Have you ever been approached by someone, maybe a family member or a friend, about a golden opportunity that promises to make you rich fast? If that is a yes, this opportunity will often entail being a “brand” distributor or “contractor” and selling make-up, health supplements and any essential item needed in the current environment.
While the offer may sound tempting, you should be on alert. Most of these offers are multi-level marketing (MLM) or pyramid schemes. These schemes have made a comeback due to the onset of unemployment, and while it may work at first, most end up losing their money, and the profits go only to a select few. Experts claim it is harder to earn from these schemes than winning the lottery.
Last week, I talked about what to watch out for when a business is MLM. If you are not familiar with these MLM schemes, here are 8 of the most controversial ones that you should avoid at all costs:
Primerica is a legitimate insurance MLM company that recruits people with no insurance background to sell complicated insurance programs that they claim are better than others.
However, those who get into the program are pressured to recruit as they try to sell these products to get profit. Because of its practices, the company faced several lawsuits over the years, leading to the creation of the Anti-MLM Coalition.
Many sued women’s apparel brand LuLaRoe for its MLM business model that asked “investors” to invest thousands of dollars, believing that launching a clothing business startup with them would bring in millions once the business kicks in.
However, this promise didn’t come true as many declared bankruptcy after the company failed to deliver the clothes the investors were selling to their customers. A supplier sued the brand for failing to pay for the requested clothes.
Herbalife is a known supplement company placed on top as a MLM industry. It was sued several times for operating under a pyramid scheme where none of its distributors gained any profit. Its top distributors were also sued after appearing in the company’s recruitment videos.
Although the company has restructured its business practices as part of the lawsuit settlement, it had to pay millions to settle their cases for misleading investors and bribery.
Younique is a beauty industry MLM that uses struggling women as “presenters” to promote their products. Many of these “presenters” are lured in with the promise of financial independence but would later find out that they must keep buying merchandise to maintain their status. Younique has eight status tiers; the higher the tier, the higher the commission you get. But, as you climb this ladder, presenters will discover that they will slowly be buried in inventory, pay huge expenses and face pressure from the company.
Advocare is another supplement MLM company that operates under a pyramid model. For the company’s model, recruiting is the top priority instead of sales, and they would even inflate their profits to entice unsuspecting investors. They will also use the same tactic in showing an inflated “potential earnings” chart and “low” upfront costs” to attract recruits.
Like its fellow MLM schemes, Neora is sued by recruits for utilizing an illegal pyramid scheme and promising financial independence to anyone who joins. When there are fresh recruits, a higher premium is given compared to those who get high sales.
Others also complained that the wellness MLM company pushes for the success mantra of “Recruit, Recruit, Recruit” instead of promoting their products.
Amway denies all claims that they are a pyramid scheme and an MLM firm in a recent post they did to answer the critics. However, the “independent business owners” whom they worked with disagree and claim that they are using deceptive business practices to mislead people into investing in them by promising high returns and fewer expenses.
The Beachbody program was a product of a woman who used it to lose weight and get a fit body. Thanks to the ‘success’, it convinced the woman to become a Beachbody fitness coach. Unfortunately, she spent hundreds of dollars on fees to sell the program and its related merchandise to others and lost time being with her children.
Other Beachbody coaches who were sucked into the program also experienced the same problems and left the company after 2 years because of it.
There is no “golden opportunity” that will help you immediately become big like the schemes in this list. If you wish to earn big bucks, you have to earn from it, and you don’t have to rely on a business model that requires you to recruit and sell items constantly. If someone approaches you with a similar scheme or to any of these schemes, stay away immediately!
If it is too good to be true, it probably is!