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More On Multilevel Marketing

Caution Watch Out
A reader wrote to me regarding an online multilevel marketing article I wrote and felt I did not do justice to representing MLM properly.

Message sent:

I read your article on Multi-level Marketing where you state 'We tell it like it is.' You've really missed the mark with this one. There are hundreds of multi-level marketing companies from Avon to Watkins. Companies like Mary Kay, Shaklee, Tupperware, Pampered Chef, Discovery Toys and many, many more all pay on multiple levels. That's what multi-level marketing means. The 'companies' you described in your article are illegal pyramid schemes. True multi-level companies are responsible for millions of dollars in sales every year. Do a real service to your readers. Do some more research and get it right. Start at to learn about the real professionals in this industry.

Respectfully submitted,


Response to the message sent:
(note: Removed the name of the reader to protect their privacy online.)

Hello "Reader,"

I appreciate your comments here.

If you are referring to the article I wrote a while back titled:

Multi-level Marketing

The article was not written to be an in-depth piece on every single multi-level marketing company that has ever come along.

I state in the article, "There have been many multi level marketing companies over the years. Some of these companies have actually provided a quality service or product, many have not. In fact, many of the companies could be considered nothing more than pyramid schemes."

It was simply a warning to consumers to be careful.

For every good multi-level marketing company that has come along, there have been hundreds of others that are nothing more than pyramid schemes.

The problem with all multi-level marketing, is once a market is saturated, and everyone and their brother and sister become involved in it, it is difficult to earn any real dollars. Most multi-level product sales and selling procedures or MLM service providers tend to spiral downward to this point in time of market saturation.

Futhermore, because it is multi-level, everyone down the line (typically) pays a percentage of their costs to the people above them.

Keep in mind, I am not necessarily saying this is bad. However, if you look at history, that is the way it is with multi-level marketing. Sure, there have been other types of payment structures created for MLM, with some being better than others, but MLM by its very wording represents a mult-level format.

Also, it is wise to be aware that the Internet has really propelled MLM to a point of saturation with many of the MLM companies.

Here is some information related to multi-level marketing:

Note also, that it is typically the ground floor people that get involved with companies that make it very rich. Once again, I am simply saying that is the way it is. If you look at the historical data for every single MLM company, the people have indeed gotten rich, that got in early.

The FTC provides the following warnings about multilevel marketing;

The Bottom Line About Multilevel Marketing Plans

The Bottom Line About Multilevel Marketing Plans

Multilevel or "network" marketing plans are a way of selling goods or services through distributors. These plans typically promise that if you sign up as a distributor, you'll receive commissions - for your sales and those of the people you recruit to become distributors. These recruits sometimes are referred to as your "downline."

Some multilevel marketing plans are legitimate. However, others are illegal pyramid schemes. In pyramids, commissions are based on the number of distributors recruited. Most of the product sales are made to these distributors - not to consumers in general. The underlying goods and services, which vary from vitamins to car leases, serve only to make the schemes look legitimate.

Joining a pyramid is risky because the vast majority of participants lose money to pay for the rewards of a lucky few. Most people end up with nothing to show for their money except the expensive products or marketing materials they're pressured to buy.

If you're thinking about joining what appears to be a legitimate multilevel marketing plan, take time to learn about the plan. What's the company's track record? What products does it sell? Does it sell products to the public-at-large? Does it have the evidence to back up the claims it makes about its product? Is the product competitively priced? Is it likely to appeal to a large customer base? How much is the investment to join the plan? Is there a minimum monthly sales commitment to earn a commission? Will you be required to recruit new distributors to earn your commission?

Be skeptical if a distributor tells you that for the price of a "start-up kit" of inventory and sales literature - and sometimes a commitment to sell a specific amount of the product or service each month - you'll be on the road to riches. Often consumers spend a lot of money to "build their business" by participating in training programs, buying sales leads or purchasing the products themselves. Too often, these purchases are all they ever see for their investments.

Your Responsibilities

If you decide to become a distributor, you are legally responsible for the claims you make about the company, its product and the business opportunities it offers. That applies even if you're repeating claims you read in a company brochure or advertising flyer. The Federal Trade Commission advises you to verify the research behind any claims about a product's performance before repeating those claims to a potential customer.

In addition, if you solicit new distributors, you are responsible for the claims you make about a distributor's earnings potential. Be sure to represent the opportunity honestly and avoid making unrealistic promises. If those promises fall through, remember that you could be held liable.

