Talk:Multi-level marketing

Confusion

Just for future reference, can someone lay out the distinct difference between multi-level marketing and basic reselling? As far as I can see, MLM is the same as a company (for example, a domain hoster) selling on the rights to a domain to another company, who then in turn sell them on- anyone can then buy a domain, and every 'member' must pay the member above a monthly fee. Is this not multi-level marketing too? TheOneAndOnlyAnonymouse 21:40, 6 April 2011 (UTC) — Preceding unsigned comment added by Anonymouse909 (talk • contribs)

For the older "stair-step" type multi-level marketing compensation plans, used by companies like Amway, you are correct, it's essentially no different to other wholesale/retail distribution systems - someone resells to someone who resells to someone who resells to a consumer. Indeed the FTC in it's Amway investigation found the "number of levels" was very similar to traditional distribution networks. With "newer" plans, like binary or matrix, it's not quite so simple, with payment plans that aren't based on simple volume markup profit margins. --Icerat (talk) 00:21, 29 May 2011 (UTC)

POV fork merger discussion

Direct selling is basically just a WP:POVFORK of this article. In fact, both articles explicitly state that they are the same thing. —CodeHydro 01:48, 30 August 2010 (UTC)

Actually, per Retailing By Patrick M. Dunne, Robert F. Lusch direct selling and multi-level marketing are two different things--direct selling is the distribution method while multi-level marketing is one of several compensation plans used in direct selling. Sadly the number of sources that confuse the two far outnumbers the sources that correct the misunderstanding.--BruceGrubb (talk) 04:25, 30 August 2010 (UTC)

Well both articles will have to clarify that information, though we'd need an example of a case of direct selling that is not multi-level marketing, otherwise the distinction is merely hypothetical and too liable to POV forking to be worth a second article. —CodeHydro 12:20, 30 August 2010 (UTC)

Hmm, here what I found: Of the companies under the Direct Selling Association, 99.6 percent of sales involved some form of multi-level marketing compensation in 2009, according to the DSA website. The distinction really seem negligible, but I'll let others have their opinion. —CodeHydro 12:37, 30 August 2010 (UTC)

Amway back in the 1970's said that there was a multi-level form of direct selling ("Person to person" sales plans... "dream" opportunity or business nightmare? LIFE Feb 27, 1970). "Why Direct Selling No Longer Works" gives an insight to the ultimate decline of direct selling--the long tail method makes such a business model ineffective to moving products to consumers at the lowest price possible.--BruceGrubb (talk) 09:28, 2 September 2010 (UTC)

Agreement. They are one in the same. One is just newspeak for the other. Plenty of sources available. What more do we need to merge these two? Micahmedia (talk) 03:30, 3 September 2010 (UTC)

Nonetheless, I must say that there are very very few Direct Selling companies that do make single-level marketing sales. Perhaps adding a section in the direct selling that describes both single and multi level marking, with clear indication that direct selling involved multi level marking in the vast majority of cases, may be an easier solution than merging... just to give the 0.4% of single-level sales a voice without directly associating them with the negative connotations of pyramiding. What do you guys think? —CodeHydro 21:36, 3 September 2010 (UTC)

Unless anything is found saying this that is both recent and reliable I say eliminate the direct marketing article.--BruceGrubb (talk) 17:11, 17 September 2010 (UTC)

I do quite a bit of work with the direct selling industry, and I can tell you that combining the "direct selling" and "multi-level marketing" (MLM) pages would be a mistake. Direct selling is a sales channel (or product distribution method), comparable to traditional retail outlets, internet shopping, and the like. MLM is a compensation system, more analogous to bonuses, commissions, profit-sharing, etc. While many direct selling companies employ an MLM compensation system, not all do. The two terms are simply not synomymous. —Preceding unsigned comment added by DCFlyer23 (talk • contribs) 18:36, 17 September 2010 (UTC)

Sadly we need a realible source that tells us this. So far the majority effectively say they are the same thing.--BruceGrubb (talk) 07:25, 22 September 2010 (UTC)

They are simply not the same thing in a number of important ways. The door to door vacuum cleaner salesman is involved in direct selling. Furthermore, given the size and growth of the network marketing industry, and the diverse issues associated with it, it deserves its own presentation, though the current page stinks due to blatantly prejudiced editing. --Vejeestu (talk)

"Direct Sales vs. Network Marketing Understanding the difference will help you determine which opportunity is the best fit for you. By Michael L. Sheffield | May 19, 2003

Many of us who make our living from this arena still debate what the difference between network marketing and direct sales is. Even so, the vast majority of experienced network marketers would define these terms this way.

Most experts would agree that network marketing is a part of the direct selling concept where products or services are offered on a one-on-one basis and sold directly by the salesperson to the consumer. However, the two approaches offer very different benefits to the salesperson.

Direct sales companies are known as "seller-based," which means they give more income to the distributor when he or she makes a sale at retail. Direct sales companies usually market higher-ticket, one-time-sale, durable items such as air and water filters, cookware, art, home accessories, etc. With the direct sales business approach, the majority of the available profit designated for the salesperson's commission goes to the person who makes the retail sale. That person usually earns a significantly higher percentage of the designated sale commission than does the sales management that may be supervising his or her work.

