In the past, I’ve shared the story of the worst job I ever had. In a lot of ways, it felt like I was part of a pyramid scheme or multi-level marketing operation. I’ve been approached to participate in similar operations since then: once by my veterinarian (?!?) and once by a stranger in a book store. Sometimes you cannot tell a scam is a scam until you see it up close, and then the sunk-cost fallacy will sometimes force you to make a poor choice. GRS reader Bozemblem recently sent me this story of his close encounter with a “business opportunity” that turned out to be a scam.
I’ve been reading Get Rich Slowly for about a year now, and I can definitely relate when you talk about your struggles and triumphs with money. Here’s an experience I recently had.
I currently work and live in one of the most expensive parts of the United States. I’m going to school part-time to get my MS in Computer Science. School is very expensive, even with my employer paying a great deal of the tuition. On top of that I’m getting married next year and I have a tiny amount of credit card debt. I do a very good job of budgeting my money; I follow it quite closely and it won’t be long before I’ve rid myself of the debt. However, as you might be able to tell, money is a bit of a concern and so I’m always looking for way to either decrease my spending (which I think I’ve done a good job of so far without going crazy) or increase my income (which is much harder to do, and it is my attempt to do so which is why I’m writing you).
Business opportunity
The other night I was in the grocery store buying some items for my sick fiancee. Unfortunately, there was only one cashier on duty and I was one of an unusually large number of customers that night. As I waited in line, a nice gentleman in line behind me struck up a conversation. I spent some time talking to him and eventually we got around to talking about what we did for a living, and I mentioned that I am a software engineer. Upon hearing that, he got pretty excited and told me that he was a small business owner in need of someone with my skill set. Seeing this as an opportunity to possible earn some extra money, we exchanged number and he promised to call me the next week to talk about opportunities for some part-time work with his company.
Later that next week he called me, and we set up a time to meet. He told me to meet him at a hotel the next week; he and some of his fellow small business owners were part of a larger corporation, and he presented this to me as an opportunity to network and meet other people who may be interested in my skills. Cautiously optimistic, I agreed.
Well tonight I met this individual and had quite the experience. It slowly started to come together for me, and the saddest part about it is that those were three hours that I will never get back. Turns out, it was just one large pyramid scheme, and it didn’t matter if I was a software engineer or not.
Pyramid scheme
Here’s how the operation works: you join as an “apprentice” of another member, and you maximize your profits by getting other people to become your “apprentice”. It was disguised as an “e-commerce” (sorry for the abuse of quotation marks) operation; basically you bought your home goods from this one organization instead of a place like Wal-Mart. Everyone else you got to sign up and buy those same goods from that organization would gain you some money. And when they got people to sign up, then you would get a cut of the profits as well. As soon as I had an opportunity, I left, feeling disgusted and embarrassed.
I however, was the only one. Of the other “candidates” in the room, only I left. Everyone else seemed excited. It’s not hard to see how. The speaker was very compelling; very funny and personable. He spoke of living a “lifestyle” as opposed to a life (my first red flag). Then he talked about stuff like “how would you feel if you could drive a different car…every day of the week!” He then had us list out which 7 cars we wanted. Actually, we listed out 6. Aston Martins, Rolls-Royces, etc… The 7th car he picked. And it was the car he drove, and he implied that it was through this program that he was able to afford it. I wish I could have left right then, but I was sitting near the front and although I hated myself for being there, I couldn’t bear to be rude either.
Your readers should be aware of these operations! They may sound good, and the money may be real, but it’s all top-heavy. The ones at the bottom (ie. YOU) won’t be making all that money, but you’ll help someone else do it! Beware of the charismatic speaker; this guy was really good; going so far as to say “I don’t even care if you join or not”. Implying, of course, that he’s doing us a favor, despite the fact that he wouldn’t have any money if no one signed up.
But that one statement was so powerful, and I could tell my fellow attendees were getting sucked in. That one statement created such a sense of urgency and yet indifference on his part. He was basically saying that he didn’t need us, that he can find more people, the “right” people. And he kept talking about us being “candidates”, and he spoke often of a selection process. I’m not privy to such information, but if I had to guess, I would say that we were all going to be selected.
Get rich quick!
That and numerous other methods were employed to give us a sense of opportunity, and give us a taste of the rich lifestyle. He was damn good at his job, and I don’t doubt that he’s made plenty of money off of his considerable talents. Oh, and don’t forget the $200 registration fee, the $150 insurance costs, and the undisclosed costs of the training materials. By the way, I only got those figures by pressing my “sponsor” until he finally relented.
