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How MLMs Trick People

Blocks are stacked in a pyrmaid.

A few months ago my mom and I took my baby and toddler to the science center to play around and do some sciencey things!

It was early and it was quiet in the baby play area. Soon after we arrived, a father and his two young sons came in to play. This man’s kids were roughly the same age as my boys and we started to chat about kids and parenting, you know, as parents do!

It didn’t take long before the conversation took a turn. He started to ask a ton of questions about what I did for work and if I wanted to stay home full time with my kids. He asked if I’d ever considered becoming an entrepreneur.

Without any prodding or apparent interest on my part, he then launched into a story about his entrepreneurial journey and how great it was to be able to stay home with his kids. And, the best part, he could make more than enough money to support his family in just a few hours a night.

It almost sounded too good to be true! Right?

I could smell the multi-level marketing (MLM) or network marketing pitch from a mile away. But, I engaged. I wanted to see what he was selling and it was kind of fun to watch him squirm.

When he was taking too long to get to his pitch I lost interest and started to gather my kids. When he saw that I was heading out he must have felt that it was now or never so he jumped in, and I was right, multi-level marketing, network marketing, being one of his MLM reps, or however else you want to view it.

“Oh, so if you’re interested in learning more about entrepreneurship, you could give me your number and I could get my wife to call you with more details.”

Ahhhh, yeah right. I told him I wasn’t comfortable giving out my number and asked if he had a business card I could take.

He pretended to check his pockets, “Hmmmm, I must have forgotten them. You know how it is with kids, haha.”

Hmmm, good one buddy. What self-respecting “entrepreneur” doesn’t carry around any business cards?

I responded, “Well, do you want to give me your wife’s number and I could call her?”

“Oh, yeah, okay, ummm, yeah, sure, I guess I could do that.”

He gave me his wife’s name and number and (spoiler alert!) I never called. But I did google her and the two of them were definitely working for an MLM. It’s important to know that not every multi-level marketing company is a pyramid scheme, but some are hidden under the guise of direct sales, or a business model that seems genuine.

As my mom and I were walking out of the science center an hour or so later we saw that Mr. MLM had cornered another mom in the parking lot. My thought was, what a sleazeball. In my mind, he was targeting “vulnerable” new moms, many of whom I know will do anything to stay home with their babies. This is one of the MLM sales tactics.

I also thought to myself, for someone who just told me he only had to “work a few hours a night” to make his fortune, it seemed like he was working pretty darn hard. Not to mention, he was completely ignoring his kids.

What is an MLM?

If you haven’t been trapped in a similar situation with an MLM salesperson, consider yourself lucky. It’s easy to see the marketing appeal of a home-based business where you sell a company’s products and get paid for it, but many of these MLM schemes make their money selling items to their reps while reps make money recruiting the next level of people direct-selling a product few consumers buy.

Not every person involved in an MLM is an annoying, relentless salesperson who preys on busy, tired, distracted mothers at the science center. In fact, you probably know some pretty amazing people that are part of an MLM.

Multi-level marketing (MLM) companies sell products or services directly to customers. Rather than going to a store, your mom, sister, co-worker, or some random dude at the science center will try to sell directly to you.

There are two ways you can make money with an MLM business:

  • Making a commission when you sell a product or service
  • Making a commission when you recruit new MLM sellers

MLM recruitment and sales strategies

MLMs use a number of different tactics to recruit salespeople; you’ve probably seen many of these in your social media feeds. They need to lure fresh blood into the MLM industry to keep their business model afloat and they will often say whatever it is they need to sell you on the supposed business opportunity with their company (while telling you how great running a home-based business is).

They prey on the vulnerable

Whether it’s new moms who want the freedom to stay at home and work online so they can be with their kids, or those who are experiencing financial hardship and need fast money, MLMs know who to target. MLMs sell the dream that you can be your own boss, work from home and, of course, you can make tons of money. Who wouldn’t want to join an MLM?

They bombard you with positive messages and images 

If you know someone in the MLM industry then you’ve witnessed the insane amount of self-promotion that comes with trying to make a sale. The positive messages about the so-called business opportunity and “subtle” selling never seem to end. There’s no way that face cream, essential oil, or nutritional supplement can be as good as they say it is. It seems to cure all of their problems.

