Multi-level Marketing (MLM)s - Are they scams?

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moth1ne
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Multi-level Marketing (MLM)s - Are they scams?

Post by moth1ne » Tue Jan 29, 2013 4:26 am

So I should say that someone close to me has recently been drawn into a "business opportunity" with a company called ACN. They claim to be a seller of telecommunications services and have been partnered with dozens of large telecom companies including: comcast, verizon wireless, ADT Home Security, etc. They claim to be a multi-level marketing company that "does not make money on recruiting but on getting customers". When you become an "Independent Business Owner" you are required to qualify... meaning you need to sell 3 types of services (they recommend friends, families, co-workers). After that, they pressure you to gather up your friends and family and have an At-home meeting and convince others to join in your business. This is where I find the entire business model crooked and borderline criminal. The incentive to sell is not nearly as emphasized as the incentive to recruit others and build legs of your business. I won't go into the specifics but I'm sure enough of you could gather some research and make your own conclusions. In my opinion, when a company has to come out and say "we're not a pyramid" it generally means... their a pyramid. They have a an A rating on the Better Business Bureau but someone had recently told me companies can actually buy themselves an A.
"Extraordinary claims require extraordinary evidence." -Carl Sagan, The Demon Haunted World

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Donnageddon
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Re: Multi-level Marketing (MLM)s - Are they scams?

Post by Donnageddon » Tue Jan 29, 2013 5:00 am

Do you need to pay a fee to "join the business"?

Does the company derive a large share of its income from "franchise fees"?

If not, it might just be an aggressive Multi-Level Marketing scheme.

Even if the answers are no, I would avoid it, unless I really believed in the product, and enjoyed selling it.

That may explain why I am not wealthy, and why I can sleep at night.
My name is not Donna.

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moth1ne
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Re: Multi-level Marketing (MLM)s - Are they scams?

Post by moth1ne » Tue Jan 29, 2013 5:07 am

Donnageddon wrote:Do you need to pay a fee to "join the business"?

Does the company derive a large share of its income from "franchise fees"?

If not, it might just be an aggressive Multi-Level Marketing scheme.

Even if the answers are no, I would avoid it, unless I really believed in the product, and enjoyed selling it.

That may explain why I am not wealthy, and why I can sleep at night.
Oh yea, I left that part out. There's a $499 start up fee. They say they don't make on franchise fees but I'm sure they do. They hold huge mega conferences and charge $50 tickets.
"Extraordinary claims require extraordinary evidence." -Carl Sagan, The Demon Haunted World

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Re: Multi-level Marketing (MLM)s - Are they scams?

Post by Donnageddon » Tue Jan 29, 2013 6:17 am

Sell!

Er, I mean "don't buy"

Or sell.

Sounds "fishy".
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Re: Multi-level Marketing (MLM)s - Are they scams?

Post by moth1ne » Tue Jan 29, 2013 6:29 am

Donnageddon wrote:Sell!

Er, I mean "don't buy"

Or sell.

Sounds "fishy".
Yea that was my suspicion...
"Extraordinary claims require extraordinary evidence." -Carl Sagan, The Demon Haunted World

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Re: Multi-level Marketing (MLM)s - Are they scams?

Post by Scott Mayers » Sat Jan 25, 2014 4:44 am

All MLMs are scams. They are based on a way to legitimize the original chain-letter concept (similar to a Ponzi scheme) by providing some arbitrary product or service that is relatively much cheaper in the market place as a means to make it appear that the consumer is negotiating fair deals. Also, although one is free to simply be a consumer, the main function is to promote the idea of becoming an investor and business person by [an investment]* usually through an initial kit or similar type investment. This is the actual money that is chained.

Also, when clever people appear to be making money on this, if they actually are, it is not because of the actual outcomes that they declare them as [from the scheme itself]*. Usually it is from simply sales for first-time business kits or packages only because the actual mathematical logic demonstrates why this is impossible. The trick is to get people to simply buy the kit. The major income for the biggest dealers are actually due to the side-line business of promoting materials that foster one to buy in as well as encourage those who have to continue. The biggest of these are personal motivational speeches and materials like motivational tapes or videos and/or books.

There is a lot of clever social psychology that goes into this. By buying a business kit and license for instance, they get you to invest in such a way that you feel responsible and accountable for all your failure. A company like Amway took it one step further. Recognizing that they could use the effectiveness of the MLM scams, they set their income model simply to gain money on the product end that is legally required to get involved by selecting the cheapest and easiest product originally to be made: soap. Then by exclusively selling these products to separate legal entities that actually do the MLMs, they not only achieve free promotion and advertising through the MLMs but create exclusionary market places. Even while they now must declare this separation and require legal signatures to MLM members to abandon this, people do not realize the significance or real reasons behind it.

Redefining of common terms to trademarked and non-conventional ones is another example they all use (Although this is also used in most other businesses too now; 'Free', for example, is usually defined non-conventionally in small writing to actually mean buy one first, get one free [conventional definition] which is no different than considering it half-price with the necessity of buying for two, a means to entice extra potential consumers who make use of the gift of the second product.). This is a transference con that was recognized to be profoundly effective in cults and political movements during the early part of the last century.

*Edit: added words to fix grammar and provide clarity.
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