If you have ever wondered how to make money online – you might have come across hundreds of opportunities disguised as multi-level marketing (MLM). Well, I am here to tell you that multi-level marketing is a scam and it should be avoided at all costs!
On the surface, multi-level marketing programs can seem like a great opportunity. However, deep inside, where most people don’t get the chance to see – there’s a whole different picture.
MLM programs are set to fail and they do more bad than good in everyone’s lives. But how are they still legal? I am not sure, but judging by the number of lawsuits against some of the biggest MLM companies – MLM is definitely getting shut down.
Luckily, when I was learning how to make money online, I didn’t come across MLM programs. However, not many people are as lucky as I am.
In the article below, you’ll find everything that’s wrong with MLM and why you can never succeed with it.
What is Multi-Level Marketing and Why is it so Popular?
Multi-level marketing is usually set as a program along with an established company that manufactures and sells physical products.
However, instead of doing their own advertising and having an in-house sales team – these companies distribute their products through independent sellers.
Therefore, anyone can join an MLM program and start selling the company’s products. On the surface, this doesn’t seem bad, right?
This is one of the biggest reasons why MLMs became so popular.
However, when you take a deeper look – you’ll see that multi-level marketing works in layers.
There is an upline and downline, and you are in the middle. Upline is someone who has recruited you to the program and they make money from the products you buy or sell.
Below you is a downline which consists of people you recruit and you earn money by either selling products or recruiting other people. You can also earn money from the products people below you sell.
Therefore, multi-level marketing is a big money chain that goes across multiple levels. The more money you are able to bring to the company – the higher your status within the program & company will be.
However, not only I believe that MLMs are a scam – but it has been proven, and down below, I’ll show you why.
Multi Level Marketing is a Scam – and Here’s Why!
The System Just Doesn’t Work
If you have a deeper look into the levels of multi-level marketing model – you will come to the realization that this type of model doesn’t work.
Because it focuses way too much on recruiting. Whenever you are recruited to a company, your goal is to either sell products or recruit others as you can earn money from their sales as well.
Therefore, everyone decides it’s a lot easier to recruit a person and earn passive income rather than sell products over and over.
Everyone is focused on trying to get someone to buy a product or recruit someone who will sell the product to someone below them.
However, what people within an MLM are doing is that they’re selling products to each other and earning from each other. This reduces the number of people who are truly interested in the product and people who only want the product without being a part of the MLM.
And since anyone can join and anyone can recruit people – with the advertising of so many people and the company’s branding, this model can easily become unsustainable. Some researches have shown that it doesn’t even take many levels inside of an MLM to exceed the population of the country or even population of the world.
However, if there was just no recruiting part to the MLM program and it was only an indirect sales process by independent sellers – I believe that MLMs could actually be sustainable and even successful to a certain degree.
That’s just one of the reasons why affiliate marketing is a strong business model.
MLM Model is Based on Recruiting
There is a good documentary called Secrets of the Multi-Level Millionaires: Ellie Undercover which shows inside of the MLM programs and inside of the MLM companies.
I highly recommend everyone to check out this documentary.
What was interesting the most is that inside the private meetings of some of the most known MLM companies – they were showing the true colors of MLM.
Behind a skincare company or a company that sells beauty products, MLM is actually a recruiting business which is exactly what they teach their new recruits.
As I’ve mentioned previously, recruiting is the worst part of the MLM program because it can easily turn into a pyramid scheme. Everyone in the MLM program focuses on recruiting more people because it’s the only way to make more money.
But if everyone is recruiting, and no one is actually selling the products – what does this tell you? It is a bubble that can burst at any time.
If it doesn’t burst – such MLM programs eventually get sued and forced to change the way they operate.
MLM Companies Overpromise Things and Prey for Vulnerable People
Did you ever get an offer, or an “opportunity” to work at home, have more time for your kids, work on a beach only with the help of your laptop, or even replace your 9-5 job by selling beauty or makeup products on Facebook?
