Thread: The false lines used by mlms

I did want to say that the part about it being your own business is one of the worst lies. I believe some people had run into trouble with tax deductions with the IRS, because they thought the deductions were part of "their business". I guess the IRS didn't see it that way. I have not done research into this and this was an article I saw a while ago.
So take it with a grain of salt. It may or may not be true.

Maybe someone knows about this. Does the IRS view deductions by MLMers (distributors) in their "so called" business a legal tax deduction?

Originally Posted by Theophilus

Maybe someone knows about this. Does the IRS view deductions by MLMers (distributors) in their "so called" business a legal tax deduction?

Most MLMers receive 1099's, and often have W-2 wages to boot if they have a regular job. They can deduct some things as business expenses, I believe, but it can get complicated.

Here's a little forum of CPA's discussing it (it's pretty funny):
TaxAlmanac - Discussion:Mary Kay

And there's this old report from Jon Taylor:
MLM The Truth » Blog Archive » Who Profits from Multi-Level Marketing*? Preparers of Utah Tax Returns Have the Answer.

Originally Posted by Emet

Most MLMers receive 1099's, and often have W-2 wages to boot if they have a regular job. They can deduct some things as business expenses, I believe, but it can get complicated.

Here's a little forum of CPA's discussing it (it's pretty funny):
TaxAlmanac - Discussion:Mary Kay

And there's this old report from Jon Taylor:
MLM The Truth » Blog Archive » Who Profits from Multi-Level Marketing*? Preparers of Utah Tax Returns Have the Answer.

One of the problems with them trying to deduct things is your business is required to show a profit after every so many years (3?) to qualify AS a business at all. Since so very few MLMers ever see anything even close to a profit, the "business" doesn't pass tax code requirements for any deductions. None. They can try and write things off, but an auditor will disallowe them if they get audited.
As such, it's a bogus claim 97% of the time at least.

"MLM saves a fortune in advertising expenses and passes the savings on to the customer"

The reason companies pay for advertising is "because it works" and can be shown to be cost effective.

As one example,

2010 Super Bowl Consumer Survey Results: Shopping, Spending, Commercial Viewing

2005 - 2010 Comparison of Consumer and Retailing Trends Related to Super Bowls

By Barbara Farfan, About.com Guide

See More About:

• super bowl advertising & marketing survey
• superbowl consumer trends
• super bowl retail spending
• retail industry super bowl advertising

Each year since 2005, the Retail Advertising and Marketing Association (RAMA) has commissioned a survey to quantify the consuming intentions of Americans related to the annual Super Bowl event. With a larger audience than any other televised event in America, the Super Bowl provides both an immediate boost to retail industry sales and a potential long-term benefit to the brands, as they join the ranks of advertising history with memorable commercials that are eagerly viewed.

This is a comparison of key measurements in the Retail Advertising and Marketing Association's 2010 Super Bowl Consumer Intentions and Actions Survey for the past six years.

Percentage of American Consumers Who Plan to Watch the Super Bowl

73.2% - 2010

73.3% - 2009

70.0% - 2008

69.7% - 2007

65.9% - 2006

Amount of Planned Spending for Merchandise Related to the Super Bowl

$52.63 per person - 2010

$57.27 per person - 2009

$59.90 per person - 2008

$56.04 per person - 2007

$49.39 per person - 2006

$49.27 per person - 2005

Total Super Bowl Related Spending Predicted

$8.9 billion - 2010

$9.6 billion - 2009

$9.5 billion - 2008

$8.7 billion - 2007

$5.3 billion - 2006

$5.6 billion - 2005

Number of Consumers Planning to Purchase Televisions for Super Bowl Event

3.6 million - 2010

4.5 million - 2009

3.9 million - 2008

2.5 million - 2007

1.7 million - 2006

1.4 million - 2005

Percentage of Super Bowl Watchers Who Will Purchase Food and Beverage for the Event

71.4% - 2010

72.4% - 2009

67.3% - 2008

69.3% - 2007

68.0% - 2006

Percentage of Consumers Who Plan to Purchase Apparel or Accessories Related to Super Bowl Teams

