Why does this site say all MLM are scams?

[Jclepage]

Ok, I will start out by saying, that I scanned alot of the forums here, and it says basically that all MLMs are scams.

That is the most untrue thing I have ever heard. Check out a fortune 500 company that RELIES on MLM.

excel telecommunications.
www.excel.com (http://www.excel.com)

Why would a fortune 500 company use MLM as their main marketing, if it is a scam, or illegal?

This is all I wanted to say.

Thanks for listening, and please get all your facts straight before slamming MLM.

JC

[Webwatch]

Hi.
I agree that not all MLM's are scams. Due to the fine line between MLM's and Pyramid schemes there needs to be one defining principal between the two.

I believe that if there is an end product for an end user that can be bought without that end user being required either by financial incentive or continued use of the product to recruit new members then that is an MLM.
Herbalife is a good example of an MLM with an end product but (theres always a but) due to agressive marketing practises used by Herbalife and promises of large incomes even in oversaturated markets even this example can be called into question.

There are other defining characteristics between MLM's and Pyramid Schemes but I use this one for my own due diligence.

You may have noticed the ongoing Kanosis discussion which is worth a look as it highlights the struggle to define the difference. My own views can also be seen on the thread so I wont bore you by repeating them here.

To recap.
In my opinion not all MLM's are Pyramid Schemes and not all Pyramid Schemes are Ponzis but all Ponzis are scams. However I have yet to find a Pyramid Scheme that stands the true test of time.

But as this is a personnal opinion treat it as such and dont follow my rules if you have your own that you believe more strongly.

I don't agree that this Forums says all MLM's are scams.
Please get your facts right before starting a thread in order to make a very weak attempt to discredit this forum.

[jokach]

Webwatch makes a good point. I, and many others, also believe that not all MLM"s are scams (as you believe as well), and if you truly scanned the entire forum, you would see that what you are suggesting is just not true. You're point saying that we suggest that all MLM's are illegal is just not true as well. There are many MLM"s out there that are scams, and unfortunately, they are the ones that get highlighted the most on this site, which might be why you got that impression.

We do appreciate your taking the time to review our forums, but please don't make quick decisions on its content before understanding what is really going on.

jokach

[surfer]

Welcome to Matrix Watch Jclepage.

Any particular reason that you picked
a bankrupt MLM that discontinued it's
MLM program (http://w3.excel.com/us/news/news_110104.asp) as your shining example.
Did something change that I missed?

The issue I have with many MLMs is in
the way they are marketed.

They all seem to want to deny the fact
that when you join an MLM you are entering
into a sales career.

They also like to ignore the fact that in
business, most people are going to fail.
They try to make it sound like everyone
can and will succeed to make the income
of their dreams.

Many MLMs have products that are so
overpriced to feed the comp plan that
they can't stand on their own in the
open market.

I do believe that some MLMs have
products that are better in quality
than your mainstream store brands,
but the quality difference is not
enough to justify the price for
consumers outside the member base.

MLMs such as the example you
provided walk the thin line between
legal and pyramid.

Excel's products were competitively
priced(not the lowest, but not the
highest), but the big money for most
of those that succeeded was in the
recruiting.

Now, it's probably been nearly a
decade since I reviewed the comp
plan, but the only thing that kept
Excel from being a total pyramid
scheme was the 2 customer quota
that had to be attained to in order
to release the coded bonuses to
the sponsor and those higher in
the pyramid.

So the primary objective for the
reps was to sell people on the dream
of making big money in the telecom
industry, get them to buy in at the
highest level possible, have them
switch their long distance and buy
one other service(paging, ISP, etc.)
and then get them to do the same
thing.

The fees to become a rep were
obviously used to pay the coded
bonuses to upline, but Excel was
able to stay "legal" because of
that two customer minimum.

There are a couple of other telecom
MLMs that work in a similar fashion
today.

In nutritional MLMs, you have the
same pattern done a little differently.

Very few customers exist outside
of the MLM member base because
of the inflated prices.

The entire objective is to rope people
into thinking they can earn incredible
money with little effort just by going
on "autoship" for x amount of dollars
per month.

The MLM industry would probably be
looked at in a much more favorable
light if it could break the focus away
from recruiting and focus more on
selling to real customers.

[sisco50]

Ok, I will start out by saying, that I scanned alot of the forums here, and it says basically that all MLMs are scams.

That is the most untrue thing I have ever heard. Check out a fortune 500 company that RELIES on MLM.

excel telecommunications.
www.excel.com (http://www.excel.com)

Why would a fortune 500 company use MLM as their main marketing, if it is a scam, or illegal?

This is all I wanted to say.

Thanks for listening, and please get all your facts straight before slamming MLM.

JC

I don't believe that MW is saying all MLMs are scams. Maybe the vast majority turn out to be, but not all. MLMs are legal. Pyramid/Ponzi schemes are not legal. But a person needs to be able to tell the difference between them and there is a lot of discussion here that does just that. :)

[Dreamer]

I havent read surfers entire post, so forgive me if i repeat anything, but this is my opinon.

1. Does the company sell a product of worth and value?
2. Is there requirements or suggestions that I have to recruit?
3. Will the product be sold to non-members.
4. The money that is paid downhill, is at least 70% comes from sales of product, and not member ship fees?

If those 4 can be answered Yes, I find nothing wrong with it. The few threads I pay attention to here is faulty in usually all of them. With matrix sites they were selling worthless eBooks. They typically say you do not need to recruit, however, if you want your product you better do so. No non-members ever buy from them, even though some sites actually said you can buy the worthless eBooks and not be put in the list. And, finally, the monies paid out came from the pockets of the members camoflauged in the sale of something. But people werent buying the product, they were buying the spot.

I have nothing against legal MLMs. If the law says its legal, it might be fine with me. If the law said ponzis are legal, then I wouldnt care so much about that.