Can someone give me some good simple arguments on why is it a scam? I mean, it obviously is, but they make it look so legit and make it look like everyone is gonna win money.
Browsing through your hand histories makes me wonder that you might not be aware these games are possibly play money. Have you ever tried to cash out? - Kapol
Browsing through your hand histories makes me wonder that you might not be aware these games are possibly play money. Have you ever tried to cash out? - Kapol
Well you can make money doing it, nobody can refuse that, but it's a sham really.
Most of the time it's like trying to sell cat food in a city with no cats, there is no need for it in the society
so you're forced to try to sell it to your friends and family to justify your investment and make a profit,
but they have no use for it either, and since they already have it they figure it might not be so bad to become
a "sales rep" or whatever the hell it's called in the specific sham and so it goes on and on from idiot to idiot.
If you're good at selling things to idiots just start your own sham with a nonsensical product and make money, go nuts.
Just don't make someone else make a profit, indeed the bulk of the profit, doing it.
LikeASet United States. May 02 2012 20:53. Posts 2113
The MLM companies put all their focus on getting you to be aggressive sales people. They'll talk and talk about how you can make so much money and then they'll spend little time on what their actual product(s) is/are. Trying to reach the top 10% of people who are actually making a decent living off their residual incomes through MLM takes as much work as starting your own business. MLM companies don't know want you to know that, they try to emphasize how easy it will be, most people in MLM companies are really scumbags at heart.
Another reason would be that the products are often shams. MLM companies are behind 90% (made up %) of the bullshit health products you can think of. Noni juice, goji juice, supplements of all kinds. They make outrageous claims and deceive their distributors with extremely low quality research, and hired spokespeople. For instance, Protandim (supplement) is promoted by a company called LifeVantage. The company claims that their product was invented by a qualified medical doctor, I can't recall his name, but he also acts as the medical front and runs a bunch of sham experiments which, of course, always show how amazingly effective the product is at killing cancer when the study obviously does not prove any effectiveness, etc, tons of absurd claims. It turns out (and LifeVantage has had to admit this in court iirc) that the product was invented by a random dude with no medical background (aka a guy who wanted a bullshit product to push in a MLM scam). The Doctor they use as a front is a paid shill -- but somehow distributors never actually know this.
The company also does illegal things like promote its stock on weekly "business calls", which are actually just looooong advertisements to help keep their distributors wrapped up in the product and brainwashed.
These behaviors are typical of MLM companies.
tldr; there's much more but 1 reason MLM are scams cuz they often push bullshit products with absurd claims. the product is just a mechanism for the MLM to spread
It's a scam when the bulk of any individuals profits typically come from signing up other individuals as sellers.
If the business plan doesn't revolve around selling the product, and instead focuses on signing up new 'sellers' (who have to pay a fee, and thus, try to sign up new sellers.. etc. etc.) then it's bad news bears
Spicy United States. May 03 2012 00:05. Posts 1027
MLM =/= ponzi
MLM's don't involve paying out money from falsified investment returns. A key characteristic about ponzi schemes is the "fake" money created as a figure on a piece of paper. MLM's don't necessarily do this
1
Centrin United States. May 03 2012 01:15. Posts 53
MLM's are more of a mindFU than a physical dupe ala ponzi.
MLM = Like watching a good commercial on TV = "Life Insurance Salesmen"
There could be no real paper involved like Spicy states, just the perception of value:
Not unlike buying indulgences back in Europe's Dark Ages when the Catholic theology "ruled the world" in the 1500s.
there are legitimate MLM businesses but the majority are some kind of nasty schemes so be careful. They always look good but most are shemales.
Zep: When I said I feel obligated to troll, it was a figure of speech
Last edit: 03/05/2012 01:53
1
auffenpuffer Finland. May 03 2012 03:03. Posts 1429
Skeptics dictionary sums it up well imo:
The reason MLM schemes cannot succeed is because MLM marketing is, in essence, a legal pyramid scheme. The basic idea is for a sales person to recruit more sales persons. This is very advantageous to those who own the company and supply the products, especially since the sales persons in MLMs are also customers. But it is puzzling why a sales person would think it is to his or her advantage to increase the number of competing sales persons.
there are legitimate MLM businesses but the majority are some kind of nasty schemes so be careful.
What does legitimate mean here? There are some that have been around for 20 years and that do supply some over priced crap, but in the heart of all MLM business is the idea that one must recruit more salespersons. That alone is imo sufficient to make them scams.
Trying to reach the top 10% of people who are actually making a decent living off their residual incomes through MLM takes as much work as starting your own business.
