You’ve probably heard the term MLM (multilevel marketing) thrown around social media these days. Perhaps you’ve even joined a group on social media simply to hear what’s happening in the MLM world. If so, you’re probably wondering: What is MLM, and how can I get involved?
MLM is short for “Multi-Level Marketing,” which explains the structure of these networks. Essentially, an MLM company rewards you for selling their products and services, while also encouraging you to sell products to people who are “down the line” (or “down the funnel”) from you.
Here’s how it works: You sign up to be a distributor (or a “team member”) of a particular MLM company. Then, you receive a massive amount of training from the company. When you’ve learned enough, you’re expected to go out and make sales.
Sounds great, right? Well, in practice, things can get a bit more complicated. When you’re starting your own business, it’s important to look out for scams and pitfalls that you might fall into.
The Scam: Amway
Amway is one of the more infamous names in the MLM world, thanks to all the bad press surrounding the industry. The company is particularly notorious for its high prices, vague product promises, and dubious ethical practices. If you’ve ever shopped at Walmart, you’ve probably seen products that are sold using Amway’s strategies. If not, here’s a short list of what Amway is known for:
- overpriced consumer goods
- multi-level marketing schemes
- close-knit communities of “distributors”
- disclosure of hidden sales taxes
If you think that you or someone you know might be a victim of scam, here are some signs to look out for:
- implausible, extravagant promises of riches
- persistent pressure to buy a particular product
- a desperate cry for help from a “distributor” or “team member” who’s gone bad
- complaints of repeated harassment
- a request for funds to cover an “overhead” or “business expenses”
The Pitfall: Avon/Jeeves/Sherpa
Avon, Jeeves, and Sherpa are all well-known MLM companies that have fallen into a bit of a trap. The businesses, which were all started in the 20s and 30s, operate on a commission-only basis. In other words, you’re not required to sell a lot of products to make money. Instead, you’re rewarded for bringing in new distributors. (If you join Sherpa, you’re also entitled to a commission — but you have to sell a certain amount of products to generate that income.)
The problem is that these businesses rely on extremely high sales volumes to stay profitable. In order to achieve that, the companies go through a lot of representatives. Sometimes, that can lead to problems with sales fatigue and burnout.
If you think that you or someone you know might be at risk of becoming a victim of a MLM scam or a similar type of business, here are some red flags to look out for:
- a persistent desire to do better than everyone else
- a love of “teaching others”
- a lack of empathy towards other people
- a sense of insecurity or inadequacy
- a sense of entitlement
- a sense of superiority
The Sugar Daddy: Young Living Essential Oils
Speaking of scams and pitfalls, let’s not forget about Young Living essential oils. If you’re not familiar, essential oils are the oils that are extracted from plants and trees. These are usually expensive and highly sought-after compounds that have a variety of uses. (You can read more about essential oils here.)
You might know that CBD oils are a bit more popular than traditional oils these days. That’s because CBD stands for “Cannabis.” If you’re not familiar, medical marijuana can be a great solution for those seeking pain relief. In fact, many people use medical marijuana along with essential oils to create a synergistic effect when using the products together.
Essential oils are expensive, and Young Living is one of the biggest and most popular companies in the industry. Many people have gotten really, really rich off the backs of Young Living Essential Oils — and at the same time, many have gotten really, really sick. (You can check out our review of Young Living Essential Oils here.) If you’re interested in trying out these oils, or in investing in the company, here are some things to be on the lookout for: