Business, Investment,

When Is Multilevel Marketing (MLM) A Scam?

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Invested Lifestyle’s Elaine Linga is on a mission to expose the scam of multilevel marketing (MLM) or networking businesses in the Philippines. Linga openly claims she’s anti-MLM after her own horror stories with MLM companies. She has recently featured Robert L. FitzPatrick in her two-part MLM Expert Educates Investor series on her YouTube channel. Mr. FitzPatrick is president of Pyramid Scheme Alert and the world’s leading MLM expert.

MLM Is A Pyramid Scheme In Disguise

Many consider MLM legitimate, but people often compare it to pyramiding. Investopedia defines MLM as “a strategy some direct sales companies use to encourage existing distributors to recruit new distributors who are paid a percentage of their recruits’ sales.” For FitzPatrick, however, MLM is a pyramid in disguise. According to him, “multilevel marketing is disguised as direct selling, and it’s disguised as a viable, potentially very profitable income opportunity.”

MLM Is An Epitome Of Scam

More importantly, FitzPatrick also stressed that MLM “is not a business engaging in scam…. Essentially it is a scam. It is a model that cannot work. It is not direct selling. ”If MLM is a scam “disguised as a business,” the lines between legit sales companies and scammy organizations become trickier without safeguards. According to Dara Acusar’s The Fine Line Between Pyramiding and Multilevel Marketing, MLM law “is perhaps one of our nation’s most unexplored areas of law.”

Multilevel Marketing (MLM) Is A Scam Without Safeguards

Stop Promoting MLM Businesses

In addition to the absence of specific rules against MLM, very few people publicly discuss the pitfalls of MLM in the Philippines. Perhaps it’s because of the concern with litigation. It’s also discouraging that there’s a large number of showbiz and political personalities who promote MLM businesses. It’s a sad fact that many Filipinos readily support whatever product their idols endorse.

MLM Scam Victims Are Telling Their Tales

But more survivors are coming out with stories about their negative experiences with MLM. The local Facebook group MLM Pyramidposting aims to send formal complaints to the Securities and Exchange Commission if they get sufficient legitimate testimonials. It may take a long, arduous journey to amplify the voices of MLM survivors, but awareness has to begin somewhere. There are resources that can help educate people about MLM, such as the documentary Betting on Zero. It delves into Herbalife Nutrition, a global MLM corporation. In 2016, US Federal Trade Commission charged it with four counts of false, unfair, and deceptive business practices. And also, share this video of Last Week Tonight with John Oliver, which demonstrates how MLM really works.

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