What is the MLM Scam?
Did you know that if you were to recruit 25 people and teach them to do the same and if your downlines went 8 levels deep, that would total the population of the world?
That means the-sky-is-the-limit picture in MLM is a false one right from the get go. Considering that you are not going to be the only one recruiting and that, part of that total population are the elderly, children and the unemployed, the fact that you will run out of people to recruit is very real. This is the first in a long list of what is the MLM scam.
If we disregard the above figures, do you know how hard it is to recruit just one person who will be as excited about the MLM business to get good results?
The MLM business idea is not sustainable for most participants and most in this case is about 98% of distributors. Most distributors get one or two downlines, sometimes even five, who will not do much, at least not enough for financial freedom. The residual income is non-existent to most distributors, we will tell you what to ask your recruiter to uncover this fact.
As you read this, please keep in mind to share this article with those you care about that are involved with an MLM business as this will save you from explaining it to them yourself.
You are on this page because you want to know what is the MLM scam. You are either part of an MLM or someone has been talking to you about joining an MLM opportunity and you want to know why or if multilevel marketing is a scam.
What you will read here will leave you in no doubt about whether MLM is a scam or not.
What Is Multi-Level Marketing?
Multilevel marketing is when people are invited to sell a company’s products for a commission. These people are then trained on how to invite other people they know and meet, family, friends and neighbors. Of late some MLM companies are giving an option to sell through an allocated website.
People who accept the invitation are usually called distributors. A second income stage of the multilevel marketing strategy is that distributors recruit other people to become distributors and they get a percentage of the sales made by these distributors they recruit.
The recruiter is called a sponsor and those that accept the sponsor’s invitation are called their downlines.
So MLM income is through direct sales of products by the distributor plus a percentage from sales by their direct downlines and the downlines’ downlines to the number of levels permitted by the MLM company. This is what is called pyramid selling.
Each MLM company has their own way of distributor compensation and this is what they call the compensation plan or business opportunity.
MLM Other Names
- Pyramid Selling
- Network Marketing
- Referral Marketing
Generally – How You Become An MLM Distributor And How You Earn
- Pay Joining fee
- Pay Yearly Renewal Fee
- Use the products
- Recruit downlines
- Sell products
- Earn certain amount of points a month to earn commissions
- Earn certain qualifying points to maintain a status
- Have product discounts
- Retain profit on product retail sales
Why The MLM Business Opportunity Sounds So Good To A Lot Of People!
- You Want To Be Your Own Boss
- There is no Inventory to bother with
- No Need For Infrastructure
- No Experience Needed
- No Educational Qualifications Needed
- No Staff/Employees needed
- No Capital
- No Risk
- You Have Hope For Earning Residual Income
- You Hope To Earn A Lot With No Cap On Income – the sky is the limit picture
- The Ability To Work From Home
- Getting Step-by-step Training because you don’t know where to start in business to make money
- It’s comforting to know you will be led by someone who already knows about the business on a one-to-one basis
- Support, both from sponsor and fellow distributors, gives a sense of belonging
- Considering all the above, who would not get drawn to the MLM type of business?
Residual income in MLM business is the money you will earn through the sales from the levels of distributors in your down line otherwise without downlines you are just an independent salesperson for the MLM company you join but there is more to this picture.
Let’s look at one motivated person recruiting or trying to recruit 5 people for their team. It’s not even easy to recruit one person let alone 5! Your friends, family and neighbors join your downline, not because they want to do business but because they don’t know how to say no to you. So they join to please you or do you a favor but thereafter do nothing. This is totally different from getting someone who has initiated or searched and found you, looking for a business opportunity!
So earning residual income is actually closed right from the get go.
Doing business whose success is dependent on other people’s efforts means your success is dependent on other people’s input
That is what creates pushy uplines or sponsors in MLM and it also means you are back to the boss situation.
In any case, success that is dependent on other people’s efforts is tricky.
Selling MLM products is not easy. Most MLM products don’t come cheap.
MLM companies know all these details from years of experience but they will keep giving you the impression that you will have a business and be your own boss and have residual income.
This is because they know you will buy their products, pay the registration fee, go to events and pay, go to seminars and pay and then buy brochures and training materials.