It’s easy to see how people can get sucked in. Everyone else was just like me; needed a little extra cash, pressed for time and anxious to explore any opportunity, we were rip for picking. I thank goodness that my dad instilled in me a sense of skepticism, else I may have ended up with the rest of them.
Unfortunately, the road to riches isn’t that easy. It’s simple, but it isn’t quick and painless. You just gotta spend less than you earn (by prioritization and reducing the number of unnecessary “wants”), save as much as you can, diversify your investments, and constantly improve the most critical investment, yourself (through taking on a variety of tasks at your job, even if they’re outside of your typical skillset and by continuing your education). Invest in index funds, open a high-yield savings account, contribute at least enough to your 401(k) to max out your company’s match and fund your IRA; doing so will provide plenty of wealth going forward, just do the math!
A learning experience
There is one positive that came out of my experience with the pyramid scheme. The speaker preached constantly about how his program is different than a typical job because it gave you “freedom”. That’s not really true, it just transfers your obligations, and it provides you with a significant amount of risk if you are one of those who chose to do that type of thing full time (and there are those people).
The bright side for me was that I realized how much I hated the lack of freedom that working in a traditional career offers. And I’ve always had an idea for a real small business (as opposed to the scheme’s definition of a small business) that I’ve always wanted to open, and I’m going to start working towards that goal. I’ve been inspired to work to free myself from work, and to get to the point where I won’t be susceptible to schemes like the one I got sucked into tonight. Perhaps not the motivation these guys were looking for, but that’s what I got out of it!
Bozemblem’s experience is similar to several I’ve had in my own life. I believe he’s right: programs like this can provide income and success to those at the top, or to those who have special luck or motivation. But for most people, they’re actually a net loss. Do you have experience with pyramid schemes or multi-level marketing? Was this experience positive or negative? What advice do you have for others who might be considering this as a way to make money? Checkout line photo by szlea. Conference photo by Jeffrey Beall.
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I’d be most upset about those 3 hours I’d never get back, too, but its happened to all of us. Just be glad you didn’t give in to the scheme and time is all you lost. Just chalk this up to a learning experience and I’d guess you’ll never be trapped into giving your time again. We’ve all been there. Good article as I’m aware some people might need this information. Sometimes “too good to be true” seems like a great thing.
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We have just had a major pyramid scheme collapse here in Finland, called (variably) Win Club and Win-Capita. Its purported businesss was forex trading, promising annual profits of up to 400% (!).
Predictably enough, it was a total scam. About ten thousand people got suckered, though, with total losses approaching 100 million euros (about 150 million dollars); quite a lot in a country of five million people.
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Please correct me if I’m wrong, but aren’t pyramid schemes illegal? If so, did this scam qualify? Thanks.
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I nearly fell for this… twice.
The first time, I was looking for a summer job and came across a company that (I discovered) was essentially door-to-door knife-set sales. The only reason I got out of it was that I couldn’t come in for the training because it was a religious holiday, spent the next few days contemplating the “opportunity” before me, and decided I’d rather be unemployed. (I did, in the end, find another job.)
The second time, a friend of mine wanted me to come check out a new opportunity he’d discovered, essentially an MLM personal finance service organization. I had wised up by then, saw through the scheme, and told my friend what I thought. He decided to stay on, however, and I suspect he probably would have made money on it (he’s one of those rare, ambitious, personable types), but eventually was forced to leave for unrelated reasons.
As for me, I’ll happily say “no thank you” for now.
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Noah, pyramid schemes are illegal, and so many scammers disguise the operation. Multi-level marketing is sometimes a thinly veiled pyramid scheme. There’s a lot of debate about this subject. The supporters of these companies believe they’re legitimate businesses. But anyone who’s ever been duped by one knows that their methods are very slimy and not very business-like at all. (I’m one of those who has been duped.)
There’s a very fine line, of course, and sometimes it’s difficult to say “this company is a scam, this one is not”.
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Yeah I did the knife thing out of college too. Actually I was prescient enough to figure out it was a scam during “training”. I don’t remember if it was day one or two, but at some point they started talking about your required initial investment in a knife set, with a scale on how much you spend equaling how much you cared about the job. When they asked me how large a demonstration model they could put me down for, I laughed and walked out.
I still get a little annoyed thinking about the experience. I lost quite a bit of time there before walking. In addition, I put myself in a supplicant role during the “interview” process. “Please please please let me be a part of your scam!”
Ah well, it was many years ago. Still don’t understand how it’s legal, but they seem to do well for themselves.
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JD,
No comment about the guest post – just happy that the site is back to working normally!!! Did you find out what the deal was?
