Internet Business Blueprint

Internet Marketing, Viral List Building, Social Media Mastery

Internet Business Blueprint - Internet Marketing, Viral List Building, Social Media Mastery

Ten MLM Myths Defeated by the Truth

During today’s training session on the “Internet Business Blueprint” podcast, I discussed ten common myths that many face when prospecting for their network marketing (MLM) opportunity. I find that many distributors shy away from these when they are raised by their prospects and often result in a total lack of confidence during the recruiting process. My underlying advice has always been to address these questions head on and I will summarize here what the most common myths are and how to address each in effectively.

Ten Common Myths:

#1. Isn’t this a “pyramid scheme?”

There is a legal definition for what constitutes a “pyramid scheme” made available from the “Office of the Attorney General” in your State. Here is a direct quote from Illinois Attorney General Lisa Madigan on her official website.

What is a Pyramid Scheme?

Pyramid schemes are illegal money-making ventures used by individuals, businesses, and small groups of people. A typical pyramid scheme involves a few people at the top who recruit participants to recruit more participants to offer something of value (usually money, but in some cases, time) to the organization. Participants are promised large sums of money if they successfully recruit others to pay money to join the pyramid. Pyramid schemes focus on the exchange of money and recruitment; usually, no legitimate product is sold.

How are Pyramid Schemes Disguised?

Pyramid schemes may be disguised as games, chain letters, buying clubs, gifting clubs, motivational companies, mail order operations, or investment organizations.

Some pyramid schemes also call themselves multilevel marketing operations, but not all multilevel marketing companies are pyramids. The sale of legitimate products is what distinguishes multilevel operations from pyramids. If you are told you will earn commissions for recruiting new members rather than for selling something of value, the organization is probably an illegal pyramid.”

Source Illinois Attorney Generals Official Website

#2. Isn’t this “Illegal?”

The best way to answer this question is with these facts about our profession:

1. The industry in more that 60 years old
2. The sales for our profession exceed 30 Billion Dollars in the USA and 100 Billion Dollars Worldwide
3. The number of people participating is more than 50 Billion in the USA and more than 120 Billion Worldwide
4. The industry is largely self-regulated with residence set by the FTC, FDA, AG, IRS

Most prospects new to the profession of network marketing do not understand how well established and far reaching the profession is around the world, or the volume of sales generated by such a large group of people.

#3. Only those at the top make money.

The Federal Trade Commission Decision 93-618 also known as the “Amway Decision” addressed this question and has become the standard by which pyramid schemes can be distinguished from legitimate network marketing programs. There are two key factors to consider; first, the company must have a product or service utilized by consumers including those outside of the opportunity. Second, there must be a likelihood that a persons down line have a high probability of making more money than those up line.

Here is an except:

“In re Amway Corp., (93 F.T.C. 618 -1979) another landmark decision from the 1970’s, the FTC distinguished an illegal pyramid from a legitimate multilevel marketing program…

Since distributors were compensated both for selling products to consumers and to newly-recruited distributors, there was some question as to whether this was a legitimate multilevel marketing program or an illegal pyramid scheme. The Commission held that, although Amway had made false and misleading earnings claims when recruiting new distributors, (Id. at 729-33) the company’s sales plan was not an illegal pyramid scheme.

As a matter of fact, Amway’s Sales and Marketing Plan is currently the model the FTC uses to evaluate Multi-level marketing plans. They ask, “Is it illegal, or is it like Amway?”

Source Federal Trade Commission

#4. You are required to buy a bunch of products.

This is an outdated practice and very few companies have product volume requirements beyond your normal monthly personal consumption of their products. I can remember in the early 1980’s friends who were involved with Amway converting their spare bedroom into a mini-warehouse to stock their Amway products. This is no longer the case as most companies accept product orders over the Internet and ship products directly to the customer’s specified address.

#5. Product prices are inflated by network marketing companies to pay the compensation plan.

Help your prospects understand how product distribution models work and how the related expenses impact the final price to the consumer. In the traditional retail model products go from the manufacturer, to the wholesaler, to the retailer, and ultimately to the consumer. In the network marketing model the distribution model is a direct sale from the manufacturer to the consumer. The distributors are paid out in similar proportion to the wholesale channel in the traditional model.

