For businesses, the obvious reason is the savings in terms of not having to hire full-time sales people for marketing their products. These requirements are necessary but not sufficient to ensure a legitimate network marketing business. The moral issue is: Since a network marketing scheme can easily transform into a fraudulent pyramid scheme, requirements need to be followed for the scheme to be declared as legitimate.
Employing such a business model and succeeding in that endeavour is difficult.
It is necessary to know why network marketing as a business model appeals to individuals and businesses. Are MLMs a morally acceptable way to make money? Regardless of all the vehement denials, MLMs are all to some extent pyramid schemes, and pyramid schemes are illegal.
The subsequent paragraphs discuss unethical network marketing practices and ways and means of operating a legitimate network marketing business. It could however be possible that the uplines in the business are pressurizing the downlines Ethical issues on mlm increase purchases in order to reach a higher level in the scheme in order to avail better commissions.
This clearly is a recruitment-based scheme. However, ethical network marketing is possible only if the people joining the network are aware of its many fallacies.
This is because the uplines who often coach and mentor them would pressurize them to stay back as they make money out of sales made by the downlines. There are several companies such as Amway and Avon that have employed this business model and have been successful However, with the growth in the use of this business model, there has been growth in unethical companies and business practices.
The people lower down may even defend the very organization that is robbing them, hoping that they might get their chance to make "the big money" later. They must be legitimate! A company might charge low one-time fees in the beginning but then pressurize new recruits to pay charges of the nature mentioned above which might be substantial.
The ethical questions remain: Network marketing poses many ethical challenges as is evident from the above discussion. This is the essence of a personality cult. Have they been prosecuted or sued for exploiting people in the past? This policy would help provide protection to the sales personnel and also enable them to get back some portion of the money that they might have spent in acquiring inventory.
They become a pile in the back closet or attic, a trophy to pride being unable to admit that greed seized the moment.
This could also lead to the business becoming more recruitment-oriented and hence unethical. So many nice people are involved. The downlines, however would continue to remain at risk if they have to persuade their uplines to buy back their inventory and if the upline is to set a price for the inventory since they have absolutely no incentive to buy back inventory at a fair price.
Typical is an appeal to "the American dream. By "sponsoring" them, you have not only conned them and profited at their expense, you have made them feel like losers, since they are not able to make a success of the hopeless MLM concept. In short, these schemes appeal to the greed of people.
It is important that companies employing network marketing schemes make it easy for downlines to exit the network. The ethics of selling MLM products If money is needed that badly, why not simply ask friends and family for help rather than taking money from them under false pretenses--and also selling them a bill of goods?
However there are true success stories such as that of Amway which believe in ethical network marketing. But if you do not wish to promote such ideas, if you consider them sinful, then this puts you at the focal point of a moral dilemma.
An example of a pyramid scheme is the Ponzi investment scam. The scheme looks the same even if a product is introduced to make it seem retail-focused.
You must push values that are contrary to your own In most MLMs you will have no choice. To provide true protection to the downlines, the company should set a minimum fair price for returned inventory and in case the uplines do not provide a fair price, the company itself can buy back the goods at the minimum price declared.
These schemes are fraudulent and exploitative as people who enter the network at an early stage make money while those who enter late often lose money as there is a limit to the number of people who can be recruited into the network. The investor makes money when his or her recruit gets other recruits into this network.
Get used to it.The Ethics of Multi-Level Marketing - Why it IS a Scam. This page discusses the ethical problems with Multi-level Marketing. Also see these pages for: MLM - main page; Market Saturation, Pyramid Structure, Relationship Issues; Greed and Ethics in Multi-Level Marketing.
Today, I'm going to educate you about ethics in network marketing, so you can be a professional and do the business the right way. Today, I'm going to educate you about ethics in network marketing, so you can be a professional and do the business the right way.
If we teach our downline proper ethics, and if MLM companies stress ethical. Multi-level marketing (MLM) schemes are one of the fastest growing types of business.
However, little has been written about the ethics of MLMs.
This oversight is somewhat surprising, especially. Her In the context of this report, I will discuss Multi-level marketing and the ethical issues surrounding the associations with a pyramid scheme, as well as some of the techniques used in multi-level marketing, and the overall viability of the framework as a sustainable business model.
One of the fastest growing businesses in recent years is multi-level marketing or network marketing. There are several companies such as Amway and Avon that have employed this business model and have been successful However, with the growth in the use of this business model, there has been growth in unethical companies and business practices.
PDF | Multi-level marketing (MLM) schemes are one of the fastest growing types of business. However, little has been written about the ethics of MLMs. This oversight is somewhat surprising.Download