- Report: #456829
Report - Rebuttal - Arbitrate
Complaint Review: Agel
Agelagel.com Chicago, Illinois U.S.A.
Agel Multi-Level Marketing Scam = Pyramid Scheme Chicago Illinois
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Here are some points addressing WHY these companies choose the MLM format and some points addressing WHAT is WRONG with the MLM format.
Why would a company want to use the MLM scheme?
1. No money on advertising so reps can say whatever they want
2. Since reps are independent the company is shielded from false-claim lawsuits
3. The products are sold as "wholesale" so they don't have to be tested for quality
4. Company doesn't have to pay salaries, offices, supplies, advertising, etc. The sales reps do all the work for you, and you don't have to pay them.
5. Because there are no "employees" the company doesn't have to pay any benefits, worker's comp, and can pay less income taxes
6. Products that are not competitive enough in the "real" marketplace can only be sold by MLM.
7. The people who start the company can make money by ripping-off 1000s of distributors by selling them dreams.
8. The company can make more money by charging for "motivational" or "sales" seminars aimed at their distributors.
What is wrong with MLM?
1. The pyramid scheme is inherently unworkable: there are not enough people to recruit, and 90% or more of distributers do not recruit anyone. The pyramid expands and expands until there is no one left to sell to. In other words "MLMs are doomed by design to recruit too many salespeople, who in turn recruit too many salespeople, ad infinitum.
2. There is no checks-and-balances on market saturation. No one is looking out for supply-and-demand issues.
3. You are encouraged to "hire" your own competitors and fill your own backyard with competitors.
4. There is no "market need" for MLM because the Internet (and urban living= easy access to shops) has replaced the need for MLM. People can buy things cheaper online anyway. There are several sites, such as BizRate, that will find the cheapest distributors of any product.
5. The only people who become "rich" are the starters of the company and the first-level distributors. They are the ones who basically open up the company. After that, their wealth is paid for by the distributors.
6. Most (if not all) MLMs are technically illegal, because over 30% (the legal limit) of their products are sold to distributors. Most MLMs sell over 50% of their products to distributors, although it is probably more like 70%. Basically, if the emphasis is on the "opportunity" (selling distributorships) instead of the product, the MLM is technically illegal. An MLM becomes illegal when the ML (multi-level) begins to eclipse the M (marketing).
7. MLMs make blatant appeals to materialism and greed. Their pamphlets are full of "get rich quick" talk and show pictures of boats, houses, and cars.
8. MLMs tear up family and friendship networks. People start to feel exploited by distributors.
In short MLMs are a type of Ponzi (or pyramid) scheme designed to make money for those at the very top, who often have previous experience with these same types of schemes. These schemes are illegal but are able to evade prosecution by the presence of a "product" of some kind (even if the majority of the product is purchased by its own distributors).
A company must sell 70% of its products to non-distributers to be legal.
Note: Nobody gets anything for free. If you want to make money, you have to provide a skill that society NEEDS. At least with real estate sales, people are told up front that most salespeople fail. This allows real estate salespeople to go into the situation with open eyes. The sad part of MLM marketing schemes is that they encourage you to close your eyes to all the glaring inconsistencies, logical fallacies, and immoralities of the operation.
Here are some good websites that explain the problems with MLM schemes more in depth:
New York, New York
sorry, allowing you to give a competitors name would instigate others to just file against their competition, to only come back later to suggest their company your comments on this policy are welcome! CLICK here to see why Rip-off Report, as a matter of policy, deleted either a phone number, link or e-mail address from this Report.
This report was posted on Ripoff Report on 05/30/2009 09:26 AM and is a permanent record located here: http://www.ripoffreport.com/r/Agel/Chicago-Illinois/Agel-Multi-Level-Marketing-Scam-Pyramid-Scheme-Chicago-Illinois-456829. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.
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