional companies one to 30 employees and over 2.5 mil in revenue, that was tough to do. Doing that in the private sector amongst competition from other entrepreneur was "wicked" at times. I think MLM are judged and trashed, making them unappealling to the masses (thank god) because people use employee type, office mentality to critique them. Critique BEFORE you join.Granted integrity and character is important, in business though, if you don't have it your done. People need to learn to trust themselves to make their own decisions, instead of needing others to through, books, advice or a high pressured idiot trying to convince them to buy,join, or enroll in something. Trust yourself.Looking for passive income? It would be foolish not to look at MLM.

    • profile image

      Ty 

      10 years ago

      Heh...how about you produce the tax returns of 10 people you know making a profit in their own business and prove that they are not at or near the top of the hierarchy of all participants.Sounds logical until you use your brain to think about what is being said.

    • profile image

      wenfri 

      10 years ago

      Great points and duly noted. But.. and I say with caution How about a few Success stories or Testimonies as stated above. think it would be a great asset or idea as I belong to an awesome business and am slowly making more money each and every month.It takes loads of patience, time and effort to be a Success at anything

    • N376 profile imageAUTHOR

      N376 

      10 years ago

      Sometimes those peoplpe who are content with just a few hundred dollars a month is because they've realised that they'll never make more than a few hundred dollars per month, no matter what they've been told.

    • LDWorld profile image

      LDWorld 

      10 years ago

      We are professional networkers and are very truthful with our prospects about amount of work it requires and what kind of income they should expect. But remember that most people don't join MLM business to make millions, but just for the few hundred dollars per month. And we help them to do just that. So I would suggest you add links to success stories like that to make it balanced. Otherwise great lens!

    • profile image

      Dolan_Kelly 

      10 years ago

      Often these MLM companies appear attractive and seduce you with the earning claims. The company can only be as strong as the product and you have to be able to sell that product. The trouble is what you need to find are repeat customers and this is not easy. Beware! Great lens.

    • profile image

      XP 

      10 years ago

      Lovely lens. Looks very professional. *****

    • teamlane profile image

      teamlane 

      10 years ago

      Excellent work once again Glen. Blessed by a Squid Angel today! ;)

    • Loyalis LM profile image

      Loyalis LM 

      10 years ago

      Glen,Very Well done. You manage to make the MLM industry questionably but not through bashing the process and instead through encouraging people to look at the situation logically. 5 stars and Dusted.-The Captain

    • Recession Proof2 profile image

      Recession Proof2 

      10 years ago

      Glen, Very good lens. I think you're right on the money with much of your analysis. As someone who is involved in Network Marketing I think MLM has given itself a huge black-eye by allowing anyone with a dollar and a dream to join the company. There needs to be better safeguards against folks sponsoring people who have no shot at being successful. Anyhow I'll get off my soapbox by saying, network marketing is, pure and simple, a business model (a way of marketing products) not a lifestyle. Great lens.Jesse

    • profile image

      krisManuel 

      10 years ago

      Hey Glen! awesome lens. I believe mlm companies are just like people...there's good and bad ones.

    • profile image

      jacjorjac 

      11 years ago

      Fabulous lens, in fact just scrolling through I believe it will take me all day to read all your lenses. I will though!

    • profile image

      Hai 

      11 years ago

      I told my friend that I want to join a local MLM and she sent me your lens and this URL: http://www.tipskey.com/consumer_alert/read_this_be...

    • profile image

      TommyGordon 

      11 years ago

      Hi Glen. Nice lens.I'm a network marketer myself, and I certainly agree with you that an informed decision is the best if not the only way to go with an MLM business.Here's to all our success.Tommy

    • wahlees profile image

      Barry Wah Lee 

      11 years ago from Auckland

      I am in an MLM, it used to have a speed up thing which I was never comfortable with.Much of their info has been free, but some leaflets,tapes, etc can be bought not at prices like I have heard though.But just by knowing it is an MLM, you find people are less interested even in excellent product.

    • profile image

      Acne_Medicine 

      11 years ago

      dear lens master, this lens is very informative. Please consider adding it to my affiliate programs group. My group visitors will appreciate the information you have provided. Tx.

    • profile image

      wenfri 

      11 years ago

      Excellent info here Made your star shine brighter than everWendyhttp://www.squidoo.com/wendysonlinebusinessallianc...

    • ThePrancingPony profile image

      ThePrancingPony 

      11 years ago

      Hey Glen, great lens! Its very informative with good original content. Five stars from me :)

    • one SquidAddict profile image

      one SquidAddict 

      11 years ago

      Another 5* lens as usual!

    • profile image

      badmsm 

      11 years ago

      Good job, Glen! Thans for keeping us informed.

    • jackclee lm profile image

      Jack Lee 

      11 years ago from Yorktown NY

      Great job. You beat me to it. I was going to do a lens on this topic. Good luck.

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