Multi-Level Marketing is not your path to riches

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Despite the claims of many who are trying to recruit new victims into their Multi-Level Marketing (MLM) scheme, you are not going to find riches there. While there are often lofty claims about many millionaires originating in MLMs or a high percentage of women making six-figure incomes from MLMs... the reality is that the people profiting from MLMs are few and far between.

Have you ever asked someone pushing an MLM for support of their claims? Have you ever seen documentation that proved there were many making executive incomes? Have the MLMs ever voluntarily offered up statistics about the success and failure of distributors?

I can almost guarantee that your answer is "no." Why is that? MLMs don't release figures related to the number of participants involved during the year, the failure rates of participants, or even the success rates of participants because they're beyond dismal.

Take Mary Kay Cosmetics, for example. In the United States alone, about 1.2 million women will be distributors at some time during this year. Of those 1.2 million women, only about 600 will earn a six-figure income after business expenses. That means that just this year, only 0.05% of women involved in Mary Kay will make that big income. Only a tiny fraction of 1% of women involved in Mary Kay will achieve the high earnings. And Mary Kay is generally thought to be one of the "better" MLMs out there.

Do you want to waste your time and your family's money on a losing proposition like this? If you were told before you signed up that you had far less than a 1% chance of making that "big money" in your MLM, would you have signed up? It sounds to me like you're better off playing the lottery.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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