While issues of morality and ethics can be tricky to discuss, materialism and greed are universally condemned by every major religion, and even by most of the irreligious. This does not mean people are not materialistic or greedy; in fact, the common caution to not overdo it is strong evidence that we are.
And typically I did. Instead, with other companies, you can get rep pricing without signing up! I’m not averse to MLMs that have special products that you can’t get elsewhere, but I don’t see it being good to get roped in to end up even going into debt to buy more just to stay “active” with a company.
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For most people, this means if we are going to be materialistic or greedy, we would rather not be obvious about it. Thus, Madison Avenue has subtle, highly polished ways of appealing to these vices without being heavy handed. We don’t mind so much… as long as it is “veiled.” This hypocrisy, while sad, is the status quo. So, Madison Avenue is trying to be ever more subtle in appearing not to be manipulating our immoral “bent” towards greed and materialism.
Multi-level marketing (simplified Chinese: 传销; traditional Chinese: 傳銷; pinyin: chuán xiāo) was first introduced to China by American, Taiwanese, and Japanese companies following the Chinese economic reform of 1978. This rise in multi-level marketing’s popularity coincided with economic uncertainty and a new shift towards individual consumerism. Multi-level marketing was banned on the mainland by the government in 1998, citing social, economic, and taxation issues. Further regulation “Prohibition of Chuanxiao” (where MLM is a type of Chuanxiao, Chinese name of the regulation is 《禁止传销条例》 ), was enacted in 2005, clause 3 of Chapter 2 of the regulation states having downlines is illegal (original text from the regulation ‘组织者或者经营者通过发展人员，要求被发展人员发展其他人员加入，形成上下线关系，并以下线的销售业绩为依据计算和给付上线报酬，牟取非法利益的。’). O’Regan wrote ‘With this regulation China makes clear that while Direct Sales is permitted in the mainland, Multi-Level Marketing is not’.
But the people who succeed at MLMs would probably succeed in other small businesses too – they have the right network and skills, and (importantly) they got into this particular MLM in their area early.
Herbalife was able to show its revenues were based more on the sale of its products than through recruitment, and it offered numerous protections, such as a money-back guarantee, so members would not be stuck with products they could not sell. According to Herbalife, 80% of its members do not recruit other members.
Because of the encouraging of recruits to further recruit their competitors, some people have even gone so far as to say at best modern MLMs are nothing more than legalized pyramid schemes with one stating “Multi-level marketing companies have become an accepted and legally sanctioned form of pyramid scheme in the United States” while another states “Multi-Level Marketing, a form of Pyramid Scheme, is not necessarily fraudulent.” In October 2010 it was reported that multilevel marketing companies were being investigated by a number of state attorneys general amid allegations that salespeople were primarily paid for recruiting and that more recent recruits cannot earn anything near what early entrants do. Industry critic Robert L. FitzPatrick has called multi-level marketing “the Main Street bubble” that will eventually burst.
Direct selling method in which independent-agents serve as distributors of goods and services, and are encouraged to build and manage their own sales force by recruiting and training other independent agents. In this method, commission is earned on the agent’s own sales revenue, as well as on the sales revenue of the sales-force recruited by the agent and his or her recruits (called downline). Also called multilevel marketing (MLM), cellular marketing, or by other such names, it is a multi-billion dollar worldwide industry that distributes practically any portable item, although restricted or banned in several countries due to its history as a vehicle for consumer fraud.
For more, see the Frequently Asked Questions, Additional Points and Rebuttals section at http://www.vandruff.com/mlm_FAQ.html E-Mail the author of this article, Dean Van Druff, at end of this section.
I’ve used oils internally and felt that they were helpful (though the Slim and Sassy did nothing for me :-(), but I am changing my thinking on this. Oils are super potent. It takes about 16 pounds of peppermint leaves to make 1 ounce of peppermint oil. Wow. (Source)
As noted, many MLM companies do generate billions of dollars in annual revenue and hundreds of millions of dollars in annual profit. However, the profits of the MLM company are derived to the detriment of the overwhelming majority of the company’s non-salaried workforce (the MLM participants). Only some of the profit is then significantly shared with none but a few individual participants at the top of the MLM participant pyramid. The earnings of those top few participants then allows the creation of an illusion of how one can potentially become financially successful if one becomes a participant in the MLM. This is then emphasized and advertised by the MLM company to recruit more participants to participate in the MLM with a false anticipation of earning margins which are in reality merely theoretical and statistically improbable.