And then there’s the selfies. Here’s me and my new car that I can afford thanks to my MLM business, and here’s me on a vacation (thanks MLM income), and here’s me in front of my new house….and on and on. The goal is to sell a vision and even though we all know how contrived and filtered and fake most pictures on social media sites like Facebook, Instagram, and Twitter are, we can still fall for it.

They try to make it seem like they’re doing you a favor 

“Why do you think you would be a good fit for our company?”

Rather than try and convince you to join their MLM team, many salespeople will try to turn the tables and have you convince them that you have what it takes to be successful. They might ask why they should let you join their team. It’s a kind of reverse psychology sales tactic and I guess sometimes it works.

They go for quantity 

A lot of MLM recruiting advice suggests targeting as many people as possible. There’s no point wasting your time trying to convince a few people who are kind of interested to join. Instead, talk to as many people as you can get to listen and just based on numbers, you’ll eventually hook a few people.

How MLMs use peer pressure

Has someone close to you tried to sell you an MLM product? Have you been invited to one of their “meetings” or a Tupperware party?

If you’ve ever attended one of these meetings or parties, did you feel obligated to buy something or, even worse, did you feel pressured to sign up as a new MLM seller? Did you drink the Kool-aid?

This happens all of the time. It’s peer pressure. You go to one of these parties to support your friend and then you feel pressured to make a purchase. It’s too awkward to leave empty-handed and you don’t want to hurt your friend/sister/coworker’s feelings.

Once you’re on the inside and you’re selling for an MLM there’s the potential for more peer pressure. Because your sales benefit all of the people above you (your upline) these people are motivated to keep you selling. They don’t want you to quit so they pressure you to keep on going.

“You’re so close to success, don’t quit now. You’ve come so far.”

If you feel like you should quit — then you should quit.

How MLMs manipulate their statistics

First, let’s start with some real stats about MLMs. Between 73% and 99% of MLM participants lose money. Do you like these odds? I don’t think so.

So, with these statistics out there in the public how on earth do MLMs continue to recruit new sellers?

They focus on the 1% 

In order to get new people interested in selling, the MLM recruiters focus on the income made by the top 1%. When they share claims about the unbelievable income you can make, this is based on the results at the top. There is no way you are going to be able to obtain the same results as the people at the top no matter how much you “believe.”

Their statistics are “inherently flawed” 

The Federal Trade Commission (FTC) has recommended that MLMs should be required to share their average earnings with new recruits, but this has been met with great resistance. If MLMs do release average earning statistics, the FTC says they are “laden with obfuscation and deception, apparently to avoid revealing the abysmal odds of success for new recruits.”

The FTC states that the MLM statistics are inherently flawed because they assume two things:

An infinite market — their statistics assume that the world population is infinite so there is a never-ending stream of possible MLM recruits. This is obviously not accurate.

A virgin market — their statistics also assume a virgin market. While I can’t find a good definition for this anywhere I can only assume it means a market that has not been touched by MLMs. This also does not exist.

So, as you can see, the statistics provided by MLMs can’t be true if they are based on these two false assumptions.

How to avoid supporting MLM companies

If you’ve done your research and you feel compelled to join an MLM, it’s your life. However, if you’re someone who’s not interested in joining an MLM and you’re looking for ways to actively avoid an MLM sales pitch, there are things you can do.

Avoid the science center by my house 

First, if you’re at the science center and a man with brown hair in his mid-thirties with two kids comes over to talk about entrepreneurship…run! Haha.

Express your disinterest in MLMs 

Be upfront with people in your life that are involved in MLMs. Before they come to you with a pitch that will make you both feel awkward and uncomfortable, just tell them that you are not interested. You can wish them good luck in their MLM journey, but tell them it’s not for you and you are not going to change your mind. Don’t engage by going to a meeting, don’t pass the buck and give them the information of your other friends and family members.

It’s not an exaggeration to say that MLMs have ruined friendships. Be sure to put an end to the possible “business relationship” early so you have a chance of salvaging your actual friendship.

MLMs are a tricky business

Even “legitimate” MLMs make promises to people that they just can’t live up to. Pyramid schemes are, by design, super difficult to navigate. It’s hard to get straight-up answers about how money is made and who really profits. But, the bottom line is that most people involved in MLMs lose money. Don’t be one of those people.

–By Jessica Martel

SmartCents Mom