"Multi-level Marketing" has a shady reputation. You won't hear many direct selling companies refer to themselves as an MLM - some will deny they're MLM. They'll refer to the term only when defending the company. Few people set out looking for a Multi-Level Marketing company or Pyramid Scheme to join. This explains why those in MLM quickly defend their company and deny the claim - who wants be associated with taking advantage of people - who is looking for a bad rap? They interpret the claim as a personal attack. Calling their company illegal directly questions their source of income and by participating in this company, it questions their ability to make good decisions for themselves and their family. Many on the defense are in debt and believe that if they just block out the nay-sayers (wisdom and discernment), put on the blinders and stay in their lane, they'll pay off the debt then profit with great income.
Here are a few red flags - in rough draft form - that you are with a company that does or does not claim MLM status or has not been properly investigated and declared a Pyramid Scheme yet (No company titles themselves a Pyramid Scheme because a pyramid scheme is illegal in the U.S. - See Federal Trade Commission (FTC) website):
Idolizing
Idols. Valuing things attached to the company that raises them onto a pedestal - higher than families, friends and the LORD. Self denial makes idolizing hard to spot. Many will claim that their priorities are God first, family second and career third, but they work for the company throughout the day almost every day. Some will claim they have excellent time management skills - that they intentionally map out time for faith, relaxation, family and they're well balanced, but still they always seem to be working. They lack one or more fruits of the Spirit.
Addiction
Obsessing over the company's purpose and your personal mission. Very similar to Bi-polar "mania" - you're invincible, you're going to change lives in the world, you're on fire and no one is going to stop you. A need to constantly think about your home-based business and an itching desire to work it to get ahead and be successful.
Prosperity Gospel
People in the group pray together, call on the LORD together, read scripture together. A common theme is that the LORD wants his people to be financially successful and happy in life, but the Gospel promises none of this. They teach that God will meet you halfway if you just put in the effort. If you plant the seeds, he'll honor your work and water it. The LORD does not promise this either. He promises that his Word will not return void, that all things work together for his good and when you ask it will be given to you -- in accordance to his Word and his will.
This is a works-based teaching that puts the focus back on self and not on Christ and his saving grace. Plus God will not honor work that leads others into debt, practices that promote addiction and impulsiveness (deception) instead of work that teaches discernment and money management.
Spiritual Claims
Claims that this company is God's will for you and you weren't placed here by accident. There's a divine purpose for you in this company to positively impact others and change lives. God may be calling you to do this. Feel like Peter and you're ready to get out the boat and walk on water with Jesus into this amazing company? Face fear and take a risk?
Before you decide to get out of the boat, you'd better be sure it's what you've been called to - and that Jesus is the One calling you. God's looking for more than impulsiveness. Sometimes we make reckless decisions about relationships, finances, or work, then rationalize them using the veneer of spiritual language. In many self-help books [and MLMs] risk-taking is seen as commendable, but as a Christian the risks you take should be in direct response to God. If you're a thrill-seeking personality you may be particularly susceptible in this area. Boredom can make you vulnerable, and tempt you to solve your problems making rash decisions that are out of step with God's will. There's a fine line between "Thou shalt not be afraid" and "Thou shalt not be stupid" - one that's easily blurred. Knowing when to step out of the boat and take a risk doesn't just call for courage, it calls for wisdom to ask the right questions, discernment to recognize the Master's voice, and patience to wait until He says, "Come!" (TWFYT, March 3, 2016)
If your family or those you are close to have questions or are concerned about your decision to join, they're not being "haters." Those are red flags. Pause and discern.
Discourages input from others outside the company
Those further along than you in the MLM will encourage you to seek advice only from those successful in the company. They'll discourage opinions from others outside the company. It seems to make sense. "If you want to graduate from college, you wouldn't ask advice from someone who never earned a degree or dropped out." True, but college is not an MLM. Not a good comparison. This is cult-like behavior that is easy to follow when you're determined to better your life and do whatever it takes to make it happen.
It's a "lucrative" opportunity, but the Middle Upper to Upper class is absent. Majority of workers are middle to working class.
You're told to look for those who are hard working, successful and have a need and deep desire to better themselves and their family - in other words, you're looking for those struggling in the working and middle class to exploit and take advantage of. If the opportunity was lucrative and amazing, many in the upper middle class would leave their high paying careers to join. But they don't. Those who do typically don't come from generations of wealth. They've seen financial struggle and still fear wealth becoming scarce. Those in upper middle class are normally intelligent and have high analytical thinking skills. They weigh their options and know the difference between profit and loss, so they don't join pyramid schemes. The upper class won't think twice about an MLM because the "return" on the "investment" requires ridiculous hustle for a profit much lower than what they earn on their investments and business. They're experienced with growing and maintaining wealth. The upper class takes risks, but they are well calculated. They understand that building wealth takes time and dedication and if it's done fast, it's probably unethical. Many leaders in the Pyramid Scheme strongly desire to join the upper class and prove they made it, but they're not respected. If you've "made it," you'll view others in the upper class as snobby and condescending towards your success in your MLM. They'll view you as a con artist.