People are doing this in droves and the MLM company makes a killing.
MLM business opportunity is in the business of selling false hope and they know it! Flogging a dead donkey!!! They might have brilliant products but the business opportunity, hmmmmm??? (head shake)
Is Multi-Level Marketing A Scam?
- In this article, you will find what your upline will NEVER tell you.
- If not your upline, then what the person trying to recruit you will NEVER tell you
MLMs sell real products and so they are not officially called scams from tweaking here and there to meet authority non scam standards. BUT, promising someone their own business and residual income is deceitful, the deceitfulness is not so obvious. The set up makes it possible to promise this but practically it’s not possible for a lot of people to attain. MLMs usually just add more expenses to your already heavy budget, not to mention the waste of time.
The MLM Pushy Attitude
- Someone you know has approached you enthusiastically and told you that they are onto the best opportunity ever, they want to recruit you but you want to check first.
- YOU ARE ABSOLUTELY RIGHT – Who wants to be pushed into saying yes?
- Take your time, and see if you like it.
- Is it really true that the MLM is a good opportunity, pays well and is worth the investment of your time and money?
- Are MLM companies good ?
- Is it easy to make money with the opportunity?
- All MLM companies will have slight variances to their business opportunity or compensation plans but the end result is always the same – very few distributors earn much or anything.
The Purpose Of This Post?
- The following is a comprehensive description of how MLM opportunities work.
- To fully inform you about what to expect with an MLM company
- Look at this information and see if you want to go ahead with an MLM company.
- There is enough information here to help you to come to a definite decision about the MLM business opportunity.
MLM Business Opportunity Activities?
In a nutshell you…
- Use and sell products
- Sponsor people into the program
- Attend local business presentations/events and training
- Promote events to your downlines
- Work with your upline/sponsor
- Distributors earn through retail profits,
- personal volume,
- leadership bonuses,
- car bonus etc.
- A distributor must be active each month to qualify for commissions. Being active is about purchasing products and recruiting downlines.
- Each product carries credits and so you have to make a certain number of credits each month.
- Some MLM companies don’t use terms like sponsor and dowlines as such. They use fancy titles to impress.
- Making sales and recruiting people through good salesmanship is all part of the business.
- Good salesmanship in MLM usually means being pushy otherwise you have no business at all BUT being pushy, you also lose a lot on the social and likability side. No one likes being pushed into doing things.
What Truly Goes On With MLMs?
To Impress you before you go out there and be pushy in your social circle, some MLMs will give you a title like
- IBO – Independent Business owner or
- Assistant supervisor
- They imply you can work hard, take control of your life, fire your boss and live large but how real is this?
- You get caught up in the promises and get blinded to what’s really going on.
- The entrepreneurial freedom promise is unattainable because of the structure of the business
- Your business in an MLM is dependent on the few people you know and meet and that is not enough to build a business, ever!
- You will eventually realize you are working tirelessly for nothing
- Some MLM companies will say they are really not an MLM and dress their opportunity with fancy descriptions but as long as your earnings largely depend on recruiting other people, selling the company products and their business opportunity and has a pyramid structure, then you are involved with multi-level marketing
- Check with what is listed below and know for yourself if what you are dealing with is an MLM and wasting your time and effort.
- If you want to stay in it because you like the products, that is fine, but know that business wise, there are no large sums of money to look forward to for 98% of distributors.
The Reality Of The MLM Business
- Being your own Boss… well, from experience, you are really not your own boss. You have an upline who is constantly checking on how you are pushing the business. You will soon realize you are under pressure to recruit and to sell.
- No stock/inventory… really? Some MLM companies require that you push certain number of credits each month to earn a commission or maintain a status. There are thousands of distributors with MLM products in their garages that they did not manage to push.
- Work From Home… with the business meetings, presentations, and training that goes on, this is NOT a 100% work from home business opportunity. You are in and out and everywhere, adding up the traveling and events costs.
- Flexibility… well, sometimes. You can’t really decline meetings and presentations all the time or block those calls from your upline. The environment is usually kind of pushy and presentations and upline calls and training happens quite often at set times!
