Monday, April 27, 2020

Money Monday: Multi-Level Marketing is Not a Pyramid Scheme

Image copyright Robinraj Premchand on Pixabay

Disclosure: Post contains affiliate links.


Over the past few days, I've seen several instances of people being accused of attempting to scam others when promoting products. I have not had anyone aggressively accuse me of attempting to scam my readers, but I have seen several bloggers accused of it. On my recent post promoting the Cryptotab Browser, the commenter wasn't aggressive towards me, but they erroneously referred to Cryptotab's multi-level affiliate marketing platform as a "Ponzi scheme," also known as a pyramid scheme.

Legitimate multi-level marketing is not a pyramid scheme. 

There is an excellent post at Differen.com about the differences between a legitimate MLM platform and a pyramid scheme. I am going to share the main points from this post, but I recommend that readers take a look at the entire article.


Here are the key points from the post.

Multi-level marketing (MLM) is a legitimate marketing strategy where an actual product is provided. This says nothing about the quality of the product. This is open to debate. The point is, there is a product provided. With a pyramid scheme, there is no real product sold.

Multi-level marketing is legal. Again, a customer may debate the quality of the product being offered, but there is a real product and it is legal to market products in this manner.

With multi-level marketing, prospects pay money upfront in order to enroll in a program. Participants in MLM can make money from enrollment fees AND by selling products. The time, money, and energy invested in the program may not be worthwhile to the prospect in the long run, but multi-level marketing is a legal strategy.

With a pyramid scheme, prospects pay money upfront in order to enroll in a program. Participants make money primarily from enrollment fees of prospects who sign up under them rather than by selling products.

A participant in legitimate multi-level marketing may opt to focus on recruitment rather than the sale of the product offered.  This is perfectly legal as long as there is an actual product offered.

In a previous post, I praised Cryptotab's in-browser cryptocurrency miner. You set the thing and forget it, letting it do its thing while you do yours. I am admissibly new to cryptocurrency, and the commenter may be correct that users don't get that much payout from the miner's efforts and most of their payout will come from promoting the Cryptotab browser. I've only had the browser for about two weeks and I just started promoting it, so I really can't say if this is the case. However, the commenter is incorrect about Cryptotab's affiliate program being a "Ponzi scheme." It is a legitimate multi-level marketing program.

There is an actual product being offered (the Cryptotab browser) and in this case, anyone choosing to become an affiliate puts no money into the program. You download the Cryptotab browser free of charge. You can simply use it as a browser without ever utilizing the miner, but I don't know what sense that makes when utilizing the miner costs you nothing. You don't have to be an affiliate to use the browser or the miner. The worst thing a user is risking by trying the Cryptotab browser is discovering that they don't like it, in which case they can remove it from their computer.

The other program that I promote is Watkins, which is a legitimate multi-level marketing program that requires a small investment to join: usually $29.95 per year, but the fee is reduced to $14.95 through April. This fee gives consultants access to the back-office area, which includes printable promotional materials and links to web pages that the consultant can share in order to recruit new prospects AND sell products. I use these products myself and initially signed up as a consultant simply so I could get discounts on them but decided that this was a product that I could see myself promoting.

Again, one can debate the quality of the products being sold, could say that participation in the program is more trouble than it's worth and that the investment is too costly. Whatever arguments might be made regarding those points, Watkins is not a scam or a Ponzi scheme. It is a legitimate multi-level marketing program which, in my opinion, is more transparent than many legitimate MLMs. The cost to join the program appears on the first page of the website. Further, there are no quotas to remain part of the program.

Avon, which is another legitimate MLM program that I have been a consultant for in the past and might consider being a consultant for again, requires consultants to put in an order once every six campaigns in order to maintain their consultant status. I don't like this particular requirement, but it doesn't mean that Avon is a scam or a pyramid scheme. They provide a legitimate product and it is possible for consultants to make money selling that product.

Another thing that impressed me about Watkins is the fact that no-one is going to hound me or give me a schpiel about why I should be a consultant. No-one will ever call me unless I request that they do so. I'm not even obligated to receive the monthly consultant email. I could use my annual membership fee the same way I use my annual Costco membership fee and accrue points to buy my own products at increasingly deep discounts and keep my pantry, cleaning closet, and medicine chest stocked. Just because I am part of a multi-level marketing plan where I will receive monetary compensation if a new consultant signs up through my link does not mean that Watkins is a pyramid scheme. It clearly is not.

In the future, I will direct anyone stating that the programs I am promoting are pyramid schemes or scams to this page. The promotion of products and services is permissible on most blogging platforms as long as the poster clearly states their intent. I am fine with legitimate concerns and politely worded constructive criticism. Shouting SCAM on every post containing affiliate links is unproductive and tiresome. I for one don't have time for that muckity-muck and will not entertain it.

I lost thousands of dollars to scams and unscrupulous schemes in the 1990s and early 2000s and pride myself on being transparent about my affiliate marketing efforts and only promoting products and programs which are free or reasonably priced. Ripping people off is not a win. Helping others prosper and lead fulfilling lives is.

Cheers,
Your ornery old Aunt Cie

This post is copyright 2020 by Cara Hartley

Cross-posted to:


2 comments:

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