Don’t Let Your Facebook Friends Sell You a Pyramid Scheme

Last week, someone tried to sell me what essentially amounted to little more than a jumped-up pyramid scheme. I was quite surprised, because I didn’t realize such business models were still so prolific, and that all the negative press hadn’t destroyed the industry for good.

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It turns out that many of these schemes — now dubbed multilevel marketing (MLM) “business opportunities” — are in fact making a bit of a comeback, and social media networks (in particular Facebook) are the new platform of choice for those looking to recruit more investors.

Just in case you ever get tempted, here are a few things you might want to keep in mind the next time a Facebook friend comes knocking with an unmissable business opportunity.

What is a Pyramid Scheme?

A pyramid scheme is characterized by an unsustainable growth model that’s prone to collapse, and as a result they’re illegal in most parts of the world. The core business practice relies on recruitment, with no sales of goods or services of any value taking place. Investors essentially pay money to those above them in the pyramid to be a part of the scheme, with any return on investment coming from new recruits “below” them.

Don't Let Your Facebook Friends Sell You a Pyramid Scheme img 0003

The more people that are signed up, the more money makes its way up the pyramid (quite often there are fees to remain a part of the process, which ensures money continues to make its way to the upper tiers). Such schemes can be very profitable for those at the top of the pyramid, but as the image below demonstrates, they quickly become unsustainable.

Over the past century, endless variations of the pyramid scheme have popped up, with ever-more complex rules and models. Names like “gifting circles” and “marketing grids” have been used interchangeably to hide the true nature of what is taking place, and governments around the world have moved to make the schemes illegal. The U.S., U.K., Australia, New Zealand, and Canada are among just a few of the countries which have outlawed this century-old scam.

So how is Facebook fuelling the comeback of such questionable business practices? Pyramid schemes have essentially been rebranded for the Internet age, under the guise of “multilevel marketing” schemes. But don’t be fooled, the two have more than a few similarities.

Multilevel marketing schemes essentially skirt the law and “pyramid” moniker by involving the sale of actual products, much of the time under a subscription model. They involve two levels of participation: the product, and the chance to become a partner who recruits more people to sell the product. Generally speaking, users cannot become referral partners without themselves first being enrolled in the sales side of the business.

Don't Let Your Facebook Friends Sell You a Pyramid Scheme mlmfacebook1

Quite often users will be told that most people aren’t interested in the opportunity to become resellers, but the incentives to do so (like waived subscription fees) appear very compelling on the surface. This often leads to more emphasis being placed on the referral side of the business, over actually selling the product offered in the first place.

Multilevels of Mischief

The problems with most MLMs are varied, beyond more than a passing resemblance with the pyramid schemes of yore. Just like pyramid schemes, most of these schemes appear unsustainable, as they also rely on the signing-up of more salespeople to sell a product. When the product is being given away for free as an incentive for signing users up (a common marketing tactic to tempt new referral partners), you’re essentially looking at the pyramid business model that’s previously been outlawed.

Furthermore, there are quite often many hidden costs you won’t be told about upon signing up. Users signed up “beneath” a salesperson are commonly referred to as their “downline” — and if you can’t grow your downline, you’ll be urged to take part in training seminars, or use additional sales tools provided by the company themselves. You guessed it — these often aren’t free, with everything from small training functions to large seminars costing hundreds of dollars to attend.

It also pays to take a look at the product, because much of the time it isn’t all it’s cracked up to be. I was told that my membership to one particular scheme would enable me to book cheap travel to luxury destinations, but there’s no way of seeing these amazing deals before signing up. In fact, the advertised cost didn’t include flights or further travel, which quite often makes up the bulk of the price in any package holiday. There are plenty of free iPhone apps that will allow you to save money on travel Travelling A Lot? You Need These Free iPhone Apps Turn your iPhone into a handy travel tool, not just incredibly efficient way of racking up expensive roaming charges. Read More , and they don’t involve paying money in order pay out more money later.

Don’t be surprised if the compensation schemes involved for becoming a representative are complex. Most are so complex that you probably won’t fully understand them yourself, which is the whole point. Caps on payouts, a minimum number of referrals before you’re paid, and misleading promises of free cars are not uncommon. A typically worrying example of the latter involves actually signing up for the “brand new luxury car” in your own name, and receiving compensation in the form of payments — provided you remain at a certain tier within the program. Fail to make the grade? Now you have a car loan to pay for too.

Don't Let Your Facebook Friends Sell You a Pyramid Scheme wv incomedisclosure

Disingenuous claims (often as a result of the overly complex nature of the business) are also all too common, with my favorite being “no money is spent on outward marketing at all” — this is purely because the business model relies on new recruits to market like crazy in order to make any sort of return on the initial investment. It’s no wonder sales tactics are often referred to as “cult-like.”

Where Does Facebook Come In?

Previously schemes like Amway, founded in 1959 and relying entirely on the multilevel marketing model to sell their products, required a very real list of friends or acquaintances to exploit in order to make your newfound career a success. Facebook makes this considerably easier, with a seemingly endless list of potential “clients” and “business partners” to connect with.

