Archive for the ‘Scam’ Category

It’s also referred to as:
  • network marketing
  • direct selling
  • referral marketing
  • fucking your neighbor over

Last year I attended an in-home presentation for a product guaranteed to make my life easier.  A friend of my girlfriends had a family member that was part of this company that sold this revolutionary widget. Reluctantly we went just to see what it was about. Her friend seemed pretty excited about it. So I gave it the benefit of the doubt.

During the presentation I was just amazed.  Amazed how structured the pitch was, how it was delivered, terms used.  Rhetorical art I would call it.  The words, the phrases, all pre-coached to some degree, like any sales pitch I guess, but this one had a different twist. In the past I had worked in sales for a number of years so I was pretty familiar with the art of pitching being more how you say something than what you actually say. Perception is everything you know, and this group had it down to a science. I was impressed.

But what had confused me about the whole thing before I even got to the house was why was I having to go to a presentation to get this product.  Why not just pick it up from a local retail store or order from some online marketplace. During the presentation it started to become clearer to me why this platform was chosen. For this to be effective, you need to have your audience comfortable and somewhat obligated to stay put for a while. What better way to do this that having them come to someone’s home with people they know that had invited them. Comfortable setting, familiar face(s) around. Perfect.

But why would this company choose this model to sell their product. Most companies sell their products in a retail store with a logistics network for getting the product there, traditional advertising to drive interest and thus sales. Simple really, tried and true. During the presentation it seemed increasingly less time was spent on selling the product to me and more about how I could sell this to other people. Then it dawned on me, I am not being sold the tangible widget they have demonstrated in front of me, I was in fact brought here for my undivided attention so they can convince me to invest into this amazing opportunity.

It was the ideal job. To work from home, make your own schedule, be your own boss etc.. Sounds great to me. One little problem though. If you break down their model into two sides it starts to make more sense as to how it’s wrong.  One side is the sales of a tangible product. They present the product to you, you in turn purchase it, deal done. By itself, I don’t see anything wrong with retailing a product to your friends and neighbors. Whether the widget sold actually works or not is really a moot point here, that’s an entirely different post. The other side is the opportunity start up kit they are also trying to sell.  This is the part that’s fucked.

So during the presentation as the speaker was showing me example after example of people that were once living in dire straits and now own beachfront houses with big boats etc. I started to wonder how many people fell into this idea and never got anything out of it. That’s when it hit me. The real ‘product’ has nothing to do with the widget presented. This particular model was in the business of selling opportunities wrapped in bullshit. The company made some money selling the widgets I’m sure, but the real money was made on the failure of others.

Think of it this way. If in a small community of 20,000, 10 people were distributers of this widget, and lets say that they each recruit 5 each month and a ‘starter kit’ was $250. Over time that adds up fast. And it doesn’t take a rocket surgeon to figure out that if most were successful in being a distributer that this model would ultimately fail miserably within a year. It would be like opening  50 new Wal-Marts in Toledo. Doesn’t make sense. It would just saturate the market. Unless, the parent company knows something.  Hmm, what do they know that they don’t present in their shiny brochures…

Most people that know statistics well don’t play the lottery very much, and if they do it’s more for fun, not trying to get their nest egg. This type of scam really isn’t much different.  The hope and probability sold is much different than the reality. Although, if one does have an outgoing personality and naturally extraverted with a large circle of friends they may do pretty well recruiting those around them into this scheme whereby earning themselves  some of their victims failure money because not all of them will succeed.

So while sitting there listening to this crap and realizing what it really was I only got more and more pissed. I had wished I was an attorney or politician; someone in a position to stop this cycle of victimization. It’s bullshit. When you apply for a job at Wal-Mart you don’t have to pay them $200 to get the job.  If you did you would be pissed.

At the end of the presentation I had figured that the other people there would mirror my sentiments on the opportunity presented but to my surprise there was positive feedback. I just stared wide eyed as people started signing up. Knowing that most of them couldn’t really afford to do it anyway how could they justify the investment? I didn’t say anything.  When asked, me and my girlfriend politely declined and left.

