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Digital Subscriptions > Skeptical Inquirer > Sept/Oct 2018 > Multi-Level Menace

Multi-Level Menace

Multi-level marketing companies use subtle influence techniques to capture and influence recruits—and you are at risk.

If you’ve been around social media lately, you’ll have come across a friend who suddenly is posting about makeup, diet shakes, essential oils, shampoo, or even insurance. Their personality seems somehow different. And they want to “catch up for a coffee”—with an agenda.

More and more people are being lured into the glittering promises that are multi-level marketing (MLM) companies. Social media provide rich hunting grounds. MLMs are proliferating. They are aggressive recruiters, with trained workforces using influence techniques to reel in new members. Once signed up, they exploit their members ruthlessly. This isn’t an issue we can afford to ignore—we’re not safe.

What Is an MLM?

The structure of these companies defines them as multi-level marketing. They also may call themselves network marketing, party plan, or direct sales companies.1 Distributors in such companies earn money and advance by selling products or services to end customers but also from commissions on the sales of the people who have signed up underneath them, continuing down in multiple levels (hence multi-level). The ultimate aim of the people at the top is to earn massive passive incomes off their teams.

All of these MLMs sell some product or service. They each have their own version of “MLM opportunity” where you can sign up as an independent distributor of these things—and of course it costs to sign up.

You sign up under someone—usually a persuasive friend or relative—who becomes your upline sponsor. You can then purchase the products or services from the company at varying wholesale discounts and either use them yourself or sell them to others at the retail price.

But the real push is to get more people to sign up under you for the “MLM opportunity.” You then become their upline sponsor. These people are called your downline. And when they place a wholesale order with the company, you earn a commission based on the amount they spend. And when they sign up people underneath them, you might earn commissions on those people’s orders as well. This is how the big bucks are made at the top of MLMs—from downline commissions, not product sales. Studies show that only 1 percent of people at the top of an MLM typically make a very large income. The 99 percent remaining make minimal income, nothing, or lose money (Taylor 2011).

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