It’s Who Calling, Now?

Over the years, I think I’ve been recruited by every multi-level marketing (MLM) organization there is; some of them multiple times. Amway has a special place in my memories, since one of my father’s secretaries was a huge Amway kingpin, and she must have asked me about joining the organization a dozen times all by herself, but I’ve also heard from people selling insurance, vacuum cleaners, water purifiers, various brands of health and beauty products, vitamins, brushes, cleaning products, financial services and office supplies. I’ve declined (or ignored) all of them, although there have been a few I ran into during what I thought were real job interviews with real companies, where I’ve gotten somewhat short with people. I know they don’t mean to be insulting, but it’s the principle of the thing…

If you’ve been fortunate enough to avoid this class of business, an MLM is generally a sales organization in which each level of “employees” is required to recruit the next level; they then receive a percentage of everything brought in by the people they’ve recruited, as well as all of the business brought in by new people their people recruit, the people those people recruit, and so on. Clearly, then, if you have enough generations or “levels” of people working for you, it is possible to realize a very large amount of income every month without actually having to sell any of the products involved. Which is good, because with very occasional exceptions, most of the actual products are horrible…

You may be asking if these operations are legal, and if so, why anyone would want to work for such a cockamamie outfit. The straight answer is, MLM organizations are legal in most of the U.S. provided they tell you up front how their operation works – and all of the claims they make about how you can realize a huge income without doing any actual work are true enough. The point that usually gets left out of these recruiting pitches is that for most people the whole thing is a waste of time (and usually money). Ask yourself how many people you know who would be willing to go to work for you, selling these products – because the odds are good that your friends and family alone will not represent enough of a customer base to recover your buy-in fee, let alone make enough money to live on. To actually make those fabled money-for-nothing earnings, you’re going to need a lot of people to sell your wares on their own dime (without a base salary or any expense money) – and you’ll probably need a lot of suckers to pay the buy-in fee even though they will never make it back…

So why am I ranting about this industry now? Because the current economic downturn is drawing a huge number of people into this sector, according to a story this week by the Associated Press online. Just as happened during the 1991 and 2001 recessions, people are taking on these dubious enterprises as second jobs, hoping to use them as a hedge against loss of income or possibly their jobs. Which wouldn’t be such a big deal, I guess, if not for the aforementioned recruitment under false pretenses. At one point in the late 1990s I recall asking my contact, via telephone, if the job I was coming in to interview for was an MLM job; she categorically denied that it was. When I showed up, however, it turned out that not only was the company an MLM, it was the same one I had declined to fork over several thousand dollars to just three days earlier…

I lost my temper, walked out of the “interview” and sent them a bill for my wasted time (and mileage) – which of course they ignored. I’m not going to tell you that all such companies are pyramid scams (although many of them are) and I’m not going to tell you you’ll lose money and waste your time if you become involved with one (although most people do). I’m just suggesting that you read the fine print before you sign anything…

And for goodness sake, DON’T expect to make a vast fortune by doing nothing! For that, you’re going to have to go into politics, like everyone else…