So we all know that Multi-Level Marketing is pretty much a ripoff in the business industry. The FTC (Federal Trade Commission) reports that 99.9% of all MLM businesses are pyramid schemes based on recruiting other members to make money. This is illegal and to add to the previous list the following companies have now gone under and many people have lost quite a bit of money and time by believing in what’s touted as a “Sure Thing” or Great Business.
Here we go Again, however this list is Specifically for MLM Businesses:
MLM’s Now Defunct
- BurnLounge (shut down as pyramid scheme by FTC in 2012)
- Equinox International (dissolved in 2001)
- European Grouping of Marketing Professionals/CEDIPAC SA (dissolved 1995)
- European Home Retail (dissolved 2007)
- Fortune Hi-Tech Marketing (dissolved 2013)
- Holiday Magic (dissolved in 1974)
- Metabolife (dissolved in 2005)
- MonaVie (went into foreclosure 2015)
- Nouveau Riche (real estate investment college) (dissolved 2010)
- Solavei (dissolved 2015)
- Royal Tongan Limu (dissolved in 2003)
- Sunshine Empire (dissolved 2009)
- Telexfree (bankrupt 2014)
- United Sciences of America (dissolved in 1987)
- WakeUpNow (dissolved 2015)
- World Leadership Group (dissolved in 2008)
To expand on some multi level marketing/network marketing lingo and definitions take the time to read this.
Multi Level Marketing is a controversial marketing strategy for the sale of products and/or services where the revenue of the MLM company is derived from a non-salaried workforce (also called participants, and variously known as “salespeople”, “distributors”, “consultants”, “promoters”, “independent business owners”, etc.) selling the company’s products/services, while the earnings of the participants is derived from a pyramid-shaped commission system.
Although each MLM company dictates its own specific “compensation plan” for the payout of any earnings to their respective participants, the common feature which is found across all MLMs is that the compensation plans theoretically pay out to participants only from the two potential revenue streams. The first stream of compensation can be paid out from commissions of sales made by the participants directly to their own retail customers. The second stream of compensation can be paid out from commissions based on the sales made by other distributors below the participant who had recruited those other participants into the MLM; in the organizational hierarchy of MLMs, these participants are referred to as one’s “down line” distributors.
MLM salespeople are, therefore, expected to sell products directly to end-user retail consumers by means of relationship referrals and word of mouth marketing, but most importantly they are incentivized to recruit others to join the company as fellow salespeople so that these can become their down line distributors leading to further losses for the person that recruited them.
So as always, Stay Informed and –
Until Next Time …