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Fake MLM crap :)

icerat

Philosopher
Joined
Apr 22, 2008
Messages
6,099
Location
Kyiv, Ukraine
There's a couple of threads on MLM (multilevel marketing) running at the moment. I'm a supporter of the MLM model, but I've noticed that many skeptics are not. In discussions I've noticed that their criticisms are pretty much never about the actual MLM model, or if they are, they've misunderstood the model (thinking for example that it's "endless chain" or you get paid for recruiting ala pyramid schemes).

The MLM model does however have a major weakness that is also one of it's major strengths - it has a very low cost of entry. This is the case both from agents, who can register for low or even no fees, and also for companies that wish to get their products to the marketplace.

There are two results from this. One is that lots of people join MLM companies and don't take the business seriously, so to 3rd parties it looks like lots of "failure", when in fact it's lots of "didn't really try".

Perhaps a bigger issue though, and a big reason why many skeptics in particular feel MLM is a scam, is the low cost of entry for a company. MLM allows a company to offset the majority of their marketing costs to the field, and not pay unless sales actually result. In traditional marketing this would be akin to putting ads on TV and not paying anything unless they actually got sales because of it.

The result is that if you have some new product you want to market, but not much money to market it, or not enough to market it against established players in the category, then MLM is a smart way to go. That leads to an inevitable influx of ahh ... interesting ... products in the MLM using marketplace.

I received an email today about MLM products from Len Clements, an author and expert consultant in the MLM industry. Here's what Len had to say -

Below is a short description of several M.L.M. products. All but one is a real product, that was, or is, actually sold by an M.L.M. company. You must choose which is the fake product. After reading the list the common reaction is that I mistakenly reversed my description of the list, and I must have meant that all but one are fake and you must select the one real product. Nope. As hard as it will be to believe, only one is fake.

#1 - Sound Wave Gel.
A topical gel that interacts with your body's "energy field" to assist the body in healing itself. Works by infusing the body with high energy sound waves. This inaudible tone helps the trillions of cells in the body come into harmony. It miraculously organizes and harmonizes all human, plant and animal DNA.

#2 - Oxygen Supplement.
Many illnesses are caused by oxygen deprivation and our air "contains 50% less oxygen than 20 years ago." This 2 ounce tincture supplements the oxygen supply in the blood. It consists of "stabilized oxygenated water and sodium" which is administered orally where the oxygen is absorbed via the digestive system.

#3 - Electrical Matrix Aligner.
Molecules and atoms are made up of electronic charges. Therefore, we should not focus so much on the chemical nature, but the electrical nature of our bodies. These nutritional products "align your body's electrical matrix." These are products with their "life energy" still intact.

#4 - Luminescent Blood.
Research in Japan has shown that the growth of harmful bacteria and viruses are inhibited by certain spectrums of light. Also, these light spectrums accelerate the production of antibodies. A line of products have been developed that can introduce harmless, luminescent phosphates into the blood stream, thus causing "the bad bugs" to go dormant.

#5 - Antibody Trainer.
Bacteria and viruses are becoming more resistant to antibiotics. This product "trains" chicken antibodies to recognize and destroy over 250,000 forms of viruses within the human blood stream. Can "stop sickness and disease forever!"

#6 - Shoe Insoles.
Acupressure therapy has shown that when certain sections of the bottom of the feet are massaged, there is a positive effect on various body organs. There are a variety of shoe insoles each with a different pattern of strategically placed bumps and ridges that are therapeutic in the treatment of various bodily ailments.

#7 - Amazing Crystals.
These microscopic crystals can cause water to freeze at room temperature, will increase the power and mileage in your car engine, will clean laundry for up to seven years without detergent, and causes skin care products to work 85% better.

#8 - Death Bonus.
Distributors purchase several life insurance policies and make the company the primary beneficiary on all but one. Bonuses of over $100,000 are distributed upline from the proceeds of the policies after a distributor dies. On average, one out of every 110 downline members will die each year.

#9 - Age Reversing Capsules.

The human body naturally sends "longevity signals" to the brain which tell your brain that your body is growing younger. This product increases and amplifies those signals. The result is that a 50 year old can achieve a "biological" age of 34 within six months (which can be verified by a "highly sophisticated" at home urine test sold by the company).

#10 - Sour Milk Perfume.
Distributors buy a package of milk culture which they grow in their refrigerator. The resulting culture is used as an ingredient in the reproduction of the actual perfume once used by Cleopatra. The company will repurchase the culture for more than the price paid for it, plus upline commissions are paid on the original culture purchase.