6.5% - 2010

5.6% - 2009

6.0% - 2008

6.3% - 2007

Percentage of Viewers Who Think the Football Game is the Most Important Part of the Super Bowl

47.8% - 2010

46.1% - 2009

46.7% - 2008

32.1% - 2007

33.6% - 2006

32.2% - 2005

Percentage of Viewers Who Think the Commercials are the Most Important Part of the Super Bowl

24.3% - 2010

26.9% - 2009

26.3% - 2008

18.1% - 2007

15.3% - 2006

15.7% - 2005


Percentage Who Think Super Bowl Commercials are Mainly About Entertainment

76.3% - 2010

79.3% - 2009

75.7% - 2008

Percentage of Consumers Who Wish Advertisers Would Not Spend Money on Super Bowl Commercials and Pass Savings to Shoppers

19.4% - 2010

21.4% - 2009

18.0% - 2008

Number of Consumers Planning to Purchase Furniture for Super Bowl Event

1.8 million – 2008

1.3 million - 2007

0.8 million - 2006

0.5 million – 2005

Number of Consumers Planning to Watch the Super Bowl Game from a Restaurant or Bar

9.2 million - 2007

8.3 million - 2006

9.9 million - 2005

Super Bowl Consumer Survey Results 2005 - 2010: Consumer Shopping, Commercial Viewing, Advertising Satisfaction, Trends

Now consider the amount of "word of mouth" advertising which could have been delivered by MLMers during the Superbowl or a similar time period.

MLM delivers "cheaper" advertising ????? No doubt.

MLM delivers advertising which is as "cost effective" Not on your sweet life.

MLM style "word of mouth" advertising appears to be competitive with paid advertising ??? Only to someone whose understanding of advertising comes from a program they saw once on TV or from their "upline"

This was my favorite used many times by YTB-a travel MLM:

"Travel Like A Rockstar"- The truth is that your MLM Company and those on the tippy top of the recruiting chain will make money regardless of what the bottom is doing. As long as there is a little growth they don’t really care. They have made their money and all they have to do is keep dangling the golden carrot of lies and phony dreams over your head and like a good little MLMer, you will keep drinking the Kool-Aid. Meanwhile, your rent is late and the car you are driving is 10 years old.

Then they tell you to sign up your friends, co-workers and family, when in all truth your friends and family and co-workers are probably as interested in your new business venture as they are interested in receiving dental work. Most people do not even think of dental work until they feel the pain.

MLM’s are for poor ignorant folks who don’t understand how badly they’re going to get screwed over, and don’t understand how much of their hard work will just pay other people for doing nothing. Brainwashing is alive and well in MLM. Convince the victims that failure is their “fault.”

"Our Products can be resold at retail prices for a handsome profit."-

MLM products must be priced high enough to support a bloated network of distributors, so prices are seldom if ever competitive with alternative retail outlets. MLM products are sold primarily to recruits to "do the business," rather than to persons outside the network of participants. People who shop around and are not buying products for the "opportunity" are not likely to become customers at all or for very long.

[B]"MLM offers true "time freedom." For those who work at it, MLM can provide an income that is reliable, leveraged, residual, long-term – even permanent income. This will allow you the "time freedom" to quit your job and to spend more time with your family or to do whatever you want. "-

These catchwords are used by MLM promoters to appeal to the desires for "easy money" that keeps on growing and providing for the comforts of life – and the resources to do what we want, when we want. However, one of the stark realities of MLM is an extremely high attrition rate. Available statistics suggest that 90-99% of recruits terminate or are inactive within a few years of joining. Those who do "succeed" must be constantly recruiting others to replace a revolving door of hapless victims of these deceptions. This can become totally consuming, leaving little time or opportunity for anything else. Meanwhile, you are still working your real job to be able to pay your bills and exhausting yourself.

