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You can picture the wide, innocent expression of the sales associate, “Scam? What is MLM scam?” If you’re like me, you nearly fell into a few of them. The excitable nature of the seller! The marvelous products that everyone will want! People practically throwing money at you! The fast and glorious riches!

Maybe you were shown a book full of millionaires and their stories. The videos of overly enthusiastic sales pitches and the almost huggable nature of the person in front of you make you feel almost guilty if you refuse.

After all, there really are millionaires in the MLM industry. Do you know who they are? The owners! The founders and early joiners are the ones with all the money. They take yours, give you stuff to sell, and expect you to recruit more suckers, umm, I mean associates.

Multi-level marketing. MLM on the touch screen with a blur financial background .The concept MLM, multi-level marketing

What Is An MLM?

The People

MLM technically stands for Multi-Level Marketing. Imagine, if you will, a pyramid – yes, like the ones in Egypt. At the very top is this one person or family who does nothing except lay around and get hand-fed grapes. Maybe once in a while they have to sign a paper.

Below these monarchial beings, you have the early joiners. Some of them still work, others lay around and soak up the passive income from those below.

Below the early joiners are people who aren’t doing too bad. They got involved before the masses arrived. Then on down further and further you get people who make less and less, and yet they work harder and harder.

The Products

Whether it’s perfume, groceries, clothes, CBD oil, or something else, the product is a valid item that some people actually want to buy. For some of these, the market is endless. Who doesn’t want detergent and toilet paper?

The founders have either designed or bought the rights to a desirable product or products. They engineer the manufacturing and sales processes. Things are placed in attractive boxes and the next lower tier of marketers are brought in to start selling.

The product, let’s say perfume, sells for $20 per ounce. It smells amazing! The founders find sellers who are in agreement that it’s worth the money. They buy the perfume and sell it to others. These people buy perfume and sell it to yet others.

Each level of others we mentioned gives a percentage of their earnings to the person who recruited them. Whoever they sell to gives them the same percentage. This percentage may be 10% or 20%, but it definitely adds up, the more people who are under you.

What if you just want the perfume? I can’t imagine my stuffy neighbors or poor relatives wanting to buy and sell perfume. I just like the smell. Can I just buy an ounce of it?

Technically, oh sure. Absolutely. Sellers must sell things, after all. I need to find a seller, but it may require a phone call or an email. I can stress all I want that my only interest is the ounce of perfume, but guess what?

NO ONE is going to show up at my door and just sell me a box of perfume. They want and are possibly required, to come in and give me a huge speech. Maybe I’ll even get a free bottle of perfume if I sign up.

Here’s some news. That bottle of perfume won’t be free. I’m going to have to buy merchandise to sell. In other words, I can smell pretty while I try to convince others to buy some from me PLUS join the MLM.

Well, for all you salespeople out there, this isn’t happening. I’ll wait for the marketer to arrive. Then I’ll open the door just a crack and say, “I have a bad cold” or maybe pneumonia or even AIDS. No one is getting in. Leave the perfume by the door, take my money, and leave. Oh, still talking? Bye! Door shuts.

No, they can’t come in to use the bathroom or get a drink of water. There’s a gas station right around the corner. If you let them in, have fun convincing them to leave.

Legal Issues

You most likely have heard the term pyramid scheme. Well, technically, a pyramid scheme is illegal. That’s because it was used to define the process, otherwise known as a Ponzi scheme, of having one person give you money. You give the person who recruited you a portion of the money. The person you recruited gives you a portion of the money he gets.

Eventually, pyramid schemes cave in on themselves. There is nothing for the people at the bottom when they can’t find another person to give them money.

As long as these people are selling a real product, the MLM is legal. It can be pencils, televisions, vacuum cleaners, or software. It doesn’t matter; if you are giving someone real money, they must give you a real product or service.

MLM companies and their marketers do get sued. If they always lost, there would be no more MLMs. You gave them money of your own free will. You signed the paper of your own free will. In exchange, you got perfume and a starter kit. No one robbed you. If you didn’t read the paperwork, that’s your problem.

That being clear, MLMs do occasionally lose. It’s a corporation. If the MLM loses, you lose. Not everything is lost, but people on the bottom aren’t going to get rich. People on top aren’t going to get poor unless the loss is savage.

PARIS, FRANCE - OCT 20, 2015: Woman unpacking unboxing cardboard carton box with protective foam pads inside after buying ordering online via internet Multi-level marketing products from Amway


Here are some examples of MLMs. Don’t go near them! Even if you come in toward the top, do you have the ability to look yourself in the face after knowing how many people are going to be ripped off because of you?

  • Amway
  • Avon
  • Herbalife
  • Juice Plus
  • Medifast
  • Qnet
  • Tastefully Simple
  • Xango

You may be thinking about the glorious products offered by some of these (and numerous other) MLMs. Great. I admit that some Avon and Mary Kay associates will be content to have you just buy some makeup without pushing you to join the MLM.

Tread carefully, though. Have you ever met a shy Avon Lady? Be sure and check any MLM company online at the BBB or find unbiased reviews. Best wishes!

A Better Way

If you believe you have the patience to wait for the money to come rolling in, but don’t want to go around pushing people to buy things, I strongly recommend affiliate marketing.

Don’t be scared of the word marketing. No pushing or annoying people is required. Get yourself a free website and join a business that offers free training and support. Yes, FREE!

However, if you decide to pay for additional web support and extra training, among other worthy benefits, there is currently a major Black Friday sale going on at Wealthy Affiliate.

I strongly encourage you to look this program up. Check other programs too, if you’d like to compare. This deal won’t last forever. BUT, if you want the completely free option, join anytime and stay as long as you want. You will NEVER be asked for credit information!!!!! Buying will be an option whenever you feel like it. Check it out!

6 thoughts on “What Is MLM Scam? – MONEY LOSING MADHOUSES

  1. Nice article on MLM programs. I have been in several over the years, although it’s been about 15 years since I was last involved. It took me that long to finally realize that it was not an ideal way to make money. I had some success with MLM’s, but I was always having to recruit harder to make up for the people that dropped out because they wouldn’t work, and weren’t making any money. I agree with you assessment to avoid them at all costs. Thanks for sharing, and good luck, Tom

  2. Thanks for this very informative post. It is nice to know that there is a site where I can go to get real information on scams. I say this because there seems to be a lot of scams online.
    I will be reviewing your site a lot now. I appreciate your honesty and will be looking into affiliate marketing with your help.

    Thanks for sharing.

  3. Great article

    I was in MLM for a Year and I can relate to what you are saying about “looking yourselves in the mirror knowing you scammed people”.
    This was the main reason I decided to quit the program all together.
    Thanx for your review

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