{"id":12438,"date":"2014-10-06T09:48:19","date_gmt":"2014-10-06T14:48:19","guid":{"rendered":"http:\/\/www.sequenceinc.com\/fraudfiles\/?p=12438"},"modified":"2014-10-06T09:48:19","modified_gmt":"2014-10-06T14:48:19","slug":"avon-is-not-a-good-mlm","status":"publish","type":"post","link":"https:\/\/www.sequenceinc.com\/fraudfiles\/avon-is-not-a-good-mlm\/","title":{"rendered":"Avon is NOT a &#8220;Good&#8221; MLM"},"content":{"rendered":"<p><a href=\"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-content\/uploads\/2014\/10\/avon-mlm.png\"><img decoding=\"async\" class=\"lazyload alignright  wp-image-12442\" src=\"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-content\/uploads\/2014\/10\/avon-mlm.png\" data-orig-src=\"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-content\/uploads\/2014\/10\/avon-mlm.png\" alt=\"avon-mlm\" width=\"237\" height=\"87\" srcset=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%27http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%27%20width%3D%27237%27%20height%3D%2787%27%20viewBox%3D%270%200%20237%2087%27%3E%3Crect%20width%3D%27237%27%20height%3D%2787%27%20fill-opacity%3D%220%22%2F%3E%3C%2Fsvg%3E\" data-srcset=\"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-content\/uploads\/2014\/10\/avon-mlm-300x110.png 300w, https:\/\/www.sequenceinc.com\/fraudfiles\/wp-content\/uploads\/2014\/10\/avon-mlm.png 1024w\" data-sizes=\"auto\" data-orig-sizes=\"(max-width: 237px) 100vw, 237px\" \/><\/a>Last week I wrote about <a href=\"https:\/\/www.sequenceinc.com\/fraudfiles\/2014\/10\/good-mlms-versus-bad-mlms\/\">Good MLMs Versus Bad MLMs<\/a>. The truth is that there is no such thing as a &#8220;good&#8221; multi-level marketing company. Oh sure&#8230; MLM supporters will tell you that some &#8220;direct sales&#8221; companies are doing it right, and some are doing it wrong. They will tell you that every company has &#8220;bad apples,&#8221; but that you have to look past those and see the good people.<\/p>\n<p>These arguments are all false. Companies call themselves &#8220;direct selling&#8221; in order to direct attention away from the fact that they are recruiting schemes. MLMs are all endless chain recruitment schemes in which <a href=\"http:\/\/www.pinktruth.com\/mary-kay-facts\/myth-of-mlm-income-opportunity-99-lose-money-in-mlm\/\">99% of participants are guaranteed to lose money<\/a>. That is not a business&#8230; it is a game rigging in favor of the owners of the company, and participants are guaranteed to lose no matter how hard they try. Promoting this as a &#8220;business opportunity&#8221; is unethical and immoral.<\/p>\n<p>It therefore follows that if the company and the opportunity are unethical and are not a business, the people promoting the company and opportunity cannot be good. A horrible, deceitful &#8220;opportunity&#8221; does not change into something right, moral, and ethical, no matter how &#8220;good&#8221; the person promoting it is.<!--more--><\/p>\n<p>Recently <a href=\"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-content\/uploads\/2014\/10\/Open_Letter_to_Direct_Selling_Companies.pdf\">Avon resigned from the Direct Selling Association<\/a>, citing ethics concerns. The company says that the DSA does not protect consumers enough, and that Avon <strong>does<\/strong> protect consumers by:<\/p>\n<ul>\n<li>Not encouraging the sale of inventory or business support materials to distributors<\/li>\n<li>Having reasonable return polices, so distributors are not left with excess inventory<\/li>\n<li>Limiting commissions paid to three generations, rather than infinite<\/li>\n<\/ul>\n<p>Sounds great, doesn&#8217;t it? Except Avon is really no different than any other multi-level marketing company&#8230;. they just don&#8217;t do MLM very well. <a href=\"http:\/\/seekingalpha.com\/article\/2531625-is-avon-different-from-herbalife\">Robert FitzPatrick analyzed Avon in an article on Seeking Alpha<\/a>. He says that Avon is really <a href=\"https:\/\/www.sequenceinc.com\/fraudfiles\/?s=herbalife\">no different than Herbalife<\/a>, an MLM that has been heavily criticized over the last two years.