"Work for only an hour or two a day to supplement your income to help meet expenses or pay down debt."-

To profit at a recruiting MLM, one must work long hours and be willing to continue to recruit to continuously replace dropouts. One must also be willing to deceive large numbers of recruits into believing it is a legitimate income opportunity. Recruits seldom profit, but are instead only fattening their upline's commission checks and enriching founders.

"If you fail at this program, it is because you failed to properly work the system. "- The system itself dooms nearly all participants to failure. MLM is built on an endless chain of recruitment of participants as primary customers. It assumes both infinite markets and virgin markets, neither of which exist. It is therefore inherently flawed, fraudulent, and profitable only for founders and those at or near the top of their respective pyramids of participants. Even with their best efforts, the vast majority will always lose money.

"MLM is the "wave of the future." In fact, "Our MLM is experiencing phenomenal world-wide growth," etc. "So get in on the ground floor of this great growth opportunity." -

MLM'rs have been saying this for over thirty years, but MLM still accounts for less than ½ of 1% of consumer purchases - in spite of the fact that the number of MLM companies has totaled in the thousands. MLM's come and go, as do new recruits, over 90% of whom drop out. Significant long-term MLM industry growth is a myth.

"Turnover, as in any business, is a reality that assures an ample supply of available prospects." -
Again, with few real customers, MLM products are sold by recruiting a revolving door of new "distributors" who buy products to "do the business." And since people perceive the opportunity as dwindling with each new "distributor," market saturation requires promoters to recruit elsewhere. So MLM's quickly evolve into Ponzi schemes, requiring the opening of new markets in foreign countries and/or new product divisions to repay earlier investors, as has happened with Amway (now Quixtar) and Nu Skin (which became IDN, then Big Planet and Pharmanex). It's not turnover, but continuous churning of new recruits to replace dropouts.

"It takes time to build any business." "This is not a get-rich-quick scheme, but a 'get-rich-slow' program." "While the potential rewards are great, don't expect instant success," etc. -
MLM promoters sell recruits on their programs as a business opportunity that takes time to build, but to get around business opportunity regulations, they present it to authorities as a "direct selling" opportunity. However, In legitimate direct sales programs, sales persons earn commissions right away and don't have to wait months or years for commissions to exceed expenses.

"In this new (MLM) program, you can be the master of your destiny."-
You will be a slave to the phone, to meeting the qualifications for commissions and bonuses, and to continual pressure to recruit new participants to replace dropouts. You are also caught in a money trap of hyper-consumption.

"Unlike franchises, business startups, or sales of existing businesses, you can start an MLM business with very little capital." -

MLM's typically bleed new recruits of their funds by inducing them to buy products on a subscription basis, to pay for ongoing training, seminars, conventions, books, tapes, and otherwise draining them of their resources until they run out of money or give up.

"An MLM that offers a refund or buyback provision is harmless." - Many MLMs offer buyback provisions, but they are used for only a tiny percentage of purchases. This is because the provisions are often stacked against the buyers (packages must be unopened, buyer must first try to sell to upline, time limit is short, etc.), and buyers were encouraged to open and use the products right away. Also, few MLM participants understand that the MLM is a scam without extensive and time-consuming analysis with the help of a qualified analyst.

"Any MLM that offers legitimate products is by definition not a pyramid scheme." -The most extreme and harmful pyramid schemes are product-based pyramid schemes by any measure - loss rates, aggregate losses, number of victims, degree of leverage (enriching those at the top at the expense of time and financial investments of those at the bottom), etc.

"MLM offers not just a nice income, but a truly fulfilling life, with the means to enjoy the good life." (The happiness of participants living a life of luxurey and ease is portrayed in sales materials used in recruitment.)
"Sages of the ages," as well as oracles from most of the world's great religions denounce the acquisition of monetary wealth as a source of lasting happiness. Those who become the most involved in MLM frequently lose their sense of what constitutes true wealth – friends, family, service to God and one's fellowman, the search for truth and wisdom, a life well lived, etc.

