MLM Math

[Mycroft]

I've come to realize this, which was the reason for my question.

At least if he were paid, I'd understand his motivation.

But if he really is not a paid shill, as he claims... Talk about a weird obsession...

Over the years I've had the opportunity to talk to several people being victimized by 419 scams, a scam where the victim gets to participate in some business deal where they are told they will get a huge payoff in the millions, but along the way they constantly meet up with new "problems" that can only be solved by the victim coming up with a few hundred or a thousand more dollars to pay some fine/bribe/or transaction fee.

None of these people could see they were being scammed. It didn't matter how long they had been on the hook, how much money they had already sunk into the scam, or how irrational the premise, they still had perfect faith that the deal would eventually go through making their fortunes.

None of these were stupid people, either.

I can only speculate that there is some psychological drive going on where when some people invest enough time, effort and money into something that they then need it to be true. That contributing another thousand dollars to a scam artist is less painful than admitting that the $75,000 you've already given him was all a waste.

 

[icerat]

Over the years I've had the opportunity to talk to several people being victimized by 419 scams, a scam where the victim gets to participate in some business deal where they are told they will get a huge payoff in the millions, but along the way they constantly meet up with new "problems" that can only be solved by the victim coming up with a few hundred or a thousand more dollars to pay some fine/bribe/or transaction fee.

Let's see. 419 scams are declared fraud by the FTC, the FBI, ACCC, Interpol etc etc etc

Nobody, anywhere, claim it's legit.

All those same bodies declare MLM legitimate. Apparently because of the power of lobbyists and corruption.

Seems the 419ers just have poor lobbyists!

Good grief, talk about false equivalency. But please, I'd be fascinated to hear the fascinating psychological process which led me to purchase Amway products I (apparently) really don't want this week.

 

[NewtonTrino]

Confusing legal with ethical is an ongoing problem. The MLM companies are simply better organized than those they are scamming when it comes to lobbying.

 

[Mycroft]

Let's see. 419 scams are declared fraud by the FTC, the FBI, ACCC, Interpol etc etc etc

Nobody, anywhere, claim it's legit.

All those same bodies declare MLM legitimate. Apparently because of the power of lobbyists and corruption.

Seems the 419ers just have poor lobbyists!

Good grief, talk about false equivalency. But please, I'd be fascinated to hear the fascinating psychological process which led me to purchase Amway products I (apparently) really don't want this week.

You're quite right in that MLM is legal and 419 scams are not, but the comparison I was drawing wasn't in their legality, but in the faith people can put in them even in the face of strong evidence to the contrary. You see similar things in relation to faith healers.

 

[Mycroft]

Confusing legal with ethical is an ongoing problem. The MLM companies are simply better organized than those they are scamming when it comes to lobbying.

And more importantly, many people are victimized by Amway, Primerica, Equinox, Herbalife or similar companies without ever understanding that the business model guarantees all but a tiny number will be failures. Instead they internalize their failure, keeping faith in the "program" thinking it is their own lack of ability that made them fail.

 

[icerat]

in the faith people can put in them even in the face of strong evidence to the contrary.

There's strong evidence you can make money. No faith required.

And more importantly, many people are victimized by Amway, Primerica, Equinox, Herbalife or similar companies

Victimised? How?

Nice bit of guilt by association there. Equinox was shut down as part of a settlement after being accused of being a pyramid scheme. Why? Because "recruiting" involved getting people to sign up as "managers" with upfront inventory purchases of $5000, and payments to "upline" primarily came from those initial purchases - ie unlike Amway, Primerica, and Herbalife you earned income primarily from recruiting new reps.

without ever understanding that the business model guarantees all but a tiny number will be failures.

Simply not true. This is again a classic case of equating MLMs with pyramid schemes and attributing the flaws of pyramids to MLMs. There is absolutely nothing inherent in the MLM model that "guarantees all but a tiny number will be failures". It is you that does not understand the model.

 

[Joecool]

And more importantly, many people are victimized by Amway, Primerica, Equinox, Herbalife or similar companies without ever understanding that the business model guarantees all but a tiny number will be failures. Instead they internalize their failure, keeping faith in the "program" thinking it is their own lack of ability that made them fail.

This summarizes the problem quite accurately. These MLM companies, while legal, still have independent reps who are scamming people shamelessly and icerat likes to divert the problem using the defense that it's not typical or that it's rare. Indeed these problems are reported all over the internet and includes icerat's beloved network 21.

And I agree that people internalize their failures and keep on because they have already invested much or because they believe that perseverance will eventually pay off.

In evaluating the compensation plan, you can see that there will be typically one guy on top with close to a hundred or more below (as per the common 6-4-2 Amway plan).

 

[Almo]

Let me ask you this...why do you care so much? If someone says they don't like Pepsi, other people don't generally run roughshod over a thread, defending Pepsi. Yet here you are, over and over again, defending Amway's products. Doesn't make a lot of sense, unless you have something to gain.

Sure, people may have a small debate over like coke vs. pepsi, but do you realize you are about 50% of the posts in this thread alone, all defending Amway like it's your firstborn child? Why is that?

I think the Amway <-> Coke connection is a valid one. Coke is obviously better than Pepsi, just as Amway is obviously a scam, and no further discussion is necessary.

 

[Joecool]

....the critics of multilevel marketing, whose wide-ranging assertions are merely opinions rather than scientifically based conclusions.

People can keep sprouting BS, I'll keep responding with "scientifically based conclusions". The fact you find me doing so "bizarre", but have no apparent problems with someone putting far, far more time and effort in to spreading BS says quite a bit more about you than it does about me.

Everything you've posted in defense of MLM is your opinion and/or conjecture.

If you could conclusively prove that Amway/MLM can work for more than a third of people who buy in, there would be few or no critics of the business.

But you can't. All you have is some examples of a diamond who worked hard and maybe lied his way to the top as your example and then you disregard the thousands who may have lost money by being involved in that diamond's business.

 

[Joecool]

You've admitted yourself several times in this thread, that not all MLM companies are legit. I think you may have even acknowledged that over half of the opportunities are illegal pyramid scams masquerading as legitimate MLMs.

Is there any other venture besides MLM where the terms "pyramid" or "scam" are so commonly used to describe it?

(Not counting those emails from Nigeria)