No Such Things as a Good MLM

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pyramid-selling-scamDefenders of multi-level marketing (MLM) will tell you that some companies “do it” right, while some companies “do it” wrong. One such example is John Hempton, a clown who thinks that Herbalife is the greatest thing since sliced bread. He says the following in an article about Nu-Skin:

Disclosure: I am predisposed to believe that multi-level-marketing schemes like Avon, Herbalife or Nu Skin are likely to be good cash generative businesses. I have done much looking at Herbalife and got very long. I do not think a negative interpretation of Herbalife is sustainable. Herbalife’s business is legal, sustainable and will generate vastly more cash in five years. Nu Skin does not lend itself to such definitive opinions. History is littered with MLMs that no longer exist – and a few like Avon, Nu Skin, Herbalife, Amway and Mary Kay which have lasted decades.

The fact that a multi-level marketing company like Mary Kay Cosmetics has been around for more than 50 years does not define whether it is a fraud or scam. Remember Enron (in business more than 15 years prior to the fraud being discovered) and Bernie Madoff (whose investment firm was in business for more than 40 years before his Ponzi scheme was revealed)? Length of time in operation has nothing to do with whether something is a scam or a fraud. Being traded on the New York Stock Exchange is not an indicator of legitimacy either.

Mary Kay Inc. is a wolf in sheep’s clothing. It lies to women, presenting its recruiting scam as a legitimate business opportunity. It uses images of pink Cadillacs and diamond rings to entice women, and to fool them into believing that many women are having success as consultants and sales directors. All the while the company is selling products to its distributors (with a pathetically small amount of those products being sold to third party customers) and profiting from doing so. But the bottom line is that 99% of participants in MLM will lose money.

While morons like Hempton tell you that Herbalife is a legitimate business with a wonderful opportunity for distributors to earn money, the truth is that Herbalife distributors lose massive amounts of money. Why? Because MLMs are pyramid schemes in which almost everyone is guaranteed to lose money. There is no such thing as a good (or better) multi-level marketing company.

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