MLM Is It a Scam or Not?

The network marketing industry, also known as multi level marketing (MLM), has become one of the major controversies in the business world. Both advocates and detractors have used strong arguments defending their view.

The detractors have condemned MLM as a scam because the system falsely claims instant riches with less effort based on a "pyramid" marketing scheme that expands a business improperly by promoting too much hype and misleading facts.

They also note that 95% of the MLM business opportunities fail, with supporting evidence. There are huge profits involved only for the top performers and not for the vast majority of the distributors.

The proponents of multi level marketing insist that it is one of the best business models to create wealth without investing large capital and on a short term basis. On the other hand, they also note that it requires a lot of effort and it is not a "get rich quick scheme", pointing out that this approach to marketing has been taught as a mainstream course in universities.

Although it is not common, if ever, to find this type of course officially given in Ivy League schools, a similar course at the University of Illinois at Chicago does exist (http://www.uic.edu/depts/oee/networkmarketing/index.html ). The proponents of MLM support their arguments by claiming that there are many cases of people who succeeded in the MLM industry with a small amount of start-up capital and only by following a specific plan put forth by the original company. They also differentiate the MLM from "pyramid schemes" because the first contains a product or service with a legitimate company which supports it.

On the other hand "pyramid schemes" contain no products or services, or they include "pseudo products" in order to justify the existence of the "opportunity"

Another argument against MLM is the bogus claim of duplication. Nothing can be duplicated since every individual is unique and, under no circumstances, are we all capable of becoming top salesmen or developers of down-line, i.e. MLM marketers recruited as salesman, referred to as "independent business owners".  Actually, a charismatic salesman in the network in this scenario rises in the ranks of the pyramid by earning money from these new recruit's hard work.

The MLM advocates that duplication is possible only when the marketing plan and the tools have been advanced by the mother company in order to be duplicable for the majority of the distributors.  This implies that whenever the mother MLM company is in a position to provide such a tool, then ordinary people with little to none marketing background can copy the marketing techniques and tools and promote their MLM opportunity successfully.

Another downside of MLM is the exploitation of our relatives urging them to join our MLM opportunity which oftentimes stresses family relationships unnecessarily and is considered by many to be a dubious marketing tactic.

Some proponents may counter that there is no need to beg your relatives for sales; instead, what you need is qualified prospects who are interested in your offer. That can be accomplished by purchased targeted leads or specific advertising methods.

The list could go on. Maybe not even an exhaustive book would be enough to note all the arguments both sides deploy. Maybe the problem is the conundrum itself, in which we have to choose between demonizing or canonizing the MLM industry.  Since nothing can be duplicated, everything boils down to how the individual marketer presents his material to his prospects.  Therefore, one can conclude the MLM system is good for some and not for others, so there is no need to disparage it or support it in the first place as a third party observer.

In that way of thinking we will not find answers. Only detailed consideration of each and every MLM company would lead to more accurate conclusions and that means thorough examination of the products or services, the marketing and compensation plan, the marketing tools , and of course the company's support and background.