In the first year of a Multi-Level Marketing operation, at least 50% of representatives drop out.

After five years of operation, at least 90% of representatives leave the company.

By year 10, only those at or near the top are still in the organization and at least 95% of its original representatives have dropped out.

Multi-Level Marketing (MLM) creates rapid market saturation

A company must carefully consider their production because mismanaging supply will drive demand down.

MLM companies don’t observe or regulate the supply/demand relationship.

MLM disregards any supply target.

Without a supply target, sustainable equilibrium is impossible.

The market quickly saturates or demand eventually drops.

The company must compensate for the demand drop in some other way or they go bankrupt.

MLM’s primary profit doesn’t come from its advertised product

The incentive to join an MLM company doesn’t come through customers’ love of the product.

If their financial statements were transparent, most of their income wouldn’t come from product sales.

Pricing models and marketing attention demonstrate the customers are the group who believe themselves to be sellers.

MLM’s product that makes most of its revenue is a “dream” of selling others on selling others the dream.

MLM sells through inspiring confidence in its prospective members through motivational tapes, seminars, and videos.

The culture heavily emphasizes that MLM materials are necessary for success

MLM always hires with a pyramid structure

Conventional sales never need to set aside time to hunt for workers:

Job markets possess a natural scarcity. People already desire the product enough that some people will believe in it. Applicants want to succeed at the job before applying for it.

MLM organizations build by geometric expansion (1 to 10 to 100) as opposed to progressive expansion (1 to 2 to 3).

At a factor of 10, three levels create 1,000 sales personnel and six levels create 1,000,000.

Some modern MLM incarnations limit the number of people someone can sponsor, but fail to address the geometric issue.

Common sense asks who those people are selling to.

Most MLM representatives say that most people will fail.

At best, the model is exploiting a majority to fund a tiny minority.

MLM doesn’t use reliable, legal distribution models

Free market price competition usually takes arbitrary distributor layers out of the chain.

Market demand ensures a highly exclusive or competitively priced product doesn’t need additional independent vendors.

MLM makes needlessly complicated pricing structures for products and materials to make products appear sophisticated.

A pyramid model is illegal under the SEC.

MLM is usually exempt from most of the Federal Trade Commission’s influence.

Sales pay in MLM is abysmally low

MLM provides bonuses and incentives for its highest achievers, like conventional sales.

However, while conventional models give the same commission percentage irrespective of sales volume, MLM gives commission proportional to sales volume.

MLM uses shady marketing tactics

Marketing sometimes appeals to greed and materialism, but MLM embraces it.

MLM branding usually implies a lifestyle of free and liberal excess.

Its culture emphasizes the desire for mass materialism and extreme wealth.

Its only subtlety arises when it associates with religion.

Most of their recruiting and retention strategies appeal to pride and vanity.

Sales for recruit purchases are high-pressure persuasion tactics that lower the prospects’ initial opposition.

MLM often establishes goals for sales staff on feelings or desires more than viability.

Along with the vices, MLM fear-mongers prospects.

Representatives usually sell the starting costs as an all-or-nothing decision to make recruits believe they can’t afford to fail.

The marketing mix of minimal experience, a saturated market, and a full-commission income inspire dishonesty in representatives.

Instead of facts or data, many sellers use hyperbole and dishonest claims about the product.

Further, many of them dishonor and falsify competitors.

MLM uses obsolete marketing tactics

MLM’s primary marketing channel is through prefabricated parties or home demonstrations with the recruiter and their recruiter.

Most MLM demonstrations feel phony or staged because the representatives have little sales experience and aren’t familiar with the product.

Selling MLM product is functionally similar to most other cold-call sales.

MLM doesn’t adhere to the rules and grace of newer marketing tactics such as relationship marketing or data mining.

MLM poorly manages vendor-client relationships

Besides blurring the line between vendor and client, MLMs inconsistently manage their public relations.

MLM brands frequently redesign their image and change their product story, which is usually a sign of a failing company.

MLM companies heavily regulate their image to strictly company-approved videos, brochures, and outlines.

Beyond recruitment, the rest of MLM capitalizes on the “be your own boss” mantra and structures very loosely.

Training for sales without research or mentorship is ineffective because marketing and sales are a trade of their own.

Anyone who questions organizational decisions or requests more input will receive shame from the community.

Though not necessarily intrinsic to MLMs, MLM leaders are portrayed as celebrities

Further, many MLM leaders are convicted criminals.

MLM growth sabotages representatives’ relationships.

Members will justify exploiting relationships as networking or business-building. Outside the company, most people believe MLM pitches are shallow, selfish exploitation. The dramatic discrepancy between internal and external views of the company inspires most MLM representatives to treat anyone who dislikes the product as an enemy.

Most MLMs feel like joining a cult

MLM guarantees strong feelings to anyone who has experienced it, either for or against it.

The fact that people who have experienced MLM never seem to feel ambivalent about it is a huge red flag.

Terrible products usually have other redeeming qualities: A low-quality product is extremely cheap. A service that takes a long time to deliver often does an adequate job. An overpriced product can still be high-quality.

Critics of MLM usually have nothing positive to say about it and proponents usually can’t express its shortcomings.

If recruiter-vendor-clients want to develop outside the company, a common practice in the rest of the sales world, the culture shames them.

Conversations with “old friends” become awkward.

Most of them are oblivious to how much shame they bring on themselves.

Lifelong friendships often unravel and groups of friends can separate.

A long-term MLM representative will avoid family and friends but won’t hold MLM responsible for the decision.

Calling out an MLM representative’s behavior is usually a waste of time.

MLM representatives claim other representatives or prospects are their new friends if anyone questions their lost relationships.

If anyone criticizes their MLM group, they’ll usually dismiss or justify the criticisms and then grow resentful if they don’t change the subject.

MLM culture, especially meetings, often vilify critics and their claims with faulty logic.

Most people end their MLM career the same way:

Rapid financial failure Setting the MLM aside for at least a few months Either embarrassment about participating or becoming more insufferable from intensified character defects

MLM isn’t technically to blame.

MLM is often a vehicle for someone’s pre-existing mental disorder.

Many MLM members move into other addictions or cults.

Leaving MLM is difficult.

Many people who leave high-paying jobs to join MLM have to admit many painful realities.

The people who like MLM are want to feel like leaders without any of the risk or sacrifice it requires.

In Summary

MLM uses the Fraud Triangle:

Pressure – comes from quotas, other people or hardship Opportunity – a chance to seize an opportunity that could change their life, even if it’s unethical Rationalization – justifying decisions May feel like a victim of overwork or underpayment

Believing in no victim because they will somehow return the money someday

Claiming anyone who doesn’t succeed at the program isn’t devoted enough

Being an MLM representative is sharing in a uniquely devious culture.

MLM encourages people to be more materialistic and greedy.

They sell a product with semi-legal methods.



MLM enterprises become famous for slander, libel, and rumor, sometimes with criminals as their marketing experts.

MLM’s most sizeable profit comes through the ability to convince people that an unsustainable marketing system is viable.



Their representatives build a reputation among their friends and family as either a con artist or a fool.

MLM culture will destroy a lifetime’s worth of family bonds and friendships in as little as a few months.