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  • Emil Stanei

MLM Pyramid or Not?

The truth? MLM is a legal business, and it is a selling pyramid scheme at the same time.

Yes, you can! You can make money, you can lose a lot of money, and you can destroy relationships, in case you join an MLM for the wrong reasons.

More than half of direct vendors report that after taxes and expenditures, their net income from direct selling is positive. Furthermore, nearly half of fresh direct vendors - those representing their present business for less than a year - and almost half of direct vendors are reporting favorable net income - high levels of direct seller satisfaction.

But the studies do not distinguish MLM from lawful direct selling, but they are all lumped together. This comparison gives MLM a better look than it is. Quite interesting because it mainly argues that, despite losing money, 15.2 million individuals in the U.S. and 60 million people worldwide continue to be direct vendors. Should we think that the 5% of the U.S. population would remain in a company where they lose cash? Simply put it, most people in direct selling don't lose some money?


People lose money when they sell directly or setting up an MLM.

The majority of direct sellers are pyramid schemes doomed to failure.

Among legitimate companies that sell directly and pyramid schemes, there is a big difference. Pyramid schemes seek (and fast) to make money from you. Legitimate direct selling companies are trying to make money with you by selling real products and services as you build your business (and theirs). After all, legitimate direct selling businesses are working hard to protect consumers against pyramid schemes.


A person should ask some questions before joining a program. They need to look closely and see if the plan is for them or their personality. Except for promoting MLM as an "income opportunity"– or even a" business opportunity–in itself is a misrepresentation. However, with product subscriptions, web services, etc. is usual MLM practice of bleeding people slowly.

The implication here is once again that MLM is the same as legitimate direct sales. While this statement may be right for direct legitimacy sales, MLM is another animal. Intense comparative research on MLMs demonstrates that there is no difference between MLM and pyramid schemes–except that products are available in MLM. The products will not mitigate the damage. The MLM are focusing on recruiting, not selling. MLMs are the most harmful of the pyramid schemes in both classes (product and non-product), by any measure–rate of loss, aggregate loss, number of victims, etc.

Recruitment is the key to success in direct sales; sales to end-users of products and services are minimal. There is no reason that think-recruitment is not an essential element of direct sales-just as expansion for any business that wants to expand is important. It is crucial to recruit others and mentor them so that they, too, can achieve their goals for direct sellers looking to build a business. But recruitment is not an individual requirement for direct selling success. Compensation must always be based on having to sell products and services-whether your sales or recruitment sales.

Nearly four out of five (78 percent) direct sellers who are in direct sales Report that they are very or very good for less than a year. Very likely to continue in the future as direct sellers. Moreover, in a survey of former direct sellers, only 34 percent of them had less than one year's tenure in direct selling when they dropped out of direct sales.


MLMs carefully avoid total attrition or retention rates being published. And again, MLM can not be separated from legitimate direct selling by business-standard.

Direct selling is an outdated purchase and sale method.

More and more people are engaged in direct sales because they enjoy the personalized service that goes with shopping this way. Direct sales have increased by 79 percent in just over a decade, from $17.94 billion in 1995 to $32.18 billion in 2006. For the vast majority of MLM participants, these sales figures represent losses. These are numbers that should cause concern as such sales represent losses for participants, at least for MLMs, who were deceived into thinking they were purchasing a "business opportunity." Founders, executives, and top-of - the-pyramid promoters are the ones who benefit. We learn from their reports that 99% of MLM participants are losing money.


Direct selling products are overpriced. The consumer market will not support high overpriced products. Competition is a powerful force and therefore, will not sell and can not last products that are not competitively priced. But there's a bit more to the price equation for direct selling than could meet the eye right away. The decision to directly sell a product is often based on very Built on an endless recruitment chain. MLM is inherently flawed, deceptive, and profitable only for founders and those at or near the top of a participant pyramid–usually those at the start of the recruitment chain. MLM is highly viral and predatory, as well. Each customer must weigh a given product's price, quality, and desirability and make a purchasing decision accordingly.


A motivation, lack of integrity, and external pressure or financial incentives generated by the MLM organization must be in place for fraudulent activity to occur.


The Tax Statement is a good start to looking at MLM or Income Disclosure. Right there's a clear picture in dollars and cents, what the distributors, particularly, are making exactly.

Income-Products-Company are the three pillars in choosing an MLM.

There is money to make in MLM set-up, but also needs to be a threshold when to quit if things are not going accordingly.


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