Debunking the Biggest Multi-level Marketing Myths
One reason for the existence of multi-level marketing myths is that people want to believe them. If nobody wanted to believe in these “untruths”, then these would die a natural death. On the other hand, if you are convinced the MLM (also called network marketing) model is a legitimate form of business, then you will work double-time to spread the good news.
Myth #1 Multi-Level Marketing is Just a Scam Business Model
Many people actually consider MLM or network marketing as just another way of describing “scams”. This isn’t true. Many people survive on MLM activities yet provide a legitimate set of products that the public can use and enjoy.
Myth #2 Multi-Level Marketing is Actually a Form of Pyramid Scheme
This is the most damaging of multi-level marketing myths because of the similarities in the activities. You know that it is a pyramid scheme if you are required to bring in a lot of recruits to pay money as their entry fee, but there are little to zero products to sell. The company requires these recruits to bring in their own recruits, also to pay the entry fee. The company continues this cycle until there are a lot of recruits who have all paid the entry fee, but no selling is being done.
A legitimate MLM company actually offers great products to the public, which is why it’s not a pyramid scheme. It is providing a valid service to people. A pyramid scheme does not do that.
Myth #3 Multi-Level Marketing Benefits Self-Centered People Only
Multi-level marketing myths seem to destroy legitimate sales networks by asserting that MLM business people are just using their family and friends to make a quick profit. A legitimate MLM business should supply products that your family and friends will truly benefit from, at a fair price. MLM should remove the many layers of business activities so that the products can be sold at a good price so that the company, the customer, and the MLM person benefit.
Myth #4 New MLM Recruits Never Benefit From Their Networks
In a true MLM scenario, a new recruit needs time to develop a robust sales network. But in MLM, the faster you build your network, the more rewarding your MLM system will become. Yes, your many uplines will be reaping more financial rewards when you are just starting out. In time, if you do your work and are able to recruit enough people, you will also be rewarded financially by the company.
The FTC Attempts to End Deceptive Marketing By 16 “MLM” Companies in 2020
One major problem that the FTC of the US has encountered is that certain companies claiming they are MLM businesses are making “deceptive claims”. These companies have continued to make illegal claims about income and health gains despite being warned by the FTC of regulatory action.
These companies claimed that:
- A recruit can earn substantial amounts of US dollars if they join the network.
- They sell products that benefit public healthwise. But there is no scientific evidence that the products can “cure” the illnesses cited in the ad or testimonial.
- They sell products that can halt, prevent, or cure covid-19 infection (in relation to the ongoing pandemic).
Some of the claims prey on the vulnerability of the public. The most at risk are those looking for an alternative source of income. One common claim is that the new distributor will be able to “work from home” yet earn more income. There are also vague claims that the distributor will eventually be able to “fire their boss” or “live a relaxed lifestyle”. The problem with these claims is that they are not realistic and thus are “deceptive claims”.
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