Why Is MLM Called A Scam?

It’s amazing that no matter how beneficial, not only this business has been but the very business model has been, that there are still naysayers out there that will call what we do a scam! Or a pyramid scheme. Or whatever negative terminology that they can think of to call what we do.

In fact, I just saw this very thing in a movie that I saw the other day and I really wanted to share it with you today. Check it out!


We have these naysayers even though it’s been well documented that one of the best ways to make money is with an MLM or multi level marketing business. Everyone from Donald Trump, Robert Kiyosaki and Oprah Winfrey are claiming that these residual income opportunities are a great way for everyday people to leverage their time and limited financial resources and make good money. These people are rich. Do you think they’d be recommending this to you, risking their reputation and the integrity that they have if it didn’t actually work? This is one of the oldest and best ways to make money; using a leveraged residual income opportunity.

How is a successful MLM business leveraged? Simply stated you find several business partners and nearly everyone else you find does the same.  Everyone participating gets a piece of the pie.  The more people consuming products, the more you make.

People often refer to these businesses as scams or pyramids.  Believe me, there may be more than a few scams out there but most of the well-known ones are very legitimate businesses with excellent products, training, resources and are designed to make you a lot of money, legal money, I might add.

These are great residual income opportunities to take advantage of since you are your own boss. You have the power to set your own hours and work as hard or easy as you want.  Rewards come from your own efforts.

Someone I heard the other day mentioned his definition of a financial pyramid and I had to laugh.  So company BCA (Big Corporate America) employs a few presidents, a bunch of vice presidents, executives, middle management and 26 levels of people higher than the workers that actually do all the work.  The people at the top make way more money than the people at the bottom.  There are fewer people at the top and more at the bottom.  Tell me, if you’re not the guy at the very top, do you want to spend your life in this corporate pyramid, on the bottom?

In a legal MLM business, each person has the same chance to make money.  You are rewarded by your ability to add motivated team members. It’s much more “fair” that the ‘lion’s share’ of the rewards be given to those who earn it.

What You Need To Succeed!

One piece of information that I have observed is that you don’t need to personally sponsor a lot of people to be successful in an MLM business.  I’ve seen it with multiple people who are extremely successful in MLM.

In the beginning it might seem challenging to find people interested in joining your business but if you make a commitment to make it work, it will. You just have to keep at it.

What You Need To Succeed!

You need to sort through people as fast as possible to succeed quickly.  Your job is to find the right people, not convince the wrong ones. To your success!

May All Your Ventures Be Met With Success,

Omarra Byrd

Permanent link to this article: https://www.omarrabyrd.com/blog/2009/02/09/why-is-mlm-called-a-scam/


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  1. Hi Omar,

    I’ve had a few years experience with MLM and here are my thoughts. I don’t believe there is anything inherently bad or unethical about the business model. The only problem is: it’s been so badly abused by unethical people, and so had gotten an unjustified bad reputation IMO.

    Like any heirarchical system, the people at the top make the most money. That’s true even in Wall Street. Look at the “insider profits” lawsuits for a great example. The people at lower levels can also make money with good effort and marketing skills, and here’s the clincher, as long as the program is ethically run and the market niche being targeted doesn’t get saturated.

    Sure, I’ve made money with MLM, and I think anybody that’s put a little effort into it will be able to honestly say that they have too. However, in the long run it seems never enough of a return to justify the expense of capital and labor involved.

    It’s important to realize that any system that has too many levels (say past 2 or 3) can really never make money for those at the lower levels unless it’s a ponzi scheme. That is, where the money is made from the “recruiting” and not from product sales. This is clearly illegal in the USA. Check out the current “Madoff Scandal” for more details as to how this happens at even the highest levels of society, even on Wall Street.

    This occurs because in a typical system over 3 levels deep the matrix gets so wide and full so fast that “market saturation” occurs. This is no myth, it really does happen, which is why most MLM systems fail in just a few years as members lose all faith in the system to generate income.

    Now, to really make money… it’s best to start your own MLM. And, the best way to do that today is to sell your own products using your own affiliate program, say up to 2-tiers deep. Now, you have everyone else spending money for the marketing to sell your product. You can do this by exploiting http://www.clickbank.com or http://www.click2sell.eu to find affiliates. Both work well. Of course, you’ll still have to have a great product to sell, and have an automated system to handle everything. But… it’s doable, and can make a lot of money.

    Love your post, and there really isn’t enough discussion on this topic anymore. I think people have thought MLM has somehow “died”. In fact, as far as I can tell, the opposite is the truth. I just think that better, more ethical systems are now being put into place.

    That can only be good for everyone.


  2. Hey Tom,

    Great comment and actually very enlightening I’m sure for a lot of readers because it was truly enlightening for me! I even had to do some research on my own and look up what a ‘Ponzi Scheme’ was. For those who are interested, here is where you can find the wikipedia definition of ponzi scheme:


    I thank you for your contribution as an experienced MLM’er (is that a word?) to the blog. I agree wholly with your comment in terms of starting your own MLM with a product and affiliates. I say I agree wholly because I currently have that:


    I would also say that another form of a personal MLM would be a membership site that charges a monthly fee. I have a membership site myself but at this time it is completely free of charge:


    These are great ideas for streams of income. Me myself, I just got started in my first MLM opportunity. Why, you might ask, would I do that if I already have some forms of my own MLM? Well, very simply stated, the economy.

    In today’s economy if you don’t have multiple streams of income coming in you could find yourself up S*@#’s Creek without a paddle, very fast I might add also. So I wanted another source of income and I believe I found it with 5LINX. I have been promoting this MLM to everyone I know because it’s not a company that sells ‘potion lotion’ or vitamins. They market products that people use day in and day out. Even people in forecloseure, having their car impounded or even getting layed off!

    They market telecommunications. Even the hard pressed still have their cell phones on! And when comparing them to all of the factors that you mentioned would kill most MLM’s, they even pass that test with flying colors. The link is in the post for any interested in what 5LINX is or what they do.

    Thanks for your contribution Tom!

    May All Your Ventures Be Met With Success,

    Omarra Byrd

  3. MLM is far different from a Ponzi Scheme and owning your own MLM is more possible than ever with all the programs that are available for management lately. For now I’m happy at the affiliate level because being in charge of service and troubleshooting just makes mlm the same as any other 9-5 in my opinion.

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