You may have had discussions with someone promoting a Multi Level Marketing (MLM) Scheme and found they say some strange things that stop you in your tracks and make you unsure of how to respond. If you haven’t had any of these discussions, prepare yourself because sooner or later, you will. It doesn’t matter which MLM the person is representing, they all use the same arguments.
Here, I will show you the themes I have noticed, and what the truth is. If you hear any of these arguments, point them here so they can see the truth and why you don’t believe them.
1. My company is pyramid shaped but it isn’t a pyramid scheme. After all, most companies, and even governments, are pyramid shaped.
They say that most companies or countries have a CEO at the top, then a few high up executives, then senior managers, managers, and finally,loads of people on the shop floor. You may be presented with images like this.
At first, you might think that there is some truth to this, and maybe the fact it is pyramid shaped is irrelevant. The mistake being made here by the MLMs is that they are confusing hierarchical organisations with pyramid schemes.
MLM Myth explains this very well:-
So, in a hierarchical organisation, people perform different roles, with differing levels of authority. They are paid a wage depending on their role, skills, qualifications etc. In a pyramid scheme people have to recruit as many people as they can to do the same job as themselves. They earn money from these people.
2. You are against MLMs because you failed at it.
I have heard this quite often. For some reason, people in MLMs think that anyone who opposes their scheme must have been a part of one themselves and ‘failed’ at it. I have never been in an MLM. People have said I have failed in one.
I wonder if it is because it is drummed into them so much about MLM being easy and only people who don’t want it or are lazy will fail. They are told that anyone who fails deserves it. Failure and the people who fail become the enemy. They might see people who criticise MLMs as bitter and out to get revenge. After all, why else would anyone have any objections to their perfect, lovely scheme where everyone can flourish and make loads of money?
I have asked people leveling this criticism why they think that. No answers have been forthcoming. Please comment below if you have accused anyone of this, and explain why.
3. Of course there is a high failure rate in MLM. It is a business. Traditional businesses fail too.
The rate of people leaving MLMs is notoriously high. This is from MLM Myth. Other MLMs have about the same churn rate. 90% of people will leave within a year.
Here are some stats for new business failure rates in the US.
Let’s say a million people start a business of their own and a million people start work for an MLM.
People left after…
Type of work Starting 1 year 2 years 3 years 4 years 5 years
MLM 1,000,000 10,000 100 1 0 0
Traditional business 1,000,000 900,000 750,000 650,000 550,000 520,000
What about in the UK? Here is an article from The Telegraph.
This is a widely reported statistic from the RSA. To compare with the above chart, in MLM after 5 years, there would be no people left. In the US there would be 520,000 businesses left and in the UK there would be 500,000 left.
Although traditional businesses are at risk of failure, the rates are in no way comparable to the rates in MLM. It’s like comparing crossing a road on a quiet cul-de-sac with running across a motorway blindfolded.
4. You can earn money in an MLM.
You can’t. Unless you own it. This table is from MLM-The Truth,
5. Other MLMs are scams, this one is different.
Yes, they all say that.
6. It only takes 5-10 hours a week to earn an income.
No it doesn’t. It takes over your whole life. You can’t stop spinning those plates for one second or it will all come tumbling down. If you are trying to earn proper money you will be up at 6am and going to bed after 11, most of the time you will have been working. This post shows the personal experiences of people in an MLM.
7. MLM is taught in Business schools.
People claim that Harvard Business School teaches MLM and have studied it. The claim is that they identified three factors that make an MLM likely to be successful. This article blows that apart.
8. You can have a better work/life balance with MLM.
No you can’t. It takes up every waking minute of your life. You don’t have a day off, no holiday from it. You may be encouraged to put your children in child care. There are events and meetings and prospecting to do. Again, have a look at this blog post outlining real people’s experiences in an MLM.
9. My MLM isn’t a pyramid scheme or illegal because there are products sold.
You can retail products in a pyramid scheme. The key is if you can only earn money by recruiting more people. MLMs will stipulate a monthly amount that has to be purchased so they can say “we are selling products, look! It can’t be a pyramid scheme.” If people in the scheme only make money by recruiting others and earn peanuts/ nothing from retailing, then it is a pyramid scheme.
