Multilevel Marketing: A High Risk Merchant's Experience Told Part 2
In my earlier article I mentioned about my own experience with MLMs, what most people would call a high risk business by virtue of high incidences of scam involved. I must admit there's a difference between the legit ones that sell real products and ones that merely ask you to recruit new distributors so that you may gain commissions off their membership fees. High risk merchant providers are aware of these. They will certainly not accept your application if they learned you had been previously involved in a MLM fraud. To learn more about this topic I wrote, see Insider Tricks to Successful Merchant Application.
PYRAMID SCAMS VS. LEGIT MLMs
I was then in my college days and seeking some help for my university fees when I saw an ad about scholarship opportunity on the local paper. I contacted the number and was told to attend a meeting to find out more about it. Soon I realized it was some sort of MLM business with a variety of benefits for the members. In my desire to get the scholarship, I joined. I paid a downpayment for my fee but it took long for me to realize that the scholarship I wanted from them would never materialize. Why? There was just too much to stuff involved like all MLM's are supposed to be. Too many meetings, too many enterprising activities, too many hours to consume calling people up to join and be part of the multi-awarded company. I ended up working on other jobs and attending scholastic workshops instead.
I wouldn't call that company a scam though. My only complaint was that my "upline" called me too much and ate up all the hours I could have been doing my laundry on Sundays. It was different from the first experience I ever had with a so-called "MLM company". It was absurd when I look back to it.
They asked for supervisors and new salespeople to fill up the slots in the fast growing company. When I came to their office, I was quickly hustled in to a seminar where the speaker thundered in an almost threatening voice, and made sure everyone was convinced and committed before they leave the room. There seemed to be no escape. They asked me to pay an upfront membership fee of several hundred dollars. I was astonished, but said I'd call my aunt to tell her that I needed help with the fee. The woman who was supposed to be my upline tried to "squeeze" me into paying, so I could become a member and earn big bucks soon. She had a really thick make-up cake on that looked like it was gonna break if she moved her face. And guess what the company was selling? A simple water filtration gadget. Needless to say I was able to bail out. The rest was history.
ARE THERE BENEFITS?
Joining a MLM company, on the consumer's part, isn't all about hype and talk about possibilities of scam. Legitimate MLM companies have been around for decades and make money from sales, and not purely from recruitment. Distributors find a good number of benefits such as motivational meetings, perks such as discounts, and enjoyment in the products that they buy.
TIPS FOR THE READERS
High risk merchants in the MLM industry warn us of pyramid scams by following the Federal Trade Commission's tips. Beware of the following:
1. Focus on profit from recruitment (commissions from growth of downline instead of sales)
2. Compulsion to buy products beyond what you can actually sell
3. Products with dubious "testimonials". Consider the phrase "too good to be true".
4. Documents to sign under compulsion
Legitimate MLM businesses are not hard to find. One good way to find out is if they're enrolled in high risk merchant services. Providers are keen on tracking fraudulent MLM companies and records of scam activities were found, their applications will automatically be denied.