- No income cap… well, there is an income cap on MLM earnings – naturally! You will soon discover that the sky is not the limit. That due to product prices, not a lot of people outside the MLM network are interested in the products. So you can only sell so much – not much. That “the-sky-is-the-limit” hope will soon be dashed. If you are waiting to prove that this writing wrong, you are going to wait until the cows come home.
- No Staff… hilarious. Yes, you have no staff in the conventional sense but you need downlines to earn in any MLM business. You definitely can’t work alone, at home. To realize any kind of income from an MLM opportunity you have to recruit, monitor and motivate your downlines. Of-course the language used for this process is sugar coated. This is actually a burden. It is like recruiting new staff all the time and forever training new staff.
- Residual Income... Maybe we should call this one ‘dwindling income’. You start off with loads of excitement, recruit family and friends, who join or buy just to support you or because they have been pushed into it. And then you realize that very few will want to really do the business and slowly the few sales you made before, come to naught.
- In reality, no residual income will happen.
- There is more… The hidden costs. You will be traveling to presentations, meetings, events, seminars, even conventions and the MLM company doesn’t pay for those! You pay for flyers, brochures, samples and pamphlets
- Keep your eyes peeled as you enter the MLM world and cut your loses as soon as you realize things are not going as you pictured.
Being A Pest In Your Social Circle?
- Distributors are encouraged to make a list of people and start talking to them about the opportunity.
- You make phone calls, plan meet ups and arrange 3 way calls with sponsors.
- Take prospects to presentations
- No one likes a salesman be it for a product or opportunity and so you become annoying.
- Your friends start to avoid you.
- You become a nuisance at parties!
- You kind of become a parasite preying on everyone you meet including friends’ friends.
- Some distributors really get pushy!
- Word of mouth is a limited way to do business because eventually your business is only about the people you know and those you meet, looking at this picture, where do you grow a huge business from?
- Some MLM companies will not allow you to create a website to advertise their products, while others make you pay monthly for a website or give you a page from their main website but this does not work because you need to know how to use that site or page to reach people.
- But the MLM company knows word of mouth is more effective as distributors are trained to be pushy and they actually don’t care about you at all. It’s all about pushing you to sell for them for very little or nothing in return and this creates HUGE profits for the company. Don’t get caught up in their promises because they are JUST THAT – promises.
- In the end distributors earn a bit of money from products recommended to other distributors in their team – it’s difficult to sell outside the network and that makes your business extremely limited.
- Guaranteed – at some point you will run out of people to recruit – end of story!
- Distributors feel trapped after investing some money – we all want to be right, right? So they stick to it longer than they should.
- If you are invested in an MLM hoping to make a living, cut your loses as soon as you realize you are not going anywhere with the opportunity, unless you want to do it as a hobby.
- MLM distributorship leaves a sour taste both socially and financially
Who Earns Well In An MLM Business?
- You will have examples of one or two people from each country with large cheques from the business opportunity and these people have tens of thousands of distributors earning very little to nothing. That means the minions are just like the donkeys carrying the heavy load for nothing!
- This is not isolated to one MLM company, you will witness this across the whole MLM industry
- Year after year you see the same high earners paraded, what’s happening to the rest of the distributors? They are working hard for nothing!
- Your success in an MLM is directly dependent on how many distributors you recruit and how active they become! Buying and selling products only, does not create residual income.
- This is the reason why your upline or sponsor is on your back all the time. An annoying sequence! Isn’t this what you are trying to get away from a job when you decide to have your own business! Even the boss at your regular 9 – 5 job is not as pushy as an upline!
Your Time And Efforts Wasted
- You spend time looking to recruit others
- you spend time taking people to venues to hear the opportunity!
- you spend money to buy the expensive products!
- YOU SPEND TIME AND EFFORT FOR LITTLE TO NO RETURN!
- As ex distributors, we have walked that road. Most distributors walk away worse off financially.
- You get brainwashed into telling a success story that is non-existent in your life or the rest of the distributors around you.
- You are running on hoping to be like one successful upline in a whole region.
What Is The MLM Scam? By now, you can see what it is but if you want to keep trying regardless, don’t focus on one stream of income. Look at other opportunities or combine income streams. Multiple streams of income is a well kept secret for the very rich!