"Join our program in its pre-launch phase (or entry into a new market or product division, etc.) and establish your position now. You can then take advantage of this virgin market and experience explosive growth." -

This is about as blatant an admission that the MLM is a pyramid scheme as you can find. It is an admission that market saturation happens quickly and that early entrants have a decided advantage over those who come in later. It often also means that the owners know that the product will be shiort-lived and they need to bring in as many marks as they can as soon as possible.

You will be helping your friends and family, as well as work and church associates, by recruiting them into your downline." -
For potential personal gain, you are exploiting those you care about the most. In other words you are squandering your social capital. You may even antagonize and drive away those nearest and dearest to you. A business that incentivizes you to deceive and exploit friends and family – and anyone else for that matter – for personal gain which is immoral and unethical.

"Former presidents and other very reputable people, sports figures and celebrities have endorsed MLM or spoken at their events." -This credibility argument is used with many scams, including the Bernie Madoff Ponzi scheme. As for speaking fees, notables can be always be bought and will "endorse" many products for a fee and expenses or even a slice of the MLM pie.

"MLM is like insurance, investing, inventing, acting, and writing in that hard work at the outset yields residual income for the rest of your life. This is done be "leveraging" the efforts of your downline – so you can retire early, travel, etc."

The odds of success in MLM is more like gambling than legitimate residual income. It appeals to the "something for nothing" mentality. MLM addiction has been observed in some "true believers." The large residual incomes reported are more the result of time of entry and willingness to deceive prospective recruits than of payoff for hard work. To succeed in MLM, one must leverage one's deceptive recruiting through others who can be persuaded to do the same.

"Our "tools for success" are unbeatable. Sign up for our seminars and conferences, and buy our books and tapes to assure your success in this business."

The "tools business" are a pyramid within a pyramid. Hardly anyone makes money selling products, (the real money is always in the recruiting) so another lucrative source of income for those at the top is the sale of "success tools" to supposedly assure the success of their downline - who are in fact only further victimized when they buy these motivational items. They will often have guest speakers at their seminars and conventions who are hawking and selling their own books, methods and tapes as well.

"Our products are less expensive through MLM because they cut out the middleman" -
MLM creates thousands of middlemen, with few real customers outside a bloated network of "distributors" ( "agents," "consultants," "demonstrators," etc.) In truth, due to a bloated hierarchy of distributors, MLM products are very expensive and cannot compete with comparable products from more legitimate sources.

"Fear of loss (of potential income by not recruiting aggressively) is a great motivator." -

If MLM participants understood what is happening to them, they would fear accumulating further losses by continuing to invest in the MLM. The truly lucky ones are those who refused to buy what their recruiters pressured them to buy.

"You will belong to a great support team. In MLM, you have a whole network of people willing to help you succeed and be your friends." -
MLM's operate like a cult with an "us vs. them" mentality. Watch how quickly the team ostracizes you when you quit or discover contrary information about the legitimacy of the program or even dare to ask certain questions.

"The founders and leaders of this MLM are highly experienced and reputable people who would not want to cheat anyone. They are certainly not criminals." -

MLM leaders at even the highest levels of the company resolve "cognitive dissonance" between what they say or believe and the harm done by their program by highly developed self-deception and denial. They also typically interract with the TOPPs (top-of-the-pyramid-promoters), or kingpins, in their organizations and not with the victims at the bottom of their respective pyramids. They do however, tend to make a timed appearance at a convention to rah rah the troops. They may also make a video or write something on their website, but again, this is non interactive.

"Build your business by duplication. Buy five of these "business in a box" packages now, sell them to five people, and ask each to do the same, etc. Be a "product of the products" by signing up for monthly shipment of these items. Soon you will be reaping huge commission checks."
This is how recruiting MLM's earn fortunes for their top recruiters. Commissions from initial and ongoing purchases by new "distributors" (in hopes of profiting) is the life blood of their business. The promised rewards never come, except to those who recruit their way to the top of a pyramid of participants. Take away the "opportunity" inducements for participant purchases, and these companies would fall like a house of cards.

