Why You Should Avoid Joining an MLM

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Why Joining an MLM is a Bad Idea

Many women (and men, too) seem to think the only way to work from home is to join an MLM. Well, they are wrong! 

Back in the 1980s, that may have been the case, but welcome to 2021.
We now have computers, the internet, cell phones, and video-conferencing tools. You know, all that cool tech stuff that makes almost any type of desk job capable of being done from home.

There are literally thousands of ways to make money from home without handing your hard-earned cash over to and MLM.

In fact, that is probably the worst thing you can do! 

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What is MLM?

MLM stands for multi-level marketing, also known as network marketing or direct sales. Multi-level marketing refers to the way the business is structured.  

Instead of just selling directly to customers, MLMs rely on making money from participants who pay a fee to join as distributors to sell their products or services. Multi-level marketing companies won’t allow their products or services to be sold without paying to join. 

Distributors (MLMers) earn commission on the product or service, and the amount of commission earned is usually dependent upon how high up in the pyramid the distributor is.

Distributors also earn commissions on products and services sold by members that have signed up underneath them, and so on, hence the multi-level (pyramid) structure.

For example, say I sign up to sell makeup for XYZ Company. I earn a 20% commission for each sale.

If I talk two of my friends into signing up, they are now considered my downlines. By signing these friends up, I just moved up a level, so now, not only do I earn commissions from my sales, but I also make a small commission from each of my downlines’ sales.

Both of my friends sign up two of their friends. Now I’ve moved up another level.

These are just fictional examples, but you get the point. For every level you move up, your commission usually gets higher. And you’re earning commissions on sales of all of those people under you. So, you’re making money by recruiting new people.

Why are MLMs so Bad?

MLMs are basically pyramid schemes that have found a way around the law.  

Pyramid schemes make all their money by recruiting new people and charging new recruits a fee to join.  

Multi-level marketing companies do the same, except under the guise you have to join if you want to sell their product or service.

The selling of the product or service is the only thing that makes MLM companies legal.

Also, unless a distributor is on the top of the pyramid, the likelihood of them making any money is EXTREMELY low. And to be at the top of the pyramid, you’d literally have to sign up as soon as the company started, or hundreds if not thousands of distributors above you would have to quit.

The chances of either is slim.

Most distributors in multi-level marketing companies make little to no money. According to the Federal Trade Commission, over 99% of those who join an MLM either don’t make any money at all. And some actually lose money.

Even the companies’ income disclosure statements themselves show how inadequate the compensation is.

According to ItWorks! income disclosure statement for 2018, the average monthly income for all distributors was $173. So, let’s say you only worked 10 hours per week, which is 40 hours a month, for a whopping $173. That equates to $4.32 an hour. That’s not even minimum wage!

Here’s another one, Paparazzi. The majority of their consultants, 69.43%, averaged a grand total of $22.83 a month in 2018.

One more. Here’s Scenty’s 2019 income disclosure statement. It’s divided into two sections – the number of consultants in group 1 and the number of consultants in group 2. Group 2 having the most consultants. The average annual commission in group 2 was $190. That’s $190 a YEAR, or $3.65 a week. That won’t even buy a Big Mac!

The income statements speak for themselves.

How Can You Lose Money in an MLM?

Remember, you must pay to join an MLM. Some companies make you pay a fee to join, and others make you buy a starter kit. Either way, you have to pay, and NONE of these companies are free to join!

Some even have monthly membership fees. Why? Because you’re also a customer. 

And, some companies charge you a monthly fee for having a page on their website. 

They claim you’ll get your own website. But they’re actually just giving you a page (with your name) on their website and charging you for it.

It costs a company no money to make pages on their websites, so they’re making free money off of their distributors.

Also, remember those different levels mentioned above? Most of these companies have different names (and some ridiculously stupid) for their levels, such as silver, gold, platinum, diamond, etc.

The companies tempt distributors by offering “free” cars after they’ve reached a certain level.