#11 - God's Soap.
Cleansing products that, when used during bathing, will prevent or even cure various diseases. According to the company founder, he awoke in the middle of the night to find that God had written the formulas for these soap products in light on his bedroom wall.

#12 - Dilution Solution.
Prevents or cures toxin related diseases by adding the actual toxic substance to water, pouring half of the solution into an equal amount of water, pouring half of that resulting solution into an equal amount of water, and then repeating this process thousands of times until the solution is so diluted that not a single molecule of the original toxin remains. This final solution will still possess the "resonant energy" of this toxin and when consumed will protect the body from that toxin.

#13 - Asteroid Juice.
A large asteroid exploded over Siberia in 1908 leveling hundreds of square miles of trees and killing all life, even microbial, within the blast zone. But soon after various exotic forms of plant life began to grow within the area, including a fruit never before found on Earth. This fruit possesses amazing health and curative qualities.

#14 - Magic Wand.
This $400 metallic wand shoots a narrow beam of "zero point energy" up to 30 meters. When directed at an object or person and waved clockwise three-and-a-half rotations it can make food taste better, plants grow faster, increase strength, and treat or cure various diseases by causing the cells to "return to source".

All are obviously crap, but can you pick which one is the "fake" product?
 
I'm gonna go with number 7, because that's the only one with a testable effect.

As soon as the crystals fail to freeze water at room temperature... people will still be idiots and buy it. *sigh* I can't pick!
 
Nope, but I can't see how this thread is going to convince me that MLM is a brilliant idea either, so what do I know.

I can't either, what's your point?

I just think it's a pretty hilarious list. People buy this stuff! :jaw-dropp

I'm gonna go with number 7, because that's the only one with a testable effect.

As soon as the crystals fail to freeze water at room temperature... people will still be idiots and buy it. *sigh* I can't pick!

Hmm, interesting thinking though. For the record I don't know which one is the "fake" one either. I'm tending towards "Death bonus" cause the insurance industry at least has some regulation and that "sales model" sounds like a pretty straight foward ponzi scheme.
 
Amway is still a bad idea and MLM is for the most part, a bad idea because it is designed to exploit your downlines. Add in scammers who sell useless training and the scam is worse.
 
It's a trick question. The answer is:

It doesn't matter if the product is real or not, MLMs are scams and the product is irrelevant.
 
Amway is still a bad idea and MLM is for the most part, a bad idea because it is designed to exploit your downlines. Add in scammers who sell useless training and the scam is worse.

I get the amway argument. The numbers are pretty clear.

Is there as much evidence that Mary Kay has the same issues? PM is fine if you'd rather.

To me there is no reason a company with real products would go MLM, but MK is very popular in my neck of the woods and I wonder if it is an exception to the rule or just better at hiding its weaknesses.
 
There is a good reason MLM is described as you said by skeptic : it is a thinly disguised pyramide crap with all the attribute cited in previous thread. Heck TV shows, journalist investigation, and independent "from the outside" view clearly all point in the same direction.

but surprise surprise : mostly only the one inside the trap feel comfortable and don't see it that way.

*shrug* keep your belief. I don't care. But to everybody I will encoutner , I will repeat them the same argument as were presented by skeptic, and try to cinvicne them to avoid that crap.
 
I get the amway argument. The numbers are pretty clear.

Is there as much evidence that Mary Kay has the same issues? PM is fine if you'd rather.

To me there is no reason a company with real products would go MLM, but MK is very popular in my neck of the woods and I wonder if it is an exception to the rule or just better at hiding its weaknesses.

In situations where the emphasis is on actually selling goods to people who aren't distributors,, then I believe these are okay. But when the salesforce is the primary target for sales of goods and training, I believe those are scams. In that regard, I believe Amway is the grandaddy of them all,
 
The MLM model does however have a major weakness that is also one of it's major strengths - it has a very low cost of entry. This is the case both from agents, who can register for low or even no fees, and also for companies that wish to get their products to the marketplace.

I have to disagree with this assertion, especially in regards to agents. If I wanted to sell somebody else's product, non MLM companies have a much lower cost of entry, namely $0 at the most (often, they will pay to train me so the cost is actually negative since I receive value from the training at no cost to me). Also, I am not required to purchase the product before I can sell it.