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I had someone pull the bait and switch on me too. They even followed me out to my car — despite my protests as a single woman — and forced a package of Amway samples into the car. I couldn’t believe it. Then they phoned me up and said that I’d have to give them back, because it would be stealing to keep it. So the creepy scam artist had to come to my home. I made sure I had two other people there — and I just left the stuff on the porch.
Ick.
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@vje
The problem with the site was the Dell ad from FeedBurner. Something about it didn’t “play nice” with my site. I notice that other sites are running it without a problem, so I can’t blame the ad entirely. There’s some sort of bad synnergy there. I just pulled the ad, and things work fine.
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I can deeply sympathize with this writer. I, too, have been approached MANY times as I work in the service industry and am extremely friendly. I have been befriended and then dumped due to not joining (this instance was so painful because I really loved the friendship)that it has made me literally hate anyone even starting one of these conversations. I refuse to take part at any time once the conversation turns to this. We even had a family “befriend” us at DISNEY WORLD (not the painful experience, that guy spent 2 months working up to asking me to join his “group”) we spent the day enjoying this family only to realize at dinner that it wasn’t our super cool family that drew them to us they viewed us as potential income – HOW SICK IS THAT! I have nothing but pity for people who earn a living that way, turning off people around them who could possibly be a real friend…viewing people and friends as income rather than the wonderful person that they are. YUK!
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This happened to me once as well back when I was 18 and fresh out of high school. I was at Office Depot looking around when another customer struck up a conversation by asking me what I thought about a piece of software. He then asked if I worked with computers and when I said yes he seemed delighted and implied that I might be able to be of assistance to him and some friends who were working on an internet business. He asked for my card and said he would give me a call. The next day he called up and said they were getting together for a meeting and asked if I would stop by. When the address was for a hotel I started to get skeptical. When I got there I knew something wasn’t right but at the time wasn’t aware it was an MLM scheme. After the whole spiel about getting rich and crap, my “sponsor” invited me to Pizza Hut for a bite to eat. By that time I realized I had wasted the past three hours of my life, but thought maybe I could at least get some free pizza out of it….. I was quite shocked once we got there and had to come up with $3.99 for my own pizza. I mean, when they deceive you, take up your time, and invite you there because THEY WANT something from YOU, you’d at least think they could cover your pizza. I guess they spent all their money on their invisible fancy cars. Luckily my parents had wisdom from experience to warn me away from getting into it.
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I’m actually going to take the positive on this one. I’ve been doing MLM for about 2 years. I have a very well paying job, but it’s not something I want to do for the rest of my life. I saw MLM initially as an opportunity to make some extra money so I could enter the real estate game.
The MLM industry as a whole has an awful reputation, and rightly so. It’s unfortunate that people prey on the hopes and dreams of others. I’ve seen it myself. There are a lot of lies, and there are a lot of scams.
That being said, a MLM “can” be run as a legitimate business, but I’ll agree that most of them aren’t. I’ve spent a considerable amount of time and money to develop ways of doing it that work for me. I don’t bother my friends and family. And I really do have a selection/application process. I don’t “hype” people up just to get them to join. It’s honestly counterproductive and not worth my time to continually convince someone of the “great opportunity” that they have. I don’t have meetings in my living room, and I don’t bother people in the checkout line at the grocery store. I DO tell people that is NOT easy, and that it IS a lot of work.
I’ve definitely had my ups and downs, but as a whole I would say that I’ve had a positive experience. But you do need to sift through the lies to figure out how to really make it work for you. MLM is a marketing and leadership business run by people that have no idea how to market or to be a leader.
But, if you have the desire to learn and are willing to make the monetary and time investment required, AND find the right fit for you, then you can be successful.
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About 12 years ago, I was living near my parents, and they moved out of state. A couple from their church called me up to ‘check in on me’ when my parents moved, and invited me to lunch, etc. I really did think they were just trying to be kind to the daughter of their former church members, but no — no sooner were the plates cleared but they started in on trying to get me into their Amway-like business (it wasn’t Amway, but was very, very like). They gave me a bag of little samples to try – everything from chewing gum to face cream.
I realized the ‘business’ for what it was, and opted out, politely. And then they demanded, very coldly, that I give the little bag of samples back to them. And they never spoke to me again, once I dropped off the unused samples.
More recently, my neighbor invited me to a ‘green’ party – I was given to understand that it was a Tupperware party or a candle party — someone would come in and tell you about their product, and you’d buy something, and that was that. Unfortunately, it was for Melalueca — we couldn’t buy anything unless we joined up and started recruiting others. Sheesh.
