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Beware of multi-level marketing

Beware of multi-level marketing

Multi-Level Marketing targets students with sketchy business practices

Multi-Level Marketing (MLM) companies have been around for some time and are now targeting students to enter their shady business practices. These are companies where individuals sell products to the public often by word of mouth and direct sales.

Typically distributors earn commissions, not only for their sales but also for sales made by the people they recruit. There is a lot of controversy surrounding MLM’s because of their business model, which operates under what appears to be a “pyramid scheme”. During the Christmas break a friend and I were invited to a meeting by associates of an MLM while in Edmonton.

It was December 20th; I was in Edmonton for a meeting when a friend and colleague from Augustana texted me to hang out. When we met, he told me that a student had gotten us tickets to an “opportunity meeting”. I was in a bit of a bad mood, so the offer was intriguing. Even though my friend and I were both science students with little to no experience, interest, or desire to get into the field of business. This was a forum that really did not make sense for us to attend but we did anyway.

The associates told us to meet up at the TD bank by southgate where a well-polished Mercedes Benz convertible pulled over. My friend and I looked at each other thinking this is probably one of those elitist millionare fundraiser things where people smoke cuban cigars and drink burgundy wine like it’s kool-aid.

We got in the car and soon reached our destination, which was a Ramada Inn. Not exactly the tycoon mansion we were expecting. The driver then told us to keep our shopping bags in the car. Reluctant, but not wanting to be rude, we hesitantly complied. We entered the hotel and were told to sit in the very front row.

The presenter was a Mechanical Engineer who works in the oil industry and owns businesses in Canada and the U.S. Prior to the presentation, we met him in person and he seemed chill. I had no reason to feel suspicious about him in any way, that is until the presentation began.

During his presentation, he consistently called upon my friend and I. He asked what we thought about the presentation, what our goals were and if we agreed with the concept he was presenting.

It was strange because there were over a hundred people in that room and yet he consistently talked to us. It was also a very confusing presentation about how the business model worked and the claims of wealth that were promised to the people in that room were insane.

When he began talking about recruiting other people, I had a dejavu moment to an episode of Last Week Tonight with John Oliver. I was curious and looked up the names of the companies Oliver mentioned only to realized that I with one of the companies John Oliver talked about in that exact episode.

“Multilevel marketing is a huge business,” according to a 2013 article by the Economist. “In 2011 direct selling [the vast majority of it through multilevel marketing] by around 16 million distributors generated sales of almost $30 billion in the U.S. Worldwide, some 92 million distributors grossed $154 billion, according to the Direct Selling Association, an industry group.”

The Economist further reports that “multilevel marketers take pains to distinguish their businesses (which are legal) from pyramid schemes (which are not). In a pyramid, recruitment is everything. People pay to participate, and are rewarded by finding others willing to pay to join. At some point the supply of new recruits dries up and the pyramid collapses.”

If something sounds too good to be true, it probably is.

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