First established as a social tool for university students, before being opened up to the general public as a way to keep in touch on a global scale, Facebook is now a multilevel marketer’s dream. It’s not unusual to add a contact on Facebook you’ve never met, or only met through friends once or twice. This essentially turns a friends list into an ever-expanding register of potential customers.

Except generally, Facebook friends are just that — your friends, and friends are more likely to trust an invite to get together to discuss something really exciting than a random person marketing to you in a bar or on the street. We let our guard down among friends, we assume the best, and we’re more willing to connect in person with someone we feel that we know; even if they only “Like” the occasional update.

Facebook is an opportunity to sell an image (you probably do it without even realizing). We choose our best photos for profile pictures, we update our cover images with themes we want to project, we post pictures of ourselves on holiday — all in the name of selling an image that probably doesn’t sum up an average day in our lives. I’m not saying all your Facebook friends are fake, but social media fosters an undeniable urge to fit in and impress.

To many multilevel marketers, this image is taken to the next level. They want you to want what they have, but often the specifics of the business are kept under wraps. I can only assume that those embroiled in MLM schemes are often fed the same instructions about making an impression among potential customers and referral partners. Rarely is the product the focus of this image, but the success of the business. This is only based on my own firsthand experience, of course.

Some Examples of MLMs

You’ve probably already heard of countless companies that depend on MLM to sell their wares, and the very mention of some of these names might reveal why the “success” of the business is the focus, rather than the product:

  • Amway according to Eric Scheibeler, a former “Emerald” level Amway member: “UK Justice Norris found in 2008 that out of an IBO [Independent Business Owners] population of 33,000, ‘only about 90 made sufficient incomes to cover the costs of actively building their business.’ That’s a 99.7 percent loss rate for investors.”
  • Arbonne — an investigation by a British tabloid raised questions about the long-term sustainability of Arbonne as recently as 2014: “Presumably those 32,768 new recruits would each like 32,768 people in their network, which might be tricky because that would require more than 1,000 million people.”
  • Avon — there are pages of complaints (and a generally unfavourable rating) regarding the massive costs involved in building a business verses potential returns on
  • Herbalife — The Huffington Post published an article in 2013 which the author claims Herbalife is little more than a pyramid scheme: “According to the distributors and former distributors that I have spoken to, most lose between $1,000 and $10,000 with the average distributor losing $3,000.”
  • Mary Kay — a cosmetics range that’s been called out by Forbes, among others: “The company promises their recruits riches, but everything from class action lawsuits to SEC filings reveals that for most sellers, it rarely works out that way. What’s really going on is that would-be saleswomen are encouraged to invest in “product” by other saleswomen, who will then get a cut of all resulting purchases”
  • WorldVentures (DreamTrips/Rovia) — A prominent New York newspaper published an in-depth investigation of WorldVentures inner workings in 2012: “According to WorldVentures’ own income disclosure statement … 73.7 percent of reps fail to earn a commission and only 0.102 percent earn a yearly income above the poverty level. The average rep earns $325 in a year. That doesn’t account for the price of joining or the cost of training events.”

How to Spot & Avoid MLM Schemes

Not all MLM schemes are the same, but most will end up in the vast majority of investors losing money (some detractors quote loss rates of over 99%). You probably want to avoid getting involved altogether, but that’s often easier said than done — especially when you feel like you’re helping a friend out.

The best way to avoid getting involved is not to take Facebook “friends” up on their event invites in the first place. Deliberately vague event invitations that makes reference to undisclosed business opportunities should ring alarm bells, along with alarming levels of enthusiasm for something that seems too good to be true.

Genuine invites to get together usually don’t make any mention of “wine and nibbles” — friends don’t organize genuine get-togethers and draw attention to the free stuff you’ll be getting while you’re there. Furthermore, friends you barely know don’t usually invite you into their homes, so if you don’t know the person on the other end of the Facebook invite, it might be best to find out a little more before you dedicate a whole evening to their sales pitch.

If you do end up attending such a function, you’ll probably notice a few hallmarks of the MLM scheme that will give it away:

  • The host will probably emphasize just how good the opportunity is, before you know exactly what the opportunity is.
  • You might be assured that any legal and licensing issues have already been resolved, usually before you know exactly what the business is.
  • You may notice that certain important business aspects, like sustainability, are glossed over — instead there will be plenty of talk about “projections” which you should probably ignore, as these are simply made up numbers.
  • At some point in the proceedings you may be told that most people won’t be interested in the business opportunity, a tactic that’s employed to assure you it’s a legitimate business and create a sense of opportunity.
  • You may find a sense of “negative optimism” is employed — suggesting you might not be interested in the business opportunity, and that’s fine if you don’t want the residual income, perks and freebies that come with it.
  • I was told by one member that they had “gone home and researched the business all night” before signing up, presumably to create a sense of assurance. Don’t buy it, always do your own research.

Remember that anything that seems to good to be true almost always is, especially when it comes to online money-making schemes and direct sales opportunities. Even if you decide that a particular MLM is worth a punt, you should never sign up right there and then. Conveniently leave your credit card at home, particularly if you’re feeling obliged to sign up out of politeness.

Once you’ve left, research anything you may be considering signing up for with a healthy degree of skepticism. Don’t just cherry pick the positive reviews or hang out in Facebook groups, type “<company name> scam” into Google and see what comes up. The worst case scenario is that you’ll be pleasantly surprised.