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That’s an old joke: A guy sees an ad in a local newspaper, “Make $1000s at home in your spare time! Send $5 for complete details!” So he sends in his $5.
A few days later, he gets a photocopied brochure in the mail. It reads, “Step #1: Take out ads in local newspapers…”
Many of us dream of starting our business, but whether or not we ever try it, most of us wind up working for someone else. Think about that before risking your time and money.
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I’m not big on MLM. We’ve been approached by friends to join Amway (and others). It is pretty easy to see through the hype, especially when you see how little money they really make. Hmmm…If you make next to nothing, why should I join?
My wife did well in Mary K a decade or so ago. She made some side money, but we quickly realized it was just a sales job. For the time and effort it took, you can make more elsewhere without alienating your friends.
We also know a couple that are serial MLM junkies. Both are smart and capable. They are just looking for immediate gratification. Instead of spending their time and energy building a real business, they fall for the next scam. The latest cost them their savings and put them almost six figures in debt.
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I had the same thing happen to me. A guy at IKEA said I looked familiar to him and we got to talking about where I’m from and as it happens he is looking for new people for his business. I ended up going to his house and have him and his wife use all the sales lines in the book. Fortunately for me I’m a psych major and all those tricks didn’t work. Beware of people coming to you unsolicited. No serious employer looks for employees in the mall.
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I applaud this blog, i think people just sharing their stories can help naive people like myself from falling into what to others know is an obvious MLM scam.
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I did scAmway for a while in college. I was recently unemployed and living on student loans and my sponsor insisted that I sign up for their tape series which came out once a week. I found out later that tape sales is where the real money is in this MLM scheme.
I now just laugh at people who try to recruit me and when they say it is not the same old Amway, I say “sure, sure of course”.
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I ended a three-year relationship with my boyfriend when he got sucked into Amway. He was buying all sorts of overpriced, mediocre products and going to weekend conventions that sounded downright creepy. Each day, they would listen to motivational speakers for 7 or more hours at a stretch, with cheerleading and chants like “Go Diamond!” or some similar nonsense. He had an answer for every objection I had, as if he were reciting from a memorized script. It freaked the heck out of me, and I couldn’t handle the radical change in his personality once Amway got a hold of him.
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I fell for a scam called 12 Daily Pro a few years ago. I actually probably knew that it was a scam – many of the questions on their forum were about if it was a scam, so the seed of that idea was definitely planted in my head. But so many people had proof of payment! The way it worked was you would send them money through eGold or StormPay (both hard to deal with, so that should have been a tip too), and every day for 12 days you could earn 12% on your payment, provided you did 12 minutes of auto-surfing, so you really get 144% of your investment after the 12 days. It was incredibly easy, and it was set up more to seem like that was the main part of the program, and if you happened to refer people, you could make more. I actually did this with only a $120 initial investment for about 4 months, and made a good deal of money on it. Finally, I decided to go against my better judgement and put another $500 of new money (rather than reinvesting based on my initial $120 + returns). That week, they shut down. I don’t care that much about losing the returns I had made through their program, it bothers me that I stupidly lost $500. The reason I had only put $120 up front was that I felt that was an amount that if I lost it all, it would be ok. I should stick to my guns in the future.
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you said “as soon as you had an opportunity” you left. why wasn’t it 5 minutes in, or were you just being polite? i hesitate to think i would have stayed 5 hours!!!!
i had a friend who had a similar experience and it ended up being a door-to-door sales job!
people will try anything when they know their “ideas” stink.
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Yeah, I actually just went through a similar experience. Like you, I’m in a position where I’m working on my debt and being careful about money, but looking for ways to increase my income.
I work a second job part-time at a bookstore and I ran into a guy there that I recognized from college. After some brief conversation he talked about how his his student loans were already paid off and bragged about how much money he was making. I was immediately skeptical, but I exchanged contact information with him anyway.
The meeting we had a week later only confirmed my suspicions. A quick Google search reveals how many lawsuits the company had been involved in. I was embarrassed and angry, as well, but at least he only wasted 45 minutes of my time (as opposed to 3 hours!? Hot damn!) before I got out of it, which itself was still 44 minutes too long.
I think the worst part about it for me was that I found out that a good friend of mine who I lost contact with when I graduated was involved with his “company”. I hate to know that she’s wasting her time with this when it’s taking away time she could spend with her young daughter.
