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MLM: Who wants to be a multi-level millionaire? |
This article was written as a 3-part series on MLM (multi-level marketing) but only one article - an expose by ex-MLM agent Malcolm Lim - was published.
Skin care
Would any man buy $980 worth of skin care products? Normally no, but maybe yes if he does it for the love of a woman. Or for the love of money.
Welcome to the world of multi-level and network marketing, where men who do not give a damn about how they look happily buy close to a thousand dollars worth of skin care, where the sickly are dispensing health and where fervent Catholics are "investing" in gold medallions embossed with the image of Pope John Paul II.
Housewives and doctors, clerks and stockbrokers... everybody seems to be in the game. They do it for one main reason - to become rich. Hopefully very rich!
Internet surfers are in the game too. For just one of these schemes, almost everyday I receive invitations to participate.
It works like this:
- Buy a set of five e-mail reports for US$5 dollars each, $25 altogether.
- If you can then encourage another 10 people to join, each would buy a $5 report from you and you would receive $50.
- If each of these 10 people get another 10 to join, 100 people would buy a second $5 report from you. You would get $500.
- Another level down, there would be 1,000 people each buying the third report from you. You will receive $5,000.
- Two levels later, you would be at the top of a 5-tier pyramid. And richer by US$555,550.
That's more than S$1 million. Want to be a millionaire? Your chances of succeeding are said to be much higher than from buying lottery tickets. Or from joining TV quiz shows.
It can happen. Apparently, it has happened.
The e-mail invitations tell me that these schemes have been thoroughly investigated by journalists and featured on US national television.
Legal
Most importantly, they assure that lawyers have proclaimed them to be perfectly legal. When you are making this sort of money, you won't want to be caught breaking the law and sitting in jail unable to enjoy your wealth, would you?
Don't worry. The people in these schemes can afford the best lawyers to work things out for them.
We therefore have a situation today where "pyramid selling" schemes, which are banned in countries like Singapore, have evolved into multi-level marketing, network marketing and other variants which, technically at least, all operate within the law.
A few could still be frauds. But most are legitimate and legal.
Not only that, such schemes are being hailed by some business gurus as models for the future.
And deservedly so. They have made a few people obscenely rich, and some others just plain rich, without having to invest any money on retail stores, advertising and so on.
All they need to do is persuade a network of relatives and friends, or even acquaintances and strangers, to buy skin care creams, herbal supplements, gold coins or $5 e-mails.
The task may not be difficult if you tell them they can become very rich, very quickly, by joining the network. As a business model, it's brilliant.
From the business and legal standpoints, it has become very hard to find objections to such schemes.
Some months ago, when I was badly in need of money, I did wonder if I should join.
Moral high horse?
For years, I had been strongly against them. But when my pockets and bank accounts were empty, I began to wonder if I was too much on a moral high horse.
Because the only objections I have left are on moral grounds, since such schemes prey on greed.
In cases which involve health products, my added objection is that all sorts of people who know zero about health are now dishing out health advice by parroting company literature. This is not healthy.
Still, I began to question. Was it (morally) right for me to owe people money when I could join one of these schemes and earn enough to clear my debts?
In the end, my answer was still "No".
I realised that whatever the scheme, whatever the product, the essence of it was the same: get people to buy things that they would not normally buy, by luring them with incredible promises of incredible wealth.
Moreover, someone had used deceit to try and recruit me into his network. I'll tell you more about him later. (See The doctor prescribes MLM.) That incident showed me the true face of MLM.
Such schemes are really scams. The bottom line is that they thrive on deception.
First is the deception that it is easy to become rich, when, in fact, very few succeed.
Second is the deception that people are buying high quality products at reasonable prices (because shop rents, staff wages, advertising, etc have been removed) when, in fact, the prices have been grossly marked-up.
When you sell $930 worth of skin care products, don't be surprised if the product cost is not much more than $9.30.
Otherwise, where do the multiple layers of commissions come from? Otherwise, how can you and everyone else in your network become multi-level millionaires?