Don’t just stop there — research the founders too. In my case, both founders had been found guilty of tax fraud and had been involved in an MLM scheme that had since ceased trading (never a good sign). See if you can find evidence of legal disputes and lawsuits — again my own research revealed that the company had been declared a pyramid scheme in Norway. They also used some pretty heavy handed legal tactics to silence detractors and ex-members hoping to expose the true nature of what was going on.

Be Careful Out There

Facebook is an amazing tool for connecting with old school friends and finding new acquaintances. It’s also awash with get rich quick schemes Are You In A Rush To Make Money From Home? Spot 7 Work At Home Scams Wealth, speed, ethics -- when it comes to money, you can only pick two. When it comes to working from home, it's very likely that you won't get a chance to even pick one of... Read More and complex scams How to Identify a Facebook Scam Before It's Too Late Facebook scams are all the rage, and they can sneak up on you. Here are some warning signs to look out for so you don't get caught in one. Read More , so you should exercise caution and always question the true motives of someone approaching you with a business opportunity of this ilk.

I’d probably get in trouble if I declared all multilevel marketing schemes to be scams, but after doing my research I’d never recommend you become involved in one.

If you want to make some easy money, you can always flog your personal information for around $2000 per year I Make $2000 A Year Selling My Personal Information, You Can Too Don't be one of those suckers that sells their information for nothing! Read More . Further online money making schemes involve writing, transcribing, and tutoring Your Guide to Making Money Online: Writing, Transcribing and Tutoring Gigs This is your guide to making money online. There are plenty of legitimate ways to earn money if you're savvy enough. Read More  and playing video games 6 Ways to Make Money Playing Video Games You can make money playing video games, but it isn't easy. If you are dedicated, this article covers how a hobby can make money. Read More , and you can even put the Internet to good use and reduce your credit card and other debt too How to Get Rich: The Fastest Way to Get Out of Debt Imagine being debt free. No overdrawn balances or unpaid bills. There is a foolproof way of getting yourself out of debt. It starts with a plan and some discipline. Let's visit the other ingredients. Read More .

What have your Facebook experiences with pyramid schemes been like? Were you added to an MLM group? Did you sign up to the scheme? What happened?

Explore more about: Facebook, Scams.

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  1. Paula Hill
    December 15, 2017 at 2:30 am

    A friend tried getting me to join. I researched it and immediatly found complaints. It was called motor club of america. They claim to have better service than AAA.. It seem legit till you look up the companys name on the emails they send you!

  2. Arley Rose
    June 29, 2017 at 10:47 pm

    Have you heard of It Works Global? I joined in March of this year and feel pretty supid that i fell for it. One of my friends persuaded me to join and i didn't fully understand what i was getting into until i stepped back and said "what am i doing?" i took a break from it and have done extensive research on it and it seems like it's impossible to make money without recruiting, which i dont feel comfortable doing because truth is i'm out money, like over $300 and have not made any back, so i dont want to suck in another poor soul into it. i will not be pursuing it any further, my upline wants me to basically lie to people and say that i'm making money but i haven't made anything, we are slapped with fees and the pressure to recruit... They steal eachothers posts on Facebook and I've even had my personal posts copied, posts about MY family and it really upsets me. when i mentioned MLM or Pyramid to them, they lashed out and yes they do all act the same, hence why people call it a cult. Take it from me, dont get sucked in, you well not make money like they say, only top of the tiers ever make good money because remember they profit from their downlines... Just my experience

  3. PJ Henry
    February 25, 2017 at 11:29 pm

    LuLaRoe is a major pyramid scheme right now. I feel terrible for all of my FB friends who have been tricked by this terrible company. They make them spend a ton only to never make it back. Let's be honest.. Pretend like you're seeing those leggings at Walmart. Would you buy them now? I didn't think so. They're really dorky. It's sad because you can't tell your friends that they've been duped.

    • Jane
      December 21, 2018 at 7:58 am

      Have you seen what's happened at LLR lately? All going down the pan fast.

  4. Data Junkie
    January 27, 2017 at 5:39 pm

    The dirty little secret of MLM is that the primary customers of the MLM company are actually the down-line reps themselves! The real money-maker is the starter kit, followed by the samples and marketing materials sold to the down-line reps inside the network. Personal sales minimums to qualify for compensation guarantee loyal customers (within the network), at least for a while. No outside sales are needed for the company to make a profit. Rep churn is actually desired, as each new rep must buy that lucrative starter kit. They say the key to success in MLM is, "recruit, recruit, recruit." They don't say, "sell, sell sell," because they really don't care if you ever sell a single item outside your network, or if you ever make a penny personally. Company profits come primarily from the inside...from reps like you. Before considering involvement in any MLM, please visit Mrs. Bottlesoup's blog. She takes issue with MLMs targeting and exploiting stay-at-home-moms, and does a great job of boiling down into simple terms the very complex compensation plans of some of today's popular MLMs, showing the level of commitment required just to make minimum wage. Very enlightening.

  5. Erika
    January 6, 2017 at 3:26 pm

    My husband is getting convinced to join MYECON and I can't get him to see the SCAM!!!

  6. Michael
    December 29, 2016 at 1:42 pm

    Let's not forget Primerica. It is a MLM in the financial industry. I went to "a job interview" which turned out to be Primerica. What I would like to add is not to trust Facebook comments of how wonderful the MLM is. I questioned Primerica in different aspects and they blocked my account. If you leave a negative comment, they block it. You can see this by going to their page and noticing that nothing negative is posted.

  7. Kay
    December 15, 2016 at 2:15 am

    Grammar corect: "... too good to be true."

  8. Melanie
    October 9, 2016 at 2:30 pm

    Definitely agree this is very one sided. I also agree to do your research and ask about any monthly fee or quotas. I don't believe that they are ALL a scam. I have seen some friends do very very well as that is their only source of income. And would so much rather a friend approach me with A direct sales approach to make money then just play the poor pitiful me I can't work please help my family (cause I'm to lazy to work). So much of these are and can be done online for those who DON'T or CAN'T get out of their house bit still TRY to make an income. And yes you can make a descent income. Ex. I work full time as a pharmacist assistant I made more money last month I my Direct sales then I did at my real job where I bust my rear working 10 hours a day 5 to 6 days a week. I am at the bottom of the food chain with just a couple people under me who only sold just a small amount probably just for personal use. I did NO in home parties, only online parties. The scam is thinking you can make money by just joining. You have to work it. I know not all companies are great but if you do your research apply yourself and don't fall victim to the buy buy buy, you can make a nice supplimental income . Not all companies are the same, some valid points made in the article but I feel as though the person writing it is a bit disgruntled at maybe joining something for them wasn't what they thought it would be. They are not a get rich quick. Commen sence .

    • Mike
      November 25, 2016 at 12:30 am

      hahaha...."commen sence", no wonder you fell for an MLM scheme.

      • Choyak Yakatak
        January 28, 2017 at 11:23 pm

        descent decent????????

    • leonette
      January 24, 2017 at 1:13 am

      You're correct there are tons of direct sales companies out there. The claims made about Herbalife are most certainly incorrect. People who don't read and listen to someone lying to them are the ones who get scammed. Major key: do the research before you allow someone to take your money. If there are monthly fees, a high buy in and virtually no true product, then it's probably not a viable business model/company.

      • Tim Brookes
        January 25, 2017 at 2:58 am

        "monthly fees, a high buy in and virtually no true product"

        You just described virtually every MLM scheme ever.

      • Choyak Yakatak
        January 28, 2017 at 11:25 pm

        There are no `direct sales` companies anymore. Fuller Brush and Encyclopaedia Brittanica do not exist anymore

    • Choyak Yakatak
      January 28, 2017 at 11:00 pm

      descent income? not decent income????? Commen not common?? The MLM velociraptor has already affected the cognitive capability......

  9. Ben Zyl
    September 30, 2016 at 11:44 am

    And now with Facebook rolling out their new inescapable 'suggested Post' adverts, about a third of them are out and out pyramid/MLM//network marketing/clickfunnel scams leavened with the usual forex/spread betting/binary options trash. No need for 'friends' to suck you in, just pay Facebook to do it for you.

  10. Babs
    August 7, 2016 at 3:49 pm

    Sorry, but MLMs are glorified pyramid schemes. Open your eyes and smell the BS! All you see now on Facebook is " oh, I just need two more people to join my team". Utter bull, the same person who typed that, puts it again and again. It's never ending. High start up fees. The company will tell you. Oh, you have over £300 of products for just £89 or similar. Bull again, the products probably amount to £30 tops. Also, I have yet to meet anyone from an MLM scheme, who got that holiday, car etc... I know of no one. They have to constantly be plugging their crap and boring us on Facebook about their overpriced crap. One company even says crap like we're selling you empowerment and positivity. Seriously. Then you're encouraged to have parties. So how much do you spend on nibbles and wine etc... To make a few lousy £ or $. Then you drop goods off at friends houses. How much do you spend on petrol/gas. The only ones who will get rich are the very ones at the top-the founders!

    • Choyak Yakatak
      January 28, 2017 at 11:27 pm

      My vehicle gets 1.2 light years per cubic Angstrom unit of gas, so I spend nothing my awesome MLM made me a trillionaire in one yoctosecond

    • Lisa H
      September 27, 2017 at 7:17 pm

      I have 4 close friends who are all driving their Lexus thanks to our MLM company, and I will be driving mine next year. :) Not all companies are created equally.

      I also make 70% of my income from the product sales and not from the "team".

  11. DeVerne
    July 29, 2016 at 5:38 pm

    This is really an article based on ignorance. Richard Branson, Dave Ramsey, Tony Robbins, The Authors or Chicken Soup for the Soul, & many other world class entrepreneurs understand Network Marketing & MLM for the value the model brings to the marketplace. It is 2016, it is time to wake up & realize that the current industrial model of earning wages is broken & out dated.
    The YouEconomy is vibrant & growing. This arena is where control over time & finances are created. Conservative statistics state that 71 billion dollars in commissions are paid out to distributors annually. With 98% being paid to families who earn a few hundred to a few thousand in monthly commissions.
    70% of Americans want a business that they own, but don't have the time, capital, or ability to stomach the risk of their investment. It is through Network Marketing that these people can have their own business & control their own destiny.
    It is sad that people are still writing trash like this that reinforces small minded thinking & keeps people trapped in the endless cycle of hire, fire, & debt.
    Pyramids are illegal, period. Network Marketing or MLM, or whatever you want to call it is not a pyramid, but a better way to reclaim control over your life & turn the tables on greedy unethical, uncaring corporations.
    DeVerne Augustus

    • Michael
      December 29, 2016 at 1:46 pm

      All those wonderful authors are being used as weapons to Brain Wash the victims of the MLM schemes.

      • Larry
        December 29, 2016 at 2:57 pm

        True! They feast on the failure that is MLM like seagulls on french fries. Nobody outside of the MLM industry has anything to do with these Cardone, Vaynerchuk, Lopez and Kiyosaki types. They simply regurgitate common knowledge and resell it to MLM'ers, often at the suggestion of their uplines, which makes one wonder what's in it for their uplines. The Landmark Forum is another favorite suggested. Est and LGAT are simply a form of group brainwashing, which makes it a perfect fit for the MLM industry.

        • Victor Ledezma
          January 14, 2017 at 8:18 am

          LOL you people sound like you failed at MLM and are salty enough to look this stuff up on the internet and just bash on everyone who wants to succeed. What's your solution? Work a job, trade time for dollars for the rest of your life? Is that what your life is about? MLM companies aren't about recruiting people and brainwashing ANYONE. The vision is to build a life of financial freedom so that people can spend their time with their families, become shining examples of hope and enjoy life the way that anyone brave enough to endure all the negative losers out there should. I love how everyone who bashes MLM does it with so much ease because it's easy to judge. But what's your solution? What else is going to provide a lifestyle that most MLM companies can offer if the work is put in with integrity and with a vision to truly help people do the same. Offer a solution, not just add negativity and maybe your opinion will matter.

        • Choyak Yakatak
          January 29, 2017 at 12:16 am

          since Victor Ledezma refuses to allow a comment, I will comment here. He alleges that MLM can make you Super Mega Turbo Rich. I would call myself an ANTI MLM ZEALOT and a 'Dream Stealer'

          my solution is get an education first, then the awesome jobs will follow. I have a group of awesome friends, all are basically ANTI MLM ZEALOTS heheehehe and none of them are POOR!!!!!

          I told my friend that I could jump across the Grand Canyon, my friend informed me that I cannot, making my friend a DREAM STEALER!!!!!

    • Larry
      January 14, 2017 at 4:21 pm

      Ive yet to review an MLM annual report, where with basic math skills, anyone can determine the number joining and leaving each and every year. Its rather easy to calculate by simply taking the number involved in a previous year, adding the new reps who joined, then comparing that to the number of reps the following year. (if an MLM has 100,000 reps, adds 30,000, but still shows a force of 100,000 the following year, its rather obvious that 30,000 have disappeared). Those are the numbers that MLMs dont want you to know. And those numbers repeat themselves over and over and over.

      • Lisa H
        September 27, 2017 at 7:30 pm

        I work for a Fortune 500 company, and our main profit is from sales. Those sales come directly from sales reps. It's NOT a MLM company, and I watch more sales reps fail than survive. Twice as many do not make it because they are not willing to put in the work. It is the same philosophy with LEGITIMATE MLM companies. You have to be willing to put in the work if you want the business to make an impact in your life. It's NOT easy, but it can be life changing.

    • Choyak Yakatak
      January 28, 2017 at 11:28 pm

      Your vague statement is touting the Gig Economy, not MLM hehehehehehehehehehe

  12. Clyde
    July 26, 2016 at 10:38 am

    It is true that many fall for sleazy and unethical schemes from people who suddenly show up in your life offering you an opportunity.

    However, I believe that this article is one sided.

    There is always the other side of the coin. If you only look at one side, you won't know how the entire coin would look like.

    Before I go over my points, I'd like to ask everyone to treat this topic with an open mind. If you aren't, then please ignore my comment because it won't make any sense to you anyway. Ok? :)

    Moving on...

    MLM is an effective sales business model and the industry itself is valued more than a billion dollars.

    Yes, I admit that I met people who are unethical and manipulative and do what it takes to earn money. Most of them exaggerate and claim that people will earn quick cash. But the truth is that people need to work hard to earn it. Greed begets them so to say, and this is the reason why MLM gets a lot of bad reputation.

    However, I also met many people who are kind-hearted who does network marketing ethically and with integrity. Many of these people have the passion to help other people succeed. This type of people in the MLM industry is rare to find. Cliche as it sounds, people who help other people succeed will get more in life.

    In the end, it's all about the people and not the system. Greed, hate, fear, love, kindness and etc come from people not from objects.

    Many network marketers aren't trained professionally to promote their business the right way, and part of the fault is from the people who signed them up. Many people in this industry mostly think about how they earn and not on how they will help other people do the business.

    To end this comment, I'd like to share my motto "Don't tell people that they will succeed with you unless you are committed on helping them succeed."

    Peace be with you, guys! :)

    • leonette
      January 24, 2017 at 1:16 am

      That's a great way to put it. MLMs are not all bad and the people that got used were looking for a way to get rich quick. You've got to put in time and effort to be successful at anything in life, especially network marketing.

      • Choyak Yakatak
        January 29, 2017 at 12:19 am


    • Choyak Yakatak
      January 29, 2017 at 12:19 am

      how can MLM be an `effective sales business model` unless group recruitment is included. The product vastly overpriced from traditional sales channels.

  13. Paul
    July 10, 2016 at 10:44 am

    Wow.... so much ignorance in this article... quite sad realy

    • Tim Brookes
      July 12, 2016 at 1:59 am

      Personally I find it sad that people falling for such unsustainable and exploitative schemes in 2016, and even sadder that their friends are to blame for it.

    • Choyak Yakatak
      January 29, 2017 at 12:20 am

      not `realy` but `realllllllly` works better

  14. Aatif
    July 4, 2016 at 9:26 am

    What in most interesting is how a number of people who've already fallen victim to such schemes are vehemently defending theirs as legitimate businesses in the comments over here. They're making the EXACT arguments that this article warns against.

    Insightful write-up, thank you.

      July 12, 2016 at 10:59 pm

      Sounds like you have a story.
      Did you join a mlm and do nothing and expect to get rich.
      That is what it sounds like to me.

      Its a shame that you try to influence so many with the garbage contained in your article.

      Truth is MLM is hard work.
      But if you have a cubicle mentality it will be beyond your mental understanding.
      And you will fear it.

      Everyone knows who Warren Buffett is correct. One of the Riches man on the planet. Why would someone with his intelligence invest in MLM companies if is was a scam?

      Think before alter peoples lives with the trash that you share.

      • Melanie
        October 9, 2016 at 2:32 pm


      • Larry
        January 14, 2017 at 4:29 pm

        Because investing in an MLM is totally different than working for one. Do you think investors in a coal mine would actually pick up a shovel and work in one? Money and greed are blind my friend. Its all about a return on investment.

        Secondly, the reason MLM corporations are successful is exactly the same reason not to join one. Their corporations prosper by keeping their selling costs low by passing the burden of those expenses onto their reps. Would anyone work a J-O-B if the boss made you pay for utilities, use of their computers and your portion of their lease? Absolutely not, but that is exactly what MLMs do daily.

        • leonette
          January 24, 2017 at 1:19 am

          What expenses? I am not charged a dime over what it cost for my membership kit which at the time was $67. The only thing I pay for is the product I use. My clients order their own product via my website or I have it drop shipped to them if I place the order for them. I have zero back-end costs and my portion of the sale is directly seen when the transaction is made.

      • Choyak Yakatak
        January 29, 2017 at 12:25 am

        I NEVER joined AN MLM, and I would be referred to as an ANTI MLM ZEALOT

        I watch the proselytizing and l will VOMIT IN THE SINK hehehehehehe

        WTF is 'cubicle mentality' does not compute. Invest in MLM companies is DIFFERENT than joining

    • Choyak Yakatak
      January 29, 2017 at 12:21 am

      it is NOT a `business`....oops sorry

  15. Anonymous
    July 3, 2016 at 4:44 pm

    Facebookinati confirmed

  16. Jamie
    May 26, 2016 at 3:05 am

    Many of the companies you have listed do not fall under the classification of a pyramid "scheme". Avon, Mary Kay, itworks, Younique, etc have actual product being sold and the earnings are based on sales and down lines.
    A pyramid scheme is a company where an "idea" is being sold and you recruit to share the "idea" such as network marketing training etc. Yes they sell some "training books" and blog services to hide what they really are. .

    I have been with Plexus for a year and have fully supplemented my full time career pay. I am far from the top and a person 4 levels down from me made more money because he worked it even harder; how is that a scam?

    • Tim Brookes
      May 26, 2016 at 5:27 am

      The only thing that differentiates these companies from actual Ponzi schemes is the fact that they involve a product or service, as stated in the article. A very small percentage of people who join up actually end up making any money at all when registration fees are taken into account, and in several jurisdictions some companies been declared illegal for their similarity to pyramid schemes (like WorldVentures in Norway).

      The problem is that growth is not sustainable when, as you put it, earnings and projections are based on "downlines" — essentially signing up as many people as possible to keep the pyramid growing. Guess what happens when it stops growing? The whole thing collapses. Of course these companies are trying to distance themselves from the idea that they are pyramid schemes — using words like "web" and "network" in their marketing material.

      To truly be successful at this sort of marketing you need to turn every facet of your life into an opportunity to sell your product, or maintain your "downline" — which is a questionable business tactic at best. If you're not willing to monetise your friends, family, neighbours, work colleagues and so on then you're not going to get anywhere with it. The experiences of others are undeniable, and so are the statistics behind the profitability of such schemes.

      I don't know anything about Plexus, but if it's based on the MLM model then I'm going to assume it's no better than any of the others listed in this article.

      • Jamie
        May 26, 2016 at 3:37 pm

        "A very small percentage of people who join up actually end up making any money at all when registration fees are taken into account".
        $34.95 is hardly an unreasonable fee to start a business from home. I have found success in one year with Plexus, and am far from the "top" as you mentioned is the only way to make any real money.

        At this point I will respectfully agree to disagree. I find it sad that your classification of most work from home businesses as scams could possibly hold someone back from an amazing opportunity.
        The reality is these businesses are not all built the same.

        • Lavon
          February 23, 2017 at 3:47 pm

          Well said Jamie. Agree to disagree.

        • Lisa H
          September 27, 2017 at 7:36 pm

          I would also like to add that ANY sales job, especially where a sales manager is working, entails recruitment to keep the company "in the green". I work for a Fortune 500 company in which sales are the lifeblood of the company. MANY more fail than succeed as sales reps, and I've watched very few truly "make it". Regardless, the management is still required to constantly recruit and they will be fired if they do not bring in new reps. How is that any different from a legitimate MLM company?

    • Choyak Yakatak
      January 29, 2017 at 12:26 am

      Your Plexis allowed you to buy a mansion where you need two airports to get around??????

    • clancy
      February 25, 2017 at 9:47 pm

      They are MLM's. You will loose money eventually. Run a mile if you hear the words MLM. Another sign, is if they get upset if you mention the words 'pyramid scheme'

      The near hysterical defence of their 'business' is yet another warning sign. MLM's are very similar to cults, members show very similar behavioural patterns.

  17. nellah heigz iamge
    May 15, 2016 at 4:18 am

    I am just about to join in one of the type,I was introduced to it by one Facebook friend
    I was so carried away by reading their post about their product and I forgot to research.I persuaded my husband to give me green light to join but due to His business he delayed for me to make the membership that I read this post I learnt a lot and it helped me a lot
    So I am gonna think twice not to fall for such pyramid schemes.
    Thank you so much friend
    You saved me..
    Spread the news so we can save others too
    Thanks. Lyn

    • Tim Brookes
      May 23, 2016 at 5:08 am

      Glad we could save you from a nasty surprise down the line!

      For anyone else reading this comment section, most of these companies have mandatory "cooling off" periods of about 2 weeks, so if you've already signed up you can often cancel and get your money back before any serious damage is done.

    • Melanie
      October 9, 2016 at 2:32 pm

      Not all companies are the same and I do encourage you to do your research, try the product for yourself and use common sence. This article is VERY one sided. Good luck out there.

      • Mike
        November 25, 2016 at 12:37 am

        I can't imagine that someone who can't even spell common sense actually has any.

        • Larry
          January 14, 2017 at 4:34 pm

          She also slid in the "try the product yourself" line. Thats all MLMs want is a dollar here, a dollar there. They depend not only on volume sales, but on the volume of those who come and leave each year.

        • Choyak Yakatak
          January 28, 2017 at 11:11 pm

          could not spell `decent` either????? `descent` means diminishing altitude

  18. Annonomoys
    April 28, 2016 at 3:59 pm

    All put there what about unique it will hit Spain by 2 of may and people sent even aware of it. They have over a Millon of users presenters in 7 countries all using Facebook. They plan to launch in Spain on the 2 of may. They are like amway Avon but these are even more agresivo as it's totally social Network. Be warned what's your thoughts all.

  19. Cindy
    March 30, 2016 at 3:33 pm

    If you want to go to work, and perform the same job day after day, and know that every business has a President, VP, directors, managers, etc, who are at the top of your mundane "workplace pyramid scheme" - you go right ahead. But don't belittle those of us that chose to promote a business that we believe in, in order to make a better life for our family, which includes making our own hours, working from home, networking and meeting exciting new people every day. I have been in direct sales for over 15 years, including rubber stamping, health, beauty and jewelry, and would never promote something that I didn't believe in. The company I am a Promoter for now, I started as a customer, and by day 17 became a Promoter, because the product works, so now I just share with people. In fact, I've given product away so people can experience it for themselves. If I eat at a restaurant I like, I share; if I have a hairdresser I like, I share. If I have a product that I like...guess what? I share. If it is a product that works, it will be successful, and guess what??? People will start getting it from may as well be me! And yes, I network. Why isn't the "product" on the big box store shelves? Because the co-founders knew that if it was, it would be pricey, and they wanted to give everyone...customers and promoters alike. Your ignorant if you don't think that the CEO of Apple or Nike arent making a gazillion dollars off the consumer. I represent a company that is cloud based, so commissions and savings are passed on to both the customer and the promoter. I also am in favor of helping my friends out if possible, because home based businesses are legitimate. You are receiving a product for you investment, and if it allows a mom to stay home with her kids, or a young person to work hard to earn a reward of an auto bonus, I'm sorry, what's wrong with that??? I am not saying that ALL home based businesses are "legitimate" but you surely make it sound like ALL direct sales companies are not legit, which I take issue with.

    • Cindy
      April 1, 2016 at 9:58 pm

      Didn't fiinish the sentence..."they wanted to give everyone...customers and promoters alike, the opportunity to get the product for FREE"

    • Choyak Yakatak
      January 28, 2017 at 11:12 pm

      I joined an MLM one nanosecond ago, now I am a trillonaire

      My mansion needs two airports to get around. My friend is a pilot

    • Choyak Yakatak
      January 29, 2017 at 12:29 am

      Are you already a trillionaire?

  20. Shirazy
    March 9, 2016 at 10:00 pm

    The small business I work for is totally a Pyramid Scam too.