Evaluating a Plan

The FTC suggests that you use common sense when evaluating a multilevel marketing opportunity and consider these tips as you make your decision:

  1. Avoid any plan that includes commissions for recruiting additional distributors. It may be an illegal pyramid.
  2. Beware of plans that ask new distributors to purchase expensive products and marketing materials. These plans may be pyramids in disguise.
  3. Be cautious of plans that claim you will make money through continued growth of your downline, that is, the number of distributors you recruit.
  4. Beware of plans that claim to sell miracle products or promise enormous earnings. Ask the promoter to substantiate claims.
  5. Beware of shills - "decoy" references paid by a plan's promoter to lie about their earnings through the plan.
  6. Don't pay or sign any contracts in an "opportunity meeting" or any other pressure-filled situation. Insist on taking your time to think over your decision. Talk it over with a family member, friend, accountant or lawyer.
  7. Do your homework! Check with your local Better Business Bureau and state Attorney General about any plan you're considering - especially when the claims about the product or your potential earnings seem too good to be true.
  8. Remember that no matter how good a product and how solid a multilevel marketing plan may be, you'll need to invest sweat equity as well as dollars for your investment to pay off.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.


So, once again, my article was simply a warning to consumers to beware. It was not an article telling which MLM plans were not PYRAMID schemes. If you are involved in a company that is legit, more power to you. I truly wish you luck and great success.

I hope you are not offended by anything I wrote here. Please don't take it as a hammer on your business. I have not done any research on Watkins. I would however take a close look to see how many representatives there are for Watkins as a way of judging how far along the company is.

An easy way to do that is with the following search:

If you look at those search results you will see the following on the right side of the Google Search page on the search date of 09-28-2008:
"Results 1 - 10 of about 41,100 from"

Keep in mind, that most of these pages are separate distributors.

If most of your selling is online, it is going to be extremely hard to compete with 41,000 distributors. The reason for this is that every single distributor has the same exact pages for the most part. Search engines will not display each distributors' pages because it is considered spam from the search engine standpoint.

Also, keep in mind, if you are going to use Pay Per Click advertising; look to see how competitive this area is.

There are over a hundred advertisers for just the keyword "Watkins" at the time this article was first published. The cost on the PPC for each click is extremely high.

I hope you find this information helpful.

Best regards,

Get Your Business Found Online Today

PS — Watkins Online is only used as an example provided by our reader. This "More On Multilevel Marketing" article is not an endorsement of Watkins, nor is it in opposition to the Watkins business plan.


The Reader wrote back:

Thank you for your in depth response. Yes, that is the article. What bothered me is that, IMHO the article is not "balanced". There is too much emphasis on the schemes and scams and not enough information about what makes a legitimate company.

As to this comment:
"Furthermore, because it is multi-level, everyone down the line (typically) pays a percentage of their costs to the people above them."

My downline does not pay a percentage of their costs to me. They are paid by the company in accordance with the company pay plan. The pay plan is designed to reward those who do the work. So I may sponsor someone who builds a bigger business than mine and they would get paid more. The "top of my line" has been in business since my company went MLM but my income is more than hers because she does very little. So I find your statement misleading.

The article just struck a nerve with me. I have many, many friends who run an MLM business from home. They sell, sponsor, take legitimate tax deductions for their home & car. They are ordinary people, not scammers or Ponzi schemers. (Actually the government is the biggest Ponzi schemer with their Social Security. LOL)

I'm just looking for balance.



Affiliates of XLPharmacy Beware!

Rx PrescriptionSubject: Canadian Pharmacies, Discount Pharmacies, Online Drug Stores, Canadian Discount Pharmacy

Message from ML, one of our readers about online prescription drug companies:

Website - Affiliate of XL Pharmacy.

What would be the cost of getting to page 1 or 2 of the major search engines using 24-30 keywords? How long would it take?

Reply: We need some other information before we can give a quote. We need the list of keywords you would like to target. And, the website you mentioned that you own does not seem to be functioning right now. So, we can't tell what you already have on the website because I get an error when I go to it. How many pages from the website do you currently have with information? Who is your target audience?

Also, when I look at it with Google Search of the index of web pages, it looks like all the pages you have and XLPharmacy web pages are the same.

