Is MLM a Scam Like a Chain Letter?
A chain letter may appear like MLM because one person is sending a letter and making money off each person that comes in later – but MLM is not a chain letter.
Chain Letter Scheme
An illegal scheme whereby someone writes a letter that attempts to induce the recipient to make a number of copies of the letter and then pass them on to one or more new recipients. To participate in the chain letter, recipients must send money to the sender of the letter. What makes this an illegal scam and not MLM is there is no real product or service offered to a consumer.
In a recent chain letter case brought before the Federal Trade Commission the document stated, “The FTC alleged the scheme is an illegal chain-letter; that the earnings claims were false; and that most participants would fail to make any money.”
The below graphic was taken from a STATE lottery web page. The text below the graphic read: “Players now have 4 chances per week to become a millionaire!” I don’t know about you, but I would call that an earnings claim. It’s also proven that most people who put in their money will “fail to make any money.”
In addition, I’m finding it difficult to figure out where the “real” product is in lotteries – or in gambling, for that matter.
What was most fascinating were these two statements from the FTC’s web site concerning “foreign” lotteries:
- “If you play a foreign lottery, you’re violating federal law.” I think it’s obvious the government is after money for themselves – the only difference between state and foreign lotteries is that the US government can’t benefit financially from foreign lotteries.
- “There are no secret systems for winning foreign lotteries. Your chances of winning more than the cost of your tickets are slim to none.”
Wow – can you believe that statement? Like the “chances” are any better in the USA!
MLM is not a chain letter and chain letters rarely use MLM to deploy their scams. But to the uneducated a chain letter can look like an MLM scam because one person is sending a letter to another, who would in turn send it to another, and each person “could” make money. This activity is illegal and unethical because there’s not a product that makes anyone’s life better.
See What is MLM? to differentiate between a chain letter and MLM.
Recommended next page: The History of MLM.
About the Author
Tim’s experience in building his own downline of 56,000 network marketers helped him develop his signature training series. A public relations ambassador for the network marketing industry, Tim has also dedicated his time to debunking the false information spread about the network marketing industry.