These are just some of the straight-up lies that MLM companies and their recruiters “sell” in order to recruit more people.
However, it doesn’t stop there. These MLM companies actually host small and large events that overpromise almost anything they can think of. Being your “own boss”, working on your own terms, working your own hours – these are just some of the ways to “sell” their MLM programs and recruit people.
If it sounds too good to be true – it probably is a scam. However, what bothers me the most is that MLM companies go a lot further than just making false promises.
Studies have shown that only 1/3 of MLM participants are male. I am not sure whether it’s the training that’s provided to new members, or it’s how far participants decide to make money – but there is a lot of preying on vulnerable people.
In the documentary I’ve mentioned earlier, Ellie goes undercover to one of the MLM meetings where they teach how to never take no for an answer, prey on people who are having financial difficulties, or even prey on young moms who are an easy target because every mom would love to be a stay-at-home mom as long as she can earn money by working remotely.
It even goes so far that they MLM companies teach on private meetings how to convert your family members and try and make some money off of their backs.
Most MLMs Show Signs of Being a Pyramid Scheme
A pyramid scheme is a business model where members are recruited on a promise of payments or service for enrolling others into the scheme. In pyramid schemes, there’s often no sale of products or investment required since the whole model is based on recruiting.
Some of the biggest MLM companies are actually a pyramid scheme because they only focus on recruiting more people.
Previously, you’ve noticed the negative effects of a business model that only focuses on recruiting. Not only it can burst out like a bubble, but it can also lose a lot of money for people who invest in MLM programs.
Not all MLM programs are the same, however, most of them focus on recruiting only which shows strong indications of it being a pyramid scheme.
Therefore, if you come across an MLM program that you really like enough to think about joining – yet they ask you to pay to join and tell you that you will have to recruit others – I would say run!
Only 0.02% of MLM Participants Earns Top Figures
Did you know that 89.2% of people don’t earn any commission and even lose money instead of making money?
In fact, only about 0.02% MLM participants make top figures – and that’s probably because they’ve joined very early and they earn a commission from everyone below them.
However, since no one can know their position in the MLM program – it’s hard to tell whether you will be able to make any money at all.
Therefore, most MLM programs require you to pay to join, pay for products, and recruit others. With thousands, if not millions of people doing the same – odds are definitely stacked up against you.
This information is hard to find, and believe me, I was digging it up and doing my own research and it was still hard to find this information.
I’ve noticed that almost every MLM company publishes this information, but since the news isn’t good – this information is often buried in the fine print.
Do you think that all of those people who are promised all the nice benefits would join if they knew this information? I don’t think they would.
Mysterious MLM Connection
MLM is very often discussed, but did you ever wonder when did MLM start and where did it start?
In case you don’t know – you’ll be surprised to hear that MLM has a mysterious connection. Some of the biggest MLM companies have been founded in the same place – Utah, USA.
This isn’t only weird on its own – but MLM is also linked to the Mormon church since some of the largest MLM companies are based in Utah.
Mormon missionaries go on missions for a certain amount of time where they approach people, try to teach about their beliefs, and even “recruit” others into their religion.
In a way, this type of recruitment is also translated into the MLM business model. What’s also shocking is that it seems like MLM targeted new & young moms since Mormons are taught that as moms – they’re supposed to stay at home with their kids.
And since 2/3 of all MLM programs and companies are women who recruit others and often “target” moms – providing “opportunity” for a way to stay at home and still make money.
I am not sure how much of this is true – but some of the things aren’t just a coincidence.
5 Reasons Why Should You Avoid MLM
It’s a High-Risk Business Model
Since almost every MLM program I’ve looked into show signs of a pyramid scheme which is never a good thing. If the business is only based on recruiting others, people making money off of each other, and no one truly wanting the products – it’s destined to fail.
And since most MLM programs require you to invest in products, pay fees, and earn through sales others make – you’re actually joining a high-risk business without even knowing it.
