By Jan Modelski

Is MLM just a bunch of scammers and crooks? Well ….. no. But you see, if you get into the wrong company, you could end up dead (figuratively speaking).

Let’s look at the experiences of David who tried network marketing (the idea of this story is based on a real person’s experiences, the names and figures have been changed). David’s married to Lesley and they have two children, Ann and John who have grown up and left home. David’s been working for most of his life in a number of jobs. He’s in his late 50’s and he begins to see his retirement coming over the horizon. His job options and advancement diminish as his salary expectations are undercut by younger employees and ‘ageism’ begins to bite. He’s also reached his ceiling in his present job. He’s got a £120,000 (US$216,000 approx.) mortgage and credit card debts of £21,000 (US$37,800 approx.). Neither of them have anything put aside for their retirement.

Both David and Lesley are in full time work. In spite of this they are struggling financially. But he’d like a better life style for Lesley and himself, to pay off the debts and to leave a legacy to his children. He’s been thinking about this for a few years now. Year by year he’s seen his income dwindle relative to the cost of living and he’s reached a point where he can see the need to take serious action as both their incomes pay the bills but little else if there was an emergency.

What are the options? Stocks and shares? Property? A bricks and mortar business such as a restaurant or an estate agent (realtor)? Or maybe he fancies his chances against the bookies with the horses and dogs?

Well the last one will see his retirement dreams disappear faster than a greyhound out of a starting gate. The others need large amounts of capital which he just hasn’t got. What’s left? He’s heard that there are  many business opportunities advertised in the press and on the internet.

He starts looking round in the local and national press, talking to friends and browsing the internet. There’s tons of adverts out there for this and that. Nutritionals, real estate, fuel savers, various affiliate programs. All promising the world (and the rest!). But which does he believe? They all sound so promising. They all sound so EASY. Like, if you just sign here, you’ll be rich and retire in 6 months!! Wow!!! Does THAT get him going!

He read lots about starting a business and what’s involved and the recurring theme is ‘Follow your passion’. But his usual choice is ‘What’s hot?’ He tries selling cheap calls. That burns out in a few months because he finds out to his frustration that everyone already has cheap calls. And the ones that he does manage to sell pay such poor returns that he calculates that to retire will take him till he’s about 80 years old! That’s no good. Then he tries cell phones. Well … everyone’s got one of those too. He stops to think and begins to look at things a little more calmly. What IS he interested in?

Well, he’s been kind of looking after his health pretty well over the years. He goes to the gym twice a week and he runs twice a week. He eats sensibly and drinks very little alcohol. He was a keen athlete when he was younger. Then he figures out that everyone (well nearly everyone) is very interested in THEIR health. He tells Lesley that he’s found the ideal MLM company that has this super-duper product that makes you feel like a million dollars and grows your hair back and ….. well that’s what this guy on the phone told him. She’s less than excited. In fact she tells him to stop wasting his time and money and concentrate on the family. In spite of her protestations, he joins this nutritional company that’s in pre-launch. They tell him that it’s a ground floor opportunity and, whooee!!, if he gets in now he’ll be able to build this huge down-line because its all new! He’ll be one of the first ones in and he’ll be right there up at the top earning huge dollars!! “Oh boy!!!!!”, he thinks. “This is the one for me! I’ll be rich in no time!”

He signs up and ticks the box to acknowledge that he’s read the Terms and Conditions and the Policies and Procedures. Well, he didn’t. It’s just one of those legal things companies have to put in. Don’t they? He starts to promote the product. Talks to all his friends and family who by now run the other way. Talks about the amazing business opportunity to everyone he meets.

He begins to advertise. A few weeks pass and he brings in a recruit into the business. Brilliant! Well, no. He can’t see any commission. He rings his sponsor and asks him why he hasn’t got any commission yet as he’s got one distributor. This was the answer he got. “For every one distributor you place in the left leg you need to place one in the right leg. You then get paid on your weaker leg. It’s a binary.” Oh, he didn’t realise that. That means he now has to work very hard to get paid. Never banked on that. So he brings in another distributor. He has $1.50 in commission but he’s as pleased as Punch. “Six months of this and I’ll be into some serious money” he thinks to himself.

Well, six months later he’s now earning $270/month in commissions and David’s dreaming of those far away places he’s going to visit next year with Lesley. He’s going to work his buns off for this baby. A year goes by and David’s planning his holidays to Hawaii when, whilst checking his commissions, he finds that he’s getting 17% less than he had last month. He thinks this a little strange and begins to look in his ‘back office’ to see how many members he has in his down-line. He’s been working very hard (his family life is all but gone) but all of a sudden he has less members than he had last month and they’ve cut the percentage on sales! He’s hopping mad.

