Business of Integrity ???.
“Multi-level marketing is a business of integrity” – the MLM companies claimed. “We are in a business of great integrity” – the direct sellers claimed.
How true is this? Some MLM companies maintain a high level of integrity and guarded this aspect of their business diligently. Other MLM companies leave you a lot to be desired and lots of room to questioning. There are also direct sellers who are highly ethical and possess a high degree of integrity. But the number is small.
In my last posting, I have highlighted how the MLM companies can manipulate the distributors/direct sellers’ commission and their ranks..
Now, I am going to share with you my encounters of how the direct sellers manipulated their downlines or their peers. Your uplines are your mentors. But how many of them have the quality to use the term “mentor”?
Receive commission on behalf of downline.
Many of the new recruits (newly sponsored distributors) are reluctant to disclose their bank account number to their upline (sponsor) and also do not want to write their bank account number in the application form. The MLM industry is still being perceived negatively by the public in general. They are afraid of being conned.The new recruits are general skeptical about the prospect in the MLM companies. So, they would authorise their uplines to collect their commission. Some uplines are honest, but others are not. They would quietly pocket their downlines’ commission, if nobody asked. Or they will use the downlines’ commission to roll their business by delaying the payment to their downlines. Complaint of this nature is rampant.
Manipulate Transfer of Business Volume Points.
It is a common practice for the upline to purchase the product from the MLM companies and distribute to their downlines. Some MLM companies permit the uplines to purchase products directly under the name of the downlines, by generating multiples invoices. Other MLM companies do not permit this.
The uplines who purchase products on behalf of the downlines are supposed to transfer the business volume points to the respective downlines to enable them to earn the commission and qualify for the relevant ranks. Some unscrupulous uplines do not transfer the business volume point correctly.This deprived the new recruit of the commission entitlement.
Some new recruits drop out or given up on the business, but their distributorships are kept alive by the uplines without their knowledge This is done by purchasing the products under they names or transfer business volume points into their account in order to maintain the number of distributors in the organisation to qualify or retain the rank.
Duplicated the MLM companies’ training materials, i.e cassette tapes, video tapes, CD-Rom. DVD and passing them off as original.
Some distributors knowingly pirated the MLM companies training materials and distribute to their downlines. Others pirated the training material and passed off as original to their downline, to make money.
This practice is rampant with most direct sellers.
Stock up of Product.
Contrary to the concept of direct selling, some upline encourage their downline to carry stock. They claimed that as a business person, carrying stock is economical and convenient to operate the business, so as not to miss any sales whenever a customer wants the product then. This is like running a conventional business. By this practice, the uplines hope to increase their group business volume points and move to higher rank. This practice spelled disaster for the distributors. It has been proven that stock up does not work because some MLM companies change product packaging or product formulations frequently.
Selling the illegal “get-rich-quick” with misleading promotion and information
I had a rude shock when one of my friend, also a professional accountant, joined a banned MLM company, “Image Direct” a few years ago. The accountant has his own accounting firm and was in the MLM business for many years. He was with a highly reputable MLM company, earning good money. He changed his business from a reputable MLM company to an illegal one. He introduced “Image Direct” to me knowing that it was an illegal get-rich-quick scheme. He was questioned and the answer he gave was totally unexpected from a professional man. He said “There are so many greedy and gullible peoples out there. If I don’t conned them, other peoples will”
Introduce you to more than one MLM company’s business and land you in trouble.
Many seasoned and experienced direct sellers know the fine prints in the distributorship agreement that prohibit distributorship in more than one MLM company. Yet, uplines with financial commitment problems will do more than one MLM companies and also introduce their downlines to the other MLM companies. Or when they have personal problems with a MLM company, they will discredit the company and convinced their downlines to move en-bloc to another MLM company.\
Rank Buying & Undercutting consumer prices.
As a consequent of the unethical training from uplines, they stock up product in order to buy rank. This can cause financial strain on the distributors’ cash flow. Under such situation, the logical solution is to get rid of the stock, to regenerate cash flow. They resorted to price under-cutting. This can upset the market and MLM company. They are also at risk of being terminated by the MLM company.
Misused product and teach downline to do the same
I have seen a video presentation of a Japanese distributor drinking a Liquid Organic Cleaner just to prove how safe the product is. There is another case of a distributor drinking a biodegradable vegetable rinse for treating diarrhea. The instruction on the product label clearly stated for external use only. What is the side effect? Nobody knows
They are showing their acts to their downlines, although these acts are not sanctioned by the MLM companies
Become “quack” doctor and prescript “Cure All” medicine.
Direct seller are fond of taking advantage of people in distress, especially the terminally ill peoples. There are many direct seller who claimed that their health food product can cure cancer, although non of the MLM companies ever claimed that their product is a medicine for treating cancer patients.
There are also direct sellers who claimed that their health food product is anti-aging. I believed that healthy lifestyle and health food can slow down aging. Some specially formulated health foods can slow down aging. But I have yet to come across any scientist or doctor whom have discovered or invented an anti-aging product.
Snatching your downlines.
Some direct sellers are very good at “poaching” or ”snatching” downlines. Once a distributors signed the application form to join the MLM company under a particular sponsor (upline), that distributor remains in the line/group, technically forever. But some MLM company has this rule of allowing a “lapsed” distributor to re-join the company under another sponsor/upline after a period of inactivity of 6 months to one year.
Some experienced direct sellers are very good at manipulating this rule of ‘inactivity” in order to “snatch”other direct sellers’ downlines. They would look for new recruit whom have great potential of developing the business and lure them over by discrediting the other direct sellers, or character assassination of the other direct sellers. Sometimes, they found that their friends and relatives have joined the other lines and wanted to “snatch” them. They would manipulate this “inactivity rule” by coaxing the new recruits to remain inactive for the qualifying period and later join the group. Money changed hand during this period of “inactivity” to keep the new recruits happy.
So, tell me what do you mean by”MLM is a Business of Integrity and Ethics”? I have worked for a MLM company and also been a distributor for a MLM company. I have seen the good, the bad and the ugly of this business, from both sides. The MLM companies and the direct sellers always claimed the “Goodies” but never tell you the Bad and the Ugly side of the business.
Be Wise. Do not let yourselves being manipulated by others.
