Tuesday, January 17, 2017

MLM and Rebates

Today's blog post is focused on the psychology of turning a commissioned sales person into a customer. MLMers are taught it is necessary to purchase the products monthly to qualify for commissions and they are also supposed to purchase for their own consumption. This is an extraordinary type of logic as it forces an MLMer to continue to purchase monthly regardless of their sales, and it confuses them by giving a rebate check for their own purchases rather than an actual pay check for the sale of the goods or services. There are different types of monthly subscriptions provided by MLMs, but they all come back to the same fundamental agenda of getting the distributors to spend their hard earned dollars on the MLM rather than the MLM paying the distributors to help move their product or service.

Amway, the founder of the MLM business model, was the first to utilize this psychological manipulation in order to generate a loyal customer base. They found sales were stronger and more consistent when the members of their work force were continuously buying products instead of retail customers. Amway continues to teach distributors to buy from "Their store" instead of a big box store, because it will help them generate revenue and they need the products regardless. Amway then offers compensation in the form of a rebate at the end of the month based on the amount of product purchased by the distributor. MLMers are then confused by the concept of "Their store", because it is actually Amway they are purchasing products from and generating Amway more revenue. The concept gets more confusing once the levels are implemented, hence the name multi-level marketing. Instead of selling goods or services, they are taught to increase their revenue by signing up friends, family, acquaintances, and eventually strangers to also purchase monthly goods and repeat the process. Once they have secured a solid foundation of people purchasing monthly goods, then they will start to see a rise in their paycheck and believe they are becoming more successful. This is how the pyramid is formed.

The MLM rebate is one of the key methods to lure unsuspecting consumers into the trap. They are extremely vague about how much money you will receive monthly based on the amount of goods purchased, and they do not explain that the rebate can only grow as long as more dollars are spent on MLM products. Naturally, if an MLMer doesn't have a downline then they will notice they are spending more money than they are making, but when they see that other downline members are helping to grow their rebate checks, they begin to ignore the obvious paradox. There must be more dollars spent in order to get a larger rebate, but the dollars spent don't have to come from their pockets. This in turn leads to exponential losses for the levels of MLMers that develop underneath the original tier.

MLM, in theory, could work if the MLMers were taught to focus on the sale of  goods or services before signing up new members, but that would defeat the purpose of the multiple levels of commissions. The multiple levels are used as a ruse to lure people into the MLM as a means to purchase more goods instead of selling goods, and then teach others to repeat the process. MLMers have found it is much easier to convince people to spend their own money on a business opportunity than it is to sell the goods or services they provide.

If you have a story involving abuses from your upline and would like me to share it on this blog as a guest post, then please e-mail me and I will be more than happy to post it! Your stories are not as unique as you may think, and your stories are some of the most impactful resources we have to fight MLMs. I will keep your anonymity upon request.


  1. It boils down to common sense. If you really need the product and can get good value from the MLM product, then you should buy it. But it makes no sense to "buy" your rebate, or to buy your bonus check from an MLM. If you can't sell enough to qualify for a bonus, then you should just quit. After all, if the product is good, you should be able to sell it.

    In the same line of thinking, it makes no sense to charge a ton of stuff on a cash back credit card if you can't pay off the monthly charges. Why incur a 15% interest rate to get 1 or 2% back?

    1. Great points Joe. I really like your analogy of the credit card situation as well.

  2. Absolutely correct. How can you think that you are making money, when you are spending a large sum and only getting hack a small fraction of it as a "rebate"?

    1. Their psychological manipulations are very powerful, and when they choose to deceive you by suggesting buying from "Your Store" is better than the big box store because you need the products and you will make money, it does sound very convincing. It isn't until you take the time to critically think about what they are saying and do a little math to understand the value isn't good at all, that you can see through the BS they are putting out there.

  3. It doesn't matter in the slightest how the money is divided up in a closed-market swindle, because the money is coming (in the overwhelming majority) only from the victims.

