I Confidently Can Say, MLM (Multi-Level Marketing) is a Scam

August 28, 2015 / Kyle

Multi-Level Marketing, also known as MLM, is a scam.

Yeah, I said it, mlm is a scam

Before I get started, I know this post is likely to ruffle a few feathers.  Hopefully if you are involved in MLM though, you can please let your guard down so I can give you some perspective outside of the “bubble”.  Often times when you are involved in a group and everyone thinks the same and acts the same, you don’t get any unique perspective.

Also, when you PAY for something you are instantly going to defend your purchase.  It is a stupid feeling when you realize that you have been ripped off and in no way would I call anyone stupid or look at anyone that way if they were part of an MLM.  It is all part of the journey to success and sometimes we need to find out what doesn’t work before we can find out what works.

In this post, I am going to make some valid points that I think you are going be able to appreciate on both sides of the fence.  Those that love or think they love MLM... as well as those that are bitter towards the idea of MLM because of past experiences.  Either way, these are undeniable points that I am about to make.

MLM Makes You a Hustler, Whether You Like it or Not

You are that pimp standing on the corner of the street.  You are that energy juice salesperson that solicits your “scheme” to people.  You are selling insurance programs that nobody has ever heard of, yet you do so because there is opportunity getting others to do as you are.

Every MLM is based on the hustle.  You are told, “get out there and make some cold calls”, “call your friends and family”, “talk about it every day”, “use social media to mention something about it every day”, “check up on your downline”, “boast about how great the product is”.

This is called hustling and unfortunately it puts your reputation on the line.  There is nothing more annoying than listening to someone pitch their MLM to you, often times a product they don’t even really use or they are forced to use it because of the continuity aspect of the program.

To make it in MLM, you have to hustle.  You have to hustle others.

Unfortunately there is a systemic problem with MLM and that derives in the business model itself.  It relies on you getting other people into the program and almost always if your goal is getting actual customers, it is convincing people to spend way too much on products.

Without Overcharging, There Would be NO Compensation

There would be no feasible way to earn within an MLM if they didn’t overcharge for their products/services.  Your best interest automatically has to be you “selling” people on overpriced junk most of the time, and sometimes unsafe, untested and unproven programs.

AND more often than not, it has nothing to do with the actual product.  You are selling people into a scheme so they can do the same to others.  Most MLM’s have a fee to join.  Most MLM’s require you to purchase the product.  Most MLM’s have products that are vastly overpriced to support the compensation structure of the very program.

Without overcharging for their products and without having fees or relying on recurring product orders (by the people within the program), an MLM would die out very quickly.  Unlike legitimate sales models, they rarely rely on selling quality products at a good price to customers.  They rely on selling people on the scheme fees so they can do so to others....and the endless chain continues until people wake up to what is really going on.

It’s a P_R_M_D scheme.

Paying for the Stevie Award, BBB or Other Credentials.  They Buy Trust

One of the most common tactics is for an MLM to work to gain authority for their product by getting “credentials” to put beside their name.  There are many “awards” that you can pay money for out there.

Lots of the MLM companies get so many complaints within online platforms that they have entire teams dedicated to clearing their name.  This includes paying money to the BBB to get accredited and move up their ratings.  Yes, you can pay for ratings within the BBB (even if you are a totally illegitimate company).  Same goes for the Stevie awards which are a completely unethical system for “awarding status” to many unethical companies.

There are many companies that have been taken out by the FTC for scamming that have also received awards of this nature.  There is no due diligence taken.

Making Money Off Your Friends, That Ain’t Cool.

The most common and sometimes the only way people make money in MLM programs is from recruiting others into the scheme.

I personally know, I have been involved in MLMs and this was unfortunately the only way I could promote it.  I sold my Aunts and Uncles, my Cousins, tried to sell my friends, and of course my parents bought into my products because I thought I was an entrepreneur.  I think that they committed to a program they didn’t necessarily believe in just because they felt bad for me.

Making Money Off of Friends

You get real tired real quick of shameless promoting products/services and the scheme itself to others you know.  You get tired of getting “denied” by people.  And the unfortunate but natural consequence of promoting MLM and “amazing” opportunity after opportunity is that it gives them a perception of you that you probably don’t like.  A schemer and a swindler.

Seriously though, thinking logically how could anyone ever bring themselves to spend $30 on a bottle of Acai juice (Monavie). The same Acai juice, if not better quality, could be bought at Costco for less than $10.  Sure, you are paying a Premium... but the only reason you are is because you have to fund the scheme itself and this is done through inflated prices.  By the way, Monavie has since gone out of business and was deemed a scam.

