The reason so many people are attracted to multi-level marketing companies is undoubtedly because of the fantastic returns they claim to offer. For instance they supposedly offer their consumers a viable part-time MLM income, or an extraordinary MLM income which is much greater than those offered by businesses or other professions. Ironically, this is the greatest defense of the companies when faced with charges of pyramid scheme fraud, manipulations and false promotions.



The question of legitimacy of this business affects the future and prospects of nearly 5 million new recruits in North America alone, and those of many more in several other countries of the world. The legitimacy is of course, based on the honesty or falsity of the MLM income claims.

According to a recent survey, 99% of all sales representatives each year among the companies surveyed earned less than $14 a week in rebate MLM income, before the deduction of business expenses, purchase of inventory and tax. On top of that, the MLM distributors had no average net income on the basis of door to door “retail” sales. Consequently, all the people who join these schemes end up suffering from a financial loss.

The MLM companies only disclose the number of active participants, and the MLM income figures for a period of one year or less. Thus nothing is known about the actual average incomes or the losses incurred by the new investors. In this way, they manage to hide the actual rates of failures. It's shocking to note that, the failure rates would turn out to be even greater if all the participants over a period of 5 years were to be considered. It will then be obvious, that less than one in one thousand manage to make any profit, if at all.

The “apparent” successes in MLM are part of the same small group who are positioned every year at the top of the recruitment organization. Most of the participants suffer greater losses due to the strategies employed by these MLM companies, than because of competition or their personal endeavors. The cumulative loss of the people indicates a flow of money away from several million people in the USA to a handful of owners and recruiters.

Needless to say, this transfer of income is also responsible for damaging factors such as credit worthiness, degradation of communities, leading to general impoverishment. There being two categories of MLM income opportunity, namely, rebate income and retail sales income, it is the latter that gets greater publicity, where rebates, commissions and bonuses are paid out on the purchases by “downline” recruits.

The companies claim that this source has “unlimited potential” since payment can be obtained from an endless chain of recruits. All distributors are allowed to recruit others by MLMs, and qualified distributors are allowed to receive rebates on the purchases made by the multiple levels and ever increasing number of recruits.

Thus to conclude, not only is the generation of MLM income or profits a myth for most people, it is a downright loss for the majority of participants mainly because of the marketing and sales strategies employed by MLM companies in the first place.