On our way home we were talking about the sheer number of people that sign up for this and fail. Most of the time it’s not their fault either. They just don’t have the skills or natural ability to sell on the scale required to really make a living out of it. Now, I could understand just being a home based distributer for a widget and selling the widget, and getting paid primarily on commissions from actual widget sales. But that’s not the case here. People are paying a lot of money for essentially nothing. An opportunity that there is no screening process whatsoever and most people fail. If a 5 year old wanted to join in, they would take the money.

I know, this is a long post, sorry about being long winded but I needed to explain all that to get to the part I consider fucked about all this.

My problem is this. The people that do make it. They are the ones that are profiting on the failure and hardship of others.  These people invested in your scheme believing that they could make money from home and with a little work, make more than they do in their current job. This is complete bullshit for over 97% of your victims. And what’s worse is the distributers themselves are oblivious to the scheme they are fueling. They think they are entrepreneurs selling this widget attached to an opportunity for the greater good.  News flash, they are ultimately screwing lots of people out of their hard earned money and what’s fucked is they don’t believe they are because they were told over and over with colorful brochures, videos, detailed binders, conferences and some random paid celebrity that it wasn’t so. Omgitmustbetrue!

Anyway, here are some red flags to watch out for if you think you are being sold on this crap from mlm-thetruth.com.

Red Flag #1: Endless chain of recruitment

Participants are recruited into an endless chain of recruitment.

Questions you have to ask yourself:

Would you as a new recruit, by permitted and even encouraged to recruit other participants, who would in turn be encouraged to recruit still others, and they still more, etc. – from whom you could collect commissions and /or bonuses on what they buy or sell?

Visualize yourself recruiting a chain of recruiters recruiting recruitiers, including friends and loved ones, just to enrich yourself. Wouldn’t you rather preserve and protect, rather than exploit, those relationships?

In other words if you have a crapload of friends, you have a shot at stealing lots of peoples rent money.

Red Flag #2: Advancement by Recruitment

Advancement in the hierarchy of participants is not achieved by appointment, but by recruiting more and more participants into a downline, or pyramid of participants.

Ask yourself these questions:

Is advancement in a hierarchy of multiple levels of participants achieved by recruitment and/or by a combination of recruitment and sales volume, rather than by appointment – as in other work or sales settings?

Would you be uncomfortable if you knew that to succeed, you must be able to recruit your way to the top where the money is, and that doing so would require that hundreds, even thousands, of downline recruits could lose money?

Red Flag #3: "Pay to play" purchases

In order to "play the game," or qualify for commissions and advancement in the program, participants must buy a minimum amount of products or services, either at the outset or in ongoing purchases (usually by monthly subscription).

Questions to ask yourself:

Are you being encouraged to make initial or ongoing purchases in order to take advantage of the "business opportunity," and later to continue qualifying for advancement in (or payout in overrides and bonuses from) the MLM company?

Even though there is little or no cost to "sign up" for the program, are there minimum volume requirements that must be met in order to advance to higher levels in the hierarchy or to receive greater commissions or bonuses at some level?

Are you expected to pay for training seminars, workshops, audio or video programs, weekend retreats, etc. in order to stay in the good graces of your upline?

This would also apply to people that have to pay for a starter kit or something to that affect to participate as opposed to a subscription program.

Red Flag #4: "The upline gets most of the rewards.

The company pays more in commissions and bonuses to upline participants than to the person making the sale.

Questions to ask yourself:

Would the total amount of commissions (or discounts, bonuses, etc.) paid by the company to your entire upline be more than you would receive for actually making the sale?

Are products priced higher than at standard retail outlets, making sales to non-participants difficult? And if prices are not competitive, can you see that to earn a substantial income from commissions from the company you would have to build a large downline of purchasers – who are also buying to take advantage of the "opportunity?"

Red Flag #5: Five or more levels in the pay plan

The compensation plan allows for five or more levels, which is more than are needed to manage the sales function. (In conventional sales settings, sales for the entire country can be managed in four levels – national, regional, divison, and branch sales managers – with those beneath them selling to customers.)

Additional levels only further enriches those at or near the top of the pyramid of distributors. Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.This makes it an exploitive money transfer scheme, or product-based pyamid scheme.

Ask yourself these questions:

Does the company pay overrides (commissions and bonuses) to distributors in a hierarchy of more than four levels?

Is the compensation plan so complex- with such a complex set of bonuses and other enticements – that you would find it difficult to explain it to a friend?

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