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FIB - Scams 101 - Ye Olde Archives
Posted By: William In Response To: MLM Lies (Older but Wiser)
Monday, 16 January 2006, at 3:37 p.m.
In Response To: MLM Lies (Older but Wiser)
MLM works for 100% of the people who work it the right way !
> I found this andthought you might like it.
> Lie #1: MLM offers better opportunities than all other conventional
> business and professional models for making large amounts of money.
> Truth: For almost everyone who invests, MLM turns out to be a losing
> financial proposition. Fewer than 1% of all MLM distributors ever earn a
> profit and those earning a sustainable living at this business are a much
> smaller percentage still.
> Extraordinary sales and marketing obstacles account for much of this
> failure, but even if the business were more feasible, sheer mathematics
> would severely limit the opportunity. The MLM business structure can
> support only a small number of financial winners. If a 1,000-person
> downline is needed to earn a sustainable income, those 1,000 will need one
> million more to duplicate the success. How many people can realistically
> be enrolled? Much of what appears as growth is in fact only the continuous
> churning of new enrollees. The money for the rare winners comes from the
> constant enrollment of armies of losers. With no limits on numbers of
> distributors in an area and no evaluation of market potential, the system
> is also inherently unstable.
> Lie #2: Network marketing is the most popular and effective new way to
> bring products
> to market. Consumers like to buy products on a one-to-one basis in the MLM
> Truth: Personal retailing -- including nearly all forms of door-to-door
> selling -- is a thing of the past, not the wave of the future. Retailing
> directly to friends on a one-to-one basis requires people to drastically
> change their buying habits. They must restrict their choices, often pay
> more for goods, buy inconveniently, and engage in potentially awkward
> business relationships with close friends and relatives. In reality, MLM
> depends on reselling the opportunity to sign up more distributors.
> Lie #3: Eventually all products will be sold by MLM. Retail stores,
> shopping malls,
> catalogs and most forms of advertising will soon be rendered obsolete by
> Truth: Fewer than 1% of all retail sales are made through MLM, and much of
> this is consists of purchases by hopeful new distributors who are actually
> paying the price of admission to a business they will soon abandon. MLM is
> not replacing existing forms of marketing. It does not legitimately
> compete with other marketing approaches at all. Rather, MLM represents a
> new investment scheme couched in the language of marketing. Its real
> products are distributorships that are sold through misrepresentation and
> exaggerated promises of income. People are buying products in order to
> secure positions on the sales pyramid. The possibility is always held out
> that you may become rich if not from your own efforts then from some
> unknown person ("the big fish") who might join your
> MLM's growth does not reflect its value to the economy, customers, or
> distributors, but the high levels of economic fear, insecurity, wishes for
> quick and easy wealth. The market dynamics are similar to those of
> legalized gambling, but the percentage of winners is much smaller.
> Lie #4: MLM is a new way of life that offers happiness and fulfillment.
> It provides a way to attain all the good things in life.
> Truth: The most prominent motivational themes of the MLM industry, as
> shown in industry literature and presented at recruitment meetings,
> constitute the crassest form of materialism. Fortune 100 companies would
> blush at the excess of promises of wealth, luxury, and personal
> fulfillment put forth by MLM solicitors. These appeals actually conflicts
> with most people's true desire for meaningful and fulfilling work at
> something in which they have special talent or interest.
> Lie #5: MLM is a spiritual movement.
> Truth: The use of spiritual concepts like prosperity consciousness and
> creative visualization to promote MLM enrollment, the use of words like
> "communion" to describe a sales organization, and claims that
> MLM fulfills Christian principles or Scriptural prophecies are great
> distortions of these spiritual practices. Those who focus their hopes and
> dreams upon wealth as the answer to their prayers lose sight of genuine
> spirituality as taught by religions. The misuse of these spiritual
> principles should be a signal that the investment opportunity is
> deceptive. When a product is wrapped in the flag or in religion, buyer
> beware! The "community" and "support" offered by MLM
> organizations to new recruits is based entirely upon their purchases. If
> the purchases and enrollment decline, so does the "communion.'"
> Lie #6: Success in MLM is easy. Friends and relatives are the natural
> Those who love and support you will become your life-time customers.
> Truth: The commercialization of family and friendship and the use
> of"'warm leads" advocated in MLM marketing programs are a
> destructive element in the community and very unhealthy for individuals
> involved. People do not appreciate being pressured by friends and
> relatives to buy products. Trying to capitalizing upon personal
> relationships to build a business can destroy one's social foundation.
> Lie #7: You can do MLM in your spare time. As a business, it offers the
> greatest flexibility
> and personal freedom of time. A few hours a week can earn a significant
> supplemental income
> and may grow to a very large income, making other work unnecessary.
> Truth: Making money in MLM requires extraordinary time commitment as well
> as considerable personal skill and persistence. Beyond the sheer hard work
> and talent required, the business model inherently consumes more areas of
> one's life and greater segments of time than most occupations. In MLM,
> everyone is a prospect. Every waking moment is a potential time for
> marketing. There are no off-limit places, people, or times for selling.
> Consequently, there is no free space or free time once a person enrolls in
> MLM system. While claiming to offer independence, the system comes to
> dominate people's entire life and requires rigid conformity to the
> program. This is why so many people who become deeply involved end up
> needing and relying upon MLM desperately. They alienate or abandon other
> sustaining relationships.
> Lie #8. MLM is a positive, supportive new business that
> affirms the human spirit and personal freedom.
> Truth: MLM is largely fear-driven. Solicitations inevitably include dire
> predictions about the impending collapse of other forms of distribution,
> the disintegration or insensitivity of corporate America, and the lack of
> opportunity in other occupations. Many occupations are routinely demeaned
> for not offering"unlimited income." Working for others is cast
> as enslavement for "losers." MLM is presented as the last best
> hope for many people. This approach, in addition to being deceptive,
> frequently discourages people who otherwise would pursue their own unique
> visions of success and happiness. A sound business opportunity does not
> have to base its worth on negative predictions and warnings.
> Lie #9. MLM is the best option for owning your own
> business and attaining real economic independence.
> Truth: MLM is not true self-employment. "Owning" an MLM
> distributorship is an illusion. Some MLM companies forbid distributors to
> carry other companies' products. Most MLM contracts make termination of
> the distributorship easy and immediate for the company. Short of
> termination, downlines can be taken away arbitrarily. Participation
> requires rigid adherence to a "duplication" model, not
> independence and individuality. MLM distributors are not entrepreneurs but
> joiners in a complex hierarchical system over which they have little
> Lie #10: MLM is not a pyramid scheme because products are sold.
> Truth: The sale of products does not protect against anti-pyramid-scheme
> laws or unfair trade practices set forth in federal and state law. MLM is
> a legal form of business only under rigid conditions set forth by the FTC
> and state attorneys general. Many MLMs are violate these guidelines and
> operate only because they have not been prosecuted. Recent court rulings
> are using a 70% rule to determine an MLM's legality: At least 70% of all
> goods sold by the MLM company must be purchased by nondistributors. This
> standard would place most MLM companies outside the law. The largest MLM
> acknowledges that only 18% of its sales are made to nondistributors.
No Selling in MLM
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