You came to the right place for authoritative answers to your questions and reliable guidance in making decisions about MLM participation and/or help with recovery. This information is based on the most extensive research ever done on MLM compensation plans and profitability, on distinguishing characteristics separating legitimate direct selling from pyramid or chain selling, and on the deceptions used to sell product-based pyramid schemes. Some of the features (referred to on this page) that you may find helpful include:
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A do-it-yourself 5-step quiz to evaluate any MLM
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1,357 ways to make more money than in MLM
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Typical deceptions used in MLM recruiting
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Expert witness resources for legal cases related to MLM
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Translations of reports on MLM into foreign languages
- Important new reports and developments reported on this web site
- Consumer guides for deciding about MLM participation, average earnings, red
flags to watch for, income tracker, actions victims can take, & more
- Research backing up the startling conclusions on this web site
- Special markets, such as world markets and religious groups affected
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5 Red Flags of a recruitment-driven MLM
Avoid getting lured into a scam that could cost you your money and your friends.
If you answered
YES to the questions below, then it's about time you reconsider your participation in that MLM company.
1. Participants are recruited into an endless chain of recruitment.
- Would you, as a new recruit, be permitted and even encouraged to recruit other participants, who would in turn be encouraged to recruit others, and they still more, etc. - from whom you could collect commissions and/or bonuses on what they buy or sell?
- Visualize yourself recruiting a chain of recruiters recruiting recruiters - including friends and loved ones - just to enrich yourself. Wouldn't you rather preserve those relationships?
2. Advancement in the hierarchy of participants is not achieved by appointment, but by recruiting more and more participants into a downline, or pyramid of participants.
- Is advancement in a hierarchy of multiple levels of participants achieved by recruitment and/or by a combination of recruitment and sales volume, rather than by appointment - as in other work or sales settings?
- Would you be uncomfortable if you knew that to succeed, you must be able to recruit your way to the top where the money is, and that doing so would require that hundreds, even thousands, of downline recruits could lose money?
3. In order to "play the game," or qualify for commissions and advancement in the program, participants must buy a minimum amount of products or services, either at the outset or in ongoing purchases (usually by monthly subscription).
- Are you being encouraged to make initial or ongoing purchases in order to take advantage of the "business opportunity," and later to continue qualifying for advancement in (or payout in overrides and bonuses from) the MLM company?
- Even though there is little or no cost to "sign up" for the program, are there minimum volume requirements that must be met in order to advance to higher levels in the hierarchy or to receive greater commissions or bonuses at some level?
- Are you expected to pay for training seminars, workshops, audio or video programs, weekend retreats, etc. in order to stay in the good graces of your upline?
4. The company pays more in commissions and bonuses to upline participants than to the person making the sale.
- Would the total amount of commissions (or discounts, bonuses, etc.) paid by the company to your entire upline be more than you would receive for actually making the sale?
- Are products priced higher than at standard retail outlets, making sales to non-participants difficult? And if prices are not competitive, can you see that to earn a substantial income from commissions from the company you would have to build a large downline of purchasers - who are also buying to take advantage of the "opportunity?"
5. The compensation plan allows for five or more levels, which is more than are needed to manage the sales function. (In conventional sales settings, sales for the entire country can be managed in four levels - national, regional, divison, and branch sales managers - with those beneath them selling to customers.)
Additional levels only further enriches those at or near the top of the pyramid of distributors. Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.This makes it an exploitive money transfer scheme, or product-based pyamid scheme.
- Does the company pay overrides (commissions and bonuses) to distributors in a hierarchy of more than four levels?
- Is the compensation plan so complex- with such a complex set of bonuses and other enticements – that you would find it difficult to explain it to a friend?
Details of the 5 Red Flags
here...
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The 40 MLM Misrepresentations
1. MLMs are often presented as a great "business opportunity," with huge incomes reported for many.
The truth: MLM's nearly always lead to certain loss for new recruits. The founders and a few are at the top of their pyramids of participants are enriched at the expense of a multitude of downline participants, approximately 99% of whom lose money.
2. "Everyone can do this" – and earn a good income.
The truth: Holding up top earners as examples of what others can do is deceptive. It is unfair to sell tickets on a flight after the the airplane has already left the ground.
3. Products can be resold at retail prices for a handsome profit.
The truth: MLM products must be priced high enough to support a bloated network of distributors, so prices are seldom if ever competitive with alternative retail outlets. MLM products are sold primarily to recruits to "do the business," rather than to persons outside the network of participants. People who shop around and are not buying products for the "opportunity" are not likely to become customers.
4. Every MLM Is presented as a legitimate business – "not a pyramid scheme".
The truth: MLMs, or product-based pyramid schemes, have been found to be the most extreme of all the types of pyramid schemes, by any measure - loss rates, aggregate losses, number fo victims, and degree of leverage. MLM loss rates (approximately 99 %) – are far worse than for no-product schemes, or even than most games of chance in gambling casinos.
5. MLM offers true "time freedom." For those who work at it, MLM can provide an income that is reliable, leveraged, residual, long-term – even permanent income. This will allow you the "time freedom" to quit your job and to spend more time with your family or to do whatever you want.
The truth: These catchwords are used by MLM promoters to appeal to the desires for "easy money" that keeps on growing and providing for the comforts of life – and the resources to do what we want, when we want. However, one of the stark realities of MLM is an extremely high attrition rate. Available statistics suggest that 90-99% of recruits terminate or are inactive within a few years of joining. Those who do "succeed" must be constantly recruiting others to replace a revolving door of hapless victims of these deceptions. This can become totally consuming, leaving little time or energy for anything else.
And for those who choose not to do MLM, is there anything immoral about hard work for honest rewards?
6. Work for only an hour or two a day to supplement your income to help meet expenses or pay down debt.
The truth: To profit at a recruiting MLM, one must work long hours and be willing to continue to recruit to replace dropouts. One must also be willing to deceive large numbers of recruits into believing it is a legitimate income opportunity. Recruits seldom profit, but are instead only fattening their upline's commission checks and enriching founders.
7. With MLM, you can just work seasonally, such as for Christmas or vacation money.
The truth: Since MLM compensation plans primarily reward downline recruitment, and one cannot maintain resultant "residual income" on a seasonal basis, this is an empty promise – about as empty as they come.
8. "The job market is terrible." The stock market is even shakier. MLM offers reliable, leveraged, long-term, permanent, residual income."
The truth: MLM is far more risky than either the stock market or the job market. It even makes gambling look like a safe investment by comparison. With over 90% attrition within a few years, long-term residual income from recruiting a downline is a myth for almost all MLM recruits.
9. Standard jobs are not rewarded fairly. In MLM, you can set your own standard for earnings.
The truth: Fair? Most MLM compensation plans are weighted heavily towards those who got in early or scrambled to get to the top of a pyramid of participants. MLM is the epitome of an unfair and deceptive practice.
10. "If not legal, the program would have been shut down long ago." MLM's have survived legal challenges. The fact that they are still around tells you they are legitimate.
The truth: Consumer protection officials are typically reactive, not proactive. Since victims of endless chain schemes rarely file complaints, law enforcement seldom acts against even the worst MLM schemes. Victims don't complain because they blame themselves, and they fear self-incrimination or consequences from or to their upline or downline – often close friends and family.
Continue reading
here...
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Source:
Truth on MLM or Network Marketing
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Now you know.
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How To Evaluate MLM Business
Originally Posted by YJOB
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