Multi-Level Marketing (MLM) is driven by recruitment. Products are only an excuse that are used to recruit new distributors.
In some ways, products are irrelevant.
In fact, we have coined the term, "ill-relevant" to describe the negative effects that products have on MLM distributors.
In some ways, it would be cheaper and less of an economic burden if distributors just gave money to the people in their upline, instead of having to buy products.
Note: Being forced to buy products to either…
- Stay in the program
- Maintain commissions
- Continue to qualify for independent distributor status
...are all semi-legal ploys to continue to drain money from the MLM associate.
Recruitment Under False Pretenses
What pushes Multilevel Marketing schemes over the line from being barely legal to being illegal is whether the recruit stands any chance at all of being profitable.
In most cases, unless the recruit gets into the company on the first leg as one of the organizers, or, unless the recruit "jumps ship" from another MLM organization and bring their entire organization; the independent associate must work without ceasing, allow the recruiting process to consume them, and bend the truth.
The Ethics of Full Disclosure
The way that someone who is not on the top rung of the "MLM Pyramid" makes money is by…
- Telling the eager crowd of recruits that they will make money, while knowing that over 90% of them will loose money Selling training
- Selling Promotional materials
- Forcing automatic sales of unneeded products by the recruits in order for them to remain eligible for commission payments
- Replacing downline associates with new recruits when existing ones drop out
Some critics state that the only way that upline folks can make money is by bending the ethics of full disclosure, and convincing a never ending stream of recruits to join their organization.
The unethical issues crop up when upline folks continue to harvest recruits even after they realize that the market for the products that they are selling is "saturated."
In this case, saturation means a saturation in the number of independent associates that are signed up, past the level where the market can create income for only just so many people.
Legitimate businesses control the number of their sales force so that the earning ability of their representatives is not watered down. Disreputable MLM companies continue to expand the representative base because the money comes, not from new customers, but from the induction fees and front-load product purchases that are required of the new associates.
in this way, the customer (new recruit) is being tricked into thinking that they are sales representatives, when in fact, they are the customers.
Further Proof
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MLMs are Scams: Make Money Anyway.blogspot.com
MLM are Scams: Make Money Anyway
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