Our member Char provided this as a comment to last week’s article on Gloria Mayfield Banks and the swindling of thousands and thousands of women. I thought it deserved a post of its own.
Sometimes I don’t think people completely understand why MLM is a scam. Not because the person is dumb, but because the rhetoric has been repeated so many times by con artists, that the public accepts it as true.
MLM is a closed-loop system. The money that comes into that loop is redistributed amongst the same people in that loop. That means that some people have to lose for others to win. But, everyone is sold on winning to get them to join the scheme. If that person can’t find “new money” to make a commission off of, they will be the loser.
The opportunists joining the loop of other opportunists should not be confused by being dubbed a product reseller. That actually plays a very minor role in this scheme. It really only serves as a talking point which makes the whole scheme ‘sound’ more legitimate – and appear legal. Understand, a scam must sound legitimate or it wouldn’t be a scam; it would be blatant theft. Selling the opportunity to sell the opportunity is not legal!
Why is product reselling insignificant to the MLM scheme?
- Mary Kay wants people to directly buy from them. They don’t profit off a consultant’s resales. MK relies on orders from opportunists for them to profit. This is about them, not the supposed new “business owner”.
- Psychologically, “Opportunists” will place a larger direct order with MK. These opportunists dubbed business owners will put more money into the scam, and MK keeps the lion’s share. This is why they are debt-free and worth billions.
Everyone and anyone can join and buy direct from MK. Why pay double to a supposed reseller? Plus and as mentioned, that’s not what the company prefers. This is why “training” teaches you to recruit and “build a team”…….of people who buy directly from them!
MLM is just a sales and marketing strategy FOR THE COMPANY. MK is a direct seller and doesn’t use stores. They dub their customers “consultants” because it sounds impressive and will likely get them bigger orders. Remove the rhetoric, and the consultant is just a customer. I’ll bet that hurts some people who thought they were special as a consultant. I don’t say that to be mean, but to point out how effective the MLM psychological strategy is.
Yes, MK will provide a kickback to someone willing to perpetuate their lie of a product re-selling business to lure in new “direct buyers”. GMBs commission check of $14 million is NOT from reselling product. That is all from recruiting enough new “losers” into the closed loop.
“It’s not a scam, I made money.” People DO make money in scams. They are simply successful liars or con artists, or in MLM they’re called “leaders” like GMB. Remember, bank robbers and drug dealers collect money too.
“Corporate America is a pyramid scheme too.” Here is the all important difference: Money to pay the corporate pyramid participants comes from OUTSIDE the loop of “money seekers”. The new corporate employees don’t pay into the company which would then pay the older employees. No, that would be the MLM pyramid closed-loop scheme. A legitimate corporation makes their money from non-affiliated people buying their product from genuine desire. They do not buy the product because of the attached “opportunity” to make money. It gets confusing, but in a nutshell, MLM is inherently flawed.