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Is Multi Level Marketing Ethical – Or A Scam?

In this article I will have a closer look at – is multi-level marketing ethical or a scam? 

What is multi-level marketing?

Multi-level marketing companies, or MLM”s have been around for decades.

Today, there are hundreds if not thousands of companies that recruit people to sell almost everything. But despite how the industry has developed one thing is for sure: they’re not a benefit to everyone
in this industry, probably the opposite. I will try to explain why.

As you see in the picture, all MLM companies follow a
pyramid structure in which the people at the top (known as up-lines)
make tons of money off the sales commissions of the people they’ve
recruited to work underneath them (their own lines). In fact, these
businesses rely heavily on recruiting new members, who are mostly
women ( around 70%,) targeting stay-at-home moms and others under
the promises, of financial freedom.

Interview and research

I decided to do some interviews with friends and do some research online to figure out if MLM is something to go for if you want to earn money online.

My own experience

But first I would like to tell my own experience. I was involved in a MLM company called Nutronix. This was around 2007 to 2009. Their products were of high quality. They had very powerful vitamins and other things to promote a healthier life. Then they started something called “The Berry Tree”. They promised: “If you join The Berry Tree and order products for $50 per month, this will accumulate an income for you and in the end, you can cash out a big profit, much more than you put in.

I trusted the company, so I joined. At that time I was quite new to internet marketing, but there were quite a few people on the internet who warned people to join The Berry Tree since they considered it a scam. I didn’t really understand the formula but I trusted that the company knew what they were doing. Therefore I was I just continued to order the auto-ship of $50 per month.

Time to cash out

Then the time came for cashing out. Of course, all of us were excited. Then came the shock. How much did they give back? — $50!!!!. One time! Honestly, this was a scam without comparison. We all who joined The Berry Tree were expecting a lot more and residual income. They promised $1336 per month. Nutronix was a quite reputable company and at that time they already had been on the market for 7 years but still they ended up fooling their members

My friend Hans experience

My friend Hans has another experience and that is with Herbalife. Herbalife is a network sales company founded in February 1980 by Mark Hughes. The company sells nutritional products, dietary supplements, and body care products, but has also been criticized for mainly making money through a pyramid scheme-like scheme, something the company has been convicted for in Belgium.

I also found this information in Wikipedia:

The company has been criticized by, among others, hedge fund manager  Bill Ackman of Pershing Square Capital, who claimed that Herbalife operates a “sophisticated pyramid scheme” after taking a $1 billion short position in Herbalife stock, Herbalife agreed to “fundamentally restructure” its business and pay a $200 million fine as part of a 2016 settlement with the U.S. Federal Trade Commission (FTC) following accusations of it being a pyramid Scheme. In November 2017, Ackman’s hedge fund closed out its short position in Herbalife.

My friend Hans joined them 2 times with a couple of years between. He said that their products are very good for promoting a healthier lifestyle, but as he said, he was not able to make any money with them, even if his wife also tried to help him.

My friend Priscilla’s experience

My friend Priscilla has a similar experience as Hans but she was in Amway. Amway is a direct trading company that uses network sales to sell a large number of products, primarily in skincare, beauty, and health. Amway was started in 1959 by Jay Van Andel. The company name is an abbreviation of “The American way”.

Priscilla says that Amway products are very good, but if you shall make any real money with this company, you have to work very hard for up to 5 years to build your team. That means that you normally have to convince family and friends to join and train them to do the same with their family and friends. Most of our friends are not inclined to work in this way, so it must be quite hard to build a team this way.

Is Multi-Level Marketing Really Ethical?

The following statement are not so uncommon

“Success rates are very few. It’s estimated 73 to 99 % of participants either don’t make any money or lose money. Some wise ones quit while they’re not losing too much. But thanks to the cult-like nature of MLMs many remain, convinced that they’ll be successful someday and continue to pursue friends, family, and acquaintances. Ultimately, these hunters as they’re known, lose money, relationships, and their dignity thanks to many MLM companies.”

The weakness of Multi-Level Marketing

As you probably can understand, I am not a fan of Multi-Level Marketing. Many products may have high quality, but many of the people who are supposed to market the company’s products are not always qualified to do so. To hunt family and friends and others is not a good way of marketing. Many times’ friends and others just try to avoid them and they can actually end up losing their former friendship. Is it really worth it?

Others in the chain of MLM can also be very pushy. For example, when I was in Nutronix my up-line was a person who didn’t have any scruples. I don’t know how many emails he sent to push me to take action. Of course all for his benefits. It continued until 2014. After that, I don’t really know what happened with Nutronix and the people in this company. I feel sorry for all who put their trust in this MLM company. This is what can happen.

Is MLM a scam?

Not really, but I don’t think it is a good idea to be involved in MLM companies. There are so many pits falls on the way. I don’t think Multi-Level Marketing is a solution for anyone who wants to have a secure economic future. MLM in itself is not a scam, but it will be very difficult for a person to succeed in this business.

  • MLM for making money 2/10
  • MLM recommendation: NO
  • Is MLM ethical? Not really

There are better ways

There are better ways to make money online for example affiliate marketing. What does that mean? Simply, It means if you recommend someone to buy the product from a company, that company will reward you for that by giving you a commission on that purchase. Affiliate marketing is getting more and more popular among those who make money online.

Do you want to know more about affiliate marketing and learn how the customers will come to you instead of you chasing them?

Then you should definitely

CLICK HERE!

Did you like this article? Or maybe you disagree?

Anyway, please give a comment below!

All the best

Goran

 

 

 

Goran

6 Comments

  1. Well, I agree with all that has been shared here as I see it fit that you have addressed a lot of things about mom here. I am against it due to the challenges of not being able to make money easily or having to fend off the performances of other people. It is amazing to see all these here. Thanks

    • Thank you your comment Liza. I have seen with my own eyes how many moms are struggling with MLM

  2. Hello there, Thank you very much for sharing this beautiful piece of information with us. I personally think affiliate marketing is a really tough call. I have been in affilIiate marketing for sometime. I think it’s just one of the best ways making money online. Join wealthy affiliate as soon as possible and share this to everyone. Thank you once again mate.. 

  3. I do agree with you, when it comes to joining an MLM, you have to be careful. MLM are not always that straight forward. Their is a lot watch out for. I checked your recommendation and saw its affiliate marketing. When it come to affiliate marketing you can rest assured that you will get compensated for your effort. I learnt affiliate marketing from Wealthy Affiliate, the training is comprehensive and top of it that provide you with right tools 

    • Thank you Parameter. Yes MLM can be very tricky. It was first when I came in contact with Wealthy Affiliate that my eyes were opened for the best and ethical way to make money online

      All the best Goran

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