MLMs offer 99% chance of <i>losing</i> your money on clarkhoward.com

Whenever the economy slows, the big pitches from multi-level marketing operations (MLMs) emerge.

Clark wants you to know that MLMs can be a legit opportunity. It is possible to make money by selling products or services to strangers or by recruiting others to do the selling.

But here's the rub: You need the gift of gab and you'd better not even have a trace of shyness. You must believe in the product or service you're shilling; how it's priced; and you've got to be willing to approach total strangers with your pitch. You also need a great deal of time to dedicate to the whole process.

Forbes magazine recently did an analysis of a hot MLM of the moment called Team Leadership Development. It turns out that only 1 out of every 100 people could recoup their expenses. So you have a 99% chance of losing money if you get involved!

Again, there are legit MLMs out there -- but only a handful of people are making money.

A lot of folks get pressure from relatives or friends regarding MLM pitches. Clark recommends countering by saying, "I don't have the selling ability you do." Or you might try, "Clark Howard doesn't want me doing that." That way they're mad at Clark, not you. Don't be pressured to get involved because you feel obligated. If they're really your friend, they'll still be your friend when you turn them down. And you're stuck with your relatives!

So, yes, amid all the hype there is a kernel of truth. The brains behind Team Leadership Development is making unreal money. But the silent majority isn't making a dime. So be careful out there.

What others are saying

Talk about generalizations
I was just browsing for Disney bargains when I came upon this.

Quite frankly, I am a little disappointed in you Clark. You take one story about one company and generalize in your headline about an entire, incredibly diverse industry? I am really surprised to see this.

I have had experience with MLMs and I have been both successful and unsuccessful with it. My experience tells me you get out of it what you put in. I observed that most people who join such a business do not give it that much effort. Their investment is small compared to traditional business and they have little to lose.

It's just like joining a gym does not entitle you to get in shape. You actually have to work out.
By JustBrowsing @ 04/04/09 12:06:33 AMreport abuse
MLM
I just saw all of the comments about MLM's. I have been involved with one for 12 years and have always make money with it. It does take work and commitment, but so did my restaurant that I put over 60 hours a week into. I also was in the red much of the time. With this, I get paid for what I do and do not owe any bills for my business. I have used my extra money to get debt free and put 2 kids through college. I have met many wonderful people and have not ever bothered my family or friends who were not interested in my products. You have to use common sense and excercise some constraint. I work with Quixtar because of the great products and the web based segment of the business. For someone who needs extra income, this is great. Just don't think you won't have to do anything to make it happen. You will be paid in direct proportion to your work.
By Kat @ 03/24/09 03:58:12 PMreport abuse
Chews4Health
Clark if this is so then why are you promoting Chews4Health which is an MLM? Or is this one program that actusll can work for a majority of the people involved?
By Greg @ 02/28/09 03:34:05 PMreport abuse
MLM Success
The old employment model is breaking apart. Only the foolish, complacent, or lazy refuse to see it and seize the opportunities to protect themselves and their families. Network Marketing the new way of doing business. All of your major cell phone companies, satelite, beauty product company, and nutritional companies see that.
By "Fortune Man" @ 02/22/09 07:03:14 AMreport abuse
Business
I would think Forbes Mag. would know better than to single out MLM's and say that people who join have a 99% chance of not regaining their money.
To use an example if you were to start a McDonalds franchise, the start up costs are upwards of 1.5 million dollars (more or less. If you were left with 100k yearly in profit after paying the overhead (employees, light, rent, etc.) it would take you 15 years to recoup the initial start up costs. Now, I don't know how much a McDonalds franchise owner makes, but thats just an example. Not to mention how many hours a week he spends on the job ( >60 most likely ).

Even if they made 200-300k yearly it would take less time to regain the money. But, how many people would have the money to even start?

MLMs are offering people who have the entrepreneual spirit an opportunity to acheive great success without having huge amounts of money to invest in a business like McDonalds or whatever else. And after 15 years, if they work at it 60 hours a week (just to keep the comparison going) they would very well established and have made their initial money back (maybe $200-300 depending on the business) with in the first month.

