Why Multi-Level Marketing “Million Dollar Earner” Status is Nonsense

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Multi-level marketing companies are quick to tout the success of their “million dollar earners.” Sounds impressive, doesn’t it? Who doesn’t want to make a million dollars?

Except that phrase “million dollar earner” hides the truth:

  • What they don’t clearly mention is that this is cumulative earnings over a number of years, typically between 5 and 20 years.
  • They also fail to mention that this is gross income, prior to any business expenses. The business expenses in multi-level marketing can get very high, and will include product purchases (in order to stay active and/or meet requirements for certain commission levels), travel, office expenses, training costs, business insurance, supplies, prizes for customers and downlines, venue rental for events, food for events, etc. The expenses can easily equal 40% to 60% of gross income.

  • The companies don’t usually tell you that the $1 million is NOT cash income. This “income” includes the value of prizes that are received.
  • The most typical prizes received from multi-level marketing companies include trips, jewelry, and cars. Sounds great to get free trips, jewelry, and cars, doesn’t it? Except they forget to tell you that you will be taxed on the value of those prizes, and the value assigned to those prizes is often well above what you would pay if you bought the trip or car on your own. Inflated values on prizes mean you pay inflated taxes.
  • Self-employment taxes are never mentioned. With traditional employment, you pay about 7.65% of your wages in Social Security and Medicare taxes. When you are self employed, you pay double, or about 15.3% in Social Security and Medicare taxes.
  • Also not mentioned are the benefits, or lack thereof. When you are self-employed, there is no such thing as paid time off (vacation, sick leave, or other PTO). There is no company contribution to a retirement plan. There is no company provided health insurance or disability insurance. You are on your own to cover all of those.

Suddenly, the “million dollar earner” status doesn’t sound so good, does it? Even if you get to one million quickly (let’s assume you do it in 5 years), you have $200,000 in gross income. Plan on business expenses of at least 40%, or $80,000. Plan on health insurance of $4,000 to $10,000 per year, depending on the size of your family. Plan on the extra Social Security and Medicare taxes to take another $9,000.  And no benefits.

And please don’t believe the hype that these multi-level marketing shills “retired” from their jobs and are “at home with their kids.” In order to make this kind of money, these people are working 40 to 60 hours a week. They are definitely not retired, and they probably have less quality time with their kids than most of us.

AND… they make their living dishonestly. Multi-level marketing is not a business, and you must lie and deceive if you want any chance of recruiting new people into the scam. And the only way you make the big bucks, is through recruiting. Because there is almost NO retail market for MLM products.

10 thoughts on “Why Multi-Level Marketing “Million Dollar Earner” Status is Nonsense

  1. Someone investigating fraud all their lives is bound to see everyone and everything as been fraudulent. It is impossible to take an industry that has produced countless numbers of success stories for hundred of years and tear it to shred with an article that only further goes to highlight the ignorance of the writer. This simply would not cut it, deal with your own ignorance.

  2. Tracy Coenen

    Papolous – There are not “countless numbers of success stories.” In fact, more than 99% of MLM participants have lost money in MLM. That adds up to billions of people. That is not success. That is failure. MLM is not a business. It is a scam. And the fact that it is a scam has nothing to do with me being a fraud investigator.

    Not a business: http://www.sequenceinc.com/fraudfiles/2012/08/is-multi-level-marketing-a-legitimate-business-model/

    99% lose money: http://www.pinktruth.com/mary-kay-facts/myth-of-mlm-income-opportunity-99-lose-money-in-mlm/

  3. You are backing up your claim by posting links? How about doing more research from inside of the profession of network marketing? This is an industry that experts have investigated by actually getting involved from the inside and have found out that though not perfect, it is viable. 9 out of 10 businesses fail in their first year, its not just network marketing. Your rhetoric is laughable to be honest.

  4. Tracy Coenen

    I provided those links so you would have additional material to ponder. I have spent 10 years researching multi-level marketing (or whatever name people use to try to hide the truth, such as “network marketing”) and know all there is to know about it. Yes, I was on the inside, but no it is not necessary to experience it from the inside to discover the truth. (Just like I don’t have to have cancer to knwot hat it is bad.)

    9 out of 10 businesses don’t fail. You made that up. And MLM is not a business.

  5. Hahaha! just watched a video of yours on YouTubehttps://www.youtube.com/watch?v=VVYxN6qF6VA, you said in a statement: “The best way is to ask for referrals”. The profession you are criticising uses the same model. People referring products to other people is called business, there is nothing wrong with that. Its’ amazing how double standard loops will appear in statements that made by people who criticise Network Marketing.

    Network Marketing is a business. You don’t have to agree, but the facts are there to prove this. Surely, you have never been involved in Network Marketing and your cancer analogy can not be justified. Cancer is bad, Network Marketing isn’t’.

  6. Tracy Coenen

    Yes, referrals are a great way to generate business for real businesses. MLM is not a real business. It is simply a legalized pyramid scheme in which 99% or more of participants will lose money. MLM is financially damaging to millions of people per year, which is why it is so terrible. Even if you call it “network marketing” (or any other name that is designed to hide from the term MLM), it is still bad because almost everyone will lose money no matter how hard they try. The system is designed for almost everyone to fail, and that is why it is bad.

  7. Fran

    You will never get through to these dreamers. They lie to themselves and each other in order to get more people involved. It is sad. They hurt their friends and relatives. They lose the friendship of their friends and relatives. They are blocked on Social Media. Their calls start to go unanswered and they are avoided. They think they own their own business and that people are jealous. In reality, everyone is laughing at them. This is so sad.

  8. Taby

    I had a friend who fell victim to this type of “business “. Lying is part of the deal. They lie and act like its part of “building the dream”. Anyone who tries to show them actual statistics are “negative” and “dream killers”. After ruining his savings, marriage and relationships with many friends who left the MLM and came clean.

  9. Mutanda

    Once a product has no demand,then what else is left to sell it other than lies? Revenue should be realized through actual sales not sales disguised under new recruitment and network building.

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