    In reality, 'MLM' racketers have all been peddling endless-chains of victims infinite shares of their own finite money.

    Remember, behind their mystifying camouflage, all 'MLM' cults are built on the specious pseudo-economic theory that endless-chain recruitment + endless payments by the recruits = endless profits for the recruits.

    It is also important to understand that the more-complex the rules of any pay-to-play cultic game of make-believe are, the less-likely anyone is to look behind them and discover the far more-simple truth that only the handful of persons who set up, and control, these games, take the lion's share of the revenue from them.

    1. David,

      "Remember, behind their mystifying camouflage, all 'MLM' cults are built on the specious pseudo-economic theory that endless-chain recruitment + endless payments by the recruits = endless profits for the recruits."

      That was a perfect way to describe what I was saying in a shorter breath. The basic problem with the MLM business model as a whole is the money recruits intend to generate for themselves can only be generated through new recruits multiplied exponentially. There is little to no actual retail sales money being funneled through the system, but rather the hard earned dollars of near-sighted dreamers.

  4. John - Thus, what has been ritualised as the 'MLM Business Model' is not a business, has never been a business and will never be a business (in the traditional sense of the word).

    So-called 'MLM' (as it has always been practiced, rather than how 'MLM' racketeers have steadfastly pretended it is practiced) is to traditional business what 'Creationism' is to Evolutionary Biology.

    At one time, I coined the term, 'Economic Creationism/Creationists,' to describe the phenomenon.

    Handing over your 'MLM' tythe each month whilst wasting your own time and money in the endless pursuit of further transient 'MLM' converts to duplicate the same temporary blind faith in Economic Creationism, is self-evidently a plan to commit not only financial suicide, but also psychological and social suicide.

  5. What is truly mind-boggling in its irrationality is the way in which people in Amway or other MLMs will declare passionately that MLM buying is the inevitable "wave of the future." They'll claim that all supermarkets will close, all malls will shut down, all brick-and-mortar establishments will go bankrupt. Everyone in the world will buy via MLM.

    This is parallel to the apocalyptic visions of certain flaky sects, who think that "the end is near" and that there will be some sort of mystical transformation of reality.

    Amway replacing all supermarkets and malls? You have to be a crackpot to believe that.

    1. Yes, it is truly a backwards form of logic. Inserting more middle men has never helped business, but according to MLM it is the best strategy ever.

      If an MLMer were to insist that they had some version that would crush the brick-and-mortar stores by means of online sales, that might begin to be plausible, but then why bother to pay out multiple levels if you can just buy directly from the source for a much cheaper price.

    2. Yes - I can confirm that in the mid 199Os, my brother (a university-educated teacher who previously had poured scorn on religion) completely believed that all supermarkets were going close, because the 'Amway' business was taking over.

      My brother once looked me in the eye and insisted that the above (Utopian) narrative was true that I would kick myself in the future for not getting in on the ground-floor of what would soon be a multi billion £ business in the UK. My brother's Ambot girlfriend stood beside him grinning and nodding in agreement. I was treated as though I was crazy for arguing with them.

      It was at this point that began to realise that 'Amway' is a cult that its deluded core adherents see themselves as ordinary humans who, because they are in the process of acquiring a secret knowledege, will soon transform into superhumans (just like their exemplary 'Leaders').

    3. Well, this puts Amway into the category of a gnostic cult, which promises salvation by means of a secret "gnosis" or knowledge that sets its possessors apart from the uninitiated. There were many of these cults in the ancient world, and during the intellectual ferment of the early Christian centuries.

      All Amway has done is connect gnosis with the ethos of American capitalism.

    4. Anonymous,

      Yes, it is fair to say that Amway is a gnostic cult, and if you take the time to read David Brear's research and breakdown on both Amway and cults in general it is quite chilling.