Strong Defense that initially makes sense
They have a well thought out and strong explanation on why they are not an MLM or Pyramid Scheme - because they've been accused many times. They use firm, business-like examples and comparisons. They use numbers. They reason through what they do and set the bar on standards/ethics lower (sometimes without realizing it) in their argument. Ex: "There are good and bad sides to every company. You can choose to do the good in this one and make a difference." However, if you knew a company a company was leading thousands into debt, using subtle manipulation and deception to recruit sellers, breaking up marriages and families and creating division in churches, would you financially support this company by selling or buying their product?
Labeling the company an unethical pyramid scheme is not easy. The company does a lot of good.
This is the case with most things in life. Not everything is black and white, outright bad or good. The company may impact the community positively. Ex: The company helps many lose weight and improve their health, or their product clears the skin and gives self confidence back to women, or they help others manage their money and keeps them safe and secure with affordable life insurance. But not everything that is good is best for you.
"You'll have haters. Get ready for them."
The company preps you ahead of time that people will question what you're doing because they just don't understand your potential to succeed and make a difference in people's lives... yet. They may see the light one day, if you keep working you'll show them. On the other side... those who love you the most are watching you walk into a lion's den and they honestly don't know how to save you. So most say nothing, but they ache for you on the inside.
If you're team building, you notice over time that promising intelligent people you recruit go MIA and emotionally unstable people stay.
Your higher-ups (coaches, mentors) will tell you this is your fault - you attract what you want on your team. In reality, quality people with integrity see a pyramid scheme without the label - they see something they sense is not ethical or worth their time and they cut their losses sooner. You find that most successful discerning people with a clear conscience leave. People with emotional damage and low self-esteem stick around hoping the "opportunity" will save them from their circumstances. The pyramid scheme becomes their sanctuary because they feel accepted and loved - when in reality they're being used to keep production going (keep them happy and ordering) so those above continue to receive decent pay in commission checks or meet requirements to keep their company car. These emotionally wounded people need church and to meet their real Savior, but higher-ups in the pyramid scheme keep them dependent by speaking "love" "belief" and "truth" over them, continuing to make them feel loved so they'll continue to work.
Confusion. It's hard to 100% trust your higher ups and their intentions. They speak what they stand for, but you have a sinking feeling in your gut that you can't quite figure out. They'll tell you this is fear and you need to face it, when really the Holy Spirit is working in your heart and warning you.
Leaders in pyramid schemes are the worst because they're deceitful. In corporate America, I may not have liked my boss, but she was open and outspoken about being a tyrant - she didn't try to hide it, she made clear what she wanted from us even if it was unrealistic and what she was mad about. Higher ups in pyramid schemes will tell you that you're your own boss, they're not your boss, they're your mentor and friend, they love you and care about you - while steering you to become compliant and do what they need you to do in order to get to where they need to be in the pyramid. They're secretly your boss.
They'll talk a big game and say they care about everyone and want to see every person become successful. They'll even quote scripture from the Bible and invite you to church to grow your spiritual well being. Some may genuinely care about you, but in the end, all they "pour into you" directly translates into benefits for themselves. Keep in mind that the one who shouts the loudest is the guiltiest. If she's proclaiming how much she cares about everyone and how she's here for your success and not for herself... that's straight up B.S. Look at how a pyramid is structured. Her success always depends on YOU. You also notice many in the business worship him or her and hang on their words. One time my co-leader said if our higher-up told her to jump off a bridge, she would.
Arguing with someone in the Pyramid Scheme is pointless.
People, especially leaders in the MLM, are so brainwashed and sold out on the lie that you cannot argue with them. It's very similar to trying to argue with a Jehovah's Witness. Their wall is very thick and cannot be penetrated. They're blind. Their brains are hardwired to serve this cause and they are over 100% sold out on making it. They call themselves fierce, independent, trail blazers, renegades, even refer to themselves as being a rebel and going against the grain like Jesus - when really they're being used by corporate leaders of the pyramid to pump money into the company and to convince hundreds of others to pump money into the company too. Majority are in debt and call it normal business expenses. It's best to cut them out of your life, pray hard for them from a distance and minister to them only as the LORD leads you. They'll call their obsession magnificent - and they're exactly where the enemy wants them - distracted.
You see husbands and wives cheating or leaving their spouse in the pyramid scheme.