From ML: You are so kind to get back to me. Long story short, I spent a lot of money on a campaign such as the one I described with a company that I am pretty sure now is defrauding its customers. I was trying to determine whether the info they were feeding me about the campaign would jibe with that from another advertising company. When I started asking questions, they put me off, and now my affiliate website has apparently disappeared. I suppose the next step would be to report this to some law enforcement agency. Things like this must be damaging to the image of everyone in the field of internet advertising. Is there a professional association to which I could also report my experience and which might suggest appropriate actions to remedy my situation? If you are moved to make any suggestions of your own, of course they would be most welcome!


PS This has been a rough experience, but I don't believe it would have happened if I had asked the right questions from the beginning. I haven't given up on the concept of internet advertising. Perhaps we can do business sometime.

Thanks again

Reply: Here is a place to start:

B2B legal, ethics, regulatory b2c ethical, Internet Businesses e-commerce legal issues articles and help can be found at the Internet Fraud Complaint Center, which has information about the various topics as well as filing a complaint.

Additionally, here is an article about an Internet advertising scam that is going on online, bilking thousands of dollars from businesses.

The company is using various names: Search Elevators, Link Positions, Window Billboards Network, Winspeed Network, Real Positions Network, Keywords Guru, and even a new search engine labeled RedZee Search. Read more: Advertising Scam - Search Engine Data Merging.

Getting to the top of the search results for your keywords and keyword phrases on the top search engines; Google, Yahoo!, and Microsoft Live Search takes lots of effort, time, and quality links back to the website. There are no shortcuts to doing the proper website optimization. Unethical people will promise you the world. Read some warnings from Google about webmaster guidelines.

Here are a few articles I wrote that I think you might find informative about SEO - search engine optimization (website optimization):
SEO School
What is SEO
SEO Overview

When you can provide more information about your business, let me know.

From ML: Wow,

You have gone the extra mile. There is so much I don't know about doing business online and I foolishly believed I could take a shortcut and hire someone to be the expert and take their word on how things work in the internet ad world. I will contact the complaint center and read your articles. As to my business, it was an affiliate website which I now believe to be operated by the same people who were supposed to be doing the SEO campaign. That it has suddenly disappeared from the web is not a good sign! However, perhaps I will have a website to promote in the future and then we can discuss key words. I plan to educate myself quite a bit more before diving in again. I know there are dozens, maybe hundreds of "experts" out there trying to sell their internet marketing courses, for quite a range of price points, but have no idea whether any are valid. My next step will be to go offline, to the bookstore, and see what I can find there. Again, if you do not feel imposed on I would welcome any suggestions you may have on the subject of gaining an education sufficient to prevent my getting killed like that again.

Many thanks!!


Well, the website is back after I called the company to inform them it had disappeared. I don't know the number of pages on the site but there is an online pharmacy plus three other stores, selling herbal remedies, pet meds, and food supplements. So I guess the target audience would be anyone looking to save money on these types of products. I have no clue as to how to choose keywords; the company offering the ad campaign selected them for me. there were about a dozen pertaining to the pharmacy store and the rest divided among the other stores. Since the pharmacy is the one that provides the largest commission, i think these keywords are the most important. The ones they gave me were things like "online pharmacy store", "affordable generics", "brand name medications", "reliable online medicine store", "buy prescriptions online", "trusted pharmacy source", 'order pet rx", "great savings on rx", "all natural solutions", "minerals nutrients""pet medicine", and so forth.

Sorry, I don't know what it means that all the pages are the same.

The person who says he designed the campaign claimed the site was being submitted to 132 search engines, including all of the major ones, with thirty key words, and that the optimization process would put my site on page one or two by the end of three months. In addition, there is a banner ad campaign consisting of 30,000 banners spread out over twelve months. The 90 days were up at the end of January and not a single sale has been recorded. They made very attractive claims about how this was going to produce big results, but so far there is nothing. The combined cost of the SEO and banner ads was just shy of $10,000.

Your thoughts?


Reply: First thought. You probably are competing with other people like yourself for being an XLPharmacy affiliate. Interesting business plan they have. Very unethical. Think about it.

It sounds like they set you up with a website. They promise you the world. They spend your money on some type of search engine optimization, (the same that they do for every website that sells for them). There is probably something in the fine print that says there are no guarantees on how this business plan will perform. Then, if you are lucky, they get advertising dollars and spend on the same ads as everyone else. They probably keep most of the money and not advertise very much if any at all.

Take a look at this Google Search term for the main sentence on your website:
We are among the leaders in providing health care products and medication at substantial savings. We uphold the fundamental belief that people should

Note: The Google Search results are just the tip of the iceberg.
Expand your results to include all the websites with those words and you will see a startling site.