Unless they have been appointed as sales managers, successful direct sales people are paid based on their personal sales rather than on building an organization of other salespeople. And since most products marketed by direct selling companies tend to be durable goods rather than consumable goods, there usually is limited potential for residual income. Obviously, there are exceptions, such as the residual income experienced in insurance sales, but usually when the sale is consummated, the salesperson is moving on to the next person and potential sale. Immediate commission checks are usually higher than in network marketing, so if you want quick money, direct sales is your ticket.

If you want to build a long-term residual income, however, you should consider network marketing. Network marketing distributors still sell, but the sales process usually begins with their "warm" market of friends and relatives. Network marketing companies typically offer retail commissions that are much lower, since more of the available commissions are directed toward bonuses paid to various upline management people in the sponsor tree.

In turn, you can also sponsor a downline of distributors that not only sell but also consume products, making them your customers as well." —Preceding unsigned comment added by Vejeestu (talk • contribs) 06:09, 20 October 2010 (UTC)

MLM you must: pay to join, you can never make more money than the person 'above' you and products are not sold to the general public eg no advertising through media, need to buy 'through' someone or have membership.

Direct Selling companies do not usually do any of these and generally work in with larger companies that use it as a suplement to the rest of their marketing/advertising eg launch a new product through media advertising, then making use of a direct sales company to follow up. —Preceding unsigned comment added by 118.93.237.58 (talk) 08:03, 18 October 2010 (UTC)

"you can never make more money than the person 'above' you" - This is patently untrue, an unreferenced opinion with no basis in fact. I know of many cases that contradict this statement. It is plainly evident that much of the editing of the network marketing page is driven by a need to control the subject rather then allow a balanced presentation. Vejeestu (talk) —Preceding undated comment added 05:56, 20 October 2010 (UTC).

Again this is all well and good but we need a reliable source to tell us this. It has been stated that so much of Direct Selling Association's membership is made up of MLMs that in 1999 Consumers' research magazine called it "an MLM lobbying group" (Consumers' research magazine: Volume 82; pg 12) which is what James Walsh stated a year earlier (You can't cheat an honest man Page 184). Furthermore, Kleeneze one of the founding members of the Direct Selling Association still does direct selling--now using MLM as its main selling method (Lancaster, Geoffrey; Paul Reynolds (2002) Marketing: the one-semester introduction, Page 197)

"According to Neil Offen, president of the Direct Selling Association in a recent article in Network Marketing Magazine, single level direct selling companies accounted for 75% of the organizations membership in 1990 with 25% being Multilevel. Now, 77.3% of DSA members are structured as MLM verifying a new age of marketing has arrived commanding the long awaited accompanying respect." (Sheffield, Michael L. (1999) Direct Sales Journal June / July 1999)

This shows the problem--in the space of nine years MLM went from being the minority membership in the Direct Selling Association to a super majority. If this wasn't enough there is something called single level network marketing (Krishnamachary Rural Marketing: Text & Cases Page 280) which since network marketing is also used as a synonym for MLM would dump the old single-level selling model into the MLM basket and explains how and why people can talk about "single level MLMs"--BruceGrubb (talk) 06:00, 24 October 2010 (UTC)

If anything, Direct Sales is the name of the industry and the overarching umbrella-term. Multi-level marketing refers to compensation plans that use levels. Network Marketing (in its true verbiage definition), is a compensation plan that does not use levels. However, many MLM programs utilize the Network Marketing moniker to distance themselves from some of the reputation behind the term MLM. In the long-term, I would vote for keeping the Direct Selling and Multi-level Marketing pages separate, and perhaps we all could do a better job in cleaning up the definitions. —Preceding unsigned comment added by Leef5 (talk • contribs) 19:10, 29 October 2010 (UTC)

You write, "Again this is all well and good but we need a reliable source to tell us this." And yet an assertion as thoroughly dogmatic and unreferenced as - "you can never make more money than the person 'above' you" is left in place for the sole reason that is pleases those who police this topic. There are no research references to prove that this is utterly false, other then the self-evident fact of the structure in which anyone at any point in the structure can find success and surpass those above, depending on the compensation system. Furthermore, the frequent reference from the start of the topic to "pyramid" or "like a pyramid" gives credence to a basic fallacy. If one can prove that the average network marketing structure is more like a pyramid then a modern corporation, please show the evidence. When I posted a number of legitimate, common and worthwhile references to sources that support network marketing as a legitimate business option, they were three times removed. This remarkable approach to controlling a topic brings down the entire cause of Wikipedia. Vejeestu (talk) —Preceding undated comment added 22:26, 27 December 2010 (UTC).

Vejeestu, your contribution to the article about industry supporters was accurate. It just needs to have some sources, that is why it was reverted. And of course, blanking out sourced sections is not allowed either. Please continue to participate in discussions and contribute to this article using sourced material. Thank you. Leef5 (talk) 16:13, 30 December 2010 (UTC)

I found the World Federation of Direct Selling Associations online site does a great job defining several of the terms. THe WFDSA is the overall worldwide association that all of the individual DSAs are members of in each country. In particular, the "FAQ" was most helpful with "What is the difference between direct selling and multilevel marketing?" and "What is the difference between single level and multilevel compensation plans?". Based on this official definition. direct selling is the distribution method (vs. retail sales) and multi-level marketing is the type of compensation plan. Direct sales companies can also use a single-level marketing plan. Finally, there is the "sales strategy" on whether the company uses person-to-person marketing, party plan (Tupperware, Pampered Chef, etc), or both. I believe this is as a reliable source as we are going to get with the parent organization of the industry. Leef5 (talk) 03:06, 17 November 2010 (UTC)