There is some stigma attached to networking marketing, especially with regard to multi-tier and multilevel structures, which attract pyramid schemes. Still, the appeal of network marketing is that an individual with little skill but a lot of energy can create a profitable business for themselves with little monetary investment. A good rule of thumb, according to the Federal Trade Commission, is that single-tier network marketing operations tend to be more reputable, but multi-tier schemes in which people make money based on the number of distributors they recruit — rather than self-generated sales — can be problematic. Some reputable examples of single-tier network marketing operations are Avon, Mary Kay and Excel Communications.
Whether they realize it or not, consultant leaders often use time-honored cult tactics of denial and blame to keep women within their sorority. A famous series of experiments from the 1950s conducted by Soloman Asch in England showed that three out of four people will deny evidence right in front of them if the majority says it’s not true. In the study, individuals were placed in groups where they were constantly contradicted by other members. When this happened over a length of time, they would start to agree with the majority—even though it was clear that the opposite was true. In MLMs, “you’re trained to avoid people who question whether this is a viable business or not,” Brooks says. “Which is exactly the same technique that cults use—they try to isolate you from people who question your belief system. I’ve been contacted by a number of people who deal with cult survivors, and some of their clients are former MLM people.”
MLM has its origins in direct selling, which developed in the rural United States, where supply lines were limited and retail options were scarce. In the olden days this meant the Avon lady going door-to-door, or the woman down the street holding a Tupperware party, but in the modern era direct selling can more broadly refer to any retail business that is conducted person-to-person (including electronically) rather than at a retail store.
None of these conditions exist anywhere in the real world. Markets change, trends come and go, customers are fickle and demanding, and competitors constantly enter/exit the market. There isn’t an endless supply of people willing to serve as self-appointed salespeople in any market, anywhere – some of us have better things to do than sell overpriced supplements to our friends on Facebook. And there are almost always plenty of competitive alternatives to every consumer product. So what inevitably follows is point #4…
The above title is meant to be absurd. Most people, no matter how jaded, would not foist such a con on their own mothers. Even if people don’t know the specifics of what is wrong with MLMs, intuition often warns us: “Don’t tamper with that relationship.” The first marks for recruitment are the gullible, or the “expendable” friends. But successive moral compromise, experience, and desperation… may yet lead to “good old Mom.”
Some people don’t want to give out their SS# to become a rep. The companies need these to file taxes with the IRS. I understand concerns about keeping your SS# private. One alternative is to get a Tax ID # from your state. (Update: One reader shared there is a way to get a discount from doTERRA without your SS#.)
Thus, MLM has evolved into a “niche”: it can be used to sell products that could not be sold any other way. An MLM is a way to get undue credibility by exploiting people’s personal friendships and relationships via “networking.” This is an intrinsic moral difficulty with MLMs that will be expanded in the last section.
You can begin searching for a position anytime you want! Once you’ve gotten a job, it may take a few weeks or months to get fully trained and ready to begin working, but after that you’ll be able to become a full blown network marketer.
“Most people aren’t in it to replace income. Most people are in it to make additional income,” says Hassay. “If you could give me $1,000 that I don’t have right now, my life would be a heck of a lot better. And that’s what most people are doing. There’s a wonderful group of women who join in September or October, buy Christmas presents for their family, quit in January and join again the next year.”
Recruit new members. Just like you were recruited to a network marketing company, you’ll have to recruit members to your team if you want to be successful. Always be on the lookout for new prospects who you think will be valuable additions to your team. Try recruiting services like: MLMRC. Also, you’ll want someone who is personable, a good salesperson, and a team player committed to cooperating with you.
MLM companies have been trying to find ways around China’s prohibitions, or have been developing other methods, such as direct sales, to take their products to China through retail operations. The Direct Sales Regulations limit direct selling to cosmetics, health food, sanitary products, bodybuilding equipment and kitchen utensils. And the Regulations require Chinese or foreign companies (“FIEs”) who intend to engage into direct sale business in mainland China to apply for and obtain direct selling license from the Ministry of Commerce (“MOFCOM”). In 2016, there are 73 companies, including domestic and foreign companies, have obtained the direct selling license. Some multi-level marketing sellers have circumvented this ban by establishing addresses and bank accounts in Hong Kong, where the practice is legal, while selling and recruiting on the mainland.
