Welcome to the False Profits Blog.
When I wrote the book, False Profits, 10 years ago, I described MLM and pyramid schemes as “kissing cousins,” closely related, yet not necessarilyone and the same. With 10 years of additional research, courtroom experience, communications with thousands of participants, and in-depth analysis of scores of MLMs, I now describe the situation quite differently.
Our report on the commission payouts of 11 major MLMs shows that more than 99% of all MLM participants lose money every year. Yes, 99%. That is not hyperbole. The data offered by the MLM companies themselves confirm this amazig fact.
MLM, therefore, cannot be called a “business opportunity.” The idea of MLM offering the average person a viable or an “extraordinary” income is a myth, which is to say, a lie.
Additionally, none of the MLMs studied – all of which were members of the Direct Selling Association – had significant numbers of retail customers. The sales people were, essentially, the only people buying the goods! Each of the salespeople signed contracts, paid fees, and, in order to qualify for the promised “rebates,” purchased a monthly quota of products. The salespeople, then, were investors and participants, not customers. Moreover, 60-80% of of them quit the schemes within 12 months, and they never bought the products ever again!
Without retail customers or “end-users”, MLM cannot be “direct selling.”
So what is MLM? And what sustains MLM? Obviously, it is not products — it has no real customers and its salesopele quit buying within a year. And, certainly it is not the income to the salespeople, with 99% loss rates!
MLM is sustained by the “myth”, the disguise, and the hopes it generats among those it recruits.
We shall investigate this myth in much more detail in this blog. Your views are welcome.