It's reliable, but only in a limited sense. It's a trade organization; it should accurately describe how their members want to be seen. — Arthur Rubin (talk) 06:03, 17 November 2010 (UTC)

--How about the Federal Trade Commission? Have you ever read any of their documents about compensation in commission-based pay industries? There you can find out everything you will want to know about compensation. Then you could become a reliable source instead of claiming there are none! I think we can all agree that skepticism does not warrant misleading commentary. As someone who has worked in more than one commission-based pay job, I can tell you that in any business -- whether it be software, appliances, insurance, real estate or bio-medical whatever -- whoever owns the business you are working in is getting a cut of sales, and anyone who manages your region is getting a cut, and so are the ones recruiting the sales teams. Some are listed as MLMs, and they will allow their salespeople to make a higher and higher cut, sometimes over the regional manager's cut, in order to keep them happy and to compensate them for training new salespeople or other work. Sometimes these better salespeople become the regional manager or higher ups in the company, and the people who recruited them are no longer making a cut off of them. Yes, companies that do this are also listed as MLMs.

Keep in mind we are talking about sales jobs, not administrative or back-office processing or R&D jobs, which are salaried in these same companies. Sales is highly rewarding to some and highly disappointing to others. It is curious to me how people revere the big successes in sales and advertising (David Ogilvy, Howard Schultz, Warren Buffett etc.) but get upset when they find they can't succeed in it!

(On a personal note, no one who has half a brain stays in a business they can't make enough money in. I started as a secretary in finance -- I stayed because I found I could make more money in finance than anywhere else. I knew many people who didn't, however. I myself tried sales in other industries and I didn't mesh well with the regional managers or others. I don't know why. I seem to only do well in finance. I know people who have done extremely well in other industries where I failed. I don't think the problem is the commission structure, I figure it has to do with me.) —Preceding unsigned comment added by 209.6.94.52 (talk) 17:40, 12 April 2011 (UTC)

On the FTC sometimes it is more hindrance then help. "Many pyramid schemes will claim that their product is selling like hot cakes. However, on closer examination, the sales occur only between people inside the pyramid structure or to new recruits joining the structure, not to consumers out in the general public." -- Debra A. Valentine, General Counsel for the U.S. Federal Trade Commission regarding pyramid schemes at the International Monetary Fund’s Seminar on Current Legal Issues Affecting Central Banks. Fine but other documents show that that FTC still counts distributors as consumers which by Valentine's comment above make no blasted sense.--BruceGrubb (talk) 14:05, 12 May 2011 (UTC)

This isn't mutually exclusive. You can both count distributors as consumers and also note that pyramid schemes often only have "internal consumption". The question is whether it's legitimate consumption or driven by the marketing plan. It's can even be an issue within the same company. If you have, for example, a network of MonaVie distributors who do nothing but drink it themselves - but they do so because they love and want the product, then it's fine. On the other hand if they're buying it primarily in order to get commissions and to convince others to join, then there moving on to illegal pyramid territory, where the product purchases are effectively becoming "defacto payments for recruiting" and income isn't coming from legitimate sales. Amway actually kicked out a significant group of leaders over this issue several years ago. High internal consumption is a red flag there might be a problem, it doesn't define there is a problem. Motivation for purchase is what matters. The problem is of course that this can be extremely difficult to judge, and can often be a blend of issues. Having significant external sales (in real terms, not percentage) provides evidence the product has legitimate demand at the price it's being offered for. It's not necessary but it makes it a heck of a lot easier to determine if something is legit or not. --Icerat (talk) 19:35, 28 May 2011 (UTC)

Income level section

The lead in to the Income level section expressly states: "Several sources have commented on the income level of specific MLMs or MLMs in general"

USAToday meets WP:RS requirements and most of the reliable sources in that section are making comments about specific MLMs. Ergo there is no reason to delete the comment about Fortune especially as the Attorney Generals of four states are investigating the company and another four states are looking into complaints.--BruceGrubb (talk) 10:07, 24 October 2010 (UTC)

This section quotes an article which then quotes Eric Scheibeler regarding Amway. Scheibeler was involved in a lawsuit with Amway at the time, and was also working for the plaintiffs in the UK case (they lost). That's not exactly a non-biased view. The actual UK court judgement does not support Scheibeler's claims. Norris did not make this finding. Suggestions on how to handle it? --Icerat (talk) 20:43, 25 February 2013 (UTC)

No reply? Also, it would seem that adding in the actual claims from various MLMs from income disclosures might add some balance. --Icerat (talk) 14:11, 7 March 2013 (UTC)

Failed verification

So I went through the long string of "also called" sources just now, and half of them didn't actually say that MLM == network marketing or MLM == referral marketing, or anything even remotely like that. (They did tend to say something about MLM, but not about alternate names for it.)

In two other cases, the citations that supposedly supported "referral marketing" did not contain those words, but did contain "network marketing", so I've moved them to that name. And in a couple of cases, the citations were redundant and less clear (e.g., a source that talks about network marketing, but never explicitly says that MLM is exactly the same thing), so I've simply removed those.

It is good to cite solid reliable sources, but it also good to avoid WP:REFSPAM and citation overkill. WhatamIdoing (talk) 05:03, 3 April 2011 (UTC)

RS say that Network Marketing == MLM == Referral Marketing. Note: "referral marketing" also has other meaning: the art of maintaining and creating money-making referrals with other business and with clients.

Multi-level marketing (MLM), sometimes referred to as "network marketing", also said of lots of books on getting rich quick like [1][2] and anti-scam websites like [3] and the frigging Skeptic's Dictionary Multilevel marketing is also called network marketing and referral marketing. and the frigging Federal Trade Commission FTC Consumer Alert. The Bottom Line About Multilevel Marketing Plans (...) Multilevel or "network" marketing plans. They are one and the same thing, they are synonymous, there is absolutely zero problems in using a source that only talks about "network marketing". (and, yes, we had gone overboard with refspamming, because some people insisted that they were different things) --Enric Naval (talk) 08:47, 3 April 2011 (UTC) As for MLM == referral marketing, Skeptic's dictionary multi-level marketing (a.k.a. network marketing & referral marketing) online version paper version, perpetual marketing, referral marketing, butterfly marketing, multilevel marketing, collaborative marketing, ... Somehow the term MLM (Multi-level marketing) is not liked by most people these days since it carries a meaning of different levels of income for the networking practitioners, also a book called "starting business for dummies"network marketing multilevel marketing (MLM) and referral marketing are the names used to describe selling methods designed to replace the retail outlet as a route to market for certain products.

(reviewing the edits in depth) Oh, you already knew that, sorry for my harsh comment. It's just that I get pissed off when I am told that I can't use a source, only because it doesn't use exactly the exact word that someone believes to be the correct term. --Enric Naval (talk) 08:57, 3 April 2011 (UTC)

It's okay. I was actually dismayed to see how many lower-quality sources are available on this subject. We agree that when the sentence in question is one that says "____ is another name for MLM", then any source we name really ought to have exactly that name in it.

If you've got a good source that explains the distinction between "real" referral marketing and MLM being passed off under that name, then I think referral marketing ought to be added to the "some people conflate..." bit, like direct selling. WhatamIdoing (talk) 23:49, 3 April 2011 (UTC)

Yes. I have seen that "referral marketing" way more times in non-MLM context than in MLM context. --Enric Naval (talk) 09:09, 4 April 2011 (UTC)

Don't you think this link desevers to be in the External Links Section

(Moved to User_talk:Mackverma). --Enric Naval (talk) 09:29, 16 April 2011 (UTC)

Minimum sales requirements

You cannot rationally deny that MLMs do have minimal sales requirements, and that those (at least, in the specific example given) include personal sales, whether or not the product is actually used. The "80% rule" (that 80% of products ordered be sold or used, before additional orders will be accepted), common in MLM agreements to avoid the appearance of requiring (illegal) personal purchase requirements, is not enforced; some would say intentionally unenforced.

As for Taylor being an expert, you may have a point. However, the DSA "surveys" cannot be used, if you make the rational assumption that the DSA represents their members, rather than their members' distributors/sellers/members. — Arthur Rubin (talk) 19:48, 2 October 2011 (UTC)

No, Arthur, I cannot deny they have sales requirements (as practically all commissioned sales opportunities have), but this is irrelevant to the contention. The text I deleted specifically claimed MLM companies "require" that the product be "purchased" by the distributors themselves as a prerequisite to earning commissions. Virtually all MLM companies allow for monthly quotas to be met, all or in part, by sales to customers, and do not require the product be purchased by the rep themselves. In fact, it is commonly considered quite taboo for an MLM company to require the purchase of anything other than a distributor kit (typically $20-$50).

In my 21 years of full time research and analysis of MLM I have heard of a "50% rule", "60% rule" and most often a "70% rule", but this is the first time I have ever encountered an "80% rule". There is, in fact, only a "70% rule", which is one of the "Amway safeguards". It also has nothing whatsoever to do with who buys the product or how much is sold to reps vs. customers. It's sole purpose is to guard against front loading and/or stock piling of inventory. The rule (as you stated, only a common company policy, not a law) simply demands that the product be sold, sampled or consumed by someone.

The Federal Trade Commission has specifically declared that "In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme" (emphasis mine). They go on to say, "The critical question for the FTC is whether the revenues that primarily support the commissions paid to all participants are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in a money-making venture." In other words, the FTC only cares about the motive for buying the product, not who buys it. While there are certainly some number of MLM companies with token, overpriced products that are purchased only by their reps, albeit voluntarily, the majority of MLM companies have distributors who are passionate, die hard endorsers and consumers of their products (and yes, sometimes to a fault – but that's another issue). — User:MWave 21:42, 2 October 2011 (UTC)

As for Taylor being an expert, you may have a point. (Arthur Rubin)

For a very revealing exposé of Jon Taylor's ignorance and disingenuousness regarding the 70% Rule and the "requirement" for MLM reps to personally purchase their products, please see HERE (question 5) and HERE.

In fact, I can prove beyond doubt that Taylor has no expertise in this subject right here. Please see these excerpts from his own online anti-MLM material (highlighted text):

http://www.marketwaveinc.com/articles/Taylor-70Rule1.jpg

http://www.marketwaveinc.com/articles/Taylor-70Rule2.jpg

http://www.marketwaveinc.com/articles/Taylor-70Rule3.jpg

Please keep in mind that all of this commentary by Taylor per the 70% Rule still exists on his anti-MLM website to this day, years after the exchanges described above had occurred where he was clearly informed of the facts regarding the 70% Rule. The only other option, if not gross ignorance, is gross dishonesty. I'll let the reader be the judge. — User:MWave 21:42, 2 October 2011 (UTC)

However, the DSA "surveys" cannot be used, if you make the rational assumption that the DSA represents their members, rather than their members' distributors/sellers/members. (Arthur Rubin)