The top guys are actually like 0,1%. In herbalife for example 0,58% of the participants made some profit, and most people making profit are not exactly banking boat loads of cash. (certainly not "making a decent living".
recruiting more people does not make something a scam. There are legal, legitimate MLM where you invest very little and can grow big enough to make a living. It may take a year or two, maybe 5 but it's just an opportunity, it's not a magical button that you press and make money, it takes time. However, because MLM is a bit complicated and has pyramidal structure it can easily be made into a complex illegal scheme. You can't just put all things on one place and call it a scam just because you have to recruit people. But one should be very careful and research the company and hear what people who have been there say. If it's a scam it was probably discussed on some kind of a forum.
Zep: When I said I feel obligated to troll, it was a figure of speech
On May 03 2012 02:48 D_smart_S wrote:
recruiting more people does not make something a scam. There are legal, legitimate MLM where you invest very little and can grow big enough to make a living. It may take a year or two, maybe 5 but it's just an opportunity, it's not a magical button that you press and make money, it takes time. However, because MLM is a bit complicated and has pyramidal structure it can easily be made into a complex illegal scheme. You can't just put all things on one place and call it a scam just because you have to recruit people. But one should be very careful and research the company and hear what people who have been there say. If it's a scam it was probably discussed on some kind of a forum.
if it relies on infinite demand, its a scam
Browsing through your hand histories makes me wonder that you might not be aware these games are possibly play money. Have you ever tried to cash out? - Kapol
In a nutshell: Ponzi schemes always crumble when the base of the pyramid is so large that money stops being injected. That said, if you're at the top which is unlikely to happen, you'll make money and scam those who put trust in you (usually relatives).
Odds are exactly 50%: it either happens or not
1
auffenpuffer Finland. May 03 2012 08:59. Posts 1429
recruiting more people does not make something a scam. There are legal, legitimate MLM where you invest very little and can grow big enough to make a living. It may take a year or two, maybe 5 but it's just an opportunity, it's not a magical button that you press and make money, it takes time. However, because MLM is a bit complicated and has pyramidal structure it can easily be made into a complex illegal scheme. You can't just put all things on one place and call it a scam just because you have to recruit people. But one should be very careful and research the company and hear what people who have been there say. If it's a scam it was probably discussed on some kind of a forum
Well as long as the profits come from recruiting more salespersons, not from selling products, I don't see how MLM could be legit?
recruiting more people does not make something a scam. There are legal, legitimate MLM where you invest very little and can grow big enough to make a living. It may take a year or two, maybe 5 but it's just an opportunity, it's not a magical button that you press and make money, it takes time. However, because MLM is a bit complicated and has pyramidal structure it can easily be made into a complex illegal scheme. You can't just put all things on one place and call it a scam just because you have to recruit people. But one should be very careful and research the company and hear what people who have been there say. If it's a scam it was probably discussed on some kind of a forum
Well as long as the profits come from recruiting more salespersons, not from selling products, I don't see how MLM could be legit?
Could you name two examples of legit MLMs?
I know some people who sell stuff for Oriflame, a cosmetics mlm. I don't think the people I know are recruiting for them though, just housemoms selling some products. As long as there is no big entrance fee I think such companies are fine.
Also from what I know Amway is fine too, though a bit controversial due to expensive marketing material that they sell. They were investigated by the FTC "In a 1979 ruling, the Federal Trade Commission found that Amway does not qualify as a pyramid scheme because distributors were not paid to recruit people and had to sell products to get bonus checks, and the company was committed to buying back its distributors' excess inventory".
Not a big fan of these companies though, as the sellers heavily rely on friends and families to generate sales.
Last edit: 03/05/2012 09:26
1
Spicy United States. May 03 2012 09:37. Posts 1027
On May 03 2012 02:03 auffenpuffer wrote:
The top guys are actually like 0,1%. In herbalife for example 0,58% of the participants made some profit, and most people making profit are not exactly banking boat loads of cash. (certainly not "making a decent living".
"Among his questions about the company's direct selling model, Einhorn had asked why Herbalife had stopped disclosing the exact composition of its distributor groups.
Herbalife finance chief John Desimone had said at the time that the company had stopped disclosing the information because he did not think it was valuable to the business or to investors, but offered to provide it in the future."
Their stock is being hammered and people are coming to their senses
the MLM business model also depends on constant growth, they completely ignore market saturation and that sort of thing and just keep selling and selling new suckers into becoming distributors. its design makes it naturally become crushed under its own weight
.