Very successful leaders in the pyramid are alone or have divorced and remarried because their spouse either cheated on them or left them. They'll use this story as a testimony to "fight the good fight," filling a crowded room with tears as they tell the story as a victim with an evil spouse. They don't tell the other side... they're crippling addictions, the insane amount of debt they led their family into, how they dishonored their vows at the altar by neglecting their spouse and their children, how their family pleaded for them to see the light and leave - and how they refused and continued to put the pyramid before them. They'll say God lets everything happen for a reason to make them stronger - which is true, but their situation is very similar to an alcoholic losing everyone around him and saying God is making him stronger while pouring himself a drink. Those who do remarry normally marry likable, compliant, quiet spouses who won't rock the boat and will stand behind what they do.
You spend time coming up with reasons to stay with company and stick with it.
When you question whether or not you should stick with the pyramid, leaders and business coaches will tell you that you struggle with fear and low self-esteem - you're not allowing yourself an amazing opportunity to succeed. They'll call it "self sabatoge" that's rooted in fear of success and a poor self image. They'll tell you the Enemy is working against you and the blessings that God has for you. This is nasty deception from the mouths of con artists. These are lies from Hell. Jesus calls us to speak the truth in love. If your mentors continue to tell you that you have low self esteem, they're mentally conditioning you to depend on them and the pyramid. This is verbal and emotional abuse. One time my business coach said "We're not a brood of vipers." In my mind I was thinking "You spoke it, not me." Ironically, Matthew 12:34 (ESV) describes them: "You brood of vipers! How can you speak good, when you are evil? For out of the abundance of the heart the mouth speaks."
Compensation and rewards are higher for recruiting than selling.
The selling compensation may be competitive (Ex. you can keep 50% of the profit that you make from selling the product as soon as you join), but the bonus pay that comes from recruiting someone and the amount of product they purchase from the company is much higher. The company's compensation plan revolves around how to keep their sales force motivated to do their #1 profit making activity - recruiting new people. See below on how new recruits profit the company the most.
You can earn a "Free" career car if you choose to recruit and build a team - you can't earn it through personal sales alone.
Recruiting is required to earn a career car and move up the "career path" to leadership positions and earn raises with the company. Recruiting is highly compensated and rewarded so consultants will stay motivated to do it. The company provides a "lifestyle" that the consultant highly covets and desires in exchange for recruiting (Ex: lavish trips, fully loaded luxury style cars, expensive jewelry, designer hand bags, four course meals with servers, private jets, dream trips around the world, luxurious hotel stays, limo rentals, red carpets at events).
New recruits provide the most profit for the company because their first wholesale order (purchase) is normally the largest purchase they'll make from the company - this is called an initial investment for your business to kick it off - investing in product. Most recruits are expected to quit (and stop purchasing from the company), so the company tailors its incentives and reinforcements to motivate their consultants to continue to find new recruits.
Many in the MLM will "invest" a great deal of money in their business (personally purchase thousands of dollars of product from the company) - or will recruit others and place an order under that person's name using their personal money - to earn "Free" cars. But if they kept a profit and loss sheet and crunched numbers, they'd see the car wasn't free at all - a monthly payment for a brand new SUV from their local dealership would cost them less than what they're pumping into the company each month.
But most in the pyramid are in denial and fear being looked down on by their upline and downline - they fear the shame they'll feel for not earning the car or maintaining it - or feeling shame for losing the reputation they worked hard to build. So they'll do anything, even throw numbers and finances to the wind, to maintain the appearance of success and power.
Recruiting and team building is described as simply offering an amazing, life-changing opportunity to those in need, and it's up to the person whether or not they'll choose to take advantage of this wonderful opportunity like you did.
Those in need turns out to be anyone with eyes, ears, a mouth and legs and are willing to work. Amazing opportunity is a mask name for "financially draining endeavor that continues to bring major profit to the company and more debt for you."
They have a strong legal and public relations department.
They're a well-oiled machine with years of experience. All bases are covered.
Controversial articles are written about the company and controversial topics on the company air on television. Accusations come from investigations and research conducted by credible sources (Ex. ABC's 20/20, CBS News, Forbes, Harper's)
***Rough Draft Break***
Resources:
How to Spot a Pyramid Scheme
https://www.youtube.com/watch?v=VVUUbEw_Pm8
Pyramid Scheme Alert (Robert Fitzpatrick, President)
pyramidschemealert.org
Pyramid Schemes (FTC)
https://www.ftc.gov/public-statements/1998/05/pyramid-schemes
What prompted me to start research:
ABC 20/20 "Secrets of the Sell" (October 10, 2015)
http://abcnews.go.com/Press_Release/secrets-sell-2020/story?id=34176916
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