OPINION: Multilevel marketing schemes are out of control

Like many other Instagram users, I receive messages on a regular basis from women asking if I’m interested in earning extra money by promoting certain products.

To be blunt, I’m fed up with the onslaught of messages. After receiving over 100 different messages, I’ve devised the perfect response strategy — block the account and move on with my life.

The women sending the messages are often non-salaried ambassadors for companies using a multilevel marketing strategy that entails referring products to a target audience and recruiting new sellers. They reel new ambassadors in through the private messaging function on Instagram and other social media sites.

These schemes are the latest way people — college students in particular — are being scammed. 

The ambassadors are exploited for their free labor and only receive compensation for their time based on the conversion rate of new ambassadors and the sale of products. The trademark of the scheme is the lack of hourly pay to the workforce.

Of course, workers who have high conversion rates and product sales are likely to bring in a decent wage. However, the majority of this workforce does not perform at this level. 

The marketing strategy simply uses products to cover the exchange of money. The scam operates on the unequal distribution of funds among workers and improper compensation for workers’ time and energy. 

An analysis conducted by the Federal Trade Commission found that all multilevel marketing schemes utilize a pyramid, meaning a top-heavy, structure of monetary distribution. This translates to individuals at the highest operating power within the company receiving the greatest proportion of wealth, and consequently, the individuals at the bottom receiving the lowest.

The saddest aspect of multilevel marketing schemes is the exploitation of individuals for their free or cheap labor. Often, people are lured into the schemes with false promises of an easy part-time job which pays cash for online promotion.

Clearly, the “job” isn’t as rewarding as it is made out to be. No one should be exploited and suckered into a job which is anything but traditional.

Further, the analysis showed 99 percent of the people involved actually lost money through participation in the scheme. Not only are the schemes exploiting vulnerable individuals for free labor, they are robbing their sellers.

Beyond the exploitation of workers and the unethical referral strategy, these companies often promote products which are scams themselves. Many of the products are renowned for being faulty or cheaply made. 

Of the small income these sellers make, the majority goes toward purchasing samples, catalogs and products from the company. The vast majority of companies using this strategy require their sellers to purchase the products prior to selling them. If a seller can’t effectively sell the product, they’re stuck with unwanted product and have lost time and money during their efforts.  

Multilevel marketing schemes should not be supported, especially with clear evidence showing their distribution of wealth and power. Social media users should be warned about deceiving messages from recruiters. Multilevel marketing may benefit the people at the top of the company, but someone should be speaking for the majority.

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