Ami Chen Mills Shaking the Money Tree captures the “stink” of MLM pathology and culture most vividly. Hold your nose, and dive into major deja-vu at http://www.metroactive.com/papers/metro/10.03.96/cover/multilevel-9640.html
Jump up ↑ News, A. B. C. (December 16, 2017). “Former NXIVM member says she was invited into a secret sorority, then branded”. http://abcnews.go.com/US/nxivm-member-invited-secret-sorority-branded/story?id=51617201. Retrieved February 10, 2018.
MLM salespeople are not employees of the MLM company. Participants do not derive a salary/wage, nor do participants receive remuneration from the MLM company for their invested labor and expenses in their MLM “independent business”. The income of participants, if any income is made at all, is derived only from commissions on their personal sales or their share of the commissions on the personal sales of their downlines (the MLM compensation structure).
Essentially, the idea is that any given upline collects a cut of the sales from every member of their downline. As a result, the only path to solvency for the upline is to make sure that the downline recruits as heavily as possible, with as deep a pyramid beneath them as possible – as opposed to conventional businesses, where the path to solvency is to sell sufficient product to consumers.
MLMs and related schemes are remarkably uniform in their structure and business model, the appearance/writing style of their promotional materials, and the behavior of their members. They’ll deny it, which sometimes makes them difficult to spot, but the similarities reveal themselves with even the smallest amount of due diligence and research, and are surprisingly consistent.
The only word that makes MLM Kool-Aid drinkers bristle quicker than pyramid is cult. It’s a bold accusation, one not to be trotted out lightly, but there’s simply no other way to describe the techniques MLMs use to attract and retain recruits.
The unfortunate “distributor” at the bottom is the loser, and once this becomes apparent beyond all the slick videotapes and motivational pep-talks, good people start to get a bad taste in their mouths about the whole situation.
Question your recruiter. When you’ve found a company you’re interested in, you’ll likely meet with a recruiter or another representative. Be skeptical during the recruitment process. Remember that your sponsor makes more money if you sign on, so he may not be as open with you as he could be. Don’t get distracted by promises of how much money you’ll make and really think about what you’re about to do.
Talk to a mobster, and he will tell you that he is “merely misunderstood in his benevolent intentions.” “We are just trying to ‘build our business.'” “It’s all a conspiracy to make us look bad.” “The Feds are out to get us because they are jealous or afraid of our new way of life.” “Why, look at all the good we do!” “We are looking more legitimate every day.” “Here’s a statement from a famous DA that the Mob is really a good organization and no harm ever comes from it.” “We’ve even got a minister to endorse us now!”
That sense of camraderie often starts with a love of the product. Jen Marie Rowsell, a 33-year-old Canadian arachnologist-turned-Arbonne area manager who now lives in Texas, wasn’t even interested in joining the business at first — she fell in love with Arbonne’s product line, which claims to be pure, safe and effective. But, much like the other women FLARE interviewed, she quickly realized that if she was excited about about Arbonne products and telling her friends anyway, it only made sense to actually sell them herself. And that’s when she really began to benefit from the company’s famously tight-knit sorority.
Two-tier: Participants are paid based on the direct traffic or sales they refer to a merchant or its site, as well as the direct traffic or sales generated by the affiliates who joined the affiliate program via their recommendation.
In a classic and severe case of crank magnetism, MLMs are notorious for specializing in products of dubious value (supplements, essential oils, laundry balls) and making pseudoscientific, questionable or outright false claims.
The percentage of an MLM company’s total profit that is ultimately distributed to its participants (the sales force), away from the MLM owners or shareholders, differs from one MLM company to the next. However, the percentage earmarked to be paid to participants is usually a quite smaller share of overall company profits. The earmarked figure is then distributed in complex compensation plans which, ultimately, funnel most of it to a few individual participants in the upper-most levels of the MLM participant pyramid. The remaining majority of participants (often over 99.5% or more) receive no returns, or negligible return which are more often than not at a net loss after they deduct expenses which were incurred in the promotion of their “independent businesses”.
When it comes to selling product, MLM sales reps are probably no more aggressive or obnoxious than ordinary salespeople. Since most are not salespeople by nature, and it is characteristic that MLMs attract few people with any experience selling this particular product or service, they usually sell through pre-fab “parties” or home “demos.” Thus, sales pressure is exerted by situation, if at all.
Can I ask what you think about their claims about their oils being special b/c of permeability? I looked into that and was told that all EOs can permeate cells and that EOs are not permeable so not sure what they are getting at. Thanks! And what does clinical grade mean?
Business Students Focus on Ethics: “In the USA, the average annual income from MLM for 90% MLM members is no more than US $5,000, which is far from being a sufficient means of making a living (San Lian Life Weekly 1998)”