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Why Is MLM A Large Controversy?

April 20, 2021

With the coronavirus spreading across the world, many people are desperately looking for a way to earn money. This would lead to many people being approached with enticing offers and rewards by businessmen from multi level marketing companies, or MLM for short. MLM is an infamous business strategy which involves a supplier recruiting anyone as their distributors to sell their products. Through this method, the supplier earns commissions based on the number of sales made by their distributors. Although this method is known for many users, the MLM industry has seen a surge in popularity recently as there are little to no  requirements of becoming a distributor. To help MLM companies to do their business more efficiently, mlm software development company introduces software with features and tools to help them perform tasks more easily while acting as a platform to communicate.

However, MLM is infamous for a reason. The MLM industry is considered to be one of the most frowned upon by many businessmen as many MLM companies were found using a pyramid scheme instead of its intended usage. One of the most popular cases is when distributors are given a deadline to recruit up to a certain number in addition to paying a “start-up cost” per month. Through this method, these companies would profit off the number of recruits joining in whenever they are required to pay before joining their business. Additionally, the distributors would deceive people by giving them enticing promises like “earning enough money to buy a Ferrari within a year” or “buying your own condo within 5 months”. For sharp minded people, they could detect the lies immediately, but for most people fell for their tricks due to their financial situation. One such example is when LuLaRoe, a clothing retail company in America, were recruiting people to sell their products which earned them billions, but was later found out cheating their distributors of their money.

Even without using a pyramid scheme, most legal MLM companies would use a loophole in the legal regulations to have their distributors pay more than the intended price. Despite being known for one of many ways for businessmen to earn money on the side, MLM doesn’t reward enough money to justify their cause. For example, you could be spending a few hundred dollars from your company but you would only earn a miniscule amount. However, most naive and desperate citizens would quickly join the MLM business because the thought of earning a large sum of money in a short amount of time is way too good to pass up.

MLM has been one of the most discussed topics even today as many MLM companies are still operating like usual. Although the cases are different from person to person, MLM is still considered as one of the most dangerous industries to get yourself involved in.

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