What is Multi-Level Marketing?

Researcher and consumer advocate Dr. Jon Taylor has spent years evaluating hundreds of mutli-level marketing companies. Based on his research, he has developed the following definition of multi-level marketing:

Multi-level marketing (MLM) is a purported income opportunity, in which prospects are typically recruited with exaggerated product and income claims into a company-sponsored network of endless chains of participants, and incentivized to buy products in order to qualify for commissions and to advance upward in a pyramid of multiple levels of participants. Because MLM pay plans ignore the laws of supply and demand by assuming both infinite and virgin markets, and are heavily stacked in favor of founders and those at the highest levels In the pyramid, approximately 99% of participants spend more than they receive and eventually drop out, only to be replaced by a stream of similarly misled recruits. MLM programs, as product-based pyramid schemes, are the most harmful of pyramid schemes by any measure – loss rates, aggregate losses, and number of victims. And because of endless chains of recruitment and top-weighted pay plans, MLM may also be the most unfair and deceptive, and the most viral and predatory, of any class of income opportunities.

This definition is based on analysis of the compensation plans of 500 MLMs, on the average earnings data of the MLMs that release such data, and on 18 years of research and world-wide feedback.

Comments (5)

  • Pink Truth » My Favorite Mary Kay Lies

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    [...] Reasons to NOT Do Mary KayThe Mary Kay PyramidInformation for Mary Kay DIQsMary Kay Destroying WomenWhat is Multi-Level Marketing?99% Lose Money in MLMNot Taught at HarvardReturning Mary Kay InventoryFAQ About Quitting Mary [...]

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  • Benjamin

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    MLM damages relationships, divides people, and dangles a carrot in front of those who want to get ahead. It isn’t sales. Why would you sell products when you could get others to do that for you, and get paid more for doing just that?

    How do you feel towards your friends and family whom you’ve recruited when they are not producing? Is money more important than them?

    That trainer was so nice, so inspiring when you first signed up. How does that nice trainer sound once you’re unable to produce anything? S/he’s indignant, and yet you’re the one who’s spent all this money with nothing to show for it.

    “If your network isn’t growing, it’s shrinking.” This was actually uttered by some trainer (of course he had a more complicated title) at FHTM, and I’ll bet most people on that call didn’t think about it. I was out immediately after that. (If it isn’t painfully obvious, the trainer admitted that people at the bottom rungs leave the company, because they are losing money.)

    “Oh, but what about casinos, or the stock market?” What about them? Yes, they’re awful too.

    This is not a good business. It’s hot air. It’s delusion. It’s shifting sands, a wide open drain, and it is fraud. All the Pauls up top take money from the Peters at the bottom, and that’s how it works. Stay away, and go work for something that helps and doesn’t just purport to help people.

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  • Santiago Cristal

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    I recently found a new multilevel company called WCM777. Do you have any information about it?

    It looks like new MLM companies wanted to have links with Universities like Harvard to improve his reputation. I have founded that WCM777 tries to link with Harvard in two ways.

    1. The founder of WCM777, and also CEO of World Capital Market, Phillip Ming Xu, included in his education that he has study a Private Equity Program in Harvard Business School (this information can be found in the World Capital Market management team biographies: http://www.worldcapitalmarket.com/wcm/?page_id=256). Someone have more information about this guy, World Capital Market and WCM777?

    2. In the list of partners of World Capital Market appears the Harvard Global Institute (http://www.harvardgi.org). Checking the web site is obvious that it has not any real link with Harvard, but I think they do want to create this appearance.

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  • Hopeless

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    I just started MK…well sort of…I bought my starter kit and some inventory a few months ago because I was given the what if this was your only chance, would you let it pass talk. So I decided to give it a go since I love makeup, I thought it was at my own pace, and wanted to have fun away from my school work. I am about to get my B.S.B. degree (next May whoop whoop). I told her I really did not have time until the spring. Since my sign up I now have around 90 emails that I have not gotten to in about 2 1/2 months time, numinous you need to make a debut party or such to have a kick off, you need me to help you get started, and so on. I thought this was my business? I have finals and here I am reading as to why my recruiter is driving me crazy. Its when her time is available to do the kick off not mine, and when her time is available to call my friends for the party not mine, and I have to get something set up soon (even though I told her in the beginning that I wanted to wait until spring, but got the inventory early because I thought I share this with my friends). Reality is all my friends don’t want to go to another buy this please party. I am having a hard time getting people to come over…so here I am getting blown up by her and feeling dismissed by my friends all at once! I really like the girl I met a lot and want to have her as a friend, but she is pushing me way too much, when I have other things that are going on in my life that is more important to me than selling makeup. This is not what I signed up for. The lack of understanding that school is my priority, and I am and have been busy is crazy! She was just in school so she understands to a point and I had a feeling that they were getting money when they signed me up not myself. The pushiness is getting to me (keep in mind this is from the recruit no one else), I was at school on Sunday (when she expected my list…I am guilty that I just okay-ed her on that Saturday due to driving to my parents for a spur of the moment dinner to make up for not having one on Thanksgiving since we just hung out two hours that day and prior to the holiday I last seen them in August!) Soooo…. I was at school on Sunday at something mandatory, that requires me to not have my phone on me. Since yesterday I have 2 missed calls, 1 facebook email, and around 10 text messages wondering why I am not complying to her schedule. FRUSTRATING!!! I am not ignoring her, but I am now since shes blown me up! I feel such a let down, and this is obviously not my own business…which I just wanted to do for fun since I love makeup, This is turning out to be a hassle, and not what I thought it was. Which is making rethink this whole thing!

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    • MLM Radar

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      There is hope for you! You owe her NOTHING! You are guilty of NOTHING! It’s YOUR business, not hers, and you set the schedule.

      We know a tried and true way to get her off your back. Simply call Mary Kay corporate’s product returns department. The number is in your consultant agreement. When you quit you can return any inventory item you purchased in the last 12 months, and you can return your starter kit if it is complete and unused.

      Once you cancel your consultant number and return whatever inventory you have left, even if it’s just a single item, they’ll drop you like their fingers got burned. Then you can settle back and have a joyous hassle-free school holiday.

      If Mary Kay was even HALF of what they claimed it to be, she would have no reason to stalk and harrass non-performing consultants like you. Indeed, she would be GLAD there were non-performing consultants because every customer you didn’t sign would mean there would be another customer for a perfoming consultant.

      They are harrassing you for only one reason: NO ONE, not even them and not even the busiest consultants, has enough customers, so NO ONE is ordering much inventory. But they still have inventory “production” quotas to meet every single month. They’ve already strong-armed everyone else into buying more inventory anyway, so that leaves you.

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