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Why does MLM have such a bad rep?


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Many Web 2.0 sites will not take articles on the subject of MLM, even putting the subject on the same banned list as gambling & pornography! Has the Rep of MLM stooped so low?

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Why does MLM have such a bad rep?

  1. 1. Why Does MLM Have Such A Bad Rep?For the purpose of simplicity in this article I have used MLM ( Multi Level Marketing) where I could also have usedNetwork Marketing.Ive recently tried to publish some of my MLM articles on well-known Web2.0 sites however Ive been advised thatthe subject is not welcome & is indeed on the banned list together with, among others, gambling & pornography!Has the reputation of MLM sunk so low that it has become a taboo subject? Why has this happened? Do you agreewith the banning or is it narrow mindedness on the behalf of the web 2.0 site moderators?"MLM Scams"Whilst there is no doubt that in the past there has been problems with some companies purporting to be MLMcompanies when in fact they were nothing of the sort & just scams out to part people with their hard-earned cash onthe promise that they could become millionaires, there are lots of genuine legitimate companies out there withwhom it is possible to build great businesses. The problem lies with the fact that if you do a search for MLM scam orsimilar you will find hundreds of websites telling you how bad MLM companies are & why you should not getinvolved with them. These sites however are totally one-sided & give no information about legitimate MLMopportunities. They tell you all the horror stories about how people have lost thousands after joining thesecompanies in the hope of making a million. However what they fail to tell you is that these so-called MLM companieswere nothing of the sort, they were simply scams & had nothing whatsoever to do with MLM.Pyramid SchemesYou may have heard of "Pyramid Schemes" which incidentally were made illegal more than 20 years ago, it is theseschemes or variations that all the websites knocking MLM are talking about. To be totally truthful & to give readersthe full picture the MLM bashers should distinguish between these scams and genuine MLM Businesses instead ofjust using the term "MLM" to mean something completely different. OK so how do you make the distinctionbetween the scams & the legitimate opportunities? One simple way is to look at a company and see what product isbeing offered; many scams will not even have a product but will ask you to invest your money with the promise thatyou will earn it back 10 times over. However if there is no product, what are you investing in? These schemes simplymove money around & the people at the top of the company or pyramid are the only ones making money & the onlyway they do so is to encourage people below them to go out & recruit more people to join & pay joining fees.Another variation on this type of scheme is one where there is a product involved, but in order to join you arerequired to buy lots of the product from the person who introduced you, & then you are encouraged to do the sameie go out & find somebody to join the "company" & buy product from you at a higher price than you paid for it. Thisis the typical pyramid scheme that was made illegal a long time ago. In order for it to be a true MLM company theremust be a product or service & there must be customers, after all this is how all businesses run. Any company thatmakes its money by simply introducing more distributors or reps is not a MLM opportunity & is more than likely ascam.
  2. 2. MLM StructureOn the subject of pyramids, many people when shown a MLM business structure, ie multi layers of distributors atvarious levels in the companies compensation plan immediately think " ah but its a pyramid, Ive heard about thosetypes of business". They are put off straight away & assume that they are being asked to join some sort of illegalscheme. The truth is all businesses are "pyramids". Let me show you a simple diagram to illustrate this point. Director Manager Manager Supervisor SupervisorSupervisor Worker WorkerWorkerWorkerWorker Worker WorkerWorkerWorkerWorkerWorkerWorkerWhilst this is very simplistic I hope you can see where I am coming from. A MLM company will have a similarstructure but instead of Workers it will have distributors or reps, instead of Supervisors it will have Team or GroupLeaders, instead of Managers it will have Senior Team or Group Leaders & instead of Directors it will have NationalTeam or Group Leaders. Different MLM companies will have slightly different names for the various levels in theirbusiness. The big difference between traditional businesses & MLM businesses is that in MLM there is room formany National Leaders ( Directors ) whereas in traditional business there is only 1 top position.MLM SummarySo, back to the original question, why does MLM have such a bad rep? Well in short because there is a lot ofmisinformation out there & not enough balanced discussion on the subject. ( Web 2.0 moderators take note! ) Yousee, MLM companies run on the basis that they do not advertise, the money they save on advertising allows them tosupply their product or service cheaper to the customer. This means that the general public will not have heardabout the genuine MLM businesses, but will have heard about all the "MLM Scams". Maybe if MLMcompanies spentmillions advertising on TV & in the press then they wouldnt have such as bad rep as they would be householdnames, but then if they did that, they wouldnt be MLM Companies!