Multi-level means multi-risk

It was with concern that I’ve seen through social media a friend of mine becoming very closely involved with a multi-level marketing

Throughout my career in journalism, I’ve tended to focus on local fraud. By that, I mean the way in which fraud can show up in rural Alberta and how it can affect the readers of the newspaper that employs me. I don’t like to think about my readers being ripped off by anyone.

It was with concern that recently I’ve seen through social media a friend of mine becoming very closely involved with a multi-level marketing group, and many people in my hometown apparently also seeking their fortunes with a “MML” group. I’m very concerned because, from what I know and from my experiences, what the owners and recruiters of an MML group infer or allude to and what actually happens to those recruited into an MML are invariably two different things.

A multi-level marketing scam (I will refer to MML as a “scam” because it feels so comfortable to do so) is, in essence, a type of pyramid scheme that happens to be legal. One person at the top of the pyramid sells the lipstick, body wraps, cooking supplies, motor oil, investment advice or other products to people at the next “level,” the sellers he or she has recruited. After purchasing these products, the second level is encouraged to re-sell products to a third level. What third level, you ask? Well, therein lies the crux of the situation. The second level is strongly encouraged and even trained to recruit the third level.

And then the third level is trained and encouraged to recruit and sell to a fourth level; then the fourth level recruits, trains and sells to a fifth level, ad nauseum. Obviously, as the products trickle down the multiple levels of the pyramid, profit flows back to the top person. Levels two and onward have to increase effort drastically as they try to sell product, but, by recruiting more people to the pyramid, are actually increasing their competition; only the leader at the top makes a clear profit, especially as the pyramid increases in size. More members mean, ultimately, more product being sold down the chain.

Why, you ask, is MML legal and a true pyramid scam illegal? Technically, because MML members get something for their money (lipstick, motor oil, investment advice etc.) it is not inherently illegal. A pyramid scam, on the other hand, generates money for he or she at the top, while providing nothing to recruits. That’s why a pyramid scam is a no-no.

Some MML groups or companies actually sell products of decent quality. Some sell products of questionable quality, while some peddle junk. Regardless of the quality, recruits on levels two and below think they’re going to get rich selling this stuff, but don’t think about the time and effort they’ll have to put in to recruit more sellers and convince people to buy their products on top of the fact they’ve already been shelling out their own money to buy products from the top level. Sales isn’t an easy job. It’s stressful and time consuming.

But there’s something else that bothers me about MML. The recruitment pitch always seem to involve a charismatic leader or spokesperson, who seems more intent on whipping the recruits into a frenzy than giving them advice on how to become a successful businessperson. A lot of the MLL training and motivation feels creepy to me, very similar to a crazy-eyed fanatical cult. I’m sure it’s no mistake; there’s an entire industry of self-help books, videos and speakers out there peddling platitudes and easy answers to the lonely lost souls of our communities.

I have a feeling anyone who has been convinced that MML is going to make them rich has a painful and disappointing revelation coming their way.

Stu Salkeld is the new editor of The Leduc/Wetaskiwin Pipestone Flyer and writes a regular column for the paper.

 

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

There were 410 COVID-19 cases recorded in Alberta Wednesday. (File photo)
Alberta records 410 COVID-19 cases Wednesday

Central zone dropped to 160 active cases

Shaun Isaac, owner of Woodchucker Firewood in Trochu, is awaiting a new shipment during a firewood shortage in the province. All of the wood he has left is being saved for long-time customers who need it to heat their homes. (Contributed photo).
Firewood shortage in central Alberta caused by rising demand, gaps in supply

‘I’ve said “No” to more people than ever’: firewood seller

file photo
Maskwacis RCMP investigate pedestrian fatality

Collision on Highway 2A causing fatality still under investigation.

Shaela Dansereau/ The Pipestone Flyer
City of Wetaskiwin cases rapidly climbing

City of Wetaskiwin reporting 11 active cases of COVID-19

Royal Alexandra Hospital front-line workers walk a picket line after walking off the job in a wildcat strike in Edmonton, on Monday, October 26, 2020. THE CANADIAN PRESS/Jason Franson
Alberta labour board orders health-care staff who walked off the job to go back to work

Finance Minister Travis Toews said in a news release that he was pleased with the labour board’s decision

Pilots Ilona Carter and Jim Gray of iRecover Treatment Centres, in front of his company’s aircraft, based at Ponoka’s airport. (Perry Wilson/Submitted)
95-year-old Ilona Carter flies again

Takes to the skies over Ponoka

Children’s backpacks and shoes are seen at a daycare in Langley, B.C., on Tuesday May 29, 2018. Alberta Children’s Services Minister Rebecca Schulz says the province plans to bring in a new way of licensing and monitoring child-care facilities. THE CANADIAN PRESS/Darryl Dyck
Alberta proposes legislation to change rules on child-care spaces

Record-keeping, traditionally done on paper, would be allowed digitally

Prime Minister Justin Trudeau shakes hands with US Vice-President Joe Biden on Parliament Hill in Ottawa on Friday, December 9, 2016. THE CANADIAN PRESS/ Patrick Doyle
A Biden presidency could mean good news for Canadian environment policy: observers

Experts and observers say even a U.S. outside the Paris agreement may ultimately end up in the same place

People take a photo together during the opening night of Christmas Lights Across Canada, in Ottawa, on Wednesday, Dec. 4, 2019. The likelihood that most Canadians will enjoy a holly jolly Christmas season of gatherings, caroling and travel is unlikely, say public health experts who encourage those who revel in holiday traditions to accept more sacrifices ahead. THE CANADIAN PRESS/Justin Tang
Ho, ho, no: Experts advise preparing for a scaled-back COVID holiday season

Many of the holiday season’s highlights have already been scrapped or are unlikely to take place

Sen. Kim Pate is shown in Toronto in an October 15, 2013, file photo. The parliamentary budget office says a proposed law that would give judges discretion on whether to apply a lesser sentence for murder could save the federal government $8.3 million per year. THE CANADIAN PRESS/Colin Perkel
Judicial discretion for mandatory minimum sentences for murder would save $8.3M: PBO

The result would be fewer people in long-term custody at federal correctional institutions, experts say

Husky Energy logo is shown at the company’s annual meeting in Calgary on May 5, 2017. THE CANADIAN PRESS/Jeff McIntosh
Husky pipeline spills 900,000 litres of produced water in northwestern Alberta

The energy regulator says environmental contractors are at the site

A raccoon paid a visit to a Toronto Tim Hortons on Oct. 22, 2020. (shecallsmedrew/Twitter)
Who are you calling a trash panda? Raccoon takes a shift at Toronto Tim Hortons

Tim Hortons said animal control was called as soon they saw the surprise visitor

Most Read