Network marketing companies are able to deliver what is usually a superior product directly to the marketplace at a competitive price in the marketplace. In my personal experience, those products that are priced higher in than popular brands are of superior quality and could not be offered by traditional retailers with comparable quality at a competitive price.

#6. You need to be able to peddle products.

This is another outdated view of network marketing. Back in the 1970’s and early 1980’s it would be common for a distributor to make monthly calls to their customers to collect orders, take delivery of their product orders at their home and then run all over town delivering products to their customers. The Internet has all but eliminated this practice and customers now order their products online using a retail account provided by the company. The products are then shipped directly to the customer’s specified address.

My advice is that if you feel like you are “peddling products,” you may not be thinking about your business in a big enough way and you must create scripts to allow you to effectively teach your team and customers the value of automation in your business.

#7. You must chase your friends and family to get them to join your business.

Unfortunately this practice does still exist as up-line leaders race to gain access to your warm market. It is essential that you share your message with the people you love the most in your life. I believe it is logical that if you possess a high level of belief in your program, that you would want to share the potential for financial security and time freedom with those closest to you?

I do not condone the notion of “chasing” anyone to convince them to join your business. Shift your mindset to having an expectation that your friends and family members will look at your business, and arrive at the decision that is best for them. You job is to do the best job possible to share the information, facilitate a third party call for validation, and resist being too caught up in the outcome of their decisions. Keep in mind that you can build a thriving organization without enrolling a single person that you currently know.

#8. Recruiting online doesn’t work.

The evidence is overwhelming in favor of recruiting online with literally thousands of documented testimonials available online from a variety of sources. My advice is to educate yourself by reading some of these stories and select a few to add to your prospecting scripts for those who doubt that online marketing is effective.

I also suggest that you take advantage of the free training provided by attraction marketing specialist Mike Dillard by following this link:

MLM Traffic Formula Free Training

#9. You cannot be open about “what” you are inviting your prospects to – you must keep it a secret.

Do you want to destroy your credibility with your friends, family members, and prospects? If so, simply “trick them” into attending an opportunity meeting or throw them onto a third party call without providing them with the courtesy of knowing you are going to do so. In addition to alienating your prospects, you will reinforce any negative preconceived ideas they may have about network marketing.

This myth can easily be defeated by not engaging in this practice. You should always inform your prospects with honesty and integrity and teach them how to recruit by example.

#10. You can’t “get rich quick.”

Here is the best way that I can demonstrate for you that you can “get rich quick” in network marketing. The average person works in a career or series of jobs for 40 years with the hope of saving enough money to enjoy a comfortable retirement – 40 years. In network marketing, it is possible to build a long-term residual income and true wealth in 3-5 years.

By comparison, 40 years as compared to 3-5 years, I would say it is faster and just as likely that you can achieve financial independence through your career in network marketing as with traditional career choices.

Here are five strategies to use in order to bust any myth:

1. Communicate Effectively
2. Refuse to engage in a debate (who is right or who is wrong) instead share knowledge
3. Address all concerns honestly and directly
4. Validate using third party proof
5. Focus on the core issues and not minor points

If you commit to engaging in a serious discussion of these and other myths in your prospecting you will recruit new members into your team who have made strong educated decisions. Be sure to leave a comment and share your experiences and if I have not addressed a myth that you are aware of add it to your comment.

I am here to help you succeed!

(c) Copyright 2008-2009 James A. Holmes. All Rights Reserved.


James Holmes, Global Team Builder, Coach and Trainer, combining online and offline techniques to help you grow your business. To request a free 30 minute consultation contact James by phone at 303-523-9503 or email at


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Category: Coaching
  • Ben Waugh

    Well said

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  • Dana

    Hi James: Your blog, your statements and your whole overall way of putting it out there are great. Read your response to Perry’s confessional and found that to be an honest assessment of a tough situation. Thank you for being outspoken about faith and Jesus, that’s always refreshing, and my sense is that we need to draw nigh unto one another as believers. – DrD

  • JamesHolmes

    Dana – Thank you for the compliments, they mean the world to me. I love being able to share what I have learned and hope to provide as much value as I can in exchange for your support. Have a blessed day!