"Buy 1 for yourself and get the chance to sell your friends and family 5 and get your downline started!" We examine the multi-level marketing industry, where only the people who come up with the ideas make any money, and everybody else is left unhappy, broke, and tired of reading scripts and selling overpriced vitamins and similarly worthless products. Includes Global Prosperity, Pinnacle Quest International, IRS Codebusters, Stratia, and other new Global Prosperity scams.
Tax professionals know who is making the money in MLM/network marketing and it's not the new recruits that are buying up products and sales tools to "play the game." See: "Survey of Tax Preparers".
(Or you can get a 12 page report in PDF format by clicking here.)
Conclusions from this survey are strengthened by household surveys on MLM participation. As further support of these findings, a much earlier investigation by the State of Wisconsin documented evidence, from tax returns, that Wisconsin Amway Direct Distributors (the top 1%)had annual net incomes of minus $900.
Gambling Beats MLM!
Where data was available, the rate of success for recruiting MLM's is abysmal. In fact, MLM makes gambling in Las Vegas look like a safe bet in comparison. Even clearly illegal no-product pyramid schemes do far better. Read"Some Shocking Statistics"to compare the likelihood of realizing a profit from twelve MLM programs, as compared with gambling and with no-product pyramid schemes. You will also get some great pointers on how you can do your own calculations of likely profitability of an MLM.
As Dr. Taylor goes on to point out, since nearly all MLM participants lose money, it is not difficult to come up with a list of income opportunities that are likely to be a lot more profitable that MLM. He gives some suggestions:
* Sell pencils on a street corner
* Babysit.
* Tend or walk the neighbor’s dog
* Mow lawns
* Deliver newspapers
* Use a metal detector to find coins in vacant lots
* Search garbage for aluminum cans to sell for recycling
* Sit on the sidewalk and beg.
* Gamble in Las Vegas – or wage a $20 bet with typical MLM participants that none of their immediate upline showed a profit on their taxes last year from their MLM program. (Your odds of winning are at least 100 to one.)
"Herbalife distributors are 58 times more likely to make money than Quixtar distributors!!!"
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In my 8 years as a tax preparer/EA, I have seen muliple clients get involved with various mlms (Quixtar, Herbalife, Excel) and they all had one thing in common: Not one of them ever turned a profit and most of them quit within a couple years.
VinnyZ wrote:I see the new Herbalife sales pitch now.....
"Herbalife distributors are 58 times more likely to make money than Quixtar distributors!!!"
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In my 8 years as a tax preparer/EA, I have seen muliple clients get involved with various mlms (Quixtar, Herbalife, Excel) and they all had one thing in common: Not one of them ever turned a profit and most of them quit within a couple years.
I know a couple who have been on the Amway bandwagon for 20+ years and they continue to lose money. As I understand it, their annual Amway gross income has never exceeded 100k. I don't know what the real margin is on Amway products, but I can't imagine it is much. One half of the duo works full time so the other can waste what little money they do have on Amway b.s. As of a couple years ago, their children's "beds" consisted of mattresses set directly on the floor.
I know others who gave it up after a few years, and my grandparents gave it a try when Amway was still pretty new and gave it up after a few months when it became obvious it was a scam.