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I too have been tricked to going to one of these seminars and actually signed up. They are very convincing, and I was in college trying to make some side money. One of my friends was just so excited about it and she’s a smart engineer herself, so I believed in it. Luckily, I got out before I lost too much money. My friend still participates but only makes about $100-200/month, hardly worth the time and feeling of guilt by begging all your friends and family to waste money.
No more pyramid schemes for me. I will just focus on doing what I love to do and not focusing just on money but also happiness (in which money isn’t really required).
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About two years ago when I moved to Orlando I took a job as an event planner and I was basically someone who rented out the hotel space and projectors and stuff for this type of thing. A friend of mine had got me the job and when I first started I felt kinda dirty about it. But I checked into it and all the stuff that we helped out (we were like a promotion service for speakers kind of like this guy – we did all the set up and he toured the country. It was a big company with about 7 different “programs” that we did the promotion for) and they were all on the up and up. Nothing illegal, nothing pyramid – but since a lot of the tag lines were of the “lifestyle” type, it felt like it was.
Anyway, what finally made me feel okay about working there was that the programs that we sponsored really could make you rich REALLY fast – the one thing that they forgot to mention was that IN ORDER TO MAKE IT WORK YOU HAD TO WORK YOU A$$ OFF!! Sure you would “be your own boss” but that meant you were also your whole work crew! There were people who made millions at the conferences that we put together once a year, but they worked like 7 days a week and like 80 hours a week! If you found a regular job that paid half way decent and worked that much you would have a ton of cash too!
Here are the typical programs that we did that have the feel of a get-rich, but are really more of a work-your-butt-off-after-you-buy-our-expensive-instructions-and-start-up:
*Note – these are people who BOUGHT the program and actually did all the work to make it work. The crazy 80 hour a week people.
1) By far the people who made the most money were people who did debt buying. You find some person or business who has someone who owes them money. Like if you owe Bob $100 and Bob REALLY needs that money now, I say – “Okay, I’ll pay Bob right now for you, but instead of the 5% interest you were going to pay him – you have to pay me 10%.” And then the real work came in when you had to a) find where to get the pay off money to start with and B) find a bank to buy the debt from you so you don’t have to wait to get your 5%. Tons of money to be made, super super hard to do and get started.
2) Stock trading software. Yes, you can make tons and tons of money trading stock. But you need the money to invest in the first place, spend hours pouring over the info the software gives you every day, and PRAY for no slips in the market.
3) Buying and flipping real estate. Everyone knows how this one works these days. Although the current market really put a dent in that one…
4) Drop shipping on ebay or affiliate selling. You basically work as a store front for a supplier. Kinda think of yourself as an outlet store. How many times have you clicked on a small web sites “buy now” button and ended up at a bigger store? The big store actually sells the item and the little web site gets like 3% of the commission or something like that. Not a bad way to go if you have good traffic on your site – but the ebay route takes a lot of work, and you need to have things that people actually want to buy!
Those were the four biggies that we worked for and they made millions of dollars every year just selling the software, instructions on how to get started, and a super awesome, sell an eskimo ice type of personality.
It wasn’t illegal – but it was kinda like me telling you if you give me $3000 (about the average start up cost) I can tell you how to become a millionaire. Then after the check clears I give you the name of a good medical/law school that you can go to.
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Isn’t Quixtar based on a pyramid scheme? I have a few people that tried to get me to join that program.
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Carrie,
Your story sounds so familiar.My parents were in Amway for four or five years during my childhood, and I get sick to my stomach any time I hear someone’s story (positive or negative) about MLM/pyramids. They did the tapes, the bi-weekly “open” meetings, the monthly seminars and the annual national conferences. I swear they spent 5x more money on motivational materials than they made through Amway.
Recently, Amway (now Quixtar – we were there for the switch), got in TONS of trouble because one of the huge Diamonds came out and said that the majority of the money that the multi-millionaires in Amway made actually came from the motivational tapes and conferences, NOT the products and the recruits. It was a huge split, and I’m pretty sure several lawsuits came from it.
Amway/Quixtar is not a business, it’s a cult.
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Chris, I think your final assessment “cult” reflects a lot of what I’ve seen from reading about Amway/Quixtar online.
There’s a whole mentality and culture that one must buy into. One isn’t an individual business owner at all…because one’s success is wholly dependent on working within the system. And, as you say, the tapes bring in a lot of money.
Also, many report having been led to believe that they were doing it wrong when they didn’t get rich despite hard work (40-hour weeks on top of 40 hour regular jobs before they quit the regular ones). Because they thought everyone else was succeeding when everyone else was trying to look successful…because they also felt like losers. So many people with the same problem and all of them thinking they’re alone.
