MLM Scams Flourish During Economic Decline January 21st, 2009
Utah has been named America's scam capital. Some useful advice for anyone considering joining a multi-level marketing company.
by Rebecca Edwards
Tahitian Noni Juice, USANA, Nu Skin, Xango -- all are names that most Utahans know. If you have ever driven southbound on I-15 toward Provo then you have seen the proliferation of multi-level marketing (MLM), or pyramid scheme companies, that are booming in our state. In fact, Utah has been named America's "Scam Capital" by pyramidschemealert.org
During a time of growing unemployment and economic decline, these companies are becoming more dangerous than ever. As one of the many who have become unemployed in recent months, I have run into these MLM companies again and again in my job search. Most of them place a misleading ad on a job search website such as Monster or craigslist. The ads usually don't mention the company's name and while these companies will respond to a resume faster than anyone else, they often never disclose their true business or identity until hopeful job seekers show up at a large seminar-type meeting that was billed as an "interview."
All of these companies promise large payoffs for minimal work. They present miracle products and a string of heart-felt testimonials from perky converts who joined up and claim to be making tens of thousands of dollars each month and are eager to share how you can do it too! According to worldwidewarning.net, these types of companies are the fastest-growing class of white collar crime in America.
A perfect example is Melaleuca (the wellness company), a company I actually joined. They depend on aggressive recruitment for growth and the pay plan indirectly rewards recruitment over sales of products. If you don't sign up other people to sell, you won't make any money. In addition, it is very difficult to get out of Melaleuca once you join. I tried to cancel my "membership" three months in a row before it finally went into effect. Because I used my debit card to purchase my initial sales kit, they continued to bill me each month for products that they automatically sent. I had to read the contract multiple times to finally figure out how mail an appropriately worded letter to the right address during the right days of the month in order to get out.
While the majority of these companies are product-based pyramid schemes some, like Pre-Paid Legal Services, promise that you will become a business consultant or advisor. Offering to teach you everything from investment advising to strategic business management, these companies appeal to people who want to be a top-level executive or successful business owner without needing an MBA or any business experience. Usually, for an investment of up to $6,000, starry-eyed recruits will receive a briefcase full of materials, three days of training in a workshop, and a year of online and/or phone support from a mentor. After that, it is up to the individual to find a way to make their investment (which many take out loans for) pay off. In a time of fragile economic conditions the big promises sound appealing to people who are looking for work and getting more and more behind in their bills.
Utah leads the nation in concentration of recruiting MLMs. The combination of unemployment, economic downturn, and fear provides the perfect climate for them to flourish. While some people do become financially successful by joining an MLM, many of them are unscrupulous and take advantage of desperate people who feel they have nothing to lose.
Four Questions to Ask Before Joining a MLM
- How long has the company been in business? MLMs like Amway, Avon and NuSkin have developed brand recognition, which helps a great deal in finding new customers.
- How much time do your best sales reps devote to sales each week? The easiest sales ploys are those that promise minimal effort part-time. The reality is those who succeed are often those who already have extensive networks and devote their full-time efforts to their sales.
- How comfortable are you in asking your friends for sales and money? If you don't hit up your friends and family, then don't bother. Utah is a MLM capital because many in the dominant faith have no problem baring their testimony about a great product to their extensive family. Starting in MLM will require you gain your sales confidence and refine your pitch on family members and friends.
- Are you self-motivated and do you really believe in the product? Xango has become a giant success due to the hyper-enthusiasm of its sales representatives. The corporate culture is soo crazy for the juice it makes one wonder if Xango is more than just tropical berries and Mangosteen. Self sacrifice and the will power to knock on doors, make phone calls to strangers and maintain charisma are key.
Reader Comments
John Gillis
I've been a Melaleuca customer for 14 years. I have just been buying exceptional products at resonable prices.
from Kathie Bischke
I have always shied away from anything that doesn't tell the truth up front, because I feel if they'll lie to get you to the meeting they can't be trusted. I don't want to work for somebody who lies to get you to join them. Several years ago I was invited to a home when I got there I found out they were selling Amway. I clammed up and they couldn't sign me up. I hate sneaking around, and lying.
from A B
There's a lot of companies out there that people will get hurt in. That's why people have to be careful of MLM. However I've been with Melaleuca for close to 5 years and I haven't seen one person get hurt. When the person that wrote that article about their experience with Melaleuca, I had to comment. Melaleuca is helping alot of families if the people are willing to help themselves.