It is my position that the accuracy of the source should be the primary factor, not the identity of the source. I am often confronted by MLM critics with the accusation that I am biased. I respond that, yes, I am – But why does that make me wrong? For that matter, why are those who are pro-MLM considered to be unacceptable sources of information about MLM, but those who are con-MLM are cited as credible sources throughout the Multi-level Marketing page? Some, like Taylor, Robert FitzPatrick, Tracy Coenen, and Dean Van Druff are devoutly anti-MLM, some arguably to the point of obsession (one has written a 50,000 word anti-MLM manifesto). Yet their content and references are openly accepted herein, even going so far as allowing them to include direct links to their definitive anti-MLM websites. But then, those like the DSA, or myself, with considerably and demonstrably greater experience and expertise related to the subject of the page, are exempt simply because our equivalent, or in some cases lessor bias is towards MLM rather than against it.

This "minimum sales requirement" section is only one of several on this page that are replete with misinformation and duplicity that can be proven to be misleading, embellished, or utterly in error. I certainly have no issue with a balanced portrayal of MLM, including its challenges and criticisms. My own "pro" MLM website is chocked full of both. All I ask is that this page not be a sounding board for anti-MLM propagandist's. As it currently stands, it most certainly is.

Thanks for listening, Arthur, and considering a new point of view. — Len Clements User:MWave 21:42, 2 October 2011 (UTC)

Both MWave and Arthur Rubin are correct. Although the DSA could be considered a reliable source for certain pieces of factual information, because it is a trade group, sourced contributions from the DSA must be scrutinized carefully as trade groups want to put the industry in the best light possible.

Now, on the other hand, if MWave is indeed Len Clements as signed above, he does have a significant knowledge base on the subject of MLM - I would even venture to say more so than any of us here. I have read his book "Inside Network Marketing" (which passes WP RS tests) that I obtained from my local library. Although he is an advocate of MLM in general, in this book, he didn't hold back any punches calling it like it is naming companies and business practices that are unethical.

MWave - because of your inside knowledge of the industry and business practice, I encourage you to contribute to this article and related articles. However, any changes you are proposing must be sourced using a reliable source, otherwise, as far as Wikipedia goes, it doesn't exist. Because you are an self-proclaimed industry advocate, your text must also meet WP:NPOV guidelines to ensure this is factual, neutral, and sourced material. Your personal website normally cannot be a reliable source because it does not pass the RS test as lacking editorial oversight. However, it could be argued you are a WP:SPS Expert:

Self-published expert sources may be considered reliable when produced by an established expert on the topic of the article whose work in the relevant field has previously been published by reliable third-party publications.

Besides your published book, where else have you been published by reliable third-party publications?  Leef5  ^{TALK | CONTRIBS} 17:04, 3 October 2011 (UTC)

I suggest reading through Talk:Multi-level_marketing/Archive_2#Another_criticism_of_MLM where the RS of Taylor, FitzPatrick, and Clement were evaluated. A lot of high quality sources for backing up WP:SPS claims for Taylor and FitzPatrick could be found (used as supporting evidence or reference material in articles appearing in Pacific Rim Law & Policy Journal, Journal of Business Ethics, Western Journal of Communication, System Dynamics conference paper, American Board of Sport Psychology, McGeorge Law Review, and a book published by Juta Academic ie "South Africa's pre-eminent academic and law publisher") but nothing for Clement was ever produced.

As I mentioned in Talk:Multi-level_marketing/Archive_2#Careful_with_some_of_these_soucres Random House is all over the freaking map in terms of meeting WP:RS guidelines and Prima Lifesyle was Crown Publishing Group's self-help, cooking and parenting division and was formally discontinued June 1, 2003.

I would also point to WP:COI regarding any future article edits by MWave if he is indeed Len Clement especially given edits like [4]--BruceGrubb (talk) 11:31, 5 October 2011 (UTC)

"Len Clements as signed above, he does have a significant knowledge base on the subject of MLM - I would even venture to say more so than any of us here."

While I am sure that he appreciates you conferring the mantle of authority, I see no acceptable evidence to support the assertion. His authority on this subject, if any, has to be backed up by reliable sources, not speculative opinions. Rhode Island Red (talk) 15:09, 5 October 2011 (UTC)

My statement was of course speculative - I am assuming that none of the editors participating in this article discussion recently (besides MWave) have written books about MLM or been used as expert witnesses in court proceedings. It is not up to me to confer authority, just a fairly straightforward assessment.  Leef5  ^{TALK | CONTRIBS} 16:00, 7 October 2011 (UTC)

Bruce, thanks for the links- I read through that discussion (mostly an argument between yourself as Icerat (as his WP alias has changed)). I'm not seeing any "consensus" reached - more like a discussion that just stopped being discussed with both parties maintaining their original positions. What is your basis for considering books published under Random House's Prima Lifestyles imprint to be non-RS? Because the imprint was closed and the books moved to Three Rivers Press? Do we have precedence for marking an imprint (or even publisher for that matter) as non-RS after it closes/merges? Please enlighten.  Leef5  ^{TALK | CONTRIBS} 16:13, 7 October 2011 (UTC)

Two things here. First, editor Arthur Rubin agreed with my actual point: "However, not all imprints from reputable publishers are reliable. "Astrology for Dummies" would not be a usable reference as to the effectiveness of astrology, even if it did make claims. How much more if the book is about MLM from an MLM distributor. Even if it were generally edited for accuracy, it couldn't be trusted as to "facts"."

