Another Myth of MLM. A business of Integrity.

MLM is a business of Integrity. This is another myth. Why? There are hundreds of thousands MLM companies all over the world. There are 661 registered Direct Selling companies in Malaysia. Out of this figure, only 61 are members of the Direct Selling Association of Malaysia. How many of them have a good Corporate Social Responsibility policy and a Code of Ethics?. Very few. A total of 31 direct selling companies were de-registered in the year 2005 and 18 direct selling companies were de-registered in the year 2006 for various offences. (source: Ministry of Domestic Trade and Consumer Affairs July 2008).

Can you remember “Goldquest”, “Image Direct", “Giraffe World” and “Fortune Cookies”? These MLM companies came to Malaysia to RIP off millions of Ringgit from Malaysians and Singaporeans and disappeared as quickly as they came..

As a direct seller, have you ever ask the MLM company how transparent and accountable is the commission system and product quality. If you did, what was their response to the question? I can bet you. You get either a political answer or something very unpleasant. Some MLM companies can even threaten to terminate the distributorship. Would the MLM companies open the commission computation system for the distributors’ review and scrutiny? The answer is NO.

I have been a direct seller myself and also worked for a MLM company. So, I have the dual perspectives. I saw both sides of the picture and heard both sides of the story.

I have heard of MLM companies that manipulated the distributors' commission and also the direct sellers who manipulated their downlines commission. Some MLM companies do not pay the full commission as specified in the marketing plan. Direct sellers manipulated their downlines’ commission by perpetuating the roll-up commission points (SV BV, PV etc) or delay the “break away” using tactics such as point transfer and compensate scheme. Direct sellers also get downlines to authorise the payment of commission cheques in their own names or credit direct to their own bank accounts and short change the downlines.And some MLM companies allow and collaborate with distributors in this practice.

As a direct seller on recruitment drive, I would not be able to recruit anybody if I were to paint a full picture of the marketing plan (commission scheme) and the products. The marketing plan itself is too complex even for seasoned direct sellers to comprehend. What more with a prospect? Most direct sellers are trained to just highlight a few key plus points and convinced the prospect that it is something good for them and nothing to lose. Never come across one who would tell you the negative points. Some of the key plus points are excessive claims of commission earning by photocopying a few commission cheques of top earners out of thousands and thousands that earned hardly enough commission to pay for the products for their own consumption.

On the product quality, especially health food, they sometimes claimed the “cure all” formula. This has resulted in some MLM companies being sued for damages and the direct sellers terminated by the MLM companies. Do you remember the high profile "Slimming Pill" case in Singapore?

In reality, many prospects joined or bought products out of obligation to friends and relatives who are direct sellers. Some joined or bought products just to get rid of the harassment from the direct sellers.

One very important fact to note. Most of the MLM companies sell their products to their own members/distributors only.

These are some of the instances of cheating involving both the MLM companies and the direct sellers.

Folks, I will come back with more myths of the “business of integrity”

Be wise with your money and the products you are buying. Some MLM companies do give you value for money products but the vast majority of MLM companies are selling inferior products at superior prices.