Commentary on fraud, scams, scandals, and court cases.

Multi-Level Marketing (MLM) False Claims

One of the most upsetting parts of the recruitment into a multi-level marketing company is the false earnings claims. People are lured into these companies with the promises of riches. It is not only done by presenting the tiny fraction of people at the top of the pyramid as typical when they are not. It is also done with outright lies about the level of income that “average” person can expect to make.

The entire business model of MLM is built around lies. Lies about how much you’ll have to work, how you’ll make your money (if you even make any), what you’ll have to do, and how you’ll develop new leads. They lie about how easy the whole thing is, and how you’ll be successful if you’re just willing to put in the time. (The truth is that you’re almost guaranteed to fail.)

Here are some of the most common lies told in the recruiting process:

1. You will be your own boss. You can set your own hours and dictate how you do business. (Not really true. The MLM company tells you how you’re allowed to do business.) You can control how much you make based on how much you’re willing to work. (Not true either. Your earnings are limited by your ability to recruit and the amount of money those recruits are are willing to put in the scheme.)

2. The product sells itself! And it’s consumable! You’re led to believe that you can continue to sell products and make money with little ongoing effort. (Do you have any Facebook friends in MLMs? Do you see them constantly hawking their wares. How’s that for no effort?)

3. No special skills needed! Anyone can do this! (The truth is that you absolutely need sales skills. You’ll need a large network of contacts to market to, as well as the ability to approach strangers in public to develop new leads. You’ll also have to be able to check your ethics at the door as you recruit people with half truths and maybe even outright lies.)

4. Your income potential is much higher than the normal job or career you’re qualified to do. The claim is made based on the idea that you will recruit a large base below you, with the number of people multiplying effortlessly. Your current job doesn’t offer that kind of income opportunity!

5. It’s a low risk opportunity! Most MLMs offer a fairly low buy-in (unless you’re LuLaRoe), and that makes it look like a low risk. (The truth is that the costs mount quickly, and soon you’ve made hundreds or thousands of dollars of inventory purchases, and you’ve spent a bunch of money on training, supplies, and travel.)

6. You can make “residual” income. That means you earn commissions on an ongoing basis from the people you recruited, with no additional effort on your part. Suddenly, you’re making money while you sleep!

7. You will have security. You can’t be fired. You can ramp up your business when you need more money. You won’t be at the mercy of a big evil company who can downsize. (Nope. Your MLM can terminate your contract at any time. Read the contract and see how few rights you have.)

Don’t believe the hype. MLM is not a business. You’re not going to make money.

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