Second WP:BURDEN is quite clear on this: "The burden of evidence lies with the editor who adds or restores material" (sic)

So it was the burden of an editor to show that the imprint is RS and not the other way around. Wiley's For dummies imprint meets basic RS standards but there is nothing to even suggest Prima Lifestyles met the requirements and given some of the stuff they published I have serious questions regarding the quality of the books under that imprint. Things like 7-Day Detox Miracle, American McGee's Alice Strategy Guide, The Einstein Factor, The Enchanted Cat, The Healing Mind don't really indicate anything on par with Wiley's For dummies imprint much less the academic Wiley-Blackwell imprint.--BruceGrubb (talk) 15:25, 10 October 2011 (UTC)

Of course not all imprints are reliable - however, is your review of the titles you listed that this imprint carried based on your review of those books? Or was this just a cursory review of titles you felt weren't up to par? There are over 400 books in that IMDB list, across a fairly broad spectrum of subjects. I can't find any precedence why this particular imprint is being singled out as an unreliable source.

And why are we comparing imprints? The argument here for excluding Prima Lifestyles is your opinion that the quality of the books with For Dummies is better. They both appear to pass the RS test, so I'm unsure why we are making comparisons between the two. In fact, I recall there is even a "Network Marketing For Dummies" book written.

Lastly, I'm unclear why a book written about MLM by someone who has been in the business would be considered unreliable. That would be on par to excluding a book written about corporate management theory because it was written by someone who is in management at a corporation. Why the disparity? This really isn't a matter of RS, this is a merely a matter of gleaning the appropriate citations from the text in an NPOV manner. Leef5  ^{TALK | CONTRIBS} 18:22, 12 October 2011 (UTC)

All this tap dancing avoids the main issue--what even hints at Prima Lifestyles being reliable? At least For Dummies has something but Prima Lifestyles doesn't. I should mention that Network Marketing For Dummies is relatively speaking old--2001. As far as the "why a book written about MLM by someone who has been in the business would be considered unreliable" nonsense one need to only look to Talk:Multi-level_marketing/Archive_2#Careful_with_some_of_these_soucres and Kiyosaki to see the flaw with that idea.--BruceGrubb (talk) 04:36, 15 October 2011 (UTC)

I'm not seeing any "flaw" with that idea - just seeing Arthur Rubin's personal opinion on that matter. WP:SOURCES covers this (emphasis added)

Other reliable sources include university-level textbooks, books published by respected publishing houses, magazines, journals, and mainstream newspapers.

Searching through RS/N, I can't find any instances where Prima Lifestyles, an imprint of Crown Publishing Group, and division of Random House, has been challenged to its reliability as a source. If we have an official source beyond 2 users opinions, that would be a preferred center of debate.  Leef5  ^{TALK | CONTRIBS} 14:08, 17 October 2011 (UTC)

Crown Publishing Group in general has been kicked around in Wikipedia:Reliable_sources/Noticeboard/Archive_43#Pat_Buchanan and Wikipedia:Reliable_sources/Noticeboard/Archive_87#TM_research_quality where it was pointed out "No person is a WP:RS. Only published works are. (And of course, not all published works are WP:RS, only those with a reputation for accuracy and fact checking are.) Keep in mind that academic and peer-reviewed publications are considered the most reliable sources" and it was pointed out earlier "Crown is not an academic publisher" to which I add that we don't know kind of peer-reviewing (if any) Prima Lifestyles had. Again per WP:BURDEN an editor has to show that an imprint is RS and not the other way around and to date nothing to show Prima Lifestyles was anything but a vanity imprint has been produced.--BruceGrubb (talk) 04:26, 20 October 2011 (UTC)

Maybe this is helpful? "several statutes have placed additional regulations governing the activities of the MLM companies such as: (...) Prohibiting MLM companies from requiring distributors to purchase minimum initial inventories (except in reasonable quantities)" [5] , "Franchising & licensing" American Management Association, 2004, p.355

"The MLM companies cleverly institute minimum purchase requirements for each distributor or member who wishes to receive commission payments related to those they recruited into the scheme. (...) The members tipically spend far more money on minimum purchases, [other stuff], and the like that they will ever earn in commissions or overrides." "Expert Fraud Investigation", Tracy L. Coenen, John Wiley and Sons, 2009, p. 168-169

"'Front loading is a related, fraudulent process whereby even representatives of legitimate MLMs are required to buy large, expensive amounts of inventory. These types of companies often require distributors to buy the goods because there really isn't a legitimate demand from other people for the goods. It is only the promise of making large windfalls that motivate the purchase of unusually large overpriced goods or services. In these cases, when the organization collapses, individuals are unable to sell their inventory and are left with substantial financial losses." Fraud Examination", W. Steve Albrecht and others, page 546, Cengage Learning, 2008 [6]

--Enric Naval (talk) 17:48, 3 October 2011 (UTC)

Re: "For a very revealing exposé of Jon Taylor's ignorance and disingenuousness..." You cant say stuff like that here (see WP:BLP) and you can't support such mudslinging attacks using self-published sources. It would not be inappropriate for me to delete those comments, but I'll let them stand for now as an illustration of what not to do. Please don't do it again. Rhode Island Red (talk) 18:56, 3 October 2011 (UTC)

