The company’s that everyone knows are MLM trash (HerbaLife, JuicePlus, ect). When I was looking for a job I naively joined a seminar discussing CutCo Knives. Come to find out these dud muffin companies have been around since my mom was growing up, and are somehow still operational? Wouldn’t the BBB or whatever business bureau operates in the US (FTC?) have these scams shut down by now? I understand that new ones are popping up all the time but im referring to the ones that have been around forever now.
In: Economics
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Just remember that the product is not what they are selling. It’s the OPPORTUNITY for you to sell the product. That’s the scam. The product may be legit but marked up so high that you probably won’t profit. There is only so much 10 percent of the top to skim. That’s how pyramid scams work. You are under a guy who is under a guy etc etc.
A lot of the ones that have been around a long time actually make decent products, which is why they’re still around. People still buy the products, they just don’t necessarily try to recruit other “independent business owners.” Some of the older ones, like Amway, are *really* popular outside of the United States and Europe.
Edit: I see some people are completely incapable of being objective.
There’s one of those “nutrition” places in my town that basically just sells $8 Herbalife drinks.
I know I prolly shouldn’t but they taste so good
Two responses so far and they’re both just praising MLMs… wow.
OP, it’s very hard for the government agencies to successfully prosecute these companies, because they work hard to stay juuuuust barely on the side where it’s not so outright illegal that it’s easy to prosecute.
Their products suck, they’re overpriced, and most of the profit that the company makes comes from selling to people who are supposed to sell to others, but they end up with a garage full of useless junk they can’t sell. But as long as people are desperate and the MLM’s are good enough at reeling in the desperate with false promises only to saddle them with debt, it works out for them.
And all it takes is being comfortable with leaving shattered lives in your wake, from poor idiots who invested far more than they could afford into a “business” that wouldn’t ever break even for them, because you convinced them that buying 10k in merchandise upfront was their path of financial independence.
Don’t have the money? Doesn’t matter. Get a loan, put it on your credit card! What are you waiting for, this is your path to a new, rich, successful you as long as you believe in yourself. Don’t ask questions. Invest in us and yourself and your future!
***The whole industry is evil.***
They’ve been around long enough to know how to tip toe around regulations and stay in the grey areas. The promise of quick money, to many, is hard to resist.. and the cycle continues
If they’re providing a product *and* the money they make is primarily based on sales to the public, they’re not illegal.
Vemma is a notable one that did get shut down, even though there is a product, because they weren’t selling it to the public, the money was exclusively generated by recruitment. I remember that one well because several different people tried to recruit me, so I actually managed to get my hands on quite a lot of the product….and I liked it just fine. I would have purchased it and wasn’t against the idea of selling it. I can’t think of anything harmful in the supplements (as far as I know) and the energy drink was good as far as energy drinks go. The first time someone tried to recruit me (I was in college and young, so give me a break) I was all psyched at first because I was like “oh sick, I would be able to sell these at parties or be like a product rep at bars?” Then the guy was like “nooooooo you have to join and order this many then get these people to join and order that many and that’s how you make money.” And would not just sell me one case of Verve so I could drink some. So I was like “oh ok so that is a pyramid scheme, goodbye.” You can just find a Mary Kay rep and buy lipstick and only be financially responsible for the lipstick. She might try to recruit you, but she doesn’t *have* to. She can just make whatever pittance comes with selling lipstick. There’s more money for her in recruitment, but it’s possible to just sell stuff.
On a side note, the BBB isn’t a government agency and doesn’t have any control over anything. It can’t shut down a fraudulent company. It’s essentially a nonprofit Yelp or Angie’s List.
This is only tangentially related, but the Better Business Bureau isn’t a government agency or anything. It’s basically the analog version of Yelp or Google reviews.
Explanation 1 is that the typical story for why a pyramid scheme must collapse (because you eventually run out of people to buy in) *technically* only holds for a single point in time. There is, as they say, “a new sucker born every minute,” so if your pyramid scheme is sufficiently restrained, you can keep it running indefinitely by recruiting young people. Essentially none of the “Amway ladies” working today were even alive when the company was first founded.
Explanation 2 is that multi-level-marketing is not a pure pyramid scheme. In principle, it can be a valid way to recruit salespeople and give them skin in the game. If you don’t bring too many people into the business and give them a quality product to sell, then it’s possible to make enough money from sales that everyone in the business is happy.
None of this is to say that Amway or CutCo are upstanding corporations. However, both explanations suggest that a certain amount of patience/restraint on their part can keep them from too-quickly gobbling up all the potential participants/customers and subsequently collapsing.
Editing for an addendum: CutCo actually identifies as a “single-level marketing” firm, which means that all salespeople are directly recruited by the company rather than by former recruits. This presumably helps them restrain the size of the business by keeping control of how many new salespeople enter at any given time. They also claim, as of 2011, to not even require recruits to buy inventory up front. Those two factors together would make them into an ordinary knife company with a heavy emphasis on door-to-door sales.
You can also look into the “pure” product, like Madoff. If he weren’t so unlucky, chances are he could have continued decades to come.
Which is mind blowing to me.
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