And this might suprise some people "If your put 0 hours into your business you'll make $0 profit" and that goes for any business.
By Travis @ 02/18/09 11:08:44 AMreport abuse
Mary Kay Cosmetics
Be aware of Mary Kay Cosmetics. Avoid this MLM and warn your friends. They shield themselves from the behavior of their company representatives, Independent Beauty Consultants (IBC), by insisting all IBCs remain “independent contractors” rather than company employees. Mary Kay Cosmetics then watches these IBCs make unrealistic earnings promises (and employ other unscrupulous tactics) to manipulate uninformed targets into buying ridiculous amounts of products for purported resale. Many women and their families have suffered financial loss when their “business” did not produce the income intimated (or often promised) to recruits by the IBCs.

A good source of information regarding the depth of injury caused by Mary Kay Cosmetics can be found at pinktruth.com
By Kevin @ 02/09/09 08:57:13 AMreport abuse
Here is a classified website that agrees with Clark
It looks like the classified website USListed has a strong opinion when it comes to MLM.

They feature a couple in Ga that made millions from MLM.

http://www.uslisted.com/kb/entry/29/
By Thomas @ 08/18/08 10:06:18 PMreport abuse
MLM's
Q: What do MLM converts seem to have the most of?

A: People formerly known as "friends"
By Pat @ 08/14/08 11:13:37 AMreport abuse
reply
Sarah's comments are almost word for word what I've heard from people in MLM. These thoughts are repeated quite often and deflect ALL criticism away from the MLM themselves. Rena makes a good point and relates to something I've always wondered. If I put 1/2 the time needed to really build a MLM network stream under me, I could open my own business and build. It'd be must more satisfying and people wouldn't be put off by me. Undercover investigations by the media an shown high level (Diamondish) MLM guys and gals admit the money is in selling DVDs, CDs, books and seminars to the lower level MLM "businesses".
By Tim @ 08/13/08 06:16:13 AMreport abuse
Quixtar Team
Team, I believe, came out of some former Quixtar types. I know someone who was in Quixtar and then that somehow morphed into Team and then Quixtar got very mad at Team and lawsuits ensued. I am so uninterested in either due to my observation they tend to little more that a support group, an excuse to socialize and solicit new ways of getting revenue from their members. You don't get away with just selling the stuff (prices are awful) you don't advance or get to participate in bigger events unless you are on the book subscription, the dvd subscription etc. The costs never end, nobody really wants to hear your pitch and what is offered is more expensive and more hassle to order than just going to Walmart.
By Tim @ 08/13/08 06:08:31 AMreport abuse
MLM's
I think they are a waste of time. You get a call from people you have not heard from in years trying to get you on board. And then they talk your ear off. Just give me a business where I can make money and don't have to worry about recruiting anyone. thanks
By tina @ 08/12/08 09:32:36 PMreport abuse
MLMs
I have a friend who almost drove me crazy with these things. First it was a nutrition beverage which cost me $100 to order. I only did it because I really wanted to help her AND get her off my back. Months later she called about another nutritional product which was "the best." She informed me the earlier one turned out not to be so good - needless to say I was pissed because I had shelled out $100. Now she has moved on to a telephone service marketing. Like most people in these things she hs not started reaping the financial gains but they're sure to come........yeah right!
By Kym @ 08/12/08 05:02:48 PMreport abuse
MLM's
I have been involved with a multi-level marketing company for 2-1/2 years, and I do not regret a second of it. I am not making big bucks yet, but every dime I lose is of my own choosing. For every day that I don't share the story, is a day that I can expect to not make money. It's no different than any other small business venture...if you don't work at it, you don't make money. However, with this opportunity, I do have the real possibility that one day I will have financial freedom and not have to depend on a job. I can't say that for the industry that I spent 20 of the best years of my life in. At least with this venture, I decide when I can take a day off to go to the doctor, or I decide when I want to cut back to 20 hours a week. Please quit bashing MLM's until you are ready to present the whole picture and not just the negatives....which I might reiterate, can happen in ANY business venture.
By Susan Erwin @ 08/12/08 04:37:06 PMreport abuse
MLMs
I have been to 4 MLM presentation and joined 2 different companies. I think they are viable business opportunities. The key is to be under teams with strong leadership and believe in the product. The training programs are excellent. Robert Kiyosaki (Rich Dad, Poor Dad fame) has touted them. I think Clark is unfairly biased. Like anything people just need to do their research and see if it's for them.
By MD @ 08/12/08 01:02:28 PMreport abuse
MLMs
I am actually a rep for an MLM. Clark is right. It does take time and energy to be successful. I do think that people should be cautioned that frequently you are told how much $$ you can make in your spare time. This really is not true. You do really have to work in order to be successful.