1 - 10 of about 91,800 for the following words: We are among the leaders in providing health care products and medication at substantial savings . We uphold the fundamental belief that people should ...

So now, lets do a search for the following in quotes: "We uphold the fundamental belief that people should have access to affordable medication." Expand the results to include the other pages. See Google Search near the lower portion of the page to expand the results. "In order to show you the most relevant results, we have omitted some entries very similar to the 8 already displayed.
If you like, you can repeat the search with the omitted results included."

Look at those results for that sentence. Approx. 2,100 websites have the same line.

Now think about how any of those websites are going to be able to stand out in the search engine results pages. With so many websites with the exact same information, the search engines view it as spam.

Sorry for the bad news...

Now, add it up for XLPharmacy. 2,100 websites X $10,000.00 = $21,000,000.00

Wow, what a SCAM!

From ML Yikes! exactly what I was afraid of. I have an appointment to talk to a customer service person on the phone tomorrow at 11am. You were right about the fine print of course. I don't know how you found all that info about how many websites there are but if you are right which I believe you are, then by definition there never was a chance for my site to be 'optimized", was there? The contract calls for optimization. If I can show breach of contract perhaps that would give me some leverage? Do you think there is anything to go on? Do you have any suggestions as to what questions I should ask this guy? I am going to report this to the association you told me about first thing in the morning.

Thanks so much for your input.

I can't thank you enough for your valuable info and tips. Of course I know getting the money back would be a very long shot, but I guess I have to do whatever I can and at least try and shut them down if they are criminals. I have access to a law firm through prepaid legal. Would you allow me to share our correspondence with them? Of course I would not do that without your permission.

In any case I will definitely keep you posted and I thank you for your interest.

Again, many thanks

Reply:That is OK.

By-the-way, I found this affiliates of XLPharmacy ripoff report online:

From ML: Thanks for your permission! This ripoff report was filed in July. Think how many of us there must be! It's a very small consolation, but it feels better knowing there are others. I would imagine that sites like this would be monitored by some law enforcement agency. So why haven't they been shut down already? Seems strange, don't you think?.

Thanks again!

A word of warning for both the affiliates and the consumer. When dealing with Canadian pharmacies online and buying prescriptions or affiliate selling of discount prescription drugs, be sure you know who you are dealing with.

Find out more about internet ethics and ethical business marketing and advertising today.


Internet Explorer and the Malware Alarm

I got tired of fighting a virus problem with Internet Explorer 6.0 on my Wife's computer. This was after using all types of Spybot Search and Destroy, Ad-Aware, and registry checkers/repair programs; these on top of the McAfee Security Center software that was installed on the computer to begin with.

Nothing was able to find and discover the source of the virus. I did find long file names that I could not delete or rename, but then I discovered a software program (not sure which one it was now) that allowed long file names to be deleted. I ended up deleting the software because it was only a 15 day trial period. Note: be careful which sites you download software from. Many of these are bad bad sites. Suggest using McAfee SiteAdvisor to view search results with a red, green, or yellow dot indicating which sites can be trusted, before downloading anything. I suspected that most if not all of these file names in the temporary folders was the cause of the problem. However, they may have been a part of the problem, but even after deleting the files, it did not fix the issue. The last resort was to upgrade my Wife's computer operating system and do a complete new install of Windows XP Home Edition for her which by-the-way XP and Vista have IE 7. I didn't want to go the Vista upgrade route for reasons of stability and sanity.

Here is the issue I was having in which I simply could not track down the malware program that was attached to IE 6, and just by browsing around to various different web sites, would cause a scan of the computer to be started from IE 6 itself; showing us we had an infection on her computer, or pop up other windows trying to prove to us that there was a virus infection. Then if you clicked on the scan button it would install more spyware and malware on the computer. Even the x close box in the pop-up, pop-under, and pop-in windows seemed to be triggering other items in the computer system. If you have a program that you are unsure about, I suggest using the right click of the mouse at the top bar of the pop up window and select close from the mouse menu, to close these types of windows. This seems to be the only way to actually close them completely without doing other damage.

Now, the malware alarm scam is quite the reverse logic in how they approach the unsuspecting person, in that they want to sell you software to fix the installed malware. But, the clicks that you make on this program are actually installing other programs to do more dastardly computer deeds. This is the malware alarm malware scam. Talk about an ingenious evil alarm. Man, if these folks would put half the effort into good software program development, that they put the time into programming for their evil purposes, we would be a lot better off as a society.