      DeVos and Van Andel are 3rd generation swindlers learning the trade from Rehnborg (Original huckster), and then passed through Casselberry and Mytinger (2nd generation hucksters). They were the first to introduce this scam in a refined manner offering this to wholesome people as a wholesome business instead of focusing on making as many dollars as quickly as possible. They were the first to project a longstanding and powerful image, and as Brear mentioned in his post, as they gained more money they gained more credibility.


    5. 'Gnostic' is a term which has been used to describe various latter-day cults (including the 'Order of the Solar Temple', 'Nazi Party', 'Scientology', etc.). Their instigators have all observed, and copied, existing cults and peddled core-adherents initiation into a secret knowledge by convincing them that the acquisition/implimentation of this secret knowledge will lead to a future secure Utopian existence.

      That said, 'Gnosticism' itself is/was just another variation of self-perpetuating, non-rational, dualistic, ritual belief.

      I personally prefer to describe groups like 'Amway' as crimongenic cults - self-perpetuating non-rational ritual belief systems instigated, and/or perverted, for the clandestine purpose of human exploitation.

      It never ceases to amaze me that legalistically, the criminogenic cult phenomenon still does not exist. Even though cultism remains a significant danger to humanity, there has been surprising little objectively-true research and analysis published. Indeed co-opted cult 'experts' (pretending objectivity) have expanded into this intellectual vacuum and obstructed intellectually rigorous debate.

      Unfortunately, the full and frank explanation of the criminogenic phenomenon can be a threat to the self-esteeem and related psychological function of many persons, not just cult adherents; particularly, persons with a traditional 'religious' faith.

    6. Well, even the most venal and corrupt "criminogenic" cult would have to have some persons in it who were sincere believers. Scientology is a vicious, money-grabbing cultish conspiracy run purely for the financial benefit of its higher command, but there must still be many individual Scientologists who are "true believers, and who sincerely think that their cult is saving the world.

      And every organization, even the most high-minded, certainly has a few corrupt individuals in it who are criminals of some sort. Religious organizations have always admitted that not all of their members are angels -- temptation and sin can lure away even the elect.

      A completely and totally "criminogenic" cult, from top to bottom, would be nothing more than a criminal conspiracy, like the Mafia or the Colombian drug cartels. But those organizations don't consider themselves to be "religions." Their god is merely easy money. The only criminal cult example I can think of offhand which was "religious" in the true sense was the cult of Thuggee in British India, which centered on the murder of random victims as a way to worship the goddess Kali. Luckily for the world, the British Raj wiped this cult out completely.

      MLMs may be "criminogenic" in origin, but they cannot survive without the genuine faith of individuals who are not necessarily part of the criminal purpose. These individuals are just deluded victims. Joe Cool and Anna Banana weren't part of some criminal plan; they were just victims who were tricked by Amway.

      As for genuine religious believers of good faith who attend their church or synagogue or temple out of pious devotion, only the most rigid and dogmatic atheist would argue that they are part of a "criminogenic" cult. And persons of genuine religious faith can clearly see the lies of MLM thinking, and the thievery of MLM organizations.

      In MLMs, it's not faith that is the problem. It is how faith is cynically manipulated for non-religious purposes.

  6. Anonymous -

    I not sure where you have got this misleading 'completely and totally' definition of the word 'criminogenic' from.

    Contrary to what you apparently have construed, I specifically pointed out that criminogenic cults can be briefly defined as self-perpetuating non-rational ritual belief systems instigated, and/or perverted, for the clandestine purpose of human exploitation.

    You seem to have missed the last phrase of the above brief definition.

    A organisation most-certainly doesn't require all of its adherents to have a criminal intent for it to be criminogenic (ie the product of crime and crime producing). Indeed, the fact that deluded cult adherents can commit crimes whilst believing themselves to be perfectly righteous is what makes the phenomenon particularly evil.

    Perhaps the most murderous criminogenic cult of modern times is 'Aum Shrinrikyo' (aka 'Aleph') which (ironically) was, and still is, presented externally as 'Buddhist.'

