Apr 26th 2021

Nearly all of us have faced this atrocity at one time or another. The products change, but the story remains the same: the latent promise of making a truckload of money with minimal effort. Where else but in multilevel marketing? Even though it’s nothing new, for some mysterious reason, it continues to be a source of hope for many.

Multilevel marketing is mystic, exciting and inspiring. It’s characterized by pushy, motivational seminars in hotel conference halls. The speaker wears an expensive watch and an elegant suit, and during his emotion-filled presentation, he looks you straight in the eye and says, “Don’t be afraid of success! Don’t you want financial freedom?”

Ingenuously, you ask, “But what do I have to do?”

He answers assertively, “Nothing! Just make money!”

The concept sounds good. How hard could it be to convince a few friends to do something to improve their lives?

Wouldn’t you like to take advantage of a business model that would enable you to achieve financial freedom for the rest of your life? Before you answer, let’s take a closer look at the Modus Operandi of this thinly disguised pyramid scheme.

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Pyramid schemes are illegal

Any business model designed to defraud people is inherently illegal. Several decades ago, the government imposed a ban on pyramid schemes. These scams consist of nothing more than recruiting people to hand over a certain sum of money with the promise that, if they get others to do the same, they’ll receive an even larger sum of money.

The government has two main criteria for a business model to be considered multilevel marketing rather than a pyramid scheme:

  1. There must be a product or service involved
  2. There must not be a sign up fee

In other words, multilevel marketing is exactly the same as a pyramid scheme except that it purposely includes a product or service in order to avoid being classified as illegal. And of course, since they can’t charge a registration fee, they simply call it an “initial purchase” to get around the law.

Wealth through emotions and scare tactics

The multilevel marketing model is popular because, for the most part, it promises quick, easy money. It offers a supposed shortcut to happiness and stability. It’s generally associated with images of wealth and people you can identify with. It’s promoted as the kind of opportunity that only comes once in a lifetime. And just for good measure, they throw in a few scare tactics. They tell you that if you don’t sign up, you’re dooming yourself to failure.

This “incredible opportunity” is almost always for a limited time only. They lead you to believe that the future will be uncertain if you don’t become an affiliate. These aggressive recruitment techniques are part of their plan, and they do everything they can to goad you into acting on your emotions without thinking things through logically.

You’ll be the owner of your own business! FALSE!

Multilevel marketing promotes the idea that being an affiliate is the same as having your own business. More often than not, this simply isn’t the case. It’s important to emphasize that a multilevel marketing affiliation is rarely seen as one’s own business—not in concept, not when it comes to taxes, not in terms of freedom, not in any way whatsoever. Technically, it’s more like employment on a commission-only basis!

It’s a unique, revolutionary business model! FALSE!

Most multilevel marketing schemes promote the idea that they’re an innovative sales model that represents the future of commerce. In reality, the multilevel concept is nothing new; it has existed for decades. On top of that, it’s a very inefficient system, economically speaking. Distribution and sales are done at the personal level, and the people generating the sales are not paid for their time or their effort. The infrastructure, the personnel, the meetings and meeting places, the food and appetizers consumed in the process, and so on and so forth, are all used without any direct compensation.

Delusions of grandeur

All multilevel marketing companies claim to be the best. They brag about their exorbitant growth. They say they’re among the five most prominent companies in the world and that they collaborate with NASA, Microsoft and Walmart, as well as billionaires like Jeff Bezos, Warren Buffet and Bill Gates. They make all these claims, but no one bothers to verify them. No one questions them. They become an established falsehood. Statistics based on rumors. In a nutshell, the vast majority of multilevel marketing companies try to come off as giants of the industry without any trustworthy statistics to back them up.

Miracle products

Most multilevel companies claim to have a unique line of products. They usually say that they’re “miracle products” that have demonstrated incredible results and that the big companies in the industry don’t want people to know about them. Many of them show testimonials from people who have earned thousands of dollars in just a few months selling the product, as well as people who have been cured of cancer or diabetes or have lost an astounding amount of weight by using the product. Many studies show that most of these products are either identical to or not significantly different from other products already on the market at lower prices.

The numbers don’t lie

Curiously, the multilevel model seems viable until you actually do the math. The “little piece of heaven” it promises is nearly impossible to obtain. In most cases, you’d have a better chance of winning at the roulette wheel at your local casino.

Simply establishing your downline (the levels below you in the pyramid) is extraordinarily difficult. You need 14 people just to get 3 levels with 2 people, each. For 5 levels, you need 62. For 10 levels, you need 2,046. For 15 levels, you need 65,534. And for 20 levels, you need over 2 million. That’s right! More than two million people! Mission impossible!

An unlimited distributor network is unstable

Mathematically, a multilevel company is destined to collapse if the majority of its sales come from its affiliates. A business model that allows an infinite number of distributors is unstable by nature. This is because, in most multilevel schemes, success can only be achieved through recruitment or through sales to people outside the system. Otherwise, as happens in most cases, the sales come from the affiliates, themselves. Thus the capital simply trickles up and no new capital is generated. The profits don’t usually come from selling the product or service but rather from continuous recruitment.


Tragic facts and statistics

You don’t have to take my word for it. Just look at the statistics, which show that 98 percent of all multilevel companies fail. More than 99.5 percent of all the people who get involved in multilevel schemes end up losing money. Worse still, they end up buying expensive products that are technically no better than other less expensive ones on the market. On average, 70 percent of affiliates end up leaving or quitting within the first year.

The high social costs

In addition to the financial losses, there are personal and social damages. Most new multilevel marketing affiliates start by recruiting their closest friends and family members. They pester them incessantly until they finally agree to go to an exclusive meeting where the presenter talks about the aforementioned business opportunity. Some of these friends and family members even join the multilevel network just to make the affiliate happy, without really wanting to become active affiliates, themselves. In other words, they pay just to get the affiliate to shut up and leave them alone.

Great opportunities don’t just come knocking

In the business world, it’s commonly said that, if an opportunity sounds too good to be true, it probably is—and even more so if it relies on recruitment.
This brings us to the end of the analysis. Please don’t shoot the messenger! I’m only presenting the statistics, the facts. It isn’t my intention to offend anyone’s sensibilities. If for any reason the above resembles anyone’s personal experience, I assure you that it’s pure coincidence.

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