Mostly agree with Rhode Island Red, except the quote from MWave was cut short - he was talking about Jon Taylor's opinion on the 70% rule. MWave, please stick with the facts re: living people, and not any characterizations that may be construed as personal attacks. You are allowed to refer to your SPS website in article talk space when making an argument (just to save us all the time of having you say the same thing you've already said somewhere else), but none of that can be included in any WP articles unless you are deemed to be an SPS expert (similar discussion was had re: Stephen Barrett)  Leef5  ^{TALK | CONTRIBS} 19:18, 3 October 2011 (UTC)

No, please do not refer to this self-published commercial website here again (c.f.WP:SELFPROMOTE). Rhode Island Red (talk) 20:05, 3 October 2011 (UTC)

Having him link to prior relevant published articles (albeit SPS) in article talk space is acceptable when making an argument for a position - the policy you quote is in regards to article space.  Leef5  ^{TALK | CONTRIBS} 21:53, 3 October 2011 (UTC)

What is the WP policy basis for your assertion? The editor is linking to non-RS, self-published material on his own website offering commercial services/products. If the editor has a relevant comment to add here, they should simply add it rather than linking to a commercial SPS. Rhode Island Red (talk) 15:23, 4 October 2011 (UTC)

Also, the text that was deleted was sourcing non-RS sources (comments by an individual on an FTC proposed rule). Not sure why this text was ever allowed in the article. I think this whole section needs a revamp, sourced from actual RS. The sources Enric Naval identified may be a start.  Leef5  ^{TALK | CONTRIBS} 19:25, 3 October 2011 (UTC)

Back on the point, saying that (all) MLMs have minimum inventory sales requirements before new orders are accepted appears to be false. I'm not sure how one would calculate an "80% rule" for, say, Tupperware: the salesperson is not in possession of any of the stock. Everything is ordered from the warehouse. How do you require that 80% of nothing be sold before new orders are accepted? The same appears to be true for Avon, Pampered Chef, and many of the other large MLM groups. Most of these have a minimum dollar sales (you have to sell an average of $75 a month to remain a salesperson [I don't know what the real dollar levels are, but most seem to have a rule like that]), but there's no inventory and thus no rule about selling the old inventory before placing new orders. WhatamIdoing (talk) 18:37, 4 October 2011 (UTC)

First, less reputable MLMs will require to buy inventory in advance, regardless of what Avon does.

Second, let's assume a MLM like Avon, and let's apply what I have read in RS about how this works. A woman becomes an Avon salesperson, with no initial inventory requirement. The first months she sells to her circle of acquaintances and covers easily the minimum sales requirement. Then she starts running out of friends that haven't bought from her, so the sales slow down. The first time she doesn't meet the sales target, he sells a couple of items to herself so she can reach the target that month. He is told/promised/implied that increased sales in future months will help her cover these loses. The salesperson uses the items for herself, or tries to sell them directly to other persons. She perseveres a few months while the sales go down and down because of encouragement and propaganda from Avon. Eventually she gives up and leaves Avon, but she is now stuck with of dozens and dozens of Avon items that she won't be able to get rid of and that she can't return to Avon (there is now a law requiring that 80% of inventory is bought back by MLMs companies, but since Avon has no inventory and the woman was selling this stuff instead of stocking up as inventory, Avon doesn't have to buy back anything....). --Enric Naval (talk) 19:32, 12 October 2011 (UTC)

• First, let's not turn the subject of this article into Disreputable MLMs. We should never say that "MLMs do this" when the fact is actually that "Some, mostly disreputable, MLMs do this". In particular, it's inappropriate to ignore what the largest, oldest, and most successful MLMs do to focus on the practice of the smallest and shadiest ones.
• Second, if there's no inventory, then there's no inventory. You can't sell an inventory that you do not possess.
  Your hypothetical scenario about buying Avon products to meet your minimum sales quota is equally applicable to a person working in a traditional commission-based retail store or a salaried outside sales position. (Who wouldn't secretly sell himself $20 in merchandise if that kept him from losing his $2,000 monthly base salary?) There's nothing special about MLMs here.
  This is strictly anecdotal, but the fact is that I have met several women who have worked for these companies, and zero of them have taken that approach. Either the sales level was incredibly low, so the smallest bit of effort resulted in sufficient sales, or the company had some sort of "temporary leave" policy, so occasional inactivity didn't matter, or they just quit. The biggest MLMs in the world are largely staffed by women who are looking for a short-term, small-scale, part-time benefit, not by people who believe they'll get rich quick by selling cure-o'-the-month and are willing to gamble it all on squeezing just another month out of it. That's why the turnover is so high with these companies: the saleswomen don't go buy a bunch of Avon for personal use every month: they just quit. WhatamIdoing (talk) 00:49, 13 October 2011 (UTC)

• Dunno, looking around Internet [7], Avon has no minimum sales requeriment, but you need to sell 50$ each campaign (every two weeks?) to make a profit? If you don't order for 6 campaigns (3 months?) all your extra benefits are removed. The more you sell, the higher the percentage you get paid. If you become a "leadership representative", then you have a 250-400$ requirement depending on your level[8]. Yes, it looks like Avon is one of the best MLMs out there. But is this an exception to the rule? What is the typical MLM like? That should be answered using sources. --Enric Naval (talk) 15:06, 17 October 2011 (UTC)