Most of the vehicles offered are high-end, luxury cars; however, they’re not exactly “free.” They’re leases in which the company pays out a car bonus, but only if the distributor reaches and maintains a particular level.

If the distributor doesn’t maintain that level, they’re on the hook for the car payment, which can easily be $800 to $1000 (or more) per month.

Here’s where it gets really tricky. If a distributor’s sales aren’t doing well, or her down line’s sales are down, many will fork out their own money to
buy massive amounts of product, hoping to sell it, just to try and maintain their level and keep the car bonus.

If they don’t maintain their level, they’re on the hook for that car payment. If they let the car go back, they’ve ruined their credit. Instead of paying the car payment, they now have thousands of dollars in credit card debt and have products they may not be able to sell.

Either way, they’re losing money.

Why MLM Products and Services are Hard to Sell

Multi-level-marketing products are almost always sub-par, inferior products or services, and they are always over-priced. They have to be in order to pay out so many levels of commission. 

Some hair and skin products are so inferior they’ve been known to cause hair loss and allergic reactions. 

Why would the average consumer want to pay double for inferior products? They don’t, which makes them incredibly hard to sell. 

Not to mention they aren’t FDA tested and approved.

You Aren’t a Business Owner or Entrepreneur

Contrary to what MLMers (distributors) say, signing up with a multi-level marketing company does not make you a business owner or an entrepreneur. It makes you a commissioned sales representative. That’s it! Period!  

An entrepreneur is someone who creates a new business. The only entrepreneurs in multi-level marketing are those sitting in the corporate office who actually started the company, not the people paying to sell the products.  

Business owners don’t pay a large corporation a fee for the privilege of selling the corporation’s products for a small commission.  

And business owners have complete control over their products. They can change the price, the name, the packaging, etc. 

Fake Friendships and Toxic Positivity

Like fake friends? Join an MLM and become part of an upline’s “tribe,” and you’ll have more fake friends than you know what to do with.  

They’ll all be full of compliments, love, and sisterhood. But the minute you quit the MLM, you’ll be unfriended, shunned, and they’ll never speak to you again.

MLMs like to make you think it’s all your fault if you aren’t doing well. You just need to work harder, you can do this if you have the drive to succeed, or you just need to set goals. These statements are completely ridiculous and couldn’t be farther from the truth. The entire MLM structure is purposely designed to keep people from making money.  

Sounds great, huh?

How People Get Lured In

MLMers are notorious for preying on the vulnerable. 

They like to make it sound as if their life is fabulous, and they’re making all of this money “thanks to this amazing opportunity.” They get to work from their phone whenever they want while raking in cash and winning trips to conferences. I mean, sounds great, right?   

The problem is, it’s not true. The majority aren’t making any money. But they have to make it appear luxurious to get people to sign up. 

It’s the ole “fake it til you make it” routine. Unfortunately, people needing money or looking to work from home often fall for it.

Oh, and winning those trips to conferences? They aren’t free. You’re on the hook for all expenses.   

MLMers also like to prey on those with illnesses. Claiming their supplements or essential oils will cure them or make them feel better. The truth is, MLM products aren’t FDA tested and approved, and making such claims have landed several companies in hot water.   

Some MLMers have even made claims that their products can cure COVID-19, which is a complete lie, and the companies have been issued warning letters by the FTC 

As far as essential oils, they aren’t made for human consumption and can actually be toxic if ingested.

Just Say No

Seriously, being in an MLM is a good way to alienate family and friends. No one wants to or has the time to watch two-hour Facebook lives featuring cheap $5 jewelry. 

Most people don’t appreciate unsolicited sales pitches in private messages, nor do they like reading posts littered with hundreds of emojis.  

And, no one wants to be viewed as a potential dollar sign by their friends.  

Don’t waste your hard-earned money on a pipe-dream. Joining an MLM is not the only way to work from home, and you won’t be successful no matter how hard you work.

And, if you’re still thinking of joining one, just go back and re-read the income statements.

Looking For Work at Home Jobs That Aren’t MLM?

You can go here to see a list of 50 non-MLM work-at-home jobs, by category.

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