From: reb@punch.EBay.Sun.COM (Bob Brown)
Newsgroups: alt.business.multi-level
Subject: Re: Jilted/Cheating in an MLM
Date: 13 Apr 92 17:44:17 GMT
Organization: Systar Technologies, Inc.
NNTP-Posting-Host: punch.ebay.sun.com
In-reply-to: barrypa@wam.umd.edu's message of 9 Apr 92 16:19:39 GMT



> The one thing to hurt any litigiment MLM is a distributor.  

True, but then without distributors, there is no company.

>   How did these people become bankrupt? Why were they so angry about
>   the company?  Why did they have a garage full of product?  

Let's see, a garage full of products... bankrupt?  Hmmm, sounds like a
program that encourages front loading and that the company doesn't buy
back unwanted products. A sure sign for not getting involved in that
MLM.

>   What I am supposing happened, by what the 
>   jilted sponsors said in the interview, was that to cheat/bypass the market
>   plan, they just charged all the products on their credit card for 4 full
>   months to reach the executive level, in hopes that in the next few months
>   they will get their return back.

Charged all the products?! That's a big mistake. There could be lots
of problems--- the distributor is at risk for all the products, the
company is at risk because it increases it's facilities, capability,
etc. on a false reading--- namely that products are moving when they
really are stacking up in garages.

>  I feel that this situation can probably occur in any MLM, there
>  most likely can be found loop-holes to achieve high levels by cheating
>  through the marketing plan.  It is very important that in this decade, 
>  all distributors practice sound & safe business practices in their program.

IMHO, this occurs in companies who have marketing plans that
PERMANENTLY place you at the "executive level" once you meet the
criteria. For example, if you move (often read "buy") $5,000 worth
of product for N consecutive months, you are at the super duper
fantastic level and the company always and forever pays you at that
bonus level. This encourages you to get there right away by any means.
In a company that requires you to maintain that level to be paid at
that level, you're not encouraged to buy high levels of products for
the sake of reaching that level because it doesn't gain you anything.

If by "Buying in" you can reach a certain level, there can be some severe
repercussions.

	1) It encourages front loading.
	2) It makes "leaders" out of people who can buy their way in rather
	   than earn it.
	3) It allows people to show big short term checks early on, but
	   falls apart later.
	4) It encourages the short term view.
	5) It encourages debt.


>  I began to think that this could happen to any MLM.  

Distributors can screw a lot of things up. I know, I did. An important
thing to have in any company is 1) A distributor association that has
some say in how the company operates and 2) a code of ethics that
define what is and is not allowed so that the company and/or the
distributor know what can be expected.

Distributors can and have been removed from MLMs for not following
the rules--- that is reasonable. Distributors at very high levels can
be removed too--- and have been for KNOWINGLY, after being warned, 
to stop some certain activity, and then blatently continuing. Never
believe your own press clippings!


--
--Bob
Systar Technologies, Inc.		   Sun: robert.brown@EBay.Sun.COM
1712 Picasso Avenue, #B & #C            Office: reb@systar.com
Davis, California  95616		 Phone: (916) 753 - 2611