Is Multi Level Marketing Ethical?

byGormit

321 followers

5 years ago

What is multi level marketing?

Multi-level marketing companies, or MLM”s have been around since 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’s 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 follows 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 down 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 of friends and do some research online to figure out if MLM is something to go for if you want to earn money online.

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 was very good. 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 (see picture above) 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 was quite a few people on internet who warned people to join The Berry Tree since they considered it as a scam. Stubborn as I was I just continued to order the auto ship of $50 per month.

Then the time came for cashing out. Of course, you were excited. How much did they give back? $50!!!!. One time. This was a scam without compare. We all who joined The Berry Tree were expecting a lot more and residual income. 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 and fooled their members. Today it is very difficult to find any information about Nutronix, so probably they don't exist anymore,

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 of 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”[6][7] after taking a $1 billion short position in Herbalife stock.[8][9][10] 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.[11] In November 2017, Ackman’s hedge fund closed out its short position in Herbalife.[12]

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 life style, 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 skin care / beauty and health. Amway was started in 1959 by Jay Van Andel and Richard DeVos. The company name is an abbreviation of “The American way”, the American way.

Priscilla says that AmWays products are very good, but if you shall make any real money with this company, you have to work very hard for up till 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 Ethical?

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 quit while they’re not losing to 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 with call out for their products. Ultimately, these hunters as they’re known, lose money, relationships and their dignity thanks to many MLM companies.

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’ friend and others just try to avoid them and they can actually end up loosing 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 MLM companies. There are so many pits falls on the way. I don’t think Multi Level Marketing is a solution for anyone who want to have a secure economically 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

All the best

Goran