MLM Watch describes the 5 warning signs that an MLM is a product based pyramid scheme.
- Recruiting of participants is unlimited in an endless chain of recruiters recruiting recruiters.
- Advancement in a hierarchy of multiple levels of “distributors” is achieved by recruitment, rather than by appointment.
- “Pay-to-play” requirements are satisfied by ongoing ‘incentivized purchases.’
- The company offers commissions and/or bonuses to more than five levels of “distributors.”
- Company payout per sale for each upline participant equals or exceeds that for the person selling the product, creating inadequate incentive to retail and excessive incentive to recruit- and an extreme concentration of income at the top.
10. It’s not a scam. My MLM is regulated by the Direct Selling Association.
The DSA have had many pyramid schemes in their ranks before. These companies were saying they were legitimate because of their membership. Just before they were shut down.
Look up Vemma, Trek Alliance, Your Travel Biz and Equinox International.
This blog post has some interesting information about the DSA.
11. People not in MLM are living lives of quiet desperation, being wage slaves in their underpaid J.O.B.s (Just Above Broke). MLM can save them from this drudgery and misery.
This just doesn’t ring true for me at all. I have a stable job that I trained for and that I enjoy. I work part time around my family, as do others I work with. I can afford to pay my mortgage, all the bills, and save as well. My house is just how I like it and me and my family are happy. I have friends in the same situation as me. There are, no doubt, some people who are struggling financially and are unable to pay their bills. Is it as widespread as the MLMs will have you believe?
Even if there were a lot of working people upset with their circumstances, MLM would not be the answer. It would make things worse.
12. Everything is governed by the Law of Attraction. If you are positive, good things will happen to you. If you are negative, bad things will happen.
People in MLMs are taught this as part of their ‘mindset’ training. The theory is that everything has vibrations, including thoughts. These vibrations attract similar events with matching vibrations. So when you think you are not going to do well in your ‘business’, you won’t do well. Taken further, the Law of Attraction states that when negative events happen, it is because people brought it upon themselves with their negative thinking. A devastating flood with resulting deaths is due to those people having negative vibrations.
People will find their MLM will not go well. They are taught this is because of their negative mindset. They just have to be positive and assume it will all be fine and then it will be. This puts the blame on the individual, instead of the dreadful business model. It will also encourage the person to continue trying to make it work, even when all the evidence is pointing to the scheme not working. When the person finally admits defeat and leaves the MLM, they are left with the feeling that it was their fault they failed and they have feelings of shame.
13. People have succeeded in my MLM, I have seen how successful they are and I have seen the huge cheques presented to them.
People are Faking it to Make it. They have to pretend they are doing well to attract more positive events, as promised by the Law of Attraction. If they believe they are doing well, they will eventually do well in reality. People sell their small houses and rent bigger ones. They hire expensive cars, they buy expensive gifts for their downline, all to give the illusion they are doing well. They hope that as a result of all this faking, other people will notice, become curious and start asking how they can achieve the same. The sad reality is that this deception costs money which will eventually run out.
Some people, of course, do get cheques. Here’s some examples of some cheque earners. They look great and something to aspire too. Worth sacrificing everything for an attempt at that maybe?
How much time and effort and expenses have these people lost? See point 4 for the reality of what 99.9% of people will ‘earn’.
What are the chances someone in Forever Living will earn cheques like these? Worldwide there are 9.25 million distributors. In 2015 there were 661 of these cheques presented and there were 15% more given out in 2016. This means there were 760 cheques in 2016, out of 9.25 million distributors. This equates to 0.008% of the total. That is one eight hundredth of a percent. Not great odds that it will be you picking up a cheque.
A top FL earner has been exposed by her ex-husband in this blog. In it, Craig Morgan explains how he funded his wife’s lifestyle and helped pay for the trappings associated with supposedly being successful. She collected one of those cheques but it turns out, according to the husband, she was actually a few hundred thousand pounds in debt. I suspect she isn’t the only one in this position.
14. Random figures are thrown about that might look impressive if you just glanced at it, but fall apart pretty quickly if you do even one sum.