It has been my experience that most people involved with MLMs make every effort to provide a service without being a nuisance. I am sorry that some folks have apparently had bad experiences, however I don't think it is a good idea to make a blanket statement regarding any group of people.
By Rena @ 08/12/08 11:49:12 AMreport abuse
MLMs
MLMs are the worst thing ever. The salesmen are annoying and are scum of the earth.
By JC @ 08/12/08 10:09:10 AMreport abuse
Brainwashed...
What really puts me off about MLMs is that the people in them seem to have been brainwashed, or at least seem to have made a faith commitment that would be appropriate for the Almighty but looks very silly when applied to a brand of detergent.
By Michael Covington @ 08/11/08 05:11:40 PMreport abuse

Talk about generalizations

I was just browsing for Disney bargains when I came upon this.

Quite frankly, I am a little disappointed in you Clark. You take one story about one company and generalize in your headline about an entire, incredibly diverse industry? I am really surprised to see this.

I have had experience with MLMs and I have been both successful and unsuccessful with it. My experience tells me you get out of it what you put in. I observed that most people who join such a business do not give it that much effort. Their investment is small compared to traditional business and they have little to lose.

It's just like joining a gym does not entitle you to get in shape. You actually have to work out.

By JustBrowsing @ 04/04/09 12:06:33 AMreport abuse

MLM

I just saw all of the comments about MLM's. I have been involved with one for 12 years and have always make money with it. It does take work and commitment, but so did my restaurant that I put over 60 hours a week into. I also was in the red much of the time. With this, I get paid for what I do and do not owe any bills for my business. I have used my extra money to get debt free and put 2 kids through college. I have met many wonderful people and have not ever bothered my family or friends who were not interested in my products. You have to use common sense and excercise some constraint. I work with Quixtar because of the great products and the web based segment of the business. For someone who needs extra income, this is great. Just don't think you won't have to do anything to make it happen. You will be paid in direct proportion to your work.

By Kat @ 03/24/09 03:58:12 PMreport abuse

Chews4Health

Clark if this is so then why are you promoting Chews4Health which is an MLM? Or is this one program that actusll can work for a majority of the people involved?

By Greg @ 02/28/09 03:34:05 PMreport abuse

MLM Success

The old employment model is breaking apart. Only the foolish, complacent, or lazy refuse to see it and seize the opportunities to protect themselves and their families. Network Marketing the new way of doing business. All of your major cell phone companies, satelite, beauty product company, and nutritional companies see that.

By "Fortune Man" @ 02/22/09 07:03:14 AMreport abuse

Business

I would think Forbes Mag. would know better than to single out MLM's and say that people who join have a 99% chance of not regaining their money.
To use an example if you were to start a McDonalds franchise, the start up costs are upwards of 1.5 million dollars (more or less. If you were left with 100k yearly in profit after paying the overhead (employees, light, rent, etc.) it would take you 15 years to recoup the initial start up costs. Now, I don't know how much a McDonalds franchise owner makes, but thats just an example. Not to mention how many hours a week he spends on the job ( >60 most likely ).

Even if they made 200-300k yearly it would take less time to regain the money. But, how many people would have the money to even start?

MLMs are offering people who have the entrepreneual spirit an opportunity to acheive great success without having huge amounts of money to invest in a business like McDonalds or whatever else. And after 15 years, if they work at it 60 hours a week (just to keep the comparison going) they would very well established and have made their initial money back (maybe $200-300 depending on the business) with in the first month.

And this might suprise some people "If your put 0 hours into your business you'll make $0 profit" and that goes for any business.

By Travis @ 02/18/09 11:08:44 AMreport abuse

Mary Kay Cosmetics

Be aware of Mary Kay Cosmetics. Avoid this MLM and warn your friends. They shield themselves from the behavior of their company representatives, Independent Beauty Consultants (IBC), by insisting all IBCs remain “independent contractors” rather than company employees. Mary Kay Cosmetics then watches these IBCs make unrealistic earnings promises (and employ other unscrupulous tactics) to manipulate uninformed targets into buying ridiculous amounts of products for purported resale. Many women and their families have suffered financial loss when their “business” did not produce the income intimated (or often promised) to recruits by the IBCs.

A good source of information regarding the depth of injury caused by Mary Kay Cosmetics can be found at pinktruth.com

By Kevin @ 02/09/09 08:57:13 AMreport abuse

Here is a classified website that agrees with Clark

It looks like the classified website USListed has a strong opinion when it comes to MLM.

