Perhaps you’ve received a message or seen a Facebook status about opportunities with companies like Wake Up Now or Vector Marketing. Maybe you’ve even been recruited to a presentation about WorldVentures with the promise of free pizza (who could pass that up?!). If you felt confused or suspicious after claims of working your own hours, taking extravagant vacations, and making $15/hour or more, let’s clear that up.
Multi-level marketing is a networking strategy in which IBO’s (Independent Business Owners), also known as the salespeople, are compensated not only for the products they sell, but also for the sales of those they recruit, referred to as the recruiter’s downline. This means that the person who signed you up can make more than you, hence the term ‘multi-level.’ Multi-level marketing, sometimes called pyramid selling, is completely legal and its business model is similar to a pyramid scheme, which is illegal, with a few differences. Pyramid schemes rely on sign-up fees from new recruiters rather than compensation from selling a product. This model is unsustainable because eventually it will become impossible for those at the bottom to make any money (or get their sign-up fee back).
Do Your Research
It is possible to make money working for a multi-level marketing company. If you care more about flexibility and/or developing work experience than making a guaranteed salary, do your research and decide if it’s for you. In addition to conducting the necessary Google search, sites like GlassDoor provide reviews on companies by their employees. The Better Business Bureau helps consumers and potential employees identify trustworthy companies and sets standards for ethical business behavior. Consider checking if the company is Better Business Bureau accredited and read the BBB’s report on why. Also keep in mind that public companies legally have to publish Income Disclosure Statements and checking up on these might give you a better idea of how much you could make. For example, in 2013, 54% of Wake Up Now IBO’s made $0 on average a year.
On a similar note, using these research tactics can also help you when working for or donating to a charity or non-profit. Sites such as Charity Navigator evaluate non-profits based on how much they actually invest in their stated cause versus how much is spent on overhead such as CEO’s salaries.
Align Your Values
Many companies are notorious for using the bait-and-switch method by recruiting candidates based on promises of $14/hour but then telling you in the interview that this could be based on performance/commission. If a company reveals terms like these during an interview, decide if you can trust them and how important transparency is to you. On the other hand, if autonomy and flexibility are important to you, the right opportunity may be a good fit.
Be Prepared to Answer Questions
If you choose to be affiliated with one of these companies, be prepared to answer questions about it in a future job interview. Understand that an employer might have heard something negative so it’s your job to explain why you took the position and what you gained from it.
While multi-level marketing companies are legal, know the signs when you are actually being scammed. If a company sends you a check before you fill out any official tax documents (W-4 and I-9 in particular) there’s a good chance it’s a scam and they’re actually just phishing for information from your financial accounts. Mystery Shopping positions with promises of being able to buy and keep products as well as ridiculous compensation are also common scams, as talked about in an earlier blog post. Remember to never to give out information such as your credit card number, bank account information, or social security number early in the search process or via phone or email. Organizations can legally ask for your social security number as part of a formal application process, and will need it if you are hired. All jobs, no matter where you find them, need to be investigated, and ultimately, it’s a matter of personal opinion as to what’s “right” for you. Don’t forget, you can always call or email NAU Career Development if you’re unsure of a position and need a second opinion.