MULTI-LEVEL MARKETING WARNING FROM SEQUENCEINC.COM

HAUSFRAU SPEAKS: MARY KAY

Hi, everyone!  

My brain has been working overtime lately!  At one time, I "drank the koolaid" and became an "independent beauty consultant" for Mary Kay Cosemetics.  The sales pitch I was given was that I could "own my own business" by investing a meager $100 and purchasing my "Starter Kit".  Well, ok, sign me up!  After I had my starter kit, my "director" informed me that only by "purchasing inventory" within a very short time would I be successful. Noh, such beautiful pictures of fame and fortune were painted for me!  I was convinced that if I cashed in my 401(k) and "invested" the money into purchasing product, I would be driving a pink Caddy by the end of the year!  What an opportunity!!!  I was SO LUCKY!

So, not knowing what the heck I was doing, I asked my director "what inventory should I buy?"...I should have known that the problems were going to be awful when her answer was "Well, it's YOUR business, you will just have to choose those items yourself!"  So, I bought a little bit of everything!  Now, mind you, I had never actually BEEN to a Mary Kay party...I'd only bought the product ONE time! Actually...I really don't even WEAR makeup! (That's ok, she said, you have SKIN, don't you?  Everyone takes care of their SKIN!). I admit, I WAS naive...no...I was STUPID!  

So, I placed my order! I spent close to $5000 buying things I THOUGHT I needed!  While I waited for the boxes to be delivered, I started bothering everyone I knew...following the Mary Kay directions for getting bookings.  Nothing.  My friends were busy, or had allergies (especially to Mary Kay, it seemed) or had one of any number of issues!  I really TRIED...I HAD to...because I had lost my job, the economy was bad, and I needed to work NOW!!!' 

My director called me before my inventory arrived...and she had GREAT news!  Something had happened to one of the other Consultants, and there was room for me to attend the big convention in Dallas!  I could even share a room with 3 other women and just pay 25% of the room bill!!  Wasn't THAT great?  She assured me that I would learn SO VERY MUCH at seminar!  It would really get my "business off to a GREAT START!!

So, I dug deeper into my retirement funds and bought a flight to Dallas, paid fees to Mary Kay to attend the convention, gave myself some spending money, etcetera, etcetera...do I need to tell you that Convention was just day after day listening to 20-30 year directors telling all of us potential losers that their success could be OURS too? Oh, and of course, the shopping for Mary Kay products that a business just HAS to have to be successful! It was just one big "I Love Mary Kay Ashe" Party!  Oh!  And all the new PACKAGING on the products!  That ugly Mary Kay Pink was OUT and now the packages looked more like the nice expensive brands that ladies buy from Nordstrom!  Oh! I was so EXCITED!!

I returned home pumped up, and ready to fly!!  When I finally got a little rest....I started unpacking all my new inventory...and the more I unpacked, the more I realized I had a BIG PROBLEM!  Every single thing I received was "old packaging"....except all the sales materials and catalogs, which displayed NEW PACKAGING!  I called my director, who told me "oh, no problem! "It's ONLY a package!" Yes, I suppose it is....

Days turned into weeks...and I wasn't selling anything...then, just to recover some of my investment, I started discounting...then, I'd discount some more.  I started dreading talking to a client for fear they would ask for something that I DIDNT have, and I'd have to special order.  THIS WAS NOT MAKING ME MONEY!!  I'd follow the instructions, "offering the Mary Kay Opportunity" to others...and they would have a hard time keeping a straight face...I started selling stuff BELOW COST just to get rid of it!  I was giving it away as "gifts"...my "friends" were avoiding me! 

The only time my director would call was to see how much I was going to order...and then she would tell me what "MY" goal should be!  (What makes me think she was worrying about her OWN commissions?)  Not once was I able to book a real "party"...this all happened back in 1998..maybe 1999...would you believe I STILL have old PINK tubes of lipstick...and old eyeshadow?  The facial cleansers and moisturizers all became stinkey, and I had to throw those away...and there is a shoebox full of stuff still in my closet...its moved with me from Newport Beach to Costa Mesa to San Antonio to Ocala to JAX...

My next door neighbor is some fancy Director...she has the Mary Kay car....and she's been a director now for 27 years.  Sure, some DO have success, like she did (hell, she was probably there with old Mary Kay herself when she mixed up that first vat of leather tanning juice and helped her pour it into those ugly pink jars!) She owns TWO homes, has the Mary Kay car...do you think she is giving up being the Diamond Director?  (I know that if I were next in her down-line, I'd be wishing the old bat would either retire (or wither away) so I could get a chance to be at the top of the pyramid!  

I'm convinced of one thing, tho...only ONE person can be at the top of the pyramid...in either a Corporation or a small business.  There's only ONE boss, one director of West Coast, one director of East Coast...and it never will be you or me!  WE will always be at the bottom of the pyramid!

The following was written by TRACY COENEN at SEQUENCEINC.COM. You can see other articles on FRAUD there!

