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Abstract

/ul>Examples of MLM businesses<ul><li>Juice Plus</li><li>Monat</li><li>Avon</li><li>Herbalife Ltd</li><li>The Body Shop</li></ul><h2 id="d975">Legitimacy</h2>MLM Businesses are legitimate if the products are being sold directly to consumers. But if members mostly need to recruit new members to buy the products then it is a pyramid scheme and so illegal.<blockquote id="b531">It’s not a traditional business model</blockquote><h2 id="80fb">False Advertisement</h2>I realised that many of the distributors of the MLM businesses are using false advertisements to attract new members. Some of them include:‘You can be your own independent business owner’‘You could be earning thousands per month from the comfort of your home’‘You can work flexibly and do not need to invest a lot of time’Especially now that many people are unemployed due to the COVID 19 Pandemic. Predatory companies like Monat target unemployed Americans. Recruitment efforts include the promise of ‘financial freedom’ and being brainwashed that everyone on the outside is a ‘hater’. The company reportedly raked in <a href="https://www.businessforhome.org/companies/monat-global-review/">nearly $400 million in revenue</a> last year. But surpri

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singly, the sales representatives cannot even earn a decent minimum wage.<h2 id="59e7">The truth is:</h2>The people’s enthusiasm in an MLM is so high that they suspend logical judgement. They are not really an ‘independent business owners’ because they are still working for the MLM business and the majority of sales earnings go to the top people of the business. The fall out is huge, simply because distributors cannot make a high amount of sales to their friends, family and the public.MLMs target women that are not commercially savvy.Most distributors find that no matter how hard they work, they can’t sell enough inventory or recruit enough people to make money. <a href="https://www.consumer.ftc.gov/articles/0065-multi-level-marketing-businesses-and-pyramid-schemes">They also can’t keep up with the required fees or the inventory purchases they need to make to qualify for rewards</a>, and they can’t earn enough money to cover their expenses.To conclude, even if an MLM business is not a pyramid scheme, it is still very risky to join it. Over 90% will get in debt and maybe ripped apart from their friends and family. These type of businesses are designed to attract vulnerable and naive people that believe they can get easy money from working at home.</article></body>

The Truth About Multi-level Marketing Businesses

The thin line between an MLM and a pyramid scheme.

After being approached by a couple of people on Instagram and Facebook about business opportunities and the ability to earn income from the comfort of my own home, this intrigued me. I decided to do research on the companies that they worked for and found out that they were Multil-level Marketing Businesses.

Definition:

According to Investopedia MLM companies are defined as:

‘A strategy that direct sales companies use to encourage existing distributors to recruit new distributors and buy the products.

So a person can make money in two ways:

By selling the MLM’s products yourself to customers who are not involved in the MLM.
By recruiting new distributors and earning commissions based on what they buy and their sales to retail customers.

Examples of MLM businesses

Juice Plus
Monat
Avon
Herbalife Ltd
The Body Shop

Legitimacy

MLM Businesses are legitimate if the products are being sold directly to consumers. But if members mostly need to recruit new members to buy the products then it is a pyramid scheme and so illegal.

It’s not a traditional business model

False Advertisement

I realised that many of the distributors of the MLM businesses are using false advertisements to attract new members. Some of them include:

‘You can be your own independent business owner’

‘You could be earning thousands per month from the comfort of your home’

‘You can work flexibly and do not need to invest a lot of time’

Especially now that many people are unemployed due to the COVID 19 Pandemic. Predatory companies like Monat target unemployed Americans. Recruitment efforts include the promise of ‘financial freedom’ and being brainwashed that everyone on the outside is a ‘hater’. The company reportedly raked in nearly $400 million in revenue last year. But surprisingly, the sales representatives cannot even earn a decent minimum wage.

The truth is:

The people’s enthusiasm in an MLM is so high that they suspend logical judgement. They are not really an ‘independent business owners’ because they are still working for the MLM business and the majority of sales earnings go to the top people of the business. The fall out is huge, simply because distributors cannot make a high amount of sales to their friends, family and the public.

MLMs target women that are not commercially savvy.

Most distributors find that no matter how hard they work, they can’t sell enough inventory or recruit enough people to make money. They also can’t keep up with the required fees or the inventory purchases they need to make to qualify for rewards, and they can’t earn enough money to cover their expenses.

To conclude, even if an MLM business is not a pyramid scheme, it is still very risky to join it. Over 90% will get in debt and maybe ripped apart from their friends and family. These type of businesses are designed to attract vulnerable and naive people that believe they can get easy money from working at home.