Below are some all-too-true comparisons regarding MLM
MLM is like a cult.
I have Robert FitzPatrick, sponsor of pyramidschemealert.org to thank for pointing me to the excellent writings of cult expert David Brear, author of the essay “The Universal Characteristics of a Cult.” These characteristics are summarized below as they apply to MLM, with commentary by FitzPatrick and myself.
- Deception. This certainly applies to MLM. In fact, in Chapter 8 of my book Multi-level Marketing Unmasked, I have listed and debunked 111 typical deceptions used in MLM recruitment and communications
- Self-appointed sovereign leadership. As we know, all MLM leaders are They do not work their way up (as laid out in the compensation plan). They have no true peers. They are not promoted, but are god-like unto themselves – ultimate moral authorities.
- Manipulation. Manipulating downline participants to comply with leaders’ tactics becomes paramount to achieving results with such participants, who unwittingly become its victims.
- Radical changes of personality and behavior. This is a common effect among MLM recruits, leading to many divorces and estrangement between members of families, work groups, and church congregations.
- Pseudo-scientific mystification. The appellation “multi-level marketing” is pseudo-economics, making no sense, in which the impossible endless expansion is disguised, “retail sales” is a ruse, the “income opportunity” is non-existent, the pay formula is uneconomic, etc., and yet, many journalists accept “MLM” as a legitimate business model. They are “mystified” by its influence, as is much of the public.
- Monopoly of information. “Stinking thinking” and negative people condemned, exaltation of leaders as all-knowing, benevolent and perfect role models, inundation and constant quoting of books, CDs, videos, seminars, special vocabulary that is endlessly repeated, enforcement of avoidance of anyone who questions or criticizes MLM, etc.
- False justification. There is no opportunity outside MLMs; you are lost without MLM; MLM is the last best hope, “only quitters lose and only losers quit,” MLM is the “wave of the future,” etc.
- Structural mystification. Try and figure out the MLM compensation plan, its pyramidal hierarchy, its global corporate structure and policies, etc. And it would take a Philadelphia lawyer to digest and apply all the provisions of the typical MLMs book-length “Policy and Procedures” manual.
- Chronic psychological deterioration symptoms. Common outcome for MLM true-believers, leading some into long term depression and even suicide.
- Repression of all dissent. With lawsuits, intimidation, attacking of critical websites, character assassination, vilification, shunning, invalidation, discrediting, etc.
FitzPatrick concludes: Cults have no legal definition and are not illegal in the USA (just as MLM pyramids are effectively legalized). Yet, the terrible power of a cult over individuals and groups of people and the enormous harm they can cause are beyond question. We all know of religious cults, para-military cults and large-group awareness cults. MLM represents a new category of cults “ economic cults.
MLMs are like classic pyramid schemes.
Hold on – let’s be honest with ourselves. MLMs ARE pyramid schemes – the worst by any measure – loss rate, aggregate losses, and number of victims. (Read “Are all MLMs pyramid schemes?” and Chapter 2 of my eBook Multi-level Marketing Unmasked. )
The structure of MLM looks more like a pancake than a pyramid.
It is revealing to look at a linear graph of the first several repetitions of exponential expansion of an MLM pyramidal hierarchy (for example, each person recruiting four, each of whom recruit four more, and they in turn four more, etc.). As the endless chain of recruitment continues in any MLM, the width increases, flattening even further and creating a shape more like a flat line (with a bump in the middle) than a pyramid – and which would soon stretch for many miles at the bottom level. So it would be more appropriate to call an MLM a “pancake scheme” than a pyramid scheme.
In such a pancake scheme, virtually everyone at the bottom levels loses money – even more so than in a no-product pyramid scheme. (In the illustration below, the next level would be several pages wide. ( For a better illustration of pancake schemes, see Appendix 2j in Chapter 2 of the ebook Multi-level Marketing Unmasked.)
Obviously, the exponential expansion cannot continue indefinitely. Participants at the bottom levels get discouraged and drop out at rapid rates, only to be replaced by a continuing stream of hopeful new recruits, who are likewise destined to experience loss and disappointment.
*For For more information on the abysmal success/loss rates in MLM, see “Comparing MLM success rates with no-product pyramid schemes and gambling” Also see Chapter 7 of the aforementioned eBook.
MLM is like a fast-growing cancer.
Because MLMs allow unlimited recruitment of endless chains of participants, it can be extremely viral – spreading from one population to another. Because recruitment campaigns quickly saturate an area, TOPPs (top-of-the-pyramid promoters) must constantly recruiting (“re-pyramiding”) into new markets. Since MLMs reward recruitment of downlines far more than retailing products, no stable retail market for MLM products remains after recruiters have completed their campaigns in a given market. New MLMs soon become like a fast-growing cancer, that has metastacised. Since almost all participants lose money, the damage in aggregate losses can be very great.
MLM is like cannibalism.
“My picture of succeeding in MLM is that of landing on an island of cannibals, and to be a useful successful part of the community you have two choices, either be eaten, or to become one of the cannibals. Personally I have concluded that MLM as it has been structured and is currently taught, does not work, has never worked, and never will work, for the average distributor, and only works for those that are willing to become like the leaders (cannibals) that are using all the new recruits.”
– Denny Lobach
The recruiter’s message:
Trust us. “We have this great opportunity for you.
The results are unbelievable!”
(How true! How true!)