You Are NOT Building a REAL Business With MLM

You don’t own the business.  You don’t own the website.  You don’t own anything other than “product” that you usually are required to buy from the company (for way more than it is actually worth).

One of the biggest fallacies with an MLM program is that you are actually building a business.  Unlike Affiliate Marketing, where you are creating a website, a brand and a following (which is a business), in MLM you are undergoing a constant “hustle” cycle that requires you to always suck in that next person to your downline, shamelessly promoting the products and services to your family and friends, or even worse, have to buy the product yourself in order to remain part of the MLM... which can get very expensive.

You are assigned names like “sponsor”, “distributor”, “presidential level” (and many others) which serve as nothing more than a facade as to what you actually are when you are involved in MLM.  A block in the pyramid.

Think about it. A pyramid will always stand high and the top block will always be supported if there is always MORE blocks underneath the upper level.  That is why the CEO of the companies tend to make 10s of millions and the average person within the program will never be able to support the actual fees of getting involved in it.

And if you are like most, when you end up hanging up your MLM boots, you are left with drawers and boxes of “extra” product that you never used.  This more than validates that you were part of the program not for the quality of the product, rather the potential opportunity if you got other people involved in the product.  A backwards way of trying to do business and fundamentally, with MLM you are not creating a business.

MLM is NOT Affiliate Marketing, Period

This is an apple vs. oranges comparison.  MLM is nothing like Affiliate Marketing.  Affiliate Marketing gives you the freedom to promote whatever products/services that you want, within any niche, in fact, it can quite often be the seg-way for you creating and selling your own products/services.

MLM locks you to ONE program.  You by no means have the best interest of your audience in mind because you are always required to sell the same, overpriced, and often times unproven product to people.

Affiliate marketing is the act of promoting products to customers.  It it is not the act of promoting an opportunity to others with “products” hidden inside of the scheme somewhere.

It is very easy to determine whether or not you are an affiliate or an MLM’er.  If you are promoting products to others, then you are an affiliate.  If you are recruiting people into your program in your downline, you are involved in MLM.

Don’t confuse the two because at the core of it, one is an ethical way to promote products in exchange for a commission (affiliate marketing) whereas the other is an unethical way to promote a product in exchange for “recruitment” fees for getting others involved in the very same scheme (MLM).

Some of the Most Epic MLMs Are Still Alive and Well... for NOW.

There are many MLMs out there, in fact, 1,000s of them.  There is a reason they will continue to be popular, because “some” people make money with them (mostly the company and a very small handful of people).

Here are some of the most popular MLM programs:

  - Herbalife (under huge pressure by authorities)
  - NuSkin (under huge pressure by authorities)
  - Pampered Chef
  - Mary Kay
  - Avon
  - Young Living Essential Oils
  - Beachbody
  - Origami Owl
  - Stella and Dot
  - Isagenix
  - Nerium International
  - Rodan & Fields
  - Karat Bars
  - 7 Minute Workout

And then there are the many MLMs that have succumb to the very fact that they were unethical from the get go.  Departures (because of legal issues) are an all too common thing within the MLM world, which sucks as the marketer because when a company goes, so does your entire business.

Recent Multi-level Marketing Schemes Shut Down By Law Enforcement

  - Vemma (read post)
  - Mona Vie
  - Wake Up Now
  - ZeekRewards (read post)
  - BurnLounge
  - Fortune High-Tech Marketing (FHTM)
  - Global Information Alliance
  - TrekAlliance
  - TelexFree

My Conclusion, You Are Not a Bad Person if You Are Involved in MLM

One thing I have learned over the years is that people seeking any form of opportunity have different reasons for doing so.  Money is obviously a major motivating factor and that is why it seems OK to promote MLMs a lot of the time.  If your neighbours and friends are doing it, then it must be OK.  Unfortunately, there is nobody there to tell you otherwise and it takes something like this post to give you perspective.

If you are involved in an MLM, you are not a bad person.  If you have been involved in many, you are not a bad person.  We are defined often times in life by what we achieve and what “material” stuff we have, that is why a lot of us have an internal motivation to make money, make it fast, and make it just like the people at the top of these pyramids (whos success stories they are alway sold on).

You are a good person, with motives I respect. I also know that there are opportunities out there for you that can carry you far beyond any MLM program could ever, affiliate marketing being one of them.  I encourage you to think outside of the box and think outside of the bubble if you have been wrapped up in one or more MLMs and are having a tough time getting it off the ground.

There comes a time where the hustle is not worth it and the realization that 95% of people fail with multi-level marketing schemes simply because their motivation is based on recruitment of others (which is a constant and tireless hustle) versus offering a quality product to people that are already interested in that very product (like affiliate marketing).