Note: While the Malware Alarm scam does exist, I have often been a conspiracy theorist in this area online, and wondered about the whole antivirus vs virus makers, in that maybe some of the big guys that create the antivirus software, are possibly the same people that create the viruses too. So there is a kind of dig a hole mentality to convince others that the hole needs to be filled and paid to be filled. And then, what about the the big software developer of the operating system(s)? At what point does a developer say to themselves, we are no longer going to support the maintenance and software upgrades necessary to fight the viruses or other spyware programs that are directly affecting their browser explorers? Aren't they in effect making it that we will all have to upgrade our operating systems, to go to the latest versions of Internet Explorer browsers? What if this type of virus or malware program only attaches itself to IE 6 but not IE 7? And remember, IE 7 is only available with Windows XP or above. Yes I know that all things wear out, or new technology comes along that requires upgrading, but isn't there a dollar motive (to sell new operating systems) for not maintaining old legacy software and making it so that the software programs need to be installed on newer operating systems?

OK, but you say we can simply use a different browser for going online. Well, that is only partially true. Internet Explorer is required by some programs to be used for updating software, logging on to a website, or designed to only work with Internet Explorer. Microsoft Windows Operating Systems themselves require Internet Explorer to do updates. There is no such thing as a Microsoft Windows operating system without Internet Explorer built in to the foundation of the operating system. Yes you can use Firefox, Opera, Flock, Safari, SeaMonkey, and others to browse the Internet. But, no matter what, if you have a Microsoft Windows Operating System, you will be coming back to Internet Explorer at sometime, for something, and that is when they will they will make their catch. I also believe that the 2000 trial of United States vs. Microsoft did not go far enough in breaking the direct tie between IE and Windows Operating Systems. To this day, it appears that nothing has changed, even though under the settlement IE and Windows were to be separate divisions at Microsoft. I don't believe anyone at that time envisioned what the driving forces would be online.

United States vs. Microsoft

United States v. Microsoft, 87 F. Supp. 2d 30 (D.D.C. 2000) was a set of consolidated civil actions filed against Microsoft Corporation on May 18, 1998 by the United States Department of Justice (DOJ) and twenty U.S. states. Joel I. Klein was the lead prosecutor. The plaintiffs alleged that Microsoft abused monopoly power in its handling of operating system sales and web browser sales. The issue central to the case was whether Microsoft was allowed to bundle its flagship Internet Explorer (IE) web browser software with its Microsoft Windows operating system. Bundling them together is alleged to have been responsible for Microsoft's victory in the browser wars as every Windows user had a copy of Internet Explorer. It was further alleged that this unfairly restricted the market for competing web browsers (such as Netscape Navigator or Opera) that were slow to download over a modem or had to be purchased at a store. Underlying these disputes were questions over whether Microsoft altered or manipulated its application programming interfaces (APIs) to favor Internet Explorer over third party web browsers, Microsoft's conduct in forming restrictive licensing agreements with OEM computer manufacturers, and Microsoft's intent in its course of conduct.

My personal opinion is there is more going on here than meets the eye.

The dissenting states regarded the settlement as merely a slap on the wrist. Industry pundit Robert X. Cringely believes a breakup is not possible, and that "now the only way Microsoft can die is by suicide." Andrew Chin, an antitrust law professor at the University of North Carolina at Chapel Hill who assisted Judge Jackson in drafting the findings of fact, wrote that the settlement gave Microsoft "a special antitrust immunity to license Windows and other 'platform software' under contractual terms that destroy freedom of competition."

Freedom of Competition

There are many things that can destroy freedom of competition online. Keeping Internet Explorer so tightly linked to the Windows Operating System happens to be the number one reason in my book. Yes, these are my opinions but they are also the opinions of many others too.

As far as the settlement is concerned, nothing has changed at all.

On November 2, 2001, the DOJ reached an agreement with Microsoft to settle the case. The proposed settlement required Microsoft to share its application programming interfaces with third-party companies and appoint a panel of three people who will have full access to Microsoft's systems, records, and source code for five years in order to ensure compliance. However, the DOJ did not require Microsoft to change any of its code nor prevent Microsoft from tying other software with Windows in the future. Wikipedia

So, look at where we are today. Do you see any difference?

Anyways, these are a just a few of my thoughts.

Jim Warholic
Professional Web Services, Inc.

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