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  • Michael McClellon

Multi-level Marketing IS a Scam

A career in sales will never be for everyone despite its international and age-old persistence. The common phrase that gets repeated almost like clockwork, “Sales is everything”, touted primarily by sales people, is often used as the constant justification for this career’s legitimacy. Now, don’t get me wrong, sales is obviously vital for promoting any small business, a large corporation that provides opportunities for millions of people, or even a non-profit organization that devotes itself to saving the bees. But there is also a dark side of sales, one that those who are most vulnerable in this world, are unfortunately most susceptible to. We all know about the infamous pyramid scheme, but there is another sector of sales that disguises itself with a different name, yet it can also have similar effects. It is none other than multi-level marketing.


Imagine the following scenario. You’re a high school or college student with no experience, no real source of income, and you have dubious views of your financial future. No problem! Multi-level marketing companies love this demographic because of the fact that these people are willing to accept any pay at all due to their precarious situation. If that isn’t enough for these lucky students, the flashy advertising and oversimplification of the job process make it irresistibly attractive to these poor souls. The more vulnerable the employees, the easier they are to control. If MLMs had an honest, collective mission statement, that would clearly be the one. But to understand why a lot of these companies are often too good to be true, we must dive into the very essence of what makes them so controversial.


Multi-level marketing is a business model that relies on referrals made by employees in order to attract more employees that sell the company’s product. These companies also usually sell obscure, nonessential products such as facial creams, knives, and more, so the chance of you actually selling these products for profit, or even getting more people to sell them with you are paper thin. This explains why most people who get involved in multi-level marketing to reap the “benefits” in order to save themselves are often left with lost time and money. Time and money that went straight to the pockets of those running the company. What’s worse is that MLMs are very good at hiding the negative aspect of the job, and are able to constantly recruit employees by presenting only the positive side. This is why, according to economists, about 6 percent, or 17 million people in the US are involved in an MLM.


Probably the most intriguing aspect of multi-level marketing companies is their business model. As mentioned before the model operates chiefly from the value generated by adding new employees through existing ones. For example, one person recruits five people, and then those people each recruit five new people. Assuming the company is wildly successful, this strategy only needs to be repeated around 15 times to exceed the amount of people on the planet. Not to mention the fact that when layed out, this business model creates an interesting shape, one that a trip to Giza would clearly remind you of. Virtually the only thing separating an MLM from a period scheme is the fact that MLM’s don’t require you to buy inventory or pay for recruitment into the company. But with the total amount of MLM’s operating in the world, there’s bound to be a handful of them running in this illegal manner, and organizations such as the Federal Trade Commission (FTC) still have trouble deeming many MLMs as legitimate.


Despite this collection of red flags, multi-level marketing companies are still very popular in most developed nations around the world. One of the largest of these companies is called Amway, which sells skincare products and essential oils. Due to its massive size, grossing around 9 billion dollars annually, Amway contains the top distributor of all multi-level marketing companies numerically. That person is none other than Holly Chen. Chen started this career in China, which is now the largest market for multi-level marketing companies, and she was able to let this opportunity sail her past all the obstacles of an MLM to eventually become very wealthy. Now, as a 68 year-old school teacher turned selling juggernaut, Chen makes around 8 million dollars per year, earning her the nickname “Multilevel Mama”. However, is this salary really what we should suspect of someone at the very top of one of these companies? 8 million dollars a year is undoubtedly something that would make most people happy, but once you consider the size of Amway and Chen's position within the company, it becomes obvious that the very nature of MLM’s is not self-sustaining, even for those at the top. Additionally, most of Chen’s income comes from seminars, books, and speeches that she utilizes to teach her success. Statistically, you are much more likely to become incredibly wealthy if you don’t get involved in an MLM, which summarizes the story.


Learning about MLM’s in this way is definitely educational, but I feel like telling a personal story of how I was briefly involved in one will allow you to get a first-hand perspective on how these companies operate, and how the “Multilevel Mama” really gains her power. I hope this brief summary of my experience will be the nail in the coffin for any consideration you may have in joining an MLM.


