Multi-Level Marketing

today i was doing some research on Multi-Level-Marketing companies (e.g. MonaVie, Noni, Isagenix, NutraSkin, etc.).  living in utah county, (the most MLM-dense county in the USA) we’ve all been presented with MLM pitches- and we may have even signed up for some.  last year i met an older couple who had made tons of money in Vegas through a MLM they had done in the past.  The secret, they told me, was that the company marketed them as their golden couple and stuck dozens and dozens of people below them in their “down line” so everyone could see an exemplar of success.  they were very up front when they told me that they could not recreate those same earnings when they tried to do it on their own, after the successful MLM went bankrupt (as most do).  they even knew all the tricks of the trade and had experience- but it went nowhere when their only potential down line suddenly shrunk to the small number of friends and family they personally knew.

Note:  please use caution when sharing anything with someone who is involved in a MLM.  they very much act like “true believers” in the sense that they have faith in the potential of their MLM, are motivated more by feelings/personal testimony rather than hard evidence, and may take criticism very personally.  so proceed w/ caution when sharing with others- or don’t share at all.

The Federal Trade Commission (FTC) issued a decision, In re Amway Corp., in 1979 in which it indicated that multi-level marketing was not illegal per se in the United States. However, Amway was found guilty of price fixing (by requiring “independent” distributors to sell at the low price) and making exaggerated income claims.[16]

The FTC advises that multi-level marketing organizations with greater incentives for recruitment than product sales are to be viewed skeptically. The FTC also warns that the practice of getting commissions from recruiting new members is outlawed in most states as “pyramiding”.[10] In April 2006, it proposed a Business Opportunity Rule intended to require all sellers of business opportunities—including MLMs—to provide enough information to enable prospective buyers to make an informed decision about their probability of earning money.

Another criticism of MLMs is that “MLM organizations have been described by some as cults (Butterfield, 1985), pyramid schemes (Fitzpatrick & Reynolds, 1997), or organizations rife with misleading, deceptive, and unethical behavior (Carter, 1999), such as the questionable use of evangelical discourse to promote the business (Hopfl & Maddrell, 1996), and the exploitation of personal relationships for financial gain (Fitzpatrick & Reynolds, 1997).” [18]

MLM’s are also criticized for being unable to fulfill their promises for the majority of participants due to basic conflicts with Western culture.[19] There are even claims that the success rate for breaking even or even making money are far worse than other types of businesses:[20][21][22] “The vast majority of MLM’s are recruiting MLM’s, in which participants must recruit aggressively to profit. Based on available data from the companies themselves, the loss rate for recruiting MLM’s is approximately 99.9%; i.e., 99.9% of participants lose money after subtracting all expenses, including purchases from the company.”[20] In part, this is because encouraging recruits to further “recruit people to compete with [them]”[23] leads to “market saturation.”[24]

Similar claims regarding profits have been stated by The Times (“The Government investigation claims to have revealed that just 10 per cent of Amway’s agents in Britain make any profit, with less than one in ten selling a single item of the group’s products.”[25]), high level “Emerald” Amway member Scheibeler (“UK Justice Norris found in 2008 that out of an IBO [Independent Business Owners] population of 33,000, ‘only about 90 made sufficient incomes to cover the costs of actively building their business.’ That’s a 99.7 percent loss rate for investors.” [26](case referred to is BERR vs Amway (Case No: 2651, 2652 and 2653 of 2007) which does list this as one of the points of objectionability: “c) because of the requirement that an IBO pay a joining and renewal fee and the likelihood that an IBO would purchase BSM there was a certainty that the Amway business would cause a loss to a large number of people (to the extent that out of an IBO population which exceeded 33,000 only building their business).”) and Newsweek (where it is stated based on MonaVie’s own 2007 income disclosure statement “fewer than 1 percent qualified for commissions and of those, only 10 percent made more than $100 a week.)[27]

hope this might help in some way!

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5 thoughts on “Multi-Level Marketing

  1. Pingback: Sunday in Outer Blogness: Double Edition! | Main Street Plaza

  2. I disliked mlm with a passion until the internet came along, now the word leverage can be used to an incredible level with mlm. Today you no longer have to push your opportunity down people’s throats, but simply put up the information online and if they’re interested, they’ll contact you.

    Stevie
    PS There are still some awful network marketers and companies out there, so be careful.

  3. Hi. Real pleasant info on MLM Leads. I happened upon your pleasant blog while researching yahoo. For the previous few days I have been seeking to learn more. Particularly anything to do with the actual lead generation or companies making them. I’ve witnessed it all and my cousin continues promoting her newfound lead system fad on me. So I’m happy I encountered you. Best regards!

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