Like this one for example from Facebook-
I confronted them with the truth and a little bit of analysis.
They deleted the comment and left their inacurate statement with glaring figures showing how bad an investment this is.
Here is another fact that is bandied about like it is a good thing. This is from a Network Marketing site.
$200 million paid out a day! How many people work in MLMs then? The World Federation of Direct Selling Association puts the number at 100 million. That means people in MLMs earn about $2 a day! And that is the average. We have seen some people earn a lot more than that. Which means a lot of people earn a lot less than $2 a day.
No it doesn’t. Where have these facts come from? First of all, it is treating MLM as an industry in its own right, when really they cover a lot of different industries like healthcare, beauty etc. If it is an industry in its own right, it doesn’t feature in any statistics on industry earnings.
MLM Skeptic investigates this oft-repeated ‘fact’ better than I can.
16. My MLM product works because it is in the Physician’s Desk Reference (PDR).
This means nothing. The PDR is a book published in the US by a private company that contains information provided by, and paid for, the manufacturers of the products. It is essentially a book of those leaflets you get in packets of tablets. The PDR company do not verify the information or put it through any quality control.
Inclusion of an MLM product in this book does not lend it any credibility or mean that doctors are happy to prescribe it. Have a look at this analysis by MLM Watch of an MLM’s claim about their product being in the PDR.
Optimals by Ariix is in the PDR. Interestingly, it contains the following.
I think it is a good idea to have these products in the PDR, so that when people go to their doctor and tell them what they are taking, the doctor can look up what it is. And put them on the correct medication. That is cheaper and might actually work.
17. My MLM’s products are good for health because (insert dubious reason here)
No, your MLM’s product will not work. Your products are cheap, not had the right testing done, and are sold at massively overinflated prices so that everyone can get a cut of the sale. It doesn’t matter that they don’t work because everyone in the scheme is buying it anyway, in an attempt to make money. Excellent analysis here from Lazyman on exactly why the product won’t work.
18. You are just a jealous, dream-stealing hater who wants me to fail.
People criticising your MLM are not jealous. They have found out the truth and are either angry you are sucking people into your scheme, or are trying to educate you and others, in an attempt to help you get out.
The ‘dreams’ you speak of have been created by your MLM. They get you to think of some huge thing you want and aim for that, pretending that if you persevere and persevere, you will eventually get it. You won’t get that mansion/ boat/ private school place because you won’t make money. This ‘dream’ is making you stick at it longer. It is an emotional carrot, pulling you in deeper. Here is a page where you can be told how to have lovely dreams and adjust your thinking so that you can make yourself stick at your MLM for longer. If this looks normal to you, you are probably in a bit deep and need to re-evaluate your situation. If this looks horrific to you, you are well on your way to protecting yourself against these schemes.
Here’s a good one, ignore facts people, just dream. Pesky facts.
The person you are raging against is probably a friend or family member who cares about you and can objectively see what is happening to you. They want to help you. If you are leveling this accusation at someone on a forum, they have probably been led there while looking to help a good friend. They are concerned people and they want to help you.
19. By buying from me, you are supporting a local business, not lining the pockets of a corporation.
I have seen this a few times on the pages of people involved in MLM.
By buying from an MLM, you ARE helping the CEO buy a 3rd holiday home. The person who owns the company is earning loads of money from the local people trying to sell their stuff. You are not helping a girl get dance lessons or any of that other stuff. You are encouraging the person to limp on a bit longer, and continue to lose money, worsening their financial state.
20. I don’t believe your facts and figures and arguments because…. You are a keyboard warrior, I don’t know your name, You know who I am, it’s not fair. You’re not in the business, you don’t know what you are talking about. Don’t you have better things to worry about? You have too much time on your hands.
It doesn’t matter who the person is, it is the content of the argument that is important. If someone points out that it is illegal to make health claims, it is not a valid counter argument to say ‘you are a keyboard warrior’. Once the discussion is turned to the qualities of the arguer, you know that they are losing the argument. If you can’t argue with facts and figures, give up.
The next time people involved in MLMs give you ‘facts’, look a little deeper and the truth won’t be far away. Feel free to notify me of any Bingo squares you have noticed that need including on this page. Thanks.