Also people say they ruin lives, how?
In: Economics
Others have done a great job answering the mechanics of how an MLM functions and compares to a pyramid scheme, so I’ll try to answer your second question: how they ruin lives.
MLMs and their close cousin, Network Marketing companies, rely on a member’s social connections to sell product. The problem with this is that these companies KNOW they are running scams that will be unprofitable for the vast majority of participants, so they work hard to brainwash the participants into believing in the company at all costs.
Since the whole point of an MLM is recruiting new sellers beneath you, these companies force earnest sellers to spam their friends, family and acquaintances with unwanted sales pitches and “great business opportunities.” This can ruin friendships fast, especially when the recipient knows the truth and tries to explain it to the victim (I really think it’s appropriate to call most sellers victims).
Take it from someone whose wife’s best friend from high school has pitched 3 different MLMs in the last year – that friendship is toast. The financial devastation that comes from investing your life in a scam doesn’t help either
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