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Right on! A good friend’s father suckered me into my wasted evening…. “Golden Products”, which became (I believe) Amway.. “Can’t tell you anything about it. You just have to come and listen and see if it’s something you are interested in.. ” Never again!
Thx jegan
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I was sucker 18 years ago. Just out of college. A friend of mine mentioned an opportunity to sell water and air filters. NSA was the MLM company. I probably spent $500 on the products, and couldn’t even get my father to buy one! Obviously, sales was not my future.
The time wasted at the sales pitch wasn’t an issue then. But that $500 was more than I had at the time.
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just like about everyone else I have been recruited by some of these companies. My most recent one was by Primerica – basically a financial services MLM. I wrote a post about it because I was so torn in my decision making process since it really seemed to helping people – but it was still MLM.
It is amazing the varying opinions that people have about MLMs. It seems that you either love them or hate them.
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oh god, this happened to me in the 80s just out of high school. I was looking at books in the business section of this bookstore and this guy starts chatting me up and asks what I’m looking for and invites me to what ended up being an Amway (now Quixtar) pitch at this house where the only furniture in it was folding chairs, which should have been my first clue. Then I kind of lost a friend over her involvement with this MLM called MarketAmerica. We still email once in awhile but I really thought she was smarter than that. Even the trainer I hired last year was pushing MLM Advocare supplements too hard for my taste so I fired him after a month. these scams are pervasive and the scammers are slick and persuasive. “your own business” is a crock; you aren’t a business, you’re a revenue stream for the guy who sucked you in.
Amway: be your own best customer! sad that these kinds of companies are still able to operate. Amway has pretty deep political roots and throw money at politicians so they’re probably safe.
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Thank you for posting this! I was between jobs after college and down to my last few dollars when I was approached by an old college friend to join his MLM scam. He heard I was without a job and wanted to ‘help me out’. Ironically enough, it was for a pyramid scheme to sell of all things.. investment vehicles ala insurance and 401K. Some of them seemed legit, some not.
I checked out the ‘monthly meeting’ of associates and ran smack dab into the charismatic speaker, group chants, $1000 entry fee (with little to no training) and of course the personal testimonies of people that ‘made it’. Smelled fishy and I chose against it.
The worst part about this experience is that my old college buddy (and now ex-friend) who was wrapped up in this MLM DROPPED MY NAME MULTIPLE TIMES to prospective clients and even referred to me as his old college roommate to help induce trust from clients. Funny, we went drinking a couple times and now I magically became his former college roommate. He smeared my good name to sell shoddy insurance and sign up apprentices. Sickening!!
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I hate MLM schemes. My husband was a Vector (Cutco manager) for a summer and it was a disaster.
On the other hand, though, I do buy Mary Kay and Avon products occasionally. I feel like make-up is one area where it is good to make personal sales. I will never sell it, but I really like the products.
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There are many legitimate direct selling/network marketing companies out there such as Mary Kay, Avon, Tupperware, Pampered Chef, Discovery Toys, etc. In fact, Warren Buffet has recently bought Pampered Chef. Now if the richest man in the US bought a network marketing company, there must be something to this. There are more millionaires made in the network marketing industry than in any other industry. I personally have bought products from all of these companies. Even in regards to Amway, the FTC challenged it in the 70s charging that it was an illegal pyramid scheme. Amway successfully prevailed in this challenge proving that it was perfectly legal. From that point forward, networking marketing really took off and is a legitimate business model. Although some tactics used by a minority of distributors can be unsavory, the vast majority are honest, hard-working people who want to improve their financial situations and hope that their friends and family will join them in the journey.
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To all of you that have had negative experiences with this industry:
Just because you personally have had one bad experience with a particular individual does not give you the right to say that all Direct Selling/MLM/Network Marketing companies or individuals are the same way. For example, I wouldn’t say that all cops are “pigs” and immoral just because of a particular run down with one cop, right?
Since starting up in a network marketing company a little under two years ago towards the end of graduate school I have made over $100k outside of my job income only working my business part-time. I am not one of those “guys at the top” nor do I make all my money off the tools (I have made zero off tools personally — I have no problem with somebody making money off of tools, as long as they are enabling people to make money themselves).
Either way, I just wanted to add my personal experience that networking marketing is not as bad as everyone on here makes it to be. Yes, there are some idiots out there that do run scams, but for the majority it is a great opportunity for people to earn extra money.
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By the way, 12DailyPro is an autosurf and NOT an MLM/network marketing company. The autosurfs and hyip’s are illegal pyramid schemes and most people lose their money. The SEC is aggressively shutting these programs down. They promise ridiculous returns on money that you “invest” in advertising packs. There’s no product involved whatsoever. They are purely internet-based, so you would never meet anyone.
