Multi-level marketing expert Robert FitzPatrick summarizes the common deceptions used to recruit new marks into MLMs and pyramid schemes.
From his paper The Myth of “Income Opportunity” in Multi-Level Marketing:
The Lure and the Hook
MLM companies divert attention from the flawed business model and the disastrous financial outcome suffered by participants by presenting a compelling and very alluring picture to recruits.
Virtually all companies of this type in every country that they operate in make the same alluring and misleading promises to recruits:
- Opportunity to earn “residual” income, that is, ongoing commissions on the purchase by others whom you recruit or whom they in turn recruit. This expands earning power well beyond one’s own personal efforts. You can be freed from “wage slavery!”
- Continuous income without continuous work. Most products are “consumable” goods that people might re-use month after month.
- Extraordinarily high-income potential, much higher than most salaries or professions would normally promise. This claim is based on the theoretical potential of expanded recruitment efforts of others. A typical presentation shows the potential of one distributor recruiting just five other people, who each recruit five, and this continues just seven “generations.” The result is over 78,000 new sales representatives. Commissions on all of their purchases, the promotions claim, will go to that one salesperson at the top, month after month. That person could be you! Does your current job offer that kind of income opportunity?
- Possibility of early retirement provided by a continuous, residual income stream from the labors of others in your sales organization. No need to work and save all your life!
- Personal freedom, financial independence as a self-employed person. No more bosses!
- Time flexibility and more free time. More time to spend with the children, to take vacations, and to do more in life!
- Security provided by self-sufficiency against the many changeable and unpredictable factors in today’s economy, including corporate downsizing, government cutbacks, inflation, corporate profit taking, increasing requirements for high tech competency in the job market and job discrimination against older workers. You are protected!
- Opportunity to enter the business for a low initial investment of money. No risk!
- No need for specialized skills or higher education. Anybody can do it!
- No marketing expenses or “cold calls” to strangers are required because your friends and associates are your first prospects. Your first recruit is as close as your neighbor next door or your own mother in the next room!