Corporate America is Not a Pyramid Scheme

Many distributors promoting MLM try to defend legit pyramid scheme similarities with MLM by suggesting that other things out there are pyramid schemes. Quite often they'll use an analogy of a CEO managing Vice Presidents, managing middle managers, managing employees as a pyramid. You'll note that they often leave off the "scheme" part of that, which is a very important distinction.

There are so many differences that it is easy to expose the person making this claim as someone who is trying to defraud you. As the FBI says:

"At the heart of each pyramid scheme is typically a representation that new participants can recoup their original investments by inducing two or more prospects to make the same investment."

When you look at a software engineer, vice president, or CEO, does anyone make their salary recruiting other people to perform the same job as they do? You may argue that a HR person recruits, but they don't recruit a chain of HR people who recruit more HR people, etc. They recruit VPs and software engineers, and those people perform their duties, which don't typically include recruiting any others.

Here are a few other obvious differences:

  1. The typical CEO graduates from a very difficult business school and almost typically starts with a salary upwards of $150,000 a year in an executive position.
  2. The employee and/or manager isn't required to buy product to earn salary. This is what you see in MLMs and pyramid schemes: MLMs with Required Minimum Purchases to Earn Commissions are Pyramid Schemes

Corporate America is simply a hierarchical organization. It isn't a pyramid scheme with endless recruiting of 2 or more people making the same investment.

This post involves:

MLMs vs. Pyramid Schemes

... and focuses on:


9 Responses to “Corporate America is Not a Pyramid Scheme”
  1. byron Says:

    I’ve been looking but cant seem to find any mention of ACN on your site. They fit so many of the descriptions posted about shady and unscrupulous tactics that Im surprised I cant find it here. Some fellas at work are currently drinking the Koolaid from this company and Im doing my best to talk reason into them, but….. Just yesterday, the one guy mentioned how our employer is similar to a pyramid (Mr. Apple, meet Mr. Orange). Another has taken to calling people that disagree with him ‘ignorant’. Strangely, I know more about these shysters than he does, and he’s selling the bs. So please, lemme know your take on it.

  2. mlmmyth Says:

    I’ve looked into a lot of MLMs, but I haven’t looked into ACN. It just goes to show you how similar and predictable their scams are.

  3. Wade Says:

    I was interested in some information about Fortune Hi Tech Marketing. They have been around for more than 10 years and had their share of trouble in the past and wonder if maybe you might do a piece on them?

  4. mlmmyth Says:

    I haven’t looked into them, but this USA Today article should make it pretty clear that one is best served by not getting involved with them.

  5. Bill Says:

    MLMers who use this line are simply repeating what their uplines told them. A common theme I find with many MLMers is they take everything their uplines tell them as facts and never take the time to find out whether or not what they were told is true or whether it even makes sense.

    It’s no wonder why these are the same people who fall for these scams.

  6. Roger Says:

    mlmmyth, ACN is no different. I joined last year with all the hype and excitement about being able to offer “cheaper electricity” to Australian consumers and businesses. I’ve yet to come across one single person’s electricity bill we’d be able to beat with ACN. Even my own would be 4% higher if I switched energy providers to ACN’s. Likewise with their mobile phone and broadband rates, ACN’s rates are only competitive with Telstra, which has the most base stations and best signal coverage for mobile telephony and broadband bar none. Unfortunately, ACN use the Optus network, which, like Vodafone, does not provide anywhere near the signal coverage and quality of service that Telstra does, yet ACN are re-selling Optus at close to Telstra rates. What a joke! Even ACN’s business plan rates are highly uncompetitive compared to what else is out there in the marketplace.

    In my book, this makes ACN a pyramid scheme – ordinary retail and business customers wouldn’t touch ACN’s electricity and mobile phone and broadband rates because it’s most likely more than they’re currently paying, which means the only people who will become your “customers” are fellow distributors you recruit, who then join ACN’s services because they want the services to get their commission rate up, despite the bottom line being going backwards money-wise.

    Almost every MLM’s products are over-priced compared to the rest of the general marketplace, the only exception being SendOutCards which allows you to design greeting cards on-line and have them printed, enveloped and stamped and sent for you for less than $2 per card. That company so far is the ONLY ONE where its products are competitively priced when compared to the retail market (most people pay about $3 to $5+ for a good card from the stores).