"Our products are unique and consumable - perfect for repeat business." -

MLM products are typically "potions and lotions." The secret formulas are a cover for the fact that they are priced too high to compete in standard markets. In fact, the promotion of various nutritional supplements and miracle juice drinks is analogous to the "snake oil peddlers" of a century ago.

"You will be offering people you care about the very best products available for promoting their health and well being."-

No matter how high the quality of the products, investment in products for which you do not have orders in hand becomes a cleverly disguised means of laundering investments in a product-based pyramid scheme.

Everyone "needs" our product. Our products are superior to over-the-counter products.

This somehow translates into everyone will buy from you since everyone needs and uses the product. Everyone needs soap too, but there isn't just one soap product on the market. People buy products that work and the cost is a good price for the results obtained.

A blind study was done about 5 years ago that took the top 30 over-the-counter vitamin products, and tested them against the top 30 (at that time) MLM vitamin products. The results were: only one MLM Product tested in the top 15, and only 3 in the top 25. The vast majority of MLM Products were found not to contain the % of ingredients claimed on their labeling. The vast majority only had about 10% of the ingredients at the % claimed on their label. So much for 'everyone needing your product, and their products are superior.

Originally Posted by A Life Aloft

I thought it would be fun if we posted our fave lying catch phrases commonly used by MLMs.

Here are some of mine:

"Fake it till you make it"

"Make money while you sleep"Ahhh.... the lure of actually doing nothing for something that some MLMs promise to their recruits.


"We are in Pre Pre launch" This means, we are trying to line up people early because we need the money to actually launch our business and line our pockets and set up the heads of the Pyramids and give them their downlines.


"It's just like any other business...such as buying a franchise" - except when you ask to see their income from mlm (or even their upline who supposedly are successful) its suddenly personal income and none of your business. As if you would ever buy a franchise without looking at the working numbers of the same franchise in other locations.

" Its a ground floor opportunity" or "the time will never be the same to get involved" -yet on the other hand the entire compensation plan is for people to be continually signing up forever, with it being geometric so 2, 3, 5 years from now, there will need to be exponentially more people needed to be coming in to continue the same oppotunity...but somehow the opportunity is better now than it will be in the future!

" MLM has a system that cuts out the middle man and advertising costs," -yet now several layers of people get paid and MLM products are always more expensive than market.

"MLM is the easiest business opportunity in the world,"- that is until you ask them about their dismal failure rate and then suddenly MLM is what you make of it and most people will fail, because they didn't work hard enough.

"We have Celebrity endorsements"- ahhh, you mean D listers who are paid to be a spokeshole for you.

"I made ten zillion dollars in three months and quit my day job"- shows a pic guy sitting on a rented mercedes in front of a mansion that he does not live in or own.

"Anyone can do this and make money"-of course you will need to attend seminars that you pay for, training tapes and books that you also will pay for, pay various fees and after all of that, you are still broke.

"Our product is the most amazing product out there and it sells itself"- but the comp plan in not really about the product at all- it's all about recruiting others to your downline.

"Your enroller and upline become your family. They become your friends. They become the ones you count on." And when you have trouble making your monthly quotas, they suggest that you get yourself in further debt by opening new credit cards to make your qualifying orders. They tell you about the mother of 4 who was living in her car and managed to make her monthly orders. If you go to these people because you heard something negative about the company or MLMs, you will be told, "Those people are just negative and not worth the ****** - don't waste your time on it." Your concerns will not be addressed.

"You will get (for a monthly fee) your own persoanlized website". Of course it is the same exact cookie cutter websit that all the others members in your MLM have and pay for.

Individualism discouraged; group think prevails. Right from the start you're advised that there is no money in creativity, as the perfect "system" of success has been created. Although personal business ownership is touted, it is a farce. Distributors are referred to as "IBO's (Independent Business Owners). You may work for nearly a decade developing an international business, but not have the freedom to even put a newsletter into your group or call a meeting with your leaders that is not "pre-approved".

Rigid rules and regulations. Despite the claim of "personal choice" and "freedom," Distributors are bound by the rules and regulations of the MLM, by the regulations set by the Owners, by the rules set by their upline, and by the statements in their agreement that they must sign. The "rigidity" of the rules may also vary between groups.

