In researching multi-level marketing (MLM) opportunities, I found some common threads that bothered me. MLMs are generally legal, while pyramid schemes are generally illegal. Yet if the MLM business opportunities are legal, why would I be interested in researching them and calling them scams?

Even though these “businesses” may not directly violate any laws, they have common elements which disturb me. The first is their focus on recruiting new distributors. The MLMs achieve their legitimacy by having a bona fide product, but once someone becomes an independent sales representative, the focus moves to recruiting other distributors.

While reps may generally agree that a profit can be made simply by selling the products of the MLM, the real money is made in recruiting and encouraging those recruits to purchase packages of products. What started off as a low cost investment (most companies have minimal sign-up fees) can easily become a costly venture.

The second big reason I have focused on the MLM businesses is because of the deception that I perceive in the companies. It is a common practice to parade around a copy of a very large commission check earned by someone in the upper echelons of the selling ranks. No mention is made of how long it took the person to get to that commission level, what type of recruiting had to be done, what a normal commission check is like, or what expenses the salesperson inccurred in connection with that commission check.

Participants are encouraged to not think critically about the information presented to them. Quick decisions without full information are encouraged. Without the full picture, a potential recruit can’t fully evaluate the MLM opportunity.