There Is A Better Way To Earn Much More, For The Same Benefits And Effort You Put In An MLM Business Opportunity.
- With MLM business, as soon as you stop selling, your past efforts don’t pay anymore.
- You can learn to set up a real solid business where your effort will pay for years
- Replace recruiting distributors by working smart to create real residual income and truly from your home
- Have a look at the true cash cow that will reward your efforts, not once but it can be for years
- A process that will reward your efforts and earn you money while you sleep.
- Residual income with an MLM is impossible because the failure rate is too high, not many downlines will stay the course.
- Not many customers and downlines will keep buying those expensive products. A few will, but that is not enough to make residual income
Before You Join Any Multi-Level Marketing Company.
- Ask your sponsor for the terms and conditions of the plan, including:
- the compensation structure
- Your potential expenses and see if you can afford it before you fork out money on products and events.
- Support for claims about how much money you can make, talk to a lot of distributors and gather your own true picture.
- Ask for the name and contact information of someone at the company who can answer your questions
- Find out about refunds
FTC MLM Guidelines, ask your recruiter questions like…
- How many people have you recruited?
- How long have you been in the business?
- How much time did you spend last year on the business?
- How much money did you make last year — that is, your income and bonuses, less your expenses?
- What were your expenses last year, including money you spent on training and buying products?
- What percentage of your sales were made to distributors?
- How much product did you sell to distributors?
- What are your annual sales of the product?
- What percentage of the money you’ve made — income and bonuses less your expenses — came from recruiting other distributors and selling them inventory or other items to get started?
Who Is MLM For?
I would say the business opportunity is an illusion for
- Anyone who wants to have their own business,
- no staff,
- no stock,
- no shipping
- Being shown how to do business.
- Multi-level marketing seems like a great idea because it takes care of showing distributors how to do the business but you actually don’t have your own business eventually. You become the customer for the MLM company, who recruits other customers in the name of business and nothing more.
- 98% of people involved with MLM companies never really make any money.! The idea is an illusion!
Have You Got Enough Of MLM Business Opportunities?
- There comes a time when enough is enough
- are disillusioned…
- really want to consider another income stream
- want to make real residual income
- want to have your own solid business where you don’t handle any products, truly work from home with no boss or upline, no downlines to recruit and everything else taken care of for you but don’t know where to start…
… consider affiliate marketing.
- This is an idea that is twenty times or even a hundred times better than multi-level marketing!
- You have an opportunity to build your own empire for real
- no uplines and the annoying pushy business
- working from home for real
- No Capital
What Do You Benefit From Affiliate Marketing?
- its global and you work with as many companies or products as you like
- Passive income
- You join affiliate programs for free
- You truly work from home – no seminars, events and uplines breathing down your neck
- No customer support
- Don’t need employees
- No production costs
- Don’t need premises
- No packaging and shipping
- The biggest plus is that affiliate marketing is a business model that is future bust proof, if one company drops out of business you pick the next successful one or you can work with as many as you like at the same time.
- It is recession proof. When the economy is in recession all you do is switch and work with products that are good to recommend during a recession!
- You don’t bother your friends and family, instead you get a stream of visitors from people interested in what you offer.
- No upline to push you around to go and bother people – you truly work at your own pace
- You build your own business that is not dependent on recruiting other people – I’m sure by now, you realize recruiting people is not easy! Get onto something easier and more fun!
- No boss and no staff for real
- Get to know what real business, using other people’s products means
Let Us Compare
Some Questions For You
- Do you want to be the person that family and friends avoid because you have become pushy trying to recruit them for an MLM opportunity?
- Do you want to lose money over a business opportunity that will NEVER make you rich?
- Do you want to waste time and take on the embarrassment when people you invite to an MLM opportunity waste their money on your recommendation?
- Do you like being pushy? or
- Do you want the real business model that gives you a real business to work from home with no boss and no inventory, get proper guidance, no upline and no need to push anyone and instead, those interested find you.
Invest your time in affiliate marketing and you will never look back.
What Is The MLM Scam? Everything about the business opportunity.