If you’re still thinking about joining any MLM program – I highly recommend researching more about pyramid schemes and make sure you stay away from them!
Time-Consuming yet not Rewarding
In the Secrets of Multi-Level Millionaires documentary I’ve mentioned earlier, there are testimonials of some people who have worked really hard at various MLM programs, only to fail without seeing any results.
One person confesses to making only about $20 in 6 months, yet working about 40 hours a week on selling products and recruiting others.
Considering the amount of time and labor you have to put into this “business” – the odds are stacked up against you and you might not even realize it.
Cult-Like Behaviour and It’s Unethical
MLM programs touch on mindset often throughout their training, but in a very bad way. They portray the “hustle” lifestyle where you have to put a crazy number of hours in the “business”.
If you are failing, you are not only going to get told that you’re not doing enough, but other participants and members will start bashing you on doubting the program or the company – or even worse, for trying to quit.
One thing that really shocked me is that MLM programs teach their members to disconnect from people who don’t believe in them and have only negative things to say about their participation in the MLM program.
This often leads to disruptive families and even worse mental health problems. Therefore, there are definitely characteristics of a cult and if you have a look at some of the largest events held by MLM companies – you’d easily notice this even if you don’t know much about how cults operate.
It Never Works Out
With all odds stacked up against you and statistics to prove the incredibly low rate of success – it’s safe to say that these programs never work out.
If they don’t burst out like a bubble for following a pyramid scheme – they eventually get shut down by the government.
There was a huge settlement in 2016 by one of the largest lawsuit settlements in the MLM field. The settlement was worth $200 million and the company was alleged of deceiving consumers into believing they will be able to earn a decent income from a business opportunity from the company in question.
Then there’s the whole unethical approach to recruiting people by preying on financially weak people is definitely something that shouldn’t be overlooked.
About 89% of MLM Participants Lose Money
This is still one of the facts that is mind-blowing to me and yet I bet that 98% of people who join MLM programs aren’t aware of the statistics.
Of course, the “opportunity” looks very lucrative on the paper. But knowing that members are recruiting people who are going through financial situations with the hope of making money – yet only to end up losing money is something that bothers me the most.
That’s just one of the reasons why I think that multi level marketing is a scam – and I don’t think I am far from the truth.
But How MLM Companies Make Money for Themselves?
Some of these companies are multi-million companies, and some of them are even featured on the stock exchange – but how did they grow and how are they still operating successfully?
At first sight, you would think that these companies make money by selling their products. However, these companies actually make money by recruiting. After all, MLM programs are nothing more than a recruitment business.
Companies make money through recruited people as in many training materials – we’ve noticed that recruits are supposed to replace all of their products with the company’s products at their own cost.
Also, the recruits are supposed to purchase the latest products released by the company in order to be more successful and have a bigger chance of selling it to other people.
And lastly, these companies hold cult-like large events where they gather all of the members. The tickets aren’t cheap and they even take the opportunity to make more sales.
But don’t let these companies fool you. Some of them aren’t doing that well after all. In 2009, one of the largest MLM companies almost went into bankruptcy, even though their MLM program was very big at the time.
Personally, I think that multi-level marketing is a scam. There are just too many red flags and you can’t ignore them.
But is MLM really that bad? It definitely is as most companies are started around the whole MLM idea and they use it as a vehicle to achieve their financial freedom without caring about others.
Considering that MLM programs tend to have millions of members all around the world – it’s clear that these companies are taking advantage of people in any way possible.
Also, I have never seen any other business model having so many issues and having so many flaws and things that don’t add up.
Don’t fall for hope, “opportunity” or a lifestyle – as these are some of the ways these MLM companies recruit members.
Also, I’m pretty happy that MLMs are getting discovered and you can also find a review of any MLM company very easily.
Therefore, get informed, think twice, and if the opportunity seems too good to be true – avoid it!
What is your experience with MLM? What do you think is the worst part of it?