Why are MLM Internet Malls a Scam

I found this old article that was written by
Len Clemmons around 1996, Yes that is
14 years ago.

————————

Why Are Internet Malls A Scam?

Everyone wants to cash in on the Internet explosion
and the rapid growth of e-commerce on the web.
Every week some 20 year old opens a new Internet
company with an IPO on Wall Street and becomes a
billionaire overnight.

And Internet Malls look like a great opportunity
for the average person to participate in this
new financial frontier.

At first it was simply Internet “Discount Shopping Clubs”,
such as “Top Secrets” where you could become a
member for only $198, plus have the opportunity to sell
club memberships to others, as well!

The fact is, the only reason anyone bought the
membership was so they could have the right
to sell it to others. The “Discount Shopping Club”
was a virtually worthless commodity.

And now the network marketing fad is “Internet
Shopping Malls”. They are showing up on the Internet
at the rate of two or more a day, it seems.

BigSmart.com, KM.net, PriceNetMall, teamglobe.com,
SkyBizMall, PrimeBuyMall, and many, many more.

The people who start these malls make a lot of
money, because people unfamiliar with the Internet
really believe they are on the cusp of a great new
income opportunity.

And the first few levels in the downline make money,
too. This generates checks they can wave at their
new recruits and the MLM “get-rich-quick” fever
quickly spreads. This works well with any new and
different product and good honest hard-working
people invest a lot of their time, effort, money and
emotions into promoting their new Internet “business”.

First came the subscription web sites offering links to
other people’s “free stuff”, producing MLM’s pyramid
schemes such as “Free4U Online”, “thewwwlink.com”,
“FreeMart Online”, and “YourFreeMall”.

All scams… All failing.

And now “Internet Malls” are the MLM “sizzle” gimmick.
So are these malls a genuine business opportunity or
a potentially illegal MLM pyramid scheme and money
game?

Here are parameters posted by the FTC:

“Multilevel marketing plans, also known as “network”
or “matrix” marketing, are a way of selling goods or
services through distributors. These plans typically
promise that if you sign up as a distributor, you will
receive commissions — for both your sales of the
plan’s goods or services and those of other people
you recruit to join the distributors.

Multilevel marketing plans usually promise to pay
commissions through two or more levels of recruits,
known as the distributor’s “downline.”

If a plan offers to pay commissions for recruiting
new distributors, watch out! Most states outlaw
this practice, which is known as “pyramiding.”

State laws against pyramiding say that a multilevel
marketing plan should only pay commissions for retail
sales of goods or services, not for recruiting new
distributors.

Why is pyramiding prohibited? Because plans
that pay commissions for recruiting new distributors
inevitably collapse when no new distributors can
be recruited. And when a plan collapses, most
people — except perhaps those at the very top
of the pyramid — lose their money.”

All of the above mentioned “malls”, “free stuff” web
sites and “SkyBiz” are smart enough to present their
opportunities in a way which dodges the FTC
definition. But take a look at the “product” they
are all selling-

Web sites – cyberspace – virtual reality – electrons…

The cost to self-replicate all of the web site design
including the personalization involved for each web
site business owner amounts to pennies. So if you buy
a “Tripod” from SkyBiz for $330 or three standard
BigSmart.com malls for $929.85, the money is almost
all pure profit.

There are better products available which offer more
for much less money in every case.

So the product itself has virtually no intrinsic value.

Are these products useful?

A few people will use their SkyBiz web sites for fun
and for posting pics of the kids so Gramma can see
them from across the country. But this could be
done elsewhere for free (with or without sponsor
advertising).

And will the Internet public shop at these individual
“Mall” web sites? No! Why does anyone believe
that Wal-Mart wants to see everyone in town own
their own Internet shopping mall? There is no
evidence that a need or demand exists for millions
of Internet shopping malls.

A product no one really needs, wants or asked for,
sold at an outrageous price, which is pure profit.

MLM pyramid scheme designers are clever enough
to use a phony product sold at a high price which
pays large “commissions” to new recruits. In fact
what is happening is that people are making
money by simply recruiting new people and being
paid from their investment in the new “business
opportunity” and nothing else.

Their only income is from an ever-expanding
network of new people being brought into this
shell game, until the largest leg and the lowest
level of the MLM pyramid collapses and the
whole game ends.

The people at the top get rich, the folks
in the upper levels do well, but the majority
of the people get burned.

But at least these people still have their
Internet Malls, right? They can make money
from commissions paid on mall sales, right?

Not likely in the first place. More importantly,
once the MLM expands as far as it can and
the money stops flowing, the owners will
vanish to an island in the Caribbean, the
ISP will turn off the servers, and the entire
Internet Mall community will vanish in an instant.

No malls, no refunds, no commissions.

Every bad MLM opportunity makes money
for the people who start it. And where
does that money come from? From the
thousands of people who do not research
these companies and their products before
investing their hard-earned money into
them.