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Justin: Thanks for the straw man, you definitely sound like the MLM type.
Here’s the breakdown: For many of us, it’s not just one experience but many with the industry(not company X) that creates our views. Secondly, for those who have had a single experience, how violating does it have to be before we have the “right” to speak on their ills? Third, you don’t have to say all cops are pigs because of one bad experience, you say, “every experience I’ve had with the police has been unpleasant”. Or, relevant to this discussion, every experience many of us have had with MLMs have been wasteful, insulting, and predatory. Check your morals at the door and sell all the snake oil you want, but don’t be too sad when you’re called out on it.
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If Amway is so big and great, then how come they are not more popular. i went to one of their meetings once, it was creepy and looked like some mind control setup to me. I am not saying its illegal, all I am saying that its creepy and weird….
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@ Todd @ WB:
“you said “as soon as you had an opportunity” you left. why wasn’t it 5 minutes in, or were you just being polite? i hesitate to think i would have stayed 5 hours!!!!”
Yes, he was being polite. That’s one of the biggest ways MLM sleazeballs take advantage of good people; they make you seem like you’re rude if you walk out.
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Wow, good for you for walking out. I sometimes want to tell people who believe these things that there is a reason we’re all not walking around rich right now!
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I once had a stranger called who said my friend “so and so” gave her my name and said I might be willing to help a young lady get credit for a scholarship. The more people she showed these kitchen items to, the more points she’d get for this scholarship opportunity.
If she hadn’t mentioned my friend’s name, I never would’ve done it. The girl comes over, and ends up bringing a suitcase full of Cutco cutlery. In the interest of being nice, I let her in and let her do her spiel.
It took about 45 minutes before she got to the actual selling part..very clever trying to establish a relationship with me first. I guess she didn’t notice my butcher block set of Henckel handcrafted knives either…or chose to ignore them. I excused myself for a minute, ran over to the computer in another room and checked eBay. The kitchen shears I liked were 1/3 of the price on eBay…well, at least they held up their value more than most items.
After I declined to purchase from her, everything quickly went downhill and her demeanor changed to something I can only describe as loathing. Off she went in a huff, and I sat down and bought a pair on eBay..and I must admit, to this day, they are the best shears I ever had.
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I, too, just had a run-in of the Cutco kind. I actually was duped into spending over $100 on stuff I really did not need. The person who came over originally lied and said they just wanted me to critique their selling presentation which was really just a means to get inside my house. This kind of sleazy behavior to make a buck just makes me sick. The Cutco presentation represents the LAST TIME I will ever entertain any kind of MLM garbage “presentation” because, right before that, family members I hadn’t seen in YEARS duped me into joining Xango (the “miracle” juice) and I lost over $300 on buying juice with that one.
I already have a People Pleaser Complex as a result of my rough childhood and so I have always been an easy target. I would really like to get that PPC under control before I leave this earth because it drives me crazy.
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One summer in college I went to one of the infamous ‘knife sales’ meetings because I really wanted to avoid another stint working fast food. (I was naive.) As I started to walk out, the sales guy shot me daggers; I was pleasantly surprised that almost every person in the room followed me.
Some of them told me that they had felt weird about the situation, found themselves hoping that when it came to the ‘interview’ portion of the meeting that they wouldn’t be chosen, but also felt strangely compelled to stay.
I think they make good use of (exploit?) people’s habitual politeness and the cognitive dissonance experience that “I wouldn’t be sitting here if this were truly a load of crap” etc.
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My last year in college, I lived with a couple that was sucked in to Quixtar.
They bought in to the concept 100%. Traveled all over the country to go to regional meetings. Easily put in about 30 hours a week in addition to their regular (full-time) jobs. They bought “training materials” in the form of cassette tapes (new ones every week IIRC) and books.
What did they get in return? A few hundred dollars at best. And that’s before the expenses of gas, training materials, and meeting costs. Their net was very, very negative. (Interestingly, they were actively discouraged from tracking this information by their sponsors).
The only positive thing I can say is that they’ve built up some really strong cold-calling and people skills.
(As an aside, I know a fair number of people with seven digit net worth and even one venture capitalist who has nine digits to his name. None of these folks made their money through an MLM.)
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Bozemblem, I love you.
