Multi-Level Marketing. If you sell products, you pay a bit to the person “above” you who brought you into the business. If someone below you gives you a bit, you give a bit of that to the person above you. Often times selling the product pays you peanuts; to eke any kind of living out of it requires you to build significant “downstreams”.
Aaaaah. I understood the scheme, just never heard the term.
Trip
Back in the 90s, I worked with a guy who spent a lot of time pushing Amway on us co-workers. He swore that in several years he would be self supported and not have to work anymore. In a way, he was right.
But totally not a pyramid scheme.
Many years ago my (now ex) wife got her self wrapped up on Market America (I still find some of that swag floating around the house). She’s lucky she managed to return enough stuff to pretty much break even. With any of those things, unless you’re the type of person that can run a business or push it door to door, once your friends get tired of listening to you, it’s over. That was the case. Her friends only needed so many bottles of shampoo and whatever else she was selling…then what?
What bugged me is that any time I asked her any questions, she would try to answer them, but couldn’t and would say ‘just come to a meeting, I’m not even supposed to be talking about this, they tell us that when people ask questions, we’re just supposed to bring them to a meeting’. Yeah, no. Then she went on to say ‘and it’s all completely legal. They have off duty police officers there.’ To which I explained to her that lawyers could tell you if this kind of thing is on the up and up, off duty cops are there as security in case someone that lost a ton of money (or their spouse) loses it and freaks out or tries to beat someone up and needs to be removed.
Actually from what I’ve read the modern MLMs don’t really operate as a traditional pyramid scheme. There is a pyramid ‘shape’ to the actual product selling business, but it’s set up in a way that’s legal, and also no one actually makes much money on the pyramid. The people who retire into deluxe houses with a dozen cars make their money selling seminars, videos, classes, and ‘systems’ that supposedly tell people how to sell the products in the pyramid better, even though the successful people actually don’t make their money from the pyramid. It’s a really clever, though blatantly unethical, setup.
Yes, that was it.
And, according to wikipedia, it no longer exists, and has the usual bullshit and fraud and misleading nonsense associated with such enterprises.
Plus, it was so obviously a dietary fad. Who are these people who haven’t noticed that dietary fad foods last a few years then fade away and think “Yes, yes, this trend line will continue and in 4 years the entire country will be getting 30% of their caloric intake from this one product!”
(Most) MLM companies aren’t really pyramid schemes in the sense of a Ponzi scam, which finance the top levels solely from the investments of the bottom levels. There are actual products being sold, and the fact that upstream sales managers make some commission off their underlings isn’t uncommon. Any reputable organization with a sales force is going to have sales managers that are better paid than the underlings.
The shady part is
- The underlings are sold on the process as though they are all in line to become the next regional director of sales.
- The underlings often have a required purchase of the product, which is hard to sell (because sales is hard), so they just end up using it themselves at “wholesale”.
So you end up with your primary customers for your product not being people who actually want it, but people who thought they could become rich selling it.
My BIL was into M(o)na V(i)e. He tried to get my husband into it (almost caused a fight because he told me Ivylad had agreed to be part of this, which he hadn’t. I gave him the Death Glare and left the room. I knew Ivylad would never do something like that without talking to me first) and said he’d have a BMW in six months.
He was taking money out of the joint savings account with my SIL without her knowledge, and he tried to explain it was to better themselves, spending money on seminars and weekend conventions and suchlike nonsense. She found out when she went to get the older boy started on braces. There was a HUMONGOUS fight about that, with her threatening divorce and him begging on his knees to forgive him. (Ivylad happened to be over at their house when this happened.)
No BMW, but at least their marriage survived.
It seems to me if the products being sold through the MLM company are legitimately good, why wouldn’t they just sell the stuff through normal retail channels and avoid the expense of the sales force? The answer, I think, is that these products are, at best, nothing special compared to other stuff already out there.
I found this fascinating article about The Overpriced Berry Juice Drink Which Shall Not Be Named.
This came out in testimony with the lawsuit with Amway:
Maybe. It’s not like normal retail channels are without their costs. There exists room for reasonable products to be sold in normal retail channels and via MLM and plenty of other sales channels.
I mean, Amway’s been around for almost 60 years. It’s obviously not a scam like, say, Madoff’s funds. You can argue that their products are nothing special, or are overpriced, or that you don’t like their sales process, but it’s not like the products on the shelf at Target are somehow morally virtuous.
His initials wouldn’t be FS, would they? I’m one of his biggest fans, but the Nerium stuff drives me insane. I think it’s basically just that he’s young and stupid, as demonstrated by some of his other less mature behavior. I’m hoping he grows out of it.
isn’t Herbalife considered the king in this atm? although there was some talk about the ftc investigating it
all the cosmetic stuff has an automatic subscription ive noticed … they have something called keranique which is supposed ot help damaged hair and such and they always have commercials for "free trials " but after you see the commercial you notice that it says "free with monthy subscriptions "
Even tv sales king proactive has “prepaid monthly shipments” ive wondered why if all this stuff was so great they had to pre sell it
When there’s a product that either comes w/ its own financing or MUST be bought on a subscription basis, that’s where the company’s profit is. The product is immaterial (hahaha), it’s there to get people’s money committed in advance; once they’ve made that commitment they’re less likely to cancel it b/c they feel it will be a headache to do so.
Yeah, it’s FS. Besides, he was led astray by a woman. 
Lia Sophia was a jewelry company that actually had nice merchandise; most of the people who sold it did so to get discounts on the items they purchased for themselves, and I’ve noticed the same thing with people who sell other commonly-used products like Mary Kay and Tupperware.
Unfortunately, there was some fraud going on behind the scenes and the company is about 1% of what it was even 5 years ago.
Most employers don’t mind if someone’s in an MLM as long as they aren’t promoting it on work time.
Its been explained 5 times now, so I Get it… but before that I wasn’t familiar with it either.
“MLM…? What the hell is that? Mary-Liar-Moore Productions!?”
Pretty much this and now they have to detail the (im)probability of success up front.
Herbalife agrees to pay $200 million fine, restructure U.S. operations in FTC deal
In the late 70’s a friend of mine got into Amway in a big way. I stopped by his house one evening on invitation. His upline guy was there and they recruited pretty hard. After being assured that the “Sales Demo Kit” that was the real expense of signing up was worth, at retail, twice what I was being asked to pay, I signed up. the first sales I made were the products in my Sales Demo Kit, and I was slightly ahead of the game.
After that, I never ordered product that had not already been sold. I did not buy the “Tape of the Week” and “Book of the Month” motivational material. I did not max out my credit cards going to sales meetings and conventions.
After about six months, I was a few hundred dollars ahead but realized that I was not really a very good salesman. I never established a downline, and decided it was not worth my time. I quit while I was ahead.
My friend, being much more gullible than I, was not as successful. He bought all of the motivational stuff, and went to conventions and meetings every couple of months. He went so far as to take out a second mortgage to stock up on product so he could promise “Immediate Delivery.”
I am pretty sure this greatly contributed to his bankruptcy.
There’s a Proactiv vending machine at the shopping mall near my house, and the Sunday coupon section has an ad for it, with an order form. I’ve heard it works, too, which is why it’s still being sold.
I once saw a cartoon featuring amoebas at an Amway convention, and the leader is saying, “Just divide, and divide, and divide…”
I thought it was “Far Side” but don’t seem to find it in their archives.