The Internet Mall fad will pass – and the
sooner the better!

NOTE FROM DALE

I find it interesting that in the last few months
this business model has been tweaked with
very low paying affiliate programs and and
gained popularity again.

As we have talked about many times.

The Attraction marketing affiliate promoters
of today are the “mail audio tapes” network
marketers from 25 years ago.

Not following me?

Ok, let me see if I can locate another old article
that will put this in more perspective from my
friend John Milton Fogg …

I FOUND IT HERE IT IS ….

Start of Article (Keep in mind this was
written over 20 years ago)

Prosperous Prospecting Alone Does Not a
Successful Networker Make

John Milton Fogg

The new generation of mass-action prospecting
has me concerned for two reasons:

First, many of its proponents seem to be saying
the old “warm market” person-to-person approach
is dead, or should be, and that the “so-called”
experts that advocate same are killing Network
Marketing.

Second, I am witnessing an exponentially grown
group of once-upon-a-time distributors who were
persuaded to get into the business at the eyes or
ears of someone’s book or tape blitz. But now
they are out of business, because they were never
trained to do anything more than mail me a cassette.

SIDENOTE (Today you could say run google adwords
join safelist program, or join every social media site)

DO NOT, please, get me wrong – prospecting with
tape cassettes (or books) is a great innovation –
proven, positive and powerful. Upline writes, records
and sells lots of them, so you know we are all for them.

What I am not all for is the promiscuous prospecting of
hundreds and thousands of “leads” without the prerequisite
training and support that keeps those who take the plunge
in, growing their businesses and continuing to succeed.

And I predict that some companies and some distributors
are going to crash when the prospecting merry-go-round
is forced to go around all by itself.

You send me your hot little 12 minute tape with a
personalized Post It (I have missed you, too.) Funky tape,
but something intrigues me. You call.

Did I listen? Yes, I did. Did I like? Sure. Will I give you
$50 to become a distributor, buy some initial inventory
(of tapes and more tapes ) and send them to all 8,205
people on my Christmas card list without pre-qualifying
them? (Hilary who?) Sure.

Now what? In less than six months, I have an
exploding Network of Tapers: ordinary men and women
who have mastered the extraordinary prospecting-by-tape
system pioneered by a technologically-handcuffed
Ed McMahon.

Successful prospecting alone does not a Network Marketer
make. The tapes are probably the best way in the world
to get people interested and into the business because they
so simple and duplicatable. But unless your prospecting
success is followed by teaching the knowledge of Network
Marketing business-building and people skills, it’s a
short-term, get-rich-quick , pyramid scheme where a
few make money at the cost of the many.

A business built on sand.

It takes more than sending out tapes and faxing-back
signed applications to make your Network Marketing
business last – much more.

-Reprinted with permission from Upline Magazine
800-800-6349.

NOTE FROM DALE

Is it me or the similarities between this and MLM Training
Pro whatever affiliate systems the same model, just
25 years later?

The tape mailers of 25 years ago, sound like the
“Attraction Marketers” of today. Blah Blah Blah,
Warm market is dead, blah blah blah, proven local lead
generating systems are dead.

You need to be mailing tapes, I mean doing it all
on the Internet.

I apologize, I realize this post has gone in a different
direction than I had originally planed, anyway ….

Here is what you really need to understand.

A generated lead is a generated lead.

It doesn’t matter if they respond to a Google
Adwords add or picked up a Drop card at your
local CVS drugstore.

The failure rate of people is NOT GOING to change.

The people that were misguided 25 years ago and
thought mailing tapes was the answer had the same
mentality of the do it all online networkers of today.

As most of you know I have over 100 websites in
various niches. I buy expired domains weekly.

You would be shocked at how many domain names
like:

LeadSystemsProGold (I actually saw that one this
week, I would have bought it but it was getting no
traffic LOL)

Attraction marketing that, MLM Coach I am,
Online MLM Pro whatever domains are expiring
every day.

Now think about it, look behind the curtain.

What does this tell you?

Exactly! People bought into the you can do it all
online BS and then failed miserably.

70% of the population will die and not even be
able to pay for their own funeral. You are not
going to change that, I am not going to change
that and neither will any “Secret System” your
upline doesn’t want you to know about.

GEEEEEEEEEZZZZZZZZZZZ

I better stop now, but if you want more thoughts
on this subject you can check out this post:
http://hubpages.com/hub/Attraction-Marketing-is-it-BS

UPDATED 9/12/2015

This article was originally written several years ago and as an industry we have continued to make the same mistakes over and over.  In network marketing your work STARTS after someone joins your team. It is not just about getting them in, IT IS ABOUT KEEPING THEM IN AND HELPING THEM MOVE FORWARD!

 

 

 

 

 

 

 

www.7-Lies.com