MULTI-LEVEL MARKETING IS NOT A BUSINESS (IT’S A PYRAMID SCHEME)

Over the weekend, cracked.com posted an insightful article about the realities of multi-level marketing. Simply put, MLM is the same thing as pyramid scheme. It’s not a business. Almost everyone loses money. The behaviors are cult-like. And you will NOT be successful with MLM, so don’t bother trying to recruit your friends and family.

Author Kathy Benjamin calls pyramid schemes the world’s fastest growing industry, and she is right. You see the evidence all over Facebook. Several of you friends are inviting you to their party, or they’re posting staged before and after pictures and leaving cryptic messages that say “ask me how!” They often will not mention the name of the product they’re pushing, because they know they’ll lose you as a potential victim if you Google the product before they can fill your head with lies about how good the product is.

Which companies are we talking about? Some of the most common names heard are Amway, Mary Kay, Herbalife, Usana, Avon, Isasgenix, Legal Shield, Forever Living, Advocare, and Shaklee. But there are literally hundreds of these companies around. Basically any company that shows you a product and then offers you an “opportunity” to buy the product and wholesale and/or make some money selling to family and friends is a MLM. Look for keywords like opportunity, compensation plan, sharing (“we don’t sell, we share!”), independent, and recruiting.

How prevalent is MLM? In the United States, between $15 billion and $30 billion is sucked out of the economy by multi-level marketing predators each year. You’ll hear MLM pushers say that this is an inaccurate characterization, as the money was used to buy products. Yes, some of the money went toward the products – – over priced products that aren’t any better quality than you could get at Wal-Mart. So consumers are wasting money on these products, likely buying more than they can ever sell or consume because they must meet certain minimums to qualify for paltry commissions in the schemes.

Pyramid schemes have been around forever, and our government allows them to operate. Promoters will tell you that MLM is perfectly legal, so there is nothing wrong with getting involved. Just because the law doesn’t stop these companies from operating doesn’t mean they’re any good. Even though 99% of participants lose money in multi-level marketing, consumers still get sucked in by the millions. Kathy writes:

One of the reasons people have been taken in, over and over, decade after decade, is the recruitment practices these companies use. When you get right down to the way that most of these MLMs recruit people, you can’t help but start thinking that they sound like cults. The companies draw people in with a sense of community and the bonds of personal relationships, but when you decide you want to get out, they use those same things against you. People will choose to keep losing money over losing friends and their support structure. Some families of MLM members get so desperate they actually hire people to get their loved ones out of the programs, just like with cults.

Multi-level marketing companies are based on endless chain recruitment. They live or die based on the ability of distributors constantly recruiting more people. They make you think the MLM is really about selling products, but that’s a complete lie. The products are used to make the schemes look like legitimate businesses, when the bottom line is that it is all about recruiting. Kathy explains that saturation from this recruiting can happen faster than you think:

This progression works wonderfully when only a handful of people are making all the money from it. If everyone in your town uses one shampoo, no one loses out and you all have fabulous hair. But MLM programs mean that instead of just recommending your friends try a new nail polish or jewelry or essential oil, you actually need to encourage them to sell these things as well in order to make money from them. And they need to encourage more people. And so on and so on and so on.

Soon, way too many people in one area, or with the same group of friends, are selling the same thing. How soon? Well, if one person starts out and recruits two people, and they each recruit two people, etc., it would only take 28 recruitment cycles for virtually EVERYONE IN THE USA to be selling the same product.

But maybe the biggest problem is that no matter how hard you work, you are almost guaranteed to lose money. MLM supporters will claim that those who lose money just didn’t work hard enough. That’s not true. It’s simple mathematics that guarantee almost everyone will lose money. You can only make money if large numbers of people are recruited below you. That necessarily precludes almost everyone from making money, because they can’t recruit into infinity. As the pyramid below you gets wider, the new participants added have an even smaller chance of making money because there aren’t enough people in the world for everyone to make money.

Kathy writes:

Herbalife, the company getting lawsuited all over the place that we discussed above? Of all their sellers, 99.92 percent lose money. And that is just when you are a part of the scheme. When I asked friends about their experiences working for these types of businesses, most of them said they had hundreds, even thousands of dollars’ worth of stock left after they finally got out. The companies were not about to buy that back — they just had to add the loss to their other ones.

No matter what your recruiter tells you, you aren’t going to make money. 99% of people lose money in multi-level marketing. Those people bragging that they make money? Almost all of them are lying. They inflate their gross income, leave out business expenses, and otherwise flat out lie to you about making money. Of course they’re going to say that they are making money. They are trying to suck you into doing what they’re doing. If they told you they were losing money, you wouldn’t join.

Here’s the bottom line: Recruiting others to recruit others in not a business. You are almost guaranteed to lose money. It’s not fun, and your friends and family don’t want to participate. Since our government won’t stop MLMs from operating, the only answer is to educate consumers so they avoid these scams.