    SendOutCards might well be one of the best MLM’s around if it weren’t for their absolutely lack of integrity and morals. One of my lead distributors re-located to Brisbane, an hours’ drive away. Much to my surprise one morning when I logged into my back office, I found myself notched down a notch in the leadership ranks, and that distributor who moved to Brisbane was no longer in my team.

    I contacted the company, who informed me that she and her entire downline had been moved to a Brisbane-based SendOutCards affiliate because she requested the move, as she wanted to work with somebody more close to her new residence. Never mind that 1. I mentor and train people on the other side of the world, and 2. I was never consulted by the company, it ‘just happened’, and the company’s decision was final (as was the resulting 20% drop in commissions and the fact that I had spent considerable time, effort and money driving around the place helping her run meetings and help her recruit her downline, thus growing my team.

    Here’s my advice on MLM and Network Marketing – DON’T WASTE YOUR TIME, MONEY AND EFFORT.

    If you think that getting involved with any MLM is some kind of pathway to freedom, particularly financial freedom and of course freedom from a boss, you’re going to be in for a rude shock, the company you represent calls the shots. The company you represent can move the goal posts at any time, without not much notice, if any at all, and there’s no consultation process, what happens will happen, whether you like it or not. In a regular job, when the company you work for starts to suck big time, you start looking for another job, and you move on. In MLM, you build your team, and hopping from one company to another severely stunts your team growth prospects, and your leadership skills will often be called into question.

    Not worth it. MLM=100% Scam. If you really, truly believe you can make it in MLM, get yourself a sales job, built a clientele, build rapport with them, provide excellent service and after-sales support, and use something like SendOutCards to send your clients Happy Birthday cards, Christmas cards, not pieces of marketing gaff, and if or when you move to another company, you’ll have no problem in retaining many of those clients for whatever you might be selling with the new company, as they got you “top of mind” as far as they’re concerned.

  7. Paul Says:

    Corporate America does have hierarchical organization such as MLM!

    It’s not the MLM Pyramid that scam people, it’s the person in charge, just like Corporate America people have been scammed on their jobs by the person in charge!

    In both industries you have to work with people who are honest and have integrity to be successful.

    Your goal is to build a strong support system and that requires team work which produce wealth.

    Corporate America doesn’t offer you wealth and control of your life.

    The CEO may get a decent salary, but who is getting wealthy?

    The MLM Industry gives everyone a equal opportunity to create six figures or seven.

    Most likely you are buying the product over the counter anyway, why not get paid?

  8. Chris Says:

    Paul knows whats up! After joining a very reputable Network Marketing company at the age of 27 I am not 29 and have “retired” from Corporate America since I have replaced my salary. I do buy product in my Network Marketing company but it’s product I was buying every month at the store. I was a college graduate who was over work and under paid and was not going to stay on that hamster wheel I saw my parents on. Waiting until I was 65 to retire and enjoy life was not something I was ok with. You might not have to buy actual “product” at your corporate job but you do have to buy a car to comment to that job you hate to work 9+ hours a day to pay for the house you just sleep in. Hoping to have time to eat dinner with your family and see your kids before you go to bed. You will never make more than your boss no mater how many more hours you put in. I truly feel bad for people who have a closed mind and think they are “living the american dream” at their jobs. Thank god I had an open mind because I wouldn’t want to be where I was just a few months ago.

  9. mlmmyth Says:

    Chris, please provide proof of the claims of your replacement salary. So many in MLM claim that they have done it because it is a business of recruiting others. They fake it until they make it.

    However, well over 99% of people lose money in MLM. So even if you are in the rare 1% who actually makes money and the 1% of that 1% who replaces their salary, it is equivalent to someone making a claim that they should quit their job and become and NBA player… it simply is TERRIBLE advice.

    There are two ways to make money in MLM:

    1. Recruit people – The FTC says this is essentially an illegal pyramid scheme.
    2. Sell product – Sales is tough work. MLM products are very expensive. There is incredible competition from other MLM distributors. It’s so difficult that most MLMers don’t even try. A corporate job is much better.

    Finally, MLM is the hamster wheel. When you understand the churn rate of MLM, you realize that the income of your down is leaving you all the time as they become part of the 99% who fail. The only way to maintain your income is to work 24/7 recruiting people. It’s much more of a hamster wheel than anything in Corporate America.

    In MLM, there is almost no free time, because you have to go meetings at night and trips to cult rallies.

    There are many software engineers who make more than their boss. If you make yourself valuable, you will get rewarded.

 

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