I should also point out that I have a different perspective on the cost of getting something to market. For a while I worked for a very woo-woo (non MLM) company that manufactured dehydrated juices marketed as super-foods. We sold a few under our own brand, but the bulk of our business was manufacturing products for MLM companies. This now helps me realize that the great product was not even the brainchild of the founder of the MLM. The MLM exists solely as a marketing mechanism and rarely develops their own products. the reason they have such low costs getting products to market is because they never developed the product in the first place.
 
In situations where the emphasis is on actually selling goods to people who aren't distributors,, then I believe these are okay. But when the salesforce is the primary target for sales of goods and training, I believe those are scams. In that regard, I believe Amway is the grandaddy of them all,

Fair distinction that seems to make sense. I wonder if anyone around here has experience or evidence for where MK would fall on that spectrum.

Trying to stay on topic: It's interesting that Icerat's OP is focused on bogus products without addressing your point about selling only to the sales force. Bogus products don't bring as much disrepute to the model, in my opinion.
 
#12 - Dilution Solution.
Prevents or cures toxin related diseases by adding the actual toxic substance to water, pouring half of the solution into an equal amount of water, pouring half of that resulting solution into an equal amount of water, and then repeating this process thousands of times until the solution is so diluted that not a single molecule of the original toxin remains. This final solution will still possess the "resonant energy" of this toxin and when consumed will protect the body from that toxin.

I dub this the Home-Opothy Kit. The scary thing, is that is is probably more expensive than homeopathic items that you get pre-successed in your drug store. So not only are you getting nothing, you are paying more for your nothing getting it from an MLM as opposed to buying it from a subsidiary of big Pharma (yes most homeopathic remedies are manufactured by big Pharma).
 
There is a good reason MLM is described as you said by skeptic : it is a thinly disguised pyramide crap with all the attribute cited in previous thread. Heck TV shows, journalist investigation, and independent "from the outside" view clearly all point in the same direction.

Evidence?

Here's some counter evidence, from different time periods

FTC vs Amway FTC investigation (1979), Amway cleared of pyramid charges. I quote from the Findings of Fact -
* "consumers are obviously well served by the products that Amway supplies them with"
The Direct Selling Revolution (1993) (Book on Amway, written by a top business academic)
* Amway practices Direct Selling at it's best (page 2)
* Amway is not a pyramid structure (page 10)
* Amway Corporation has succeeded for more than three decades in a highly regulated industry, because it is a proper, ethical, and honourable addition to the retail marketplace (page 35)
Wave 4 (1999) (book on network marketing, written by a journalist)
* No longer is MLM perceived as an immature business, rife with scam artists hawking get-rich-quick schemes (page 19)
The New Professionals (2000) (book on network marketing, written by a business historian and a professor of marketing)
* No other industry in the US has been more misunderstood (page 70)
* A negative image (is) sometimes based on a bad experience, but more often on misinformation and a lack of knowledge (page 71)
A recent academic paper (2011)
* The paper shows that MLM remains a viable career option for youth(abstract)

but surprise surprise : mostly only the one inside the trap feel comfortable and don't see it that way.

None of those cited above are involved in MLM. I have plenty more.
 
I have to disagree with this assertion, especially in regards to agents. If I wanted to sell somebody else's product, non MLM companies have a much lower cost of entry, namely $0 at the most (often, they will pay to train me so the cost is actually negative since I receive value from the training at no cost to me). Also, I am not required to purchase the product before I can sell it.

Examples?
Note that you don't need to purchase the product before you can sell it in most MLMs either

I should also point out that I have a different perspective on the cost of getting something to market. For a while I worked for a very woo-woo (non MLM) company that manufactured dehydrated juices marketed as super-foods. We sold a few under our own brand, but the bulk of our business was manufacturing products for MLM companies. This now helps me realize that the great product was not even the brainchild of the founder of the MLM. The MLM exists solely as a marketing mechanism and rarely develops their own products. the reason they have such low costs getting products to market is because they never developed the product in the first place.

Well, MLM by definition is a marketing mechanism. Most top MLMs (eg Avon, Amway, Vorwerk etc) also manufacture their own products. Amway alone has over 300 R&D staff, more than 1000 patents, and hundreds of articles published in peer-reviewed academic journals.
 
Fair distinction that seems to make sense. I wonder if anyone around here has experience or evidence for where MK would fall on that spectrum.

Trying to stay on topic: It's interesting that Icerat's OP is focused on bogus products without addressing your point about selling only to the sales force. Bogus products don't bring as much disrepute to the model, in my opinion.

