With Multi Level Marketing organisations, Ponzi Schemes and Pyramid Scams, one common factor is ‘Pay to Play’.
It means anyone who wishes to participate has to pay to take part in the circle.
In MLMs this usually amounts to buying a ‘Starter Kit’ or placing a ‘Qualifying Order’. Usually a Starter Kit has a low level entry and a higher priced kit or two which establish at which level you buy into the scheme.
Some MLMs advertise ‘Free to Join’, which makes it look as if there’s no risk and no Pay to Play, however with any of these MLM schemes the ‘Rep’, ‘Consultant’, ‘Coach’, ‘Affiliate’ or ‘Partner’ (or whatever else their participants are called) have to maintain a certain level of payments into the system.
For some it’s a monthly website fee or a membership fee, for others it’s an auto-ship order, but the majority have a minimum order value ‘to stay active’ as a rep and earn the ‘consultant’ discount or commissions and bonuses. Most companies require a minimum order of around 200 (in whatever your local currency is) per month and a minimum of one such order in a quarter, six months or a year, just to remain on their books as a participant in the ‘discount’ scheme.
Why is this problematic?
Let’s look at a classic ‘Pay to Play’ scenario, the sad thing is that the reps don’t even realise, they think they just have to pay $3 or £10 a month to keep their website up and running, it’s a business expense. Every business has expenses, so it’s perfectly normal, right?
Not when you’re a sales rep you’re not!
The reps don’t seem to realise that being a customer first and having to buy in to the products and services of an MLM makes them part of the pyramid, they have to be paying customers in order to be employed. They have to Pay to Play. Like playing the lottery, you cannot participate unless you pay.
Of course many people play the lottery, however, when you play the lottery you know what you’re getting into. You know you are gambling and that your chance to win big is low and the likelihood that you lose that monthly fee is high. In MLMs the promise is riches, you are never told that you’re gambling your money away, you’re told it’s an investment, it’s something that will add to your business, in fact you’re lied to that you run your own business, when in fact you’re an unpaid sales rep for an international multibillion organisation and the people at the top profit from your hard work and you get paid near to nothing.
Can you imagine;
Say you’re interviewing for a role working for BMW and in order to work there you have to buy a car from them first… and if you can’t afford it, put it on your credit card, without that first purchase you don’t get the job.
Another scenario would be you work for McDonald’s and you’re only allowed to eat at McDonald’s and are not allowed to have a Burger King or KFC ever. You can only buy McDonald’s products and when you buy anything from the competition, you’re seen as a traitor. You are forced to spend your hard ‘earned’ money within the company you work for and nowhere else.
When you work on a beauty counter in a regular shop, you are provided with samples, the company you work for provides you those samples, they don’t expect their employees to pay for those samples. There is no starter kit to purchase in order to showcase the products you’re trying to sell, that’s an expense that the company pays for, not the sales rep.
Final comparison, you’re a sales person in a department store and as part of your employment contract you're expected to buy a minimum of $10 worth in products each month and pay $3 a month for the company’s website with a special link to your name or else they terminate your employment contract.
That is Pay to Play. That is essentially what MLMs ask their sales reps to do!
Pay into the company for the privilege to work there. It doesn’t happen anywhere else.