    Whilst steadfastly pretending absolute moral and intellectual authority, the psychopathic boss of 'Aum' used networks of deluded deployable agents in various countries to acquire, and gather, a stockpile of approximately 150 tons of war materials in Japan. These materials included an ex-Soviet military attack helicopter and chemicals to produce a quantity of Sarin gas sufficient to kill up to an estimated 10 millions persons.

    The boss of 'Aum' quite literally planned to trigger WW III. He only chose Sarin, because he couldn't get hold of a nuclear device.

    In 1999, 5 deeply-deluded expendable combatants of 'Aum' released a relatively small quantity of Sarin in busy Tokyo underground stations killing 13, seriously injuring 54 and affecting an estimated 6,000 people (only 980 of the mild victims came forward).

    Yet, by your definition of the word, 'Aum' is/was not criminogenic?

    However, I would contend that by their very nature, criminogenic cults are all deceptions in which deluded adherents are deployable agents, and/or de facto slaves, and/or expendable combatants, etc. who have mistaken fiction for fact. The majority of rank and file cult adherents have no idea of their leaders' hidden criminal objectives.

    I would invite you to read my pamphlet, 'The Universal Identifying Characteristics of a Cult.'

  7. In my above comment, 1999 is a typo error which should have read 1995.

  8. The word "criminogenic" can be understood in two senses, etymologically speaking. According to its roots, it can mean "productive of crime" or "produced by crime." This is the source of our misunderstanding.

    Cults such as Thuggee and Aum are both "produced by crime" and "productive of crime." Their entire genesis and subsequent history are rooted in evil. They have nothing to do with genuine religion.

    But some belief systems may have been created in good faith by persons of good will. True, in later times such systems may be used exploitatively, for evil purposes. You can hardly condemn traditional Buddhism (a profound philosophy) for the psychopathic misrepresentations of Aum; or traditional Christianity for the corruption of some latter-day Christians.

    If you confuse a cult with a religion, you are conflating honest theological thought and faith with the viciousness of something intrinsically evil. It is a mistake of imprecision to use the definition "A self-perpetuating non-rational ritual belief system" for both phenomena. They are quite different.


  9. "You can hardly condemn traditional Buddhism (a profound philosophy) for the psychopathic misrepresentations of Aum;"

    Perhaps not, but a significant number of well-informed observers have correctly blamed the 'Dalai Lama' for naively accepting stolen cash from, and acting as a useful idiot for, the instigator of 'Aum;' thus giving him unwarranted credibility both in Japan and internationally. As far as I'm aware, the 'Dalai Lama' has never admitted his wide-eyed facilitating role in the 'Aum' tragedy, let alone publicly apologised for it. I also don't know whether he ever gave the stolen cash back to aid 'Aum' victims.


    The truth about 'Aum' was unthinkable to the 'Dalai Lama,' mainly because the instigator of 'Aum' (who met, and was publicly blessed by, the 'Dalai Lama' on at least 5 occasions) pretended affinity with him and even adopted a similar ritual title.

    The instigator of 'Aum' whose given name is Matsumoto (the Japanese equivalent of Smith) is still invariably referred to by the media as 'Shoko Asahara' ('Great Enlightened One'). This is ritualised comic-book bullshit.

    Unfortunately, as the example of the 'Dalai Lama's' attitude towards 'Aum' proves, the self-evident truth that traditional religions and criminogenic cults can both be briefly defined as self-perpetuating non-rational ritual belief systems, remains unthinkable to many people; particularly, those who hold traditional religious beliefs.

    However, I am not responsible for this self-evident truth, I'm merely pointing it out.

    That said, phenomena cannot be accurately defined. That's why I took the trouble to examine a large number of exploitative non-rational ritual belief systems and then carefully set out their universal identifying chatacteristics (using accurate deconstructed language).

    I also wrote an essay in which I explain how, once you know how they function, it is child's play to instigate, and/or pervert, a non-rational ritual belief system and use it to exploit vulnerable persons.