It all started when I got back from my skydiving lessons, and decided to lay down for a while to wear off the feeling of air blowing in my face. Then, all of a sudden, I get a text message from a friend saying that I should join this company called Vector Inc. She had already given my number to the company, and said that I should expect to receive information about the job very soon. This was a friend that I haven’t talked to in a very long while, yet she made it seem like I was the first person she thought of when wanting to recruit new people for the company. She painted it as a very decent paying job, fifteen dollars an hour, and one that has a very flexible work schedule. She also explained that the company sells Cutco knives to people through sales demonstrations. Although this sounded odd, being the naive person that I was, I decided to seize this opportunity of an easy source of fast money. I received a text message from “Liz”, one of the district managers for Vector telling me that I could be interviewed the next day. So, I gladly waited until the time came, and went into the interview with a positive attitude. It went smoothly, and believe it or not, “Liz” told me a few hours later that I got the job. I was also scheduled for training that would happen 3 days later. Despite this success, I was already starting to return back to reality, and took slight issue with the fact that my friend contacted me, I set up an interview, went to the interview, and got the job all within two days. Nothing out of the ordinary.


Despite this dubious process, I went into their training thinking this would be a quick 30 minutes to an hour of showing me how to sell the knives to previously acquired customers. What it turned out to be was a 4 hour training consisting of 4 Vector managers training 80 people on one zoom call. This was where my suspicion turned into confirmed disdain. The meeting was jam packed with misleading anecdotes to make the newly recruited employees, who were all high school and college students, hooked on the job’s infinitely rewarding nature. They cited that 1200 people were interviewed, and only these 80 people were accepted. These 80 people, about 20 of which were vaping on the zoom call, clearly supporting this statistic. They also heavily focused on the very few amount of students who were able to make thousands of dollars off of this company, and they presented them as a clear goal that everyone can achieve if they just “work hard”. One of the most overplayed parts of the training was their presentations of Cutco knives. The managers praised the knives for being the best knives in the world, and that no one in their right mind would consider not buying them. The training was composed more of this propaganda than it was with actual training, and I left it still not knowing how to sell knives. What the training wasn’t descriptive on was the fact that, like in all MLMs, you must build your own list of at least 50, yes 50, personal contacts right from the beginning so that you can pester them about spending hundreds of dollars on Cutco knives so that they can finally slice a tomato without any hassle. And most importantly, the pay wasn’t 15 dollars an hour, but only fifteen dollars per appointment that you set up with these contacts. Numerically, the pay is considerably worse than most jobs you can get at your local restaurant. For these reasons, I decided to call the managers and say that I was quitting. After a ten minute call of them trying to get me back, I just hung up the phone and blocked them.


After a quick google search, I found multiple videos of people with the same experiences, and credited sources saying that Vector’s recruitment methods were outright predatory. Not to mention the multiple lawsuits against them. This was the experience of someone who was too young and dumb to realize the precariousness of the situation I got myself into, and it took four hours and a few days worth of false excitement for me to realize that MLMs are a scam. Why do I say this? Well, even though MLMs are still legal in the United States, their reputation of being incredibly misleading blatantly proceeds from them. In reality, Vector and other MLMs do scam you out of something. They scam you out of your time, hope, money, and even your dignity. Although not done in obvious ways, they always manage to take advantage of your vulnerability so that you place more trust in them, making you willing to give up your valuable resources in return for no true reward. Most of this bad news is given after you get involved, and once that happens, the control the company has on you is almost criminal. Fortunately, I was able to escape Vector, and I started an actual job working for a bakery. The pay is very generous and I even get to take home pastries every time I work there.


Anyway, you might be thinking that, considering their prevalence, MLMs are out to get you and that you will eventually be ensnared by their toxic grasp. However, avoiding these companies is actually quite easy. Believe it or not, but the most formidable enemy of MLMs is common sense.


One of the ways you can prevent yourself from getting sucked into these vacuums of despair is doing some research about any company that tries to recruit you. If it’s a sales job, and you received information from a particular company out of the blue that cites the outstanding opportunities it offers, it most definitely is an MLM that’s way too good to be true. You can also just take a few minutes to read about MLMs, and how their history has always been tethered to scams and suspicious activity. Honestly, though, the best way to avoid the nastiness of MLM’s is to just think of them as pyramid schemes. Then your perspective on them will be much clearer.


Pay attention to the red flags, and stay diligent, even though you may be desperate for any chance to become successful. Let me be the light that guides you away from a highway of eternal doom, and into a world of real opportunities void of malicious practices, so that the “Multilevel Mama” will never, ever chase after you again.



References:

https://www.youtube.com/watch?v=inPcztqj9RE&t=483s

https://www.investopedia.com/terms/m/multi-level-marketing.asp


Photo by Ben Rosett on Unsplash


To read more articles from Michael McClellon click here.


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The views and opinions expressed in the articles published on Ogma Post are those of the authors and do not necessarily reflect the official position of this website.