They feature a couple in Ga that made millions from MLM.

http://www.uslisted.com/kb/entry/29/

By Thomas @ 08/18/08 10:06:18 PMreport abuse

MLM's

Q: What do MLM converts seem to have the most of?

A: People formerly known as "friends"

By Pat @ 08/14/08 11:13:37 AMreport abuse

Sarah's comments are almost word for word what I've heard from people in MLM. These thoughts are repeated quite often and deflect ALL criticism away from the MLM themselves. Rena makes a good point and relates to something I've always wondered. If I put 1/2 the time needed to really build a MLM network stream under me, I could open my own business and build. It'd be must more satisfying and people wouldn't be put off by me. Undercover investigations by the media an shown high level (Diamondish) MLM guys and gals admit the money is in selling DVDs, CDs, books and seminars to the lower level MLM "businesses".

By Tim @ 08/13/08 06:16:13 AMreport abuse

Quixtar Team

Team, I believe, came out of some former Quixtar types. I know someone who was in Quixtar and then that somehow morphed into Team and then Quixtar got very mad at Team and lawsuits ensued. I am so uninterested in either due to my observation they tend to little more that a support group, an excuse to socialize and solicit new ways of getting revenue from their members. You don't get away with just selling the stuff (prices are awful) you don't advance or get to participate in bigger events unless you are on the book subscription, the dvd subscription etc. The costs never end, nobody really wants to hear your pitch and what is offered is more expensive and more hassle to order than just going to Walmart.

By Tim @ 08/13/08 06:08:31 AMreport abuse

I think they are a waste of time. You get a call from people you have not heard from in years trying to get you on board. And then they talk your ear off. Just give me a business where I can make money and don't have to worry about recruiting anyone. thanks

By tina @ 08/12/08 09:32:36 PMreport abuse

MLMs

I have a friend who almost drove me crazy with these things. First it was a nutrition beverage which cost me $100 to order. I only did it because I really wanted to help her AND get her off my back. Months later she called about another nutritional product which was "the best." She informed me the earlier one turned out not to be so good - needless to say I was pissed because I had shelled out $100. Now she has moved on to a telephone service marketing. Like most people in these things she hs not started reaping the financial gains but they're sure to come........yeah right!

By Kym @ 08/12/08 05:02:48 PMreport abuse

I have been involved with a multi-level marketing company for 2-1/2 years, and I do not regret a second of it. I am not making big bucks yet, but every dime I lose is of my own choosing. For every day that I don't share the story, is a day that I can expect to not make money. It's no different than any other small business venture...if you don't work at it, you don't make money. However, with this opportunity, I do have the real possibility that one day I will have financial freedom and not have to depend on a job. I can't say that for the industry that I spent 20 of the best years of my life in. At least with this venture, I decide when I can take a day off to go to the doctor, or I decide when I want to cut back to 20 hours a week. Please quit bashing MLM's until you are ready to present the whole picture and not just the negatives....which I might reiterate, can happen in ANY business venture.

By Susan Erwin @ 08/12/08 04:37:06 PMreport abuse

I have been to 4 MLM presentation and joined 2 different companies. I think they are viable business opportunities. The key is to be under teams with strong leadership and believe in the product. The training programs are excellent. Robert Kiyosaki (Rich Dad, Poor Dad fame) has touted them. I think Clark is unfairly biased. Like anything people just need to do their research and see if it's for them.

By MD @ 08/12/08 01:02:28 PMreport abuse

I am actually a rep for an MLM. Clark is right. It does take time and energy to be successful. I do think that people should be cautioned that frequently you are told how much $$ you can make in your spare time. This really is not true. You do really have to work in order to be successful.

It has been my experience that most people involved with MLMs make every effort to provide a service without being a nuisance. I am sorry that some folks have apparently had bad experiences, however I don't think it is a good idea to make a blanket statement regarding any group of people.

By Rena @ 08/12/08 11:49:12 AMreport abuse

MLMs are the worst thing ever. The salesmen are annoying and are scum of the earth.

By JC @ 08/12/08 10:09:10 AMreport abuse

Brainwashed...

What really puts me off about MLMs is that the people in them seem to have been brainwashed, or at least seem to have made a faith commitment that would be appropriate for the Almighty but looks very silly when applied to a brand of detergent.

By Michael Covington @ 08/11/08 05:11:40 PMreport abuse

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Aug 11, 2008 -- MLMs offer 99% chance of losing your money

What others are saying