Why Do Critics Hate Network Marketing aka MLM – Is Their Hate Warranted?

Jeunesse Claims To Hit $1 Billion In Annual Revenues - Claims Fastest Ever To Do It!

Have you ever really thought about why Multi-Level Marketing (MLM) aka Network Marketing; which in reality is nothing more than a marketing strategy and compensation structure inside of the direct selling channel, is seen by many as some form of the illegitimate business model?

I have been in and around the direct selling, network marketing, MLM world all of my adult life, and have seen the good, bad and ugly. So I am not writing from an outsider, critic, hater, regulatory perspective. I am writing from the perspective of someone who fully understands, and admits there are concerns and yes certain issues that should be addressed and cleaned up! And yes, I admit, at times, I have been part of the problem, instead of the solutions.

Bill_AckmanWhat I see today, is perplexing. When a community, such as the network marketing community, is facing the scrutiny that we are for overhyping the benefits, and incomes earned would continue to roll the dice.

When we are facing influential billionaire, short sellers, such as Bill Ackman, who is willing to cut secret deals with at least one whistleblower, just to win the best they made against Herbalife.

bonnie2Or, we are facing the wrath or watchdog organizations such as TINA (Truth In Advertising), led by an advocate like Bonnie Patten, who is not only an advocate but an accomplished litigator. And although they seem to be deceptive themselves from time to time, such as when they state on their website “Vemma Nutrition Company, which was formed in 2004 by Benson K. Boreyko and his two sisters, has been operating an illegal pyramid scheme while calling itself an affiliate marketing company.” I have found their actions are 100% aligned with their stated mission. They also have a sense of humor, although their video has been taken down because it seemed to have offended some minority groups. (I do have a copy)

And let’s not forget we have the BIG THREE also watching and investigating…

SEC_The Securities & Exchange Commission, has never, at least in my recollection hit a legit direct selling company as a Ponzi scheme. But the last two companies posing as network marketing companies, cost this community big! And right now there are a few companies that may be on their radar who are hyping what may be seen as unregistered securities. There is no reason to cut corners, or try and plead ignorance.

fdaThe Food & Drug Administration is always made out to be some giant monster working for big pharma. However, what I have seen in the past few years, is an agency that is understaffed and when they do hit a supplement company, its because they have found an issue or someone died. Over the last few year, I wrote a series articles cautioning about the use of questionable ingredients in supplements, as well as the backgrounds of formulators. One such ingredient DMBA, which was so close to a banned substance, I was concerned people could die. I had been following a USAToday investigative report and saw some major concerns. And in December 2015, the FDA Created the Office of Dietary Supplement Programs and Announces New Nutrition Office Leadership, which should help clean up some of the issues we all face. 

ftcThe Federal Trade Commission has been the most active agency to bring complaints against network marketing companies in the last few years. They shut down Fortune High Tech Marketing (FHTM), in part due to illegal income claims, and a comp plan marketed like a pyramid scheme. Then came the Civil Investigative Demand against Herbalife. I think in part of this was due to the pressure put on them by advocate investors and watchdog groups. But much of it is due to the questionable behaviors of some inside of the MLM community.

And then came the shockers of all shockers, the FTC charged Vemma of running an illegal pyramid scheme! Now I firmly disbelieve BK Boreyko would intentionally or unintentionally create and run a pyramid scheme. But without a doubt, the FTC complaints regarding income and lifestyle claims by some does have merit, as I have personally seen these same individuals making the same income and lifestyle claims at the new companies they have joined.

Whereas I can state that part of the issue is a lack of education of the average independent professional in the field. There is also a culture of individuals inside of the network marketing community, who just don’t seem to care about the regulations, their particular organizations, company reputation or what the laws are regarding income, lifestyle and health claims.

So, until we decide to truly do things correctly, we don’t have any room to gripe when the media, critics, haters, watchdog groups and regulators decide to attack the direct selling, network marketing, MLM community!

The ball is in our court!

Here are some additional resources to review.

Selling a Work-at-Home or Other Business Opportunity? Revised Rule May Apply to You

Final FTC Business Opportunity Rule

FTC .COM Disclosure Rules

SEC – What Is A Ponzi Scheme?

FDA – Label Claims for Conventional Foods and Dietary Supplements

FDA – Is It a Cosmetic, a Drug, or Both? (Or Is It Soap?)

 

 

 

 

 

 

Troy Dooly is recognized internationally as an influencer in the areas of personal branding, leadership development, marketing campaigns, organizational expansion, and corporate launch strategies.

His clients include start-up companies, multi-faceted public companies, billion dollar private companies, international marketing organizations and well-respected field organizations.

Dooly is a highly sought after mentor, speaker, results coach, and radio host. He is a founding member, show host (Beachside CEO) and News Director of the Home Business Radio Network, and Christian Power Radio,

Dooly is a founding member and serves on the Board of Directors of the Association of Network Marketing Professionals, working with both companies and distributors around the world in network marketing.

Please note: I reserve the right to delete comments that are offensive or off-topic.

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