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Published Feb 22, 2019

164: How to Rescue Your Loved One From an MLM Scam | Feedback Friday

Jordan Harbinger and Jason DeFillippo delve into escaping MLM scams and the emotional toll they can take while offering guidance on repaying parental support, freelance ethics, and overcoming career hurdles with unsupportive bosses.
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  • MLM Structures

    Multi-level marketing (MLM) structures often lure individuals with promises of financial freedom, but the reality is starkly different. explains how these companies, like a hypothetical "Company A," recruit distributors to sell products, such as weight loss shakes, by requiring them to purchase starter kits and maintain monthly product purchases 1. The focus shifts from selling products to recruiting more distributors, creating a cycle where the main customers are the distributors themselves 2. This structure is designed to benefit those at the top, while most participants struggle to break even.

    Arguably, the most defining feature of an MLM is that the main customers of the company's products are not unassociated folks outside the company, but they're the distributors within the company.

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    This model highlights the inherent flaws and potential exploitation within MLMs, where the emphasis is on recruitment rather than product sales.

       

    Supporting MLM Victims

    Supporting loved ones involved in MLMs requires patience and understanding. advises against direct confrontation or criticism of the MLM, as this can lead to defensiveness due to psychological commitment 3. Instead, he suggests gently reminding them of life before the MLM and encouraging them to view their situation from different perspectives 4. This approach can help them critically assess their involvement without feeling attacked.

    Do not act as if they are stupid and you are smarter. Do not do it. I know it's tempting. Don't do it. Trust me on this.

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    By planting seeds of doubt and offering support, you can help them see the reality of their situation over time.

       

    Financial Myths

    The financial myths surrounding MLMs often paint a misleading picture of potential success. reveals that 90 to 99 percent of MLM participants earn little to no profit, with most receiving minimal commission checks annually 5. This is not due to a lack of effort but rather the structure of MLMs, which resembles a pyramid scheme where only those at the top benefit significantly. The promise of financial success is akin to winning a lottery, with the odds stacked against the majority.

    There's also a chance you're going to win the $500 million power ball, but no financial advisor, and they're right effing mind would tell someone to buy $100 worth of lottery tickets every single month.

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    Understanding these financial realities is crucial for those considering or currently involved in MLMs, as it highlights the improbability of achieving the promised wealth.

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