What is an MLM Scheme?-The Truth About MLM’s Exposed!

Are you considering joining an MLM company but would like to know if it’s worth doing? If so, you have come to the right place as I reveal what is an MLM scheme and whether you should avoid joining. Is MLM’s pyramid schemes? Can you make money or is it a huge risk? I also reveal the best and worse MLM companies.

What is an MLM Scheme?

MLM is an abbreviation for Multi-Level-Marketing, it is also known as Pyramid Selling, Referral Marketing, and Network Marketing.

A simple way to describe an MLM scheme is this:

The MLM business recruits ordinary people to sell their branded products.

These people (Promoters) try to sell these products and with each sale achieved, the promoter will receive a commission.

The Promoters try to capitalize on their earnings by recruiting other people to also do the selling and these will be called downlines.

With each sale the downline makes, the promoter (Sponsor) and the downline can receive a commission from these sales.

The downline will also be required to recruit more downlines (Pyramid Selling) and this is why it is seen as a pyramid scheme.

what is an mlm scheme pyramid scheme

Can You Make Money With MLM’s?

There has been lots of research regarding making money by selling for MLM companies (including my own) and there is even a report on the FTC MLM Investigation Report website stating that studies on 350 MLM companies, more than 99% of people selling for them failed to make any money or even made a loss.

That is a lot of people, for example, AVON recruit over 6.4 million so that means around 6.3 million people selling for AVON fail to make any money and that’s only 1 MLM company out of hundreds and hundreds worldwide, so that’s tens of millions of people not making money, only living in hope.

Many people make a few sales early on when the join MLM companies but this will only be a few dollars selling to friends, family members, work colleagues, etc but these will not often be repeat customers.

How To Sell MLM Products

There are many ways to sell MLM products and the most common way is to host selling parties from home.

This is when you would buy some samples from the company and invite a few people to your home to showcase the products with the hope that some of these people will buy products, there are also a few other ways in which to promote and these include the following…

  • Brochures: You could give brochures away to your work colleagues, at the school to other parents (If your child attends the school) to neighbors or give them to your friends for them to browse and hopefully make an order.
  • Website: A few MLM companies offer free product websites if you join where you can promote the products.
  • Social Media: A lot of companies ask you to set up a social media profile to promote the products and by doing this you are able to direct message people offering the products.
  • POP-UP Shop: You could set-up a little selling booth in your local shopping center and promote the products to passers-by.
  • Door-to-Door: Back in the day before social media and easy websites, people selling for MLM’s used to go door-to-door selling products and some still do this.

Pros of MLM’s

  • Work From Home: No more commuting to and from work, getting stuck in traffic.
  • Can Make Extra Money: As I mentioned before, you can make a little bit of extra cash but it won’t be lifechanging, maybe enough to treat yourself and your family to a meal out.
  • Can Choose Your Hours: This is good if you are a stay-at-home mom, a homeworker, or have other commitments, you are able to choose the hours which suit you.
  • Discounted Products: A good point for signing-up as a promoter is that you can use the discount for yourself if it’s a product that will be useful to you.

Cons of MLM’s

  • Unreliable Income: At least 99% of people selling MLM products fail to make any profit and can even make a loss of earnings and lose the original investment.
  • Competition: These MLM companies are huge and they have so many people trying to sell for them and selling the same product, that this market is too competitive and you will find it almost impossible to make a sale unless you sell to people who you personally know.
  • You Will Lose Freinds: A marketing trick used by people selling MLM products is to bombard your social network contacts with offers and this can lead to you being blocked or reported by your contacts (Have you ever heard of “Hey Hun”)
  • Recruiting: The Companies which you sell for will expect you to recruit other promoters and this can work out badly because 1: You are creating more competition 2: Same as above, people would not want to do it and you run the risk of a broken friendship 3:You already know that over 99% of promoters make no money, so would you really want to pass this on to someone you know? (back to number 2).
  • Can Be Expensive To Start: Most companies will require you to try before to sell, which means buying samples or stock and trying them out before you sell, so you know all about the product. This can work out expensive because if you are not able to sell, you will be stuck with the product and I have seen many people trying to sell their products cheaply on Amazon or eBay because it is of no use (Again more competition).
  • Recuring Hidden Fees: Many MLM businesses hide their costs, most will require a start-up fee and expect you to reach monthly sales targets, but if you do not meet these targets you will have to pay the start-up fee again to remain as a member.
  • Confusing Compensation Plans: I have looked through so many MLM compensation plans, they are so confusing and I believe these are made that way for a reason, they are never straight forward.
  • Hidden Pyramid Scheme: You are always pressured into recruiting other promoters (downlines) and you will try and get them to recruit other downlines. This has all the markings of a pyramid scheme but unfortunately, these MLM businesses find a way around it so they do not get shut down.
  • Banned In Some Countries: The MLM Model has been banned from some countries and has been classed as an MLM scam and a Pyramid Scam.

what is an mlm scheme cons


Best MLM Companies To Join

I have spent a lot of time researching and reviewing MLM companies and I will continue to do so, but they are not all bad, some are okay for making a bit of extra cash in your spare time (But please don’t expect miracles)

The best MLM companies to join…

  • AVON
  • HB Naturals

Worst MLM Companies To Join

There are so many bad MLM companies and again I have researched and reviewed these, which you can read on this website. There are so many more which I want to research and I will do this over time, but these are the ones to avoid so far which will take your money and give you false hope.

The Worst MLM companies to join…

  • ACN
  • CROWD1
  • doTERRA

What is an MLM Scheme Conclusion

As you can see, most MLM’s are pretty much scams but not all are bad.

It is so hard to make a recurring income by direct selling these products or recruiting other members because the market is oversaturated but there are better and safer ways to make money from home and I have already researched and reviewed the best.

If you are serious about making a recurring income then why not start your own online business.

I can point you in the right direction to get started and you can be up and running in no time at all (even today), you will get a free website, free training, free help and support and you can be part of a great online community with like-minded people.

All of this is FREE to start and you can check out my #1 Review Right Here

I hope you have enjoyed this article if you do have any questions or comments then please leave them down below and I will get right back to you.

To your success



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