• One question you'd need to ask to get a meaningful assessment is this: What's "typical" mean to you? Imagine that you have a list of a dozen companies. One has 100 sales people. The rest have three. Do you line them up from largest to smallest, and pick the company in the middle, so that the "typical" MLM has three sales people? Or do you say that the big MLM has three times as many sales people as all of the others combined, so the big one is the "typical" company, meaning the one that affects fully three-quarters of the MLM sales people in your list? Both "the company in the middle" and "the company that employs the middle sales person" could legitimately be described as "typical", but you will get very, very different results depending on your choice.
  Since I see MLM issues as largely a consumer/sales person protection issue, it's my opinion that "typical" ought to be determined by how many individuals are affected by it, not by how many pieces of incorporation paperwork have been filed. And on that basis, Avon, Tupperware, Mary Kay, Pampered Chef, etc., with their millions of sales people, are very much the "typical" MLMs. Avon reports 5.8 million sales reps in 2010[9]. Mary Kay has more than 2 million.[10] Tupperware has about 2 million.[11] That's a lot of people. It would take a lot of these small-scale, shady operations to outweigh those powerhouses. WhatamIdoing (talk) 16:18, 17 October 2011 (UTC)

You seem to be talking about the typical distributor rather than the typical MLM company. It could be argued that the typical distributor would be one from Avon or Amway et al., given that they have the largest distributor pools. It could be argued that Avon and Amway are the most well-known MLMs. But I don't agree that these companies necessarily represent the typical MLM based on their size. Rhode Island Red (talk) 16:31, 17 October 2011 (UTC)

As I understand it, each individual sales person is technically a small business and therefore its own "company", so one person selling for Avon is probably the typical MLM business. But yes: In Fast food, I'd focus on McDonald's and KFC and Subway, rather than independent, locally owned fast-food restaurants, even though there's only on McDonald's and thousands of small fast food restaurants. McDonald's has a far greater impact on the fast food industry, and is far more likely to be relevant to our readers than individual, independent fast food restaurants. In MLM, I'd focus on Avon and Amway and Tupperware, rather than the smallest and least-known MLMs, even though there's only one Avon and hundreds of Avon-wannabes. Avon is far more likely to be relevant to our readers than the tiny MLMs. WhatamIdoing (talk) 19:58, 17 October 2011 (UTC)

Funny, when the Attorney General's office refers to MLMs as pyramid schemes, they didn't mention anything about Avon, Amway, and Tupperware. The process on the Talk page should involve proposing specific content to include in the article rather than trying to establish artificial constraints. I don't agree with the direction your argument is headed, but it's a mott point until someone proposes content for inclusion. Rhode Island Red (talk) 20:07, 17 October 2011 (UTC)

It doesn't name any specific businesses at all, but it directly says that "well-established, legal multi-level marketing operations" exist.

My proposal is more about not including misleading information, i.e., that there's an 80% inventory rule (which doesn't exist in many of these "well-established, legal multi-level marketing operations") or that there's an 80% buyback law (which doesn't appear to exist in 99% of the world's legal jurisdictions). WhatamIdoing (talk) 23:00, 17 October 2011 (UTC)

This discussion has strayed all over the place; it's very unclear. Perhaps we should try to wrap up this thread by putting some tangible proposals on the table. What text is specifically in question? What are the sources associated with the text in question? Rhode Island Red (talk) 02:02, 18 October 2011 (UTC)

Timeline

The timeline was interesting, but ....

1. Complete without a source (and it would have to have a single source, to avoid comparisons between related entries with different sources)
2. It's about "direct selling", not "multi-level marketing".

Among other problems. — Arthur Rubin (talk) 05:41, 17 February 2013 (UTC)

Confusion between MLM and Pyramid Scheme

The article states that many MLM companies are not necessarily pyramid schemes but also some MLM companies are pyramid schemes. However, I can hardly define by this article how a legitimate MLM company differs from an illegal pyramid scheme. It would be nice to see examples of MLM companies in the article. Can anyone really tell me the difference between those two because it seems that it is very difficult to distinguish between the 2 types. It is said that Donald Trump and Warren Buffet consider MLM (or network marketing), to be a very good business model. Now whether they truly said that or not it is unknown and also whether their statement represents the truth is also unknown but if they said that, they certainly refered to legal network marketing companies and not something illegal like these pyramid schemes. I understood that to distinguish between a legal and an illegal MLM company is to see what the intention of the customers really is; so if the customers just purchase a product with the intention of selling it to others, then it is a pyramid scheme, if they intend to buy products to personally consume themselves and then purchase some to sell to others then it is not a pyramid scheme? It is confusing where do I draw the line? — Preceding unsigned comment added by U1012738 (talk • contribs) 00:45, 6 June 2013 (UTC)

Considering as the article points out some people consider ALL MLM companies pyramid scheme you question has no answer.--216.31.124.114 (talk) 13:34, 6 June 2013 (UTC)

I have read this FTC document on MLM Multilevel Marketing and it states that the way to distinguish between a legitimate and an illegal (pyramid scheme) MLM company is, if distributors sell more products to other distributors than to the public — or if they make more money from recruiting than they do from selling...then it is a pyramid scheme and thus illegal. So the line is drawn on where the most money is made (from the public (legal) or from recruiting (illegal)) --U1012738 (talk) 16:39, 7 June 2013 (UTC)

That's a line of distinction, but I'd have to say that it's not generally recognized. — Arthur Rubin (talk) 17:35, 5 July 2013 (UTC)

I would like to add my own article to a list of Network marketing companies.

How can I add my article to this or other articles refering to network marketing as I think that my article would be of use to people looking at different types of network marketing companies.