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So what do folks know about Prepaid Legal? I’ve got a brother-in-law who falls for every scheme that comes down the road over the years and is ALWAYS trying to sell us something or recruit us for something. From green mossy herbal junk to oxy whatever, he’s sold it all thinking he’d found the money pit. It’s too bad because he’s otherwise OK, but we all avoid him because every conversation turns into a sales pitch. His latest obsession is Prepaid Legal. I can’t find what I expect to find (negatives and warnings) by web surfing. But he’s pulling my 81 year old mother into it and she doesn’t want to hurt his feelings. Should we step in or keep quiet?
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I’m from the hometown of Amway/Quickstar and had the opportunity to work for the COMPANY one summer as an intern in public relations so I got to write all of the stuff the “distributors” used to sell/defend their way of working. I liked that job b/c it paid really good over $10/hour. However, I remember there being big talk about taking away the employee store where they sold damaged products at deep discounts (i.e. the label was off on the bottle) b/c surprise, surprise none of the employees wanted anything to do with the sales side of the business. My conclusion at the end of the summer I like Amway products but not enough to have to put up with the MLM system. I’ve run into “distributors” since then and have explained my stance but they just don’t get it why I want nothing to do with the selling side. Why don’t I want to get rich working for myself, maybe b/c I feel I can get rich fasted the old fashion way by living on less than I make.
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“There are more millionaires made in the network marketing industry than in any other industry.”
The MLM industry never made more millionaires than other industries, and it makes even fewer now because markets are saturated.
“But, if you have the desire to learn and are willing to make the monetary and time investment required, AND find the right fit for you, then you can be successful.”
This is true, but it is even more true of lemonade stands, since the average lemonade stand turns a profit and the average MLM-er loses money. Smart, friendly, diligent people will do well in everything, and they’ll do even better away from MLM. And if unsuccessful network marketers didn’t have “the right fit”, well, that is because all the “right fits” were snapped up years ago by the top of the pyramid.
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I have been involved in three separate MLM operations: Quixtar, Pre-Paid Legal and Melaleuca. You immediately get pressure to become a reseller and once you do, you realize you’re “supposed” to go to all the meetings and seminars. But, since we own our own legitimate IT consulting business and have two young children we don’t have time to do the meetings–thank goodness! And, in my opinion, the scam part is that the money is made in the seminars, books, tapes, etc. that the unwitting participants buy or in getting people to agree to be resellers and pay more money rather than just buying products. However, for each of these companies, I’ve liked some of their specific products and services but in the case of Quixtar and Melaleuca the majority of products are overpriced and available elsewhere. I love the Quixtar energy drinks and the Melaleuca “Melgel” but it’s so easy to buy reasonably priced tea tree oil ointment at the health food store instead of through Melaleuca, for example. The best one has been Pre-Paid Legal. We’ve had some contracts reviewed, were able to collect some money owed to us and plan to use the law firm for more contract review and collection letters. That is definitely money well spent since independent lawyers/law firms would charge so much more for what we’ve needed. But, it does depend too, on the rep. I’ve met the “slimy” ones but I’ve met a few decent ones too. Sadly, I’ve decided to avoid one particular friend of mine because she has become a Melaleuca rep and then pressured me to do this and that–no thanks! I’m hoping she’ll return to her senses soon.
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I have been involved with two different MLM companies. Both of them were services so there wasn’t any inventory to purchase. In my opinion, they are both reputable companies (one of the NYSE so at least financially reputable). I did find out that neither company was for my wife and I. I felt extremely uncomfortable selling to family and friends and thus discontinued “educating” people on the products.
MLM companies do get a bad rap, but it’s not as if there isn’t a reason for the bad reputation. In my opinion, there are a few companies that have had questionable selling techniques and questionable products, but there are also some MLM companies that are legitimate. There are a few things to take into consideration when deciding on a MLM company:
1. Are you interested in selling to your friends and family? A lot of them say you are not selling, you are educating or informing, but let’s call it what it is, sales.
2. What sort of turnover rate does the company have for it’s “distributors”?
3. Do you have to purchase inventory?
4. What are the startup costs? What are the monthly costs?
5. Are sales increasing or decreasing?
6. Are you providing a product or a service and what other competition is currently out there?
7. A lot of MLM companies sell vitamins and such. Where is the scientific proof that these vitamins provide benefits? Let’s see the facts! Let’s see the medical studies!
I have a few friends that have done VERY well with MLM and that is all they do. In the end, I found out it was not for me. I tried two MLM companies based on the criteria set above. There was only a small amount of money for entry (I’m cheap). One of the companies provided a service that was cheaper than the established companies. The only downside is that there was competition. The other MLM service company provided a service that was not readily available to the public and I actually use the service on a regular basis and has served me well.
That’s my 2 cents!
Cheers!
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