He rings up his up-line sponsor to query this problem and finds that he’s dropped out of the program. Surprise, surprise! He rings the support number to ask them what’s happening and they say “When you signed up with us, sir, you acknowledged that you read our Policies and Procedures?” Policies and Procedures? That’s all that legal stuff that has to be in there anyway. Doesn’t it? The voice at the other end of the phone carries on. “Section 34.7 deals with the Company’s Compensation Plan. Have a nice day.” CLICK!! Ouch!! Maybe the Company’s Policies and Procedures and Compensation Plan ARE worth looking at then?

So David begins looking for the Policies and Procedures. Can’t find them. Compensation Plan’s there. But not the P&P’s. Not anywhere on the web site. He looks through all his literature that he got from the company. Nothing. So he rings them up again. Asks them to send him the Company’s Policies and Procedures. “Of course we can, sir.” Three weeks later a large envelope drops through the letter box. David finds the documents he’s been waiting for. They didn’t hurry with that one then.

He opens the document and finds Section 34.7 and sure enough there it is in black and white. “The Company has the right to modify and improve the Pay Plan.” Improve, for who? That’s my retirement your messing with there. Well, should have known better I suppose.” David carries on with the business convincing himself that he’ll make up the losses in no time with a little bit more hard work.

And it pays off. He manages to build a seriously large downline. His monthly income is now about $12,000 per month. He goes to the annual convention. There are some rumblings of discontent that year but David buries his head in the sand thinking it’ll all work out. Six months later the company sends David a letter telling him that his dealership has been terminated. No more pay cheques. No more money. No reason given. By-by dreams. Two years wasted!!

“I’ll show them!” thinks David. But he’s learnt something from previous experience that maybe the Policies and Procedures may be a good place to start. So he looks them up again. Sure enough and to David’s disappointment, deep in the body of the document there is a section, very short. It tells him that HE can terminate the agreement with the COMPANY at any time without giving any reasons. That’s good isn’t it? But here’s the crunch. The COMPANY can terminate the agreement with the DISTRIBUTOR also without any reason. No comebacks. No arbitration. No compensation for lost business or opportunities. Nothing. Zilch!! Boom!! That was a body-blow. David didn’t expect that one. It sent him reeling.

So what went wrong? Who was at fault? David? The company? The MLM industry? Let’s start with the industry. Like any industry, in amongst the genuine businesses, there are scams and tricksters that catch the unwary, the naïve and the greedy. So you can’t blame the industry. There is regulation but these scam companies pop up like a Jack-in-the-box and before the scam is picked up, the damage is done. But, there are good, solid companies as well. The trick is being able to find them.

What about the company? On the surface everything looked ok. They had a good product, they paid a percentage of sales to the distributors and allowed him to build a team, a down-line. One of the problems was that the Policies and Procedures (which is the Contract between the Company and the Distributor) was NOT available to view on the web site so that the prospective distributor couldn’t read them BEFORE he signed up for the deal. That’s illegal. Ask any lawyer.

The next problem was the Compensation Plan. It’s a binary and he gets paid on the weaker leg. He has to bring in two people to get paid on one purchase. So he has to work very hard to earn a respectable income. But the company is getting one sale without giving up any money for it. How fair is that?

The main problem was in the Policies and Procedures. The prospect couldn’t see it before he signed up. So did the management had something to hide? Well I think so. What about the section which includes the part that the COMPANY can terminate the agreement with the DISTRIBUTOR without any reason. If anyone read the Policies and Procedures and saw that section BEFORE they signed up do you think they would sign up? I don’t think so! Management wouldn’t want you to see THAT one, would they? They had no integrity. They didn’t care about their distributors who make the profits. All they cared about was lining their own pockets. Where’s the integrity in that?

And what about poor David? He basically wasted two years of his life. The marriage is down the swanee. He doesn’t feel like a millionaire and he’s got less hair. He could have been building an income for his children and his childrens’ children and saved his marriage. So how could he have done better? Where could he have found a ‘5 Pillars’ company that would look after their distributors? How many more years does David have to waste before he chances upon a company with management that had experience in the Network Marketing industry and had integrity? How much of a gambler is he anyway? Isn’t there a quicker and more reliable way? Wouldn’t he want to become educated in what to look for in a company that would give him success and be there to pay his childrens’ children?

Do you know of anyone who would like a free education in Network Marketing? Do you know of anyone who would want to be successful in Network Marketing? If the answer is yes, then pass on this report to them and ask them to download the free e-book ‘Success in 10 Steps’.

They’ll find out the truth about MLM and that their failure in the industry is NOT their fault!

Jan Modelski