<\/p>\n<p>For years, Avon was a true &#8220;direct selling&#8221; business, with no connection to the recruiting into multiple levels that is at the heart of multi-level marketing. FitzPatrick explaines, however, that in 2005 Avon changed to the MLM model of business because its sales were lagging. The company introduces a &#8220;Sales Leadership&#8221; program described as:<\/p>\n<blockquote><p>&#8220;&#8230;<em>a multi-level compensation program which gives Representatives the opportunity to obtain earnings from commissions based on sales made by Representatives they have recruited and trained, as well as from their own\u2026&#8221;<\/em><\/p><\/blockquote>\n<p>That, my friends, is classic multi-level marketing. Your hint is the multiple levels of commissions. <a href=\"http:\/\/seekingalpha.com\/article\/2531625-is-avon-different-from-herbalife\">FitzPatrick writes<\/a>:<\/p>\n<blockquote><p>Within a few years, the hallmark MLM emphasis on financially rewarding salespeople to recruit still more salespeople, <em>ad infinitum<\/em>, was full blown at Avon. In the largest ad buy in Avon&#8217;s history and delivered to the largest American television audience of the year, Avon&#8217;s 2009 Super Bowl television commercial featured, not its cosmetics, but its MLM <a href=\"http:\/\/www.marketplace.org\/topics\/business\/avons-calling-more-sales-reps\" rel=\"nofollow\"><em>business opportunity<\/em><\/a>. &#8220;To find out more about the &#8220;opportunity&#8221; the Avon ad advised, &#8220;contact an Avon representative.&#8221;<\/p>\n<p>In the midst of the Great Recession, while the cosmetics industry was contracting along with national job opportunities, and while Avon&#8217;s own revenue was declining, Avon used the Super Bowl to claim it could solve consumers&#8217; <em>income<\/em> problems. Avon had truly entered the world of Amway, which for years had been claiming to offer &#8220;the greatest income opportunity in the world&#8221; that was &#8220;recession proof.&#8221; That Amway &#8220;opportunity&#8221; turns out to be the opportunity to recruit recruiters who gain the opportunity to recruit recruiters, etc., with money flowing from last to first.<\/p><\/blockquote>\n<p>Avon started leaning more and more heavily on recruitment, with <a href=\"http:\/\/www.usatoday.com\/money\/industries\/retail\/2009-05-13-direct-sales-jobs-recession-unemployment_N.htm\">a North American executive saying<\/a>, &#8220;Right now, our direct-selling opportunity is really the No. 1 product that we have to sell.&#8221; So the company&#8217;s number one product was no longer any sort of cosmetic, it was the &#8220;business opportunity.&#8221;<\/p>\n<p>Avon would have you believe that it is better than Herbalife, but <a href=\"http:\/\/seekingalpha.com\/article\/1860101-using-an-herbalife-lens-to-examine-avon\">the companies have much in common<\/a>. FitzPatrick <a href=\"http:\/\/seekingalpha.com\/article\/2531625-is-avon-different-from-herbalife\">discusses in detail<\/a> the recruiting numbers for Avon, the discrepancies in figures it reports to the media versus figures reported to the Securities and Exchange Commission, and the heavy reliance on exponential recruiting.<\/p>\n<p>The bottom line is that Avon is not a &#8220;good&#8221; MLM. There is no such thing as a good MLM, and the endless chain recruitment scheme of Avon is no different than that of all other MLMs&#8230;.<a href=\"http:\/\/www.pinktruth.com\/mary-kay-facts\/myth-of-mlm-income-opportunity-99-lose-money-in-mlm\/\"> all of which are bad for consumers<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last week I wrote about Good MLMs Versus Bad MLMs. The truth is that there is no such thing as a &#8220;good&#8221; multi-level marketing company. Oh sure&#8230; MLM supporters will tell you that some &#8220;direct sales&#8221; companies are doing it [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[824,184],"tags":[2094,1595,937,939,938,836],"class_list":["post-12438","post","type-post","status-publish","format-standard","hentry","category-consumer-protection","category-pyramid-schemes-mlm","tag-avon","tag-direct-sales","tag-mlm","tag-multi-level-marketing","tag-multilevel-marketing","tag-robert-fitzpatrick"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p6Z0e-3eC","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts\/12438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/comments?post=12438"}],"version-history":[{"count":0,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts\/12438\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/media?parent=12438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/categories?post=12438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/tags?post=12438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}