The Secret World of Multi-Level Marketing

Last November, I had just moved to Houston from a small town in Kentucky, and I was looking for jobs in the Houston Chronicle. My experience lies in marketing and management, and the perfect advertisement jumped out at me from amongst scores of others on the page:

General office. No exp. nec. New ofc needs mgmt help. Will train.

The classified ad was followed by a phone number and a fax number, and I immediately picked up the phone and made the call.

A woman answered on the second ring and reinforced my assumption that this was a position comprised of administrative and management duties. She asked about my background, seemed impressed by my experience, and invited me to the office for an interview with the owner. She never told me the name of the company, the industry, or the job specifications, but I honestly didn’t think much of it. I assumed that my questions would be answered during the interview.

Of course, I had no way of knowing that I was about to be sucked into one of the most unethical businesses in the world.

Multi-Level Marketing, or MLM, is a form of business that involves a heierarchy of individual marketers who earn money based on their recruitments and the sale of rendition – or knock-off – products. These companies often require an initial investment of anywhere from fifty dollars to several thousand, and since you are hired as an independent contractor, the business is under no contractual obligation to make good on their promises of enormous incomes and elevated status.

Many people thrive in sales and marketing positions; those gifted with people skills and the art of persuasion can produce comfortable lifestyles based on their commission sales. MLM businesses, however, are typically and notoriously known for the promotion of products that are nearly impossible to move. For example, the company with which I interviewed marketed knock-off renditions of popular men’s and women’s fragrances. We were expected to walk the streets of Houston, going from business to business, trying to sell bottles of fake perfume out of duffle bags. Each bottle cost $27.00, of which we recieved $7.00, and we were advised to lie to consumers and tell them that the fragrances were the real designer product.

This is not good, sound marketing strategy, for those of you new to the marketing industry.

In addition to the ethics of hocking fake products and promoting them as genuine, there are legal issues that might land an unsuspecting marketer in jail, or slap him with a hefty fine. Many of these companies tell their contractors that they possess a peddler’s license that allows them to conduct business-to-business and residential sales. They will tell their recruits that this license covers all of their contractors, and send them out onto the streets under false pretenses. In reality, most of these companies possess no such license, and if a police officer catches someone peddling without a license, that person may be arrested.

Job seekers and aspiring entrepreneurs alike should beware of any company that requires an initial investment or skimps on the details of a marketing position. These companies will try to hide the fine print of their positions in order to ensure maximum retention, and if one is not cautious about prospective employers, he may find himself caught in the middle of an MLM scam. In order to protect yourself, make sure to read all paperwork carefully, especially before signing any contracts, and contact your local Better Business Bureau for a comprehensive report on the business in question. It is worth the research to determine the legitimacy of a company before spending hard-earned dollars on a scam. Hundreds fall victim each and every day.

These are signs to look for when interviewing and deciding on employment:

1. Initial investments in the company. MLM’s often as for money for products, start-up kits, deposits, and information packs.

2. Commission Sales. Not all commission-based jobs are scams, but if there is no guaranteed salary and no proven sales records for other employees, you might be entering a no-win situation.

3. Contradictions. Often the managers of these businesses will contradict themselves when speaking. Make sure to listen closely to everything they have to say.

4. Avoidance. If a prospective employer dodges questions or refuses to address concerns, he or she is probably hiding something. Interviews are not only for the hiring manager; you should be given an opportunity to clarify things and ask questions as well.

5. Forced Compliance. A sure sign of an MLM is when a hiring manager requires that you sign a contract immediately, without an opportunity to read the document thoroughly. Make sure to study contracts in depth before placing your John Hancock at the bottom.

Eventually, the MLM industry will burn itself out. There are only so many people to recruit, and it is only so long before the general public becomes wise to the fact that the products are substandard and the business practices are unethical. But instead of waiting for such a day to arrive, we need to educate our families and friends about the dangers of these companies, and put these people out of the marketplace. Hundreds of people, most of them young and naive, are led into these situations, and those of us who are aware of the dangers are obligated to share our knowledge.

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