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The camera is now the keyboard

Psychological pressure -- "You are not going to let the group down, are you? Geographical Distance -- It is no accident why MLM conventions and such are often held at isolated and distant locations such as resorts, cruise ships, and so on: so you cannot escape from the "motivational speeches". Some meetings are known to be held late at night and add sleep deprivation to its arsenal of control techniques. MLM group meetings often resemble cult meetings. No disagreement with the leader is tolerated. All hail the leader and the company.

All who believe the company are the anointed ones who will be on their way to "financial freedom and prosperity".

All non-believers are damned to be "wage slaves" and "losers" for the rest of their miserable lives and must be converted or enlightened, and "opponents" attacked for their "heresy". One of the most often encountered "information control" by MLM members is "avoid negativity".

Apparently, MLMers must avoid "negativity" and "dream stealers" to be successful. This is complete psychobabble, because if you avoid both rational and irrational fear, you end up being reckless. Learn more about why avoiding negativity is a serious problem. Amway, being the granddaddy of all MLMs, has separate "Amway Motivation Organizations" AMOs , which are ran by various "leaders" who publishes various motivational tapes, training materials, and whatnot for the member consumption as "self-improvement".

It was charged by many that these AMOs actually are Amway indoctrination centers with a veneer of plausible deniability. In fact, Dateline NBC did a special on Amway in , calling it a cult and get-rich-quick scheme outright.

Tap into the FOMO

Steven Hassan, an expert on cults, wrote on the Huffingtonpost that Amway and other MLMs, even if they are legal, are basically commercial cults. The cult behavior can go to extremes.

The problem with the gray area of MLM, and the slowness of authorities to react see next section , esp. It was heavily pushed by various MLM "coaches" and reviewers for over a year in US and Europe even though it had been kicked out of China in People in the US finally gave up when state of Georgia issued a cease and desist against this scam in , essentially kicking it out of the US.

It is in the process of being evicted from those countries as well, yet many members still defending it. Is this due to cult indoctrination? The "leaders" in this scam also claimed "agenda by consumer groups". Such problems are not limited to US and Western countries alone. A scam, claiming to be a public opinion survey company, signed up millions of members in India, promising each good income if they recruit more people, and quite a bit of the money received was transferred to Singapore, where the company was allegedly headquartered. When a TV station did an investigative report on it, all hell broke loose.

Various government agencies got involved, and found they can't really do anything about a company that is not even based in India.

You Create Your Own Results

They tried freezing the money, but the company's lawyers convinced a lower court judge and got the freeze lifted, allowing crore Rupiahs roughly million USD to be transferred to Singapore during the 2 week when the injunction was in place. The freeze was finally reinstated when a 3-judge panel countermanded the lower court judge. What is really amazing is the the amount of zeal the scam victims are spending to defend the company, including protests in the streets, petitioning the government to leave the company alone, so they can get paid, and so on.

They accuse everybody, from the government to the media to critics of a conspiracy to bring down this company and ruin their livelihood. Such obvious pyramid schemes live on because there are legitimate MLMs to lend it a modicum of credibility. They point to legitimate MLMs, claim "we are like that, we are legal", when they are certainly NOT legal, even upon cursory examination. People believe them because they don't know any better.

Plenty of people defend these pseudo-MLM scams as they failed to distinguish the difference between it and legitimate MLM. The US Federal Trade Commission, which has broad regulating powers over all forms of commerce within the United States, used to be the primary prosecuting body against multi-state pyramid schemes.

The 5 Fatal Flaws of Multi Level Network Marketing (MLM) | ToughNickel

However, since being fought to a standstill by Amway in , the body seem to have lost much of its appetite going after shady MLMs. MLM industry also hired many FTC ex-staffers for their own lobbying efforts, resulting in many 'exemptions' given to MLM industry when new laws are passed. Is there something fishy going on? I don't know. Does something start to smell? Zamzuu, was kicked out of California by then attorney general Brown now Governor Brown. Illinois also sued YTB and only settled in May , essentially forcing the company almost out of business.

However, prosecution of such schemes takes years then attorney general Brown started to suit in , and completed the plea deal in Robert Fitzpatrick. However, this took several years as well. What's worse, the new breed of international pseudo-MLM scams are often based on a completely different continent often Asia or Eastern Europe , and legally in some island off in the Caribbean or the Mediterranean Sea Cyprus, British Virgin Islands, etc. They usually have no license to operate in your location, but that doesn't stop them from promising big money if you pay them. The government will not save you from yourself if you do no "due diligence" and join a scam that pretends to be a legitimate business.

By the time the government decides to intervene, you're probably in too deep. We have listed five flaws in the fundamental MLM business model itself, and they are endemic to the system. The additional factors such as relative lack of government oversight, and rise of international pseudo-MLM scams, makes the entire industry indeed extremely dangerous for any one to contemplate joining without thorough study of the situation.

Critics of MLM, Dr. Robert Fitzpatrick, and Dr. The five flaws we had mentioned before are why, and they form a system that reinforces each other. Basically, many Network Marketing, or MLM are selling the dream of "passive income", instead of actually selling the products like it is supposed to, and that is the root of all fatal flaws.

The passive income should be incidental and the reward of great salesmanship, not the ultimate "endgame". Require "managers" uplines to sell things before they can qualify for commission.