"Own your own business". In MLMs, you do not own your own business, you do not own the product, and you are not in control of your destiny. The company holds all the strings--product supply, computer tracking, commissions, collections, customer service, order fulfillment, publicity, compliance, public relations, comp plan, everything. All you own is a position in a long line of distributors. You do not control the product you sell, the comp plan, what the company does or does not do, the money that is paid . . . distributors own nothing other than the opportunity to sign more distributors and manage the existing downline. You are at the mercy of the company, upline, downline, media, and the government.


"MLM is the best opportunity around."- Imagine you are a teenager in the mall, looking for an "opportunity" to work. You see a clothing store with "help wanted". You go in and ask for an application and how much the "job" pays, and you are told to wait in a very long line that extends out the door and into the mall. As you are standing in line, you notice a certain smell, a sort of stink. Perhaps this is why there are very few, if any, customers walking into this store, only nervous applicants.

When you get to the front, you are told that the "job" is really a "business" and will cost YOU to participate in. If you pay the nice lady sitting at a desk (there seem to be more desks here than clothing racks...), you can then sell the fine products they have on display. But you have to buy the inventory yourself on top of the fee to be "hired". And MOST IMPORTANTLY, you are told that to succeed, you must do what she is doing, recruit others to make them "successes" like her.

You do the math on the clothing profits, and indeed it is not likely for you to even make minimum wage just selling product, and besides this... there are all these other people in line as well. The profit, it appears, is to find others who will pay, like you, to be "hired" into this "ground floor" opportunity.

You should set up a similar store next door, you are told.
You walk out confused, and as you pass the long line , the thought strikes you that all these many people will be attempting to recruit EVEN MORE PEOPLE in geometric expansion to set up a store "next door".
What do you think, a good opportunity?

If such an absurd clothing "store" were ACTUALLY to show up in your local mall, could you really NOT see the difference between it and the other businesses: the way they hire, the likelihood of saturation, etc.?
Can "success" be had through voracious "recruiting" of competitors? How could this possibly be sustainable?

With MLM, of course, there is no mall or line--just nice meetings in homes; the odd lunch with a "friend"; the seminar at the hotel--so that you cannot see the absurd line forming of those whom you will be "competing" against for yet even more recruits.
Great opportunity, eh?

Pre pre-launch. I think that's what I was told about Yoli.

Originally Posted by A Life Aloft

This was my favorite used many times by YTB-a travel MLM:

"Travel Like A Rockstar"- The truth is that your MLM Company and those on the tippy top of the recruiting chain will make money regardless of what the bottom is doing. As long as there is a little growth they don’t really care. They have made their money and all they have to do is keep dangling the golden carrot of lies and phony dreams over your head and like a good little MLMer, you will keep drinking the Kool-Aid. Meanwhile, your rent is late and the car you are driving is 10 years old.

Then they tell you to sign up your friends, co-workers and family, when in all truth your friends and family and co-workers are probably as interested in your new business venture as they are interested in receiving dental work. Most people do not even think of dental work until they feel the pain.

MLM’s are for poor ignorant folks who don’t understand how badly they’re going to get screwed over, and don’t understand how much of their hard work will just pay other people for doing nothing. Brainwashing is alive and well in MLM. Convince the victims that failure is their “fault.”

Travel Like A Rockstar

Really?! I think I saw a billboard with that line yesterday. I'll read it more carefully next time I drive by.

One thing I was told about Yoli was that I should jump in immediately because MLM "Heavy Hitters" had already jumped in.

Also, I was going to be part of a "Power Leg". I wasn't familiar with that term, but it was supposed to be a good thing. However, when I asked for an explanation of the Yoli comp plan they admitted they couldn't figure it out either.

Fortunately, I waited to make my Yoli decision until after I tasted the product.

Originally Posted by A Life Aloft

"I made ten zillion dollars in three months and quit my day job"-

I'll just pick this one. Can you provide me a link to the advert you saw for this?

LOL. Fire your boss.