    The dividing line between a benign non-rational ritual belief system and a exploitative one, turns out to be very fine, and in too many tragic cases, it's become non-existent.

  10. May 1995, J. Gordon Melton (an American 'scholar of religion') and two associates, James R. Lewis and Barry Fisher (a US attorney), suddenly dropped everything and jetted off to Japan at the invitation and expense of the deployable agents of 'The Great Enlightened One.' At this time, in the wake of the Sarin attack, the Japanese police had just arrested (without charge) more than 150 deluded core-adherents of 'Aum Shinrikyo' ('Supreme Truth'). However, the Japanese authorities were still in the process of recovering and identifying tons of 'Aum' war materials: including a military grade laser, chemical and biological weapons such as Anthrax and Ebola cultures, along with chemicals and a fully-equipped laboratory to produce Sarin. However, this key-information had not yet been fully-released to the public; neither had it been uncovered nor disclosed that Matsumoto had (in complete contradiction to his own 'religious/pacifist' literature, recordings and public statements) been secretly putting into operation a plot to kill and/or maim, and/or terrify the entire Japanese population, including the government and the Head of State, and install himself as the new Divine Emperor of Japan.

    Although it now doesn't seem possible, Melton and his associates called two absurd press conferences in 'Aum's' Tokyo office, in which they steadfastly pretended moral and intellectual authority. Posing as fair-minded independent experts who had offered their services for purely philanthropic reasons, they broadcast their 'concerns' (to a group of stunned and angry Japanese reporters) that, by conducting mass-arrests of 'Aum' practitioners without charge and also by removing 'Aum' children, the Japanese police had 'infringed the civil rights of the members of a New Religious Movement.'

    This trio of dunces with diplomas insisted that, based on documentation and photos (which they had been shown by the members of 'Aum'), the group did not have the capacity to produce Sarin gas and, therefore, they had concluded that 'Aum' was being used as a scapegoat.

    Soon afterwards, when faced with public ridicule, Melton admitted that 'Aum' had been responsible for the attacks, but apparently he has never changed his eyes-wide-shut approach to the study of the cult phenomenon.

  11. Unfortunately, the self-esteem of highly-qualified, but casual, observers like J. Gordon Melton has prevented them from examining, let alone accepting, the common-sense deconstructed explanation of the totalitarian/cult phenomenon.

    Indeed, the more highly-qualified many observers are: the easier it has been to dupe them and to keep them duped, because the less-likely they are to want to admit to the world that they can be duped.

    'I know that most men - not only those considered clever, but even those who are very clever, and capable of understanding most difficult scientific, mathematical, or philosophic problems - can very seldom discern even the simplest and most obvious truth if it be such as to oblige them to admit the falsity of conclusions they have formed, perhaps with much difficulty -conclusions of which they are proud, which they have taught to others, and on which they have built their lives.'

    The above quotation is a perfect description of today's bleating flock of 'Scholars of New Religious Movements,' but it was actually written more than 100 years ago by Leo Tolstoy.

  12. A truth is not "self-evident" if it is not evident to everyone. In fact, the adjective "self-evident" is a loaded political term popularized by the American Declaration of Independence, a highly polemical and tendentious document. When Jefferson writes:

    "We hold these truths to be self-evident: that all men are created equal, and that they are endowed by their Creator with certain inalienable rights..." he is not presenting anything "self-evident" at all. In fact, both of the above propositions are highly dubious.

    In a similar manner, it is not "self-evident" to me that traditional religions and crackpot exploitative cults can be identically defined as "self-perpetuating non-rational ritual belief systems." Nor is this necessarily self-evident to a lot of other intelligent persons. It's not a question of it being "unthinkable" to us. We just consider your definition to be wrong, or a bit too broad.

    If the Dalai Lama is a naive and foolish person, how does that make him responsible in any way for the horrors of the Aun cult? An evil man came to him, pretending to be an honest and devout Buddhist. Have you never been deceived by an evil person? If the Dalai Lama was a "useful idiot," that speaks badly of his shrewdness and perceptions, but that doesn't make him responsible for the depredations of Aun.

