Like pyramid schemes, Multi-level marketing companies are dependent on heavy recruitment. It takes a lot of energy and charisma to succeed with a multi-level marketing company.
Succeeding in MLM requires the ability to go into someone’s home, look them in the eye and sell the dream of financial independence while at the same time you know they will only lose money and quit.
MLM companies make millions and billions because their distributors lose millions and billions. The few people who succeed with MLM make money by exploiting and manipulating the people they recruit.
While MLMs might be technically legal, that does not mean they are an opportunity. They are NOT an opportunity. MLMs are designed to seduce you into thinking you can make money when in reality you will only lose money.
Statistical data gathered over decades from hundreds of MLM companies proves that less than 1% of the people who try MLM make money.
In other words, your chances of making money are better in Las Vegas than with any MLM!
MLM and A Pure Pyramid Scheme.
Multi-Level Marketing companies are structured like pyramid schemes.
In a pure pyramid scheme, there is no product and nothing of value is created or exchanged. People simply pay to join and the entire organization exists because of aggressive recruitment.
Why Do People Join MLMs?
Why would people join if there is nothing of value? They join because they have been sold a dream of financial independence.
When you are sold a dream of financial independence, you respond emotionally. Your greed is triggered. Once you respond with greed, it’s like you had a lobotomy, you cannot think clearly.
That’s how MLM recruiters get you. They sell you a dream about financial independence and you hand them your money.
A charismatic personality selling the dream can practically vacuum money out of people’s pockets. I have known people to mortgage their home to join such schemes.
Because a pyramid scheme is so profitable, companies want to take advantage of it. The problem is it’s against the law.
The Difference Between an MLM & a pyramid scheme
The legal definition of a pyramid scheme is based on whether a business offers a legitimate product and to what degree the profit of a business is dependent on recruiting.
There was a time when an MLM that was dependent on recruiting was considered a pyramid scheme. However, large MLM companies earn billions of dollars a year and now influence powerful politicians at all levels of State and Federal government.
The laws are changing. New laws permit MLMs to act more like pyramid schemes and get away with it.
Financially, now there is often very little difference between a pyramid scheme and an MLM company.
For example, a pyramid scheme might charge a $100 a month for someone to be a member and there is no product. That’s illegal. On the other hand, an MLM charges someone $105 a month for $5 worth of vitamins and that’s legal.
In both cases, about the same amount of money flows from the bottom of the organization to the top.
Selling the Dream.
Typically, both pyramid schemes and MLM companies recruit people by selling the dream. They both pitch greed.
If you are considering a so-called MLM opportunity, ask yourself, is it only because you want to be financially independent? Read How to Evaluate an MLM.
The truth is, very few people achieve financial independence with MLM. Most people lose money with MLM and quit in the first year. MLM companies know this and will try to wring as much money out of you as they can before you quit.
John Oliver Demonstrates How MLM Works.
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If you found this article helpful or have experience with MLM, please leave a comment below.