    Boss at top - Feeds off everyone, big bucks.
    2 Senior Managers - Feeds off Managers & below
    5 Manager - Feeds off Sales people
    15 sales people - 100% commission
    10 office & Support - they get crumbs

    Now if I am not mistaken, MOST businesses operate this way.

    • Tim Brookes
      March 10, 2016 at 4:40 am

      The difference being a regular business model doesn't rely on referring more people to join in order to keep it sustainable. A regular business can keep growing providing its services or goods are in demand. A regular business centres itself around providing a product or service, not a marketing scheme.

      Most businesses use a hierarchy. Many businesses can seem unfair in their structure. That doesn't mean they're scams in the same sense that Pyramid Schemes and MLMs are.

      • Lisa H
        September 27, 2017 at 7:43 pm

        That's not necessarily true. Insurance companies, pharmaceutical companies, and many others based on sales reps would fold if they didn't constantly recruit and replace their sales force. I've seen it happen, as I've been in this world for a number of years.

        • Tim Brookes
          September 27, 2017 at 11:29 pm

          There's a huge difference between employing someone to work under you, and paying them for their time as opposed to finding people to buy into your company as contractors though. MLM salespeople are not employees of the company they work for, ever.

          I see you've left a few comments around this article. Like most others who seem to think that MLM companies are legitimate, you've neglected to mention the company.

    • Choyak Yakatak
      January 28, 2017 at 11:13 pm

      nd you need to buy a certain amount of product every month. Everyone from the top to the bottom are competitors?????

    • Choyak Yakatak
      January 29, 2017 at 12:30 am

      Nether do they have to PAY 'crumbs' to stay employed

    • Laura
      April 3, 2017 at 3:43 pm

      Your company pays you a salary or hourly wage for your work. You don't have to buy the products and recruit people under you. It's HUGE difference.

  21. alex
    February 18, 2016 at 8:25 pm

    Has anyone heard of it works?
    Im getting approached about it and have a feeling its another pyramid scheme

  22. Anonymous
    January 17, 2016 at 5:32 am

    I have a friend who has been pressuring me lately to be recruited to get involved selling a product called, 'Nerium EHT'. It's some sort of anti-aging supplement. The company also produces an anti-aging cream. My friend is promoting the product on Facebook. I don't know how widespread it is, but my initial investigations reveal that the company falls into the category of a MLM.

    I haven't done a whole lot of investigating, but it didn't take more than one Google search to find a source that said that the sellers of the products have to buy them, that the product retail is very, very expensive, and judging from my friend's behavior, the 'sales people' are pressed to recruit others to sell.

    I have declined her 'offers' to get involved. She's really jacked up about it and I think hurt that I will not get on board. I hope she doesn't get completely burned by the whole experience, but I fear the worst.

    Here is a link to a scathing report on Nerium EHT:

  23. Anonymous
    January 12, 2016 at 11:59 pm

    So what is FB doing to protect its members (and its own reputation)?

    • Tim Brookes
      February 18, 2016 at 11:44 pm

      Honestly, it's not really a Facebook problem. The social network is a means of talking to, connecting with, and meeting people — so it stands to reason that it's going to be abused by certain people. MLM marketers are certainly not the only ones using the platform for their own financial gain, and they're probably not the worst either. The fact is that these businesses are still not illegal, and not called out often enough as the scams they really are.

      Personally I think more needs to be done to stop these companies existing in the first place.

      • Claudia
        April 15, 2016 at 5:28 pm

        Hi Tim, I understand your concern... however, if you would like to stop these companies existing, it would mean that 34 billion USD would disappear from the US economy... Here have a look....

        I agree, a lot of people loose money because of many reasons. Do not forget that MLM is like any business. YOu will not get rich from one day to another, you need to work, and certainly, your friends would be maybe your first contacts and customers, but you need to move from and find other people. Do you know a business that can survive only with friends? I don't.

        The MLM business schema is interesting but I agree, you need to have a business mindset.. as in all other business.

        • Larry
          January 14, 2017 at 4:38 pm

          Do you honestly think that losing a mere 0.64% of the total retail market would impact the economy, knowing full well that people would simply get these very same products through traditional stores at a fraction of the cost that MLM's are charging?

        • Choyak Yakatak
          January 29, 2017 at 12:32 am

          I would rather TIGHT money, than LOOSE money. 34 billion USD is what????? 0.3% of the economy SO WHAT!!!!!!!!!

  24. Luide
    January 5, 2016 at 3:40 am

    These schemes come in all shapes and forms nowadays. Prepaid airtime multilevel "sales", subsidized travel many forms. And they are often designed to tap in to one's fantasy and emotion, making them all the more appetizing. As this article states, these models are NOT sustainable mathematically, and you will most likely lose your initial investment.

    • Larry
      January 14, 2017 at 4:42 pm

      Well said. In fact, the products and services are interchangeable. They don't even rely on products/services sales, but on "MLM'ing" their own people, via sign-up fees, monthly subscriptions, training material purchases, pay-to-attend seminars, and even pay-to-attend annual conventions.

      • leonette
        January 24, 2017 at 1:26 am

        lol, $100 for a convention is not nearly excessive. I have paid more than than to attend a sorority convention every other year (upwards of $500+).