As per my sig, Joecool is on my ignore list.

Now, by definition, except in some limited circumstances, Amway only sells to the sales force. Many manufacturers and wholesalers only sell to resellers and not direct to the consumer. Not exactly unusual.

I'm guessing the issue is rather the claim that only the sales force are consumers of the product. This is false, at least for the major MLMs.
 
Examples?
Note that you don't need to purchase the product before you can sell it in most MLMs either
Let's see, my father worked in sales for 35 years for IBM, he never spent a dime of his own learning how to sell IBM products. Even if he wanted to take outside classes, IBM reimbursed him for it.

My brother worked for about 10 years in sales for Seimens. Same story.

I have never worked sales, because the profession does not suit my personality.

Reputable companies are willing to invest in training their sales force. MLM's and other fraud companies charge their sales force to attend their own training seminars.

Well, MLM by definition is a marketing mechanism. Most top MLMs (eg Avon, Amway, Vorwerk etc) also manufacture their own products.

evidence? Simply provide an address that can be verified in google maps where Amway, Avon or Vorwerk have a manufacturing center.
 
MLM is stupid for one reason. Legitimate sales recruiters offer to pay salesmen a commission strictly based on what they sell. MLM companies pay salesmen based primarily on the level of the person doing the recruiting. If you sold one thousand widgets in one day and were recruited by someone who had ten recruiters above you, you would make less money than someone who sold 100 widgets, but only had one recruiter above you. That's why it's a type of pyramid scam.
 
MLM is stupid for one reason. Legitimate sales recruiters offer to pay salesmen a commission strictly based on what they sell. MLM companies pay salesmen based primarily on the level of the person doing the recruiting.

Astrodude, legitimate MLM companies pay salesmen a commission based on what they sell. Any "level" is simply a recognition of that. They may keep the title if the volume drops, but the commissions continue to be based on the actual sales volume

If you sold one thousand widgets in one day and were recruited by someone who had ten recruiters above you, you would make less money than someone who sold 100 widgets, but only had one recruiter above you.

I'm not quite sure what you mean by "ten recruiters above you" and "one recruiter above you"? In Amway the number of people "above" you has zero influence on how much you make.

That's why it's a type of pyramid scam.

I don't think what you describe happens in legitimate MLM
 
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Let's see, my father worked in sales for 35 years for IBM, he never spent a dime of his own learning how to sell IBM products. Even if he wanted to take outside classes, IBM reimbursed him for it.

My brother worked for about 10 years in sales for Seimens. Same story.

I have never worked sales, because the profession does not suit my personality.

Ok, that's working as an employee, different situation.

Reputable companies are willing to invest in training their sales force. MLM's and other fraud companies charge their sales force to attend their own training seminars.

Can't speak for other companies, but Amway has lots of free training. The "charged" ones you are probably thinking of are offered by a multitude of 3rd party companies.

evidence? Simply provide an address that can be verified in google maps where Amway, Avon or Vorwerk have a manufacturing center.

10255013.jpg

Amway World Headquarters
They also have farms and processing plants in California, Washington, Mexico, and Brazil and manufacturing operations in India and China (for in-market use only at present, no exporting).

Vorwerk has manufacturing plants in Germany, France, Italy, China, Mexico (JAFRA Cosmetics) and Shanghai (Lux Asia Pacific). Here's the German headquarters and plant

I don't know where Avon makes their stuff. News reports from the time Amway tried to buy them out in the 80s said it was because Amway wanted their cosmetics manufacturing capabilities. Avon's R&D unit is in Suffon, NY.

Heard of Unilever? I'm sure you know they manufacture lots of stuff? They also have an MLM division, very popular in India and South Africa.
 
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Astrodude, legitimate MLM companies pay salesmen a commission based on what they sell. Any "level" is simply a recognition of that. They may keep the title if the volume drops, but the commissions continue to be based on the actual sales volume



I'm not quite sure what you mean by "ten recruiters above you" and "one recruiter above you"? In Amway the number of people "above" you has zero influence on how much you make.



I don't think what you describe happens in legitimate MLM

It's the 'L' in MLM. "Ten recruiters above you" means you're recruited by someone who's recruited by someone who's recruited...ten times until the founder of the company. THIS DOES HAPPEN IN AMWAY. You're commission depends almost entirely on the level of the person who recruited you!

That's the 'level' in multi-level marketing. If you're paid primarily based on how much you sell, it's called single level marketing.
 

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