    I don't pretend to know what the Dalai Lama's "attitude towards Aun" is, nor does anyone else really know, I suspect. But hardly seems likely that the man would have supported the kind of murderous mayhem of Matsumoto. In fact, I get the distinct impression here that those who attack the Dalai Lama on this issue are already deeply prejudiced against religion as a whole, and would attack him (or any other religious leader) with any available weapon. If such is the case, then Matsumoto has turned out to be very useful for anti-religious polemicizing. But please don't tell me that such polemicizing is "self-evident."

    1. 'A truth is not "self-evident" if it is not evident to everyone.'

      'In a similar manner, it is not "self-evident" to me that traditional religions and crackpot exploitative cults can be identically defined as "self-perpetuating non-rational ritual belief systems." Nor is this necessarily self-evident to a lot of other intelligent persons. It's not a question of it being "unthinkable" to us. We just consider your definition to be wrong, or a bit too broad.'

      Anonymous - I am at a complete loss to understand what it is that you are trying to say here, because self-evidently you have again completely ignored what I have actually written in the final phrase of what I keep saying can only be the briefest definition of a criminogenic cult:

      '... instigated, and/or perverted, for the clandestine purpose of human exploitation.'

      Indeed, you seem to be in broad agreement with what I've written, except self-evidently you haven't read what I have written.

      BTW. As far as I'm aware, the 'Dali Lama' still features in 'Aleph' (formerly 'Aum') propaganda, and this group is still legally-registered a 'Buddhist sect' in Japan, because the post-WWII Japanese Constitution (which was written by a team of US attorneys) guarantees 'religious freedom,' but doesn't offer any common-sense definition of what constitutes a 'religion.'

      This is depite the fact that the instigator of 'Aum' remains in prison under sentence of death.

  13. Mr. Brear --

    You give J. Gordon Melton too much credit. The man is a committed cult-defender, and his scholarship has been called into question by many in the field. Melton is an activist, a polemicist, and an agitator.

    He was badly embarrassed by the fiasco in Japan, where he attempted to defend the Aun murder cult. Any other scholar's reputation would be in tatters after such a gaffe, but it hasn't bothered Melton one bit. He continues to defend idiotic and corrupt cults, in his quixotic attempt to link them to ALL religious faiths.

    Melton is on a mission. That compromises his credibility. The mere fact that he defends the evil Scientology cult, and routinely denigrates ex-Scientologists who have bravely testified to the cruelty and corruption of that sick cult, should be enough to dismiss him as highly prejudiced.

  14. Anonymous - I don't think I gave Melton credit for anything in my comments, except for being one of a bleating flock. Sadly, Melton does hold various genuine academic qualifications, but this is an important fact to note.

    In respect of your wise view of Melton and no doubt his British equivalent, Prof. Eileen Barker (who is effectively retired) as prejudiced, you are preaching to the converted. Indeed, I would go much further in my condemnation of these characters.

    Barker and Melton's joint approach was always to repeat, without challenge, various cult's own reality-inverting fictions, which obliged them systematically to exclude ex-adherents' truthful accounts of abuse and exploitation as 'the ranting of untrustworthy apostates with an axe to grind.'

  15. Some MLM's even charge a monthly "access Fee" to access their computerized sale's system. Registering may be voluntary but its highly "encouraged" if you "want to build a successful business". As further inducement, some sale's contests are only available if you're a subscriber. Its a real money generator when you consider the number of reps in a typical MLM system.

    1. Tolobelt --

      Sales contests supported by perpetual spending is a great topic idea! I will definitely have to figure out a way to write about that one!

    2. Small fees, modest charges, little expenses... that is what a great many MLMs suck out of their foolish members.

      A nickel isn't a lot of money. But convince a million people to give you a nickel, and you have a large chunk of change. Convince them to do it regularly, and you'll be rich.