With the announcement of Betsy DeVos as President-elect Donald Trump’s choice for education secretary, the nearly multiple billion dollar, 60-year-old, direct-selling giant Amway also made news. DeVos is the daughter-in-law of Amway cofounder and billionaire Richard DeVos.
And while Amway is likely the best known direct-sales distribution operation, doing business in more than 100 countries, it now has lots of competition.
In 2015 approximately 1 in 7 U.S. households included someone involved in a direct-sales business, also known as multilevel marketing (MLM), according to surveys. Some MLM companies have even become household names like Tupperware, Mary Kay or Pampered Chef. AdvoCare, Avon, doTerra, Juice Plus+, Rodan + Fields, Scentsy and Young Living are just a few other examples of the dozens of MLM companies in existence.
Reasons for participating in MLM businesses range from supporting a hobby to being able to purchase products at a major discount to having a more flexible work schedule. In many cases MLM opportunities are a way for those in bivocational ministry to supplement their income.
“I am able to serve smaller churches that can’t support a full-time salary for their pastor by serving as a distributor for Plexus,” said Tommy Strickland, pastor of Ridgeview Baptist Church, Talladega. “It helps me support my family while also living out my ministry calling. However, I always want to be careful not to cross any ethical lines related to my business and my ministry. I think that is something anyone in ministry working with direct sales must be aware of.”
Selling at church
According to Thom S. Rainer, president and CEO of LifeWay Christian Resources, “fellow church members should not be seen as targets for MLM and sales.”
In podcast episode No. 270 on thomrainer.com, Rainer addressed the question of MLM in churches and the best course of action for leaders and congregants.
“If you’re using the church for a purpose other than that which it was intended, then it shouldn’t be done,” Rainer said. “If you’re going to church just to sell products then you just don’t need to go to that church. And if someone is abusing that in your church, have someone confront them about it.”
Podcast host Jonathan Howe added, “So we’re not saying people shouldn’t be selling Mary Kay or whatever, just don’t use the church as your primary base for sales.”
In a thegospelcoalition.org article, Courtney Reissig said she has a family friend who had been in MLM for years. As the woman recruited her daughters and they began their own MLM careers, the mother “encouraged them to keep the local church separate from their business.”
Appropriate boundaries
“This can be a real struggle when your customer base is your church directory.” Reissig wrote. “The makeup consultant can view her Bible study friends as potential clients, bringing samples every week.
“But these scenarios replace the local church gathering with personal agendas. The church is for the people of God to gather together around the preached Word, prayer and the sacraments.
“It’s where we leave our agendas at the door and gather together as one body to worship the risen Christ.”
According to Reissig, MLM can be a form of ministry if used appropriately.
If you look at MLM as the world looks at work it will become “all about you and your business. … But it doesn’t have to be,” she wrote. “Our work is about God’s glory and our neighbor’s good.”
If you look at an MLM business as a way to help your neighbor, then “caring for the people who work underneath you and above you also is a way to love your neighbor,” she wrote.
If you’re a part of an MLM team, make sure “your work is benefitting the people you sell to and the people you sell with.”
Still before you sign up with any company, double check the legitimacy of the company itself. If you make money based on sales to the public, it is probably legitimate. If, however, you make money based on the number of recruits you make and/or your sales to them, the MLM is probably an illegal pyramid scheme (see story below).
Some legitimate MLM companies also require sellers to buy inventory, pay a monthly fee or meet sale quotas, according to christianitytoday.com.
According to consumer.ftc.gov, here are some steps to take when looking at MLMs:
1) Consider the products.
“Are there similar products on the market? Are they competitively priced? Are they safe? Be sure your marketing materials are truthful and that there’s solid evidence to back up the claims you make about the products. Before you repeat claims the company has made verify that there’s competent and reliable research to back them up.”
2) Learn more about the company.
“Find and study the company’s track record. How long have they been in business? Do they have a positive reputation for customer satisfaction? Has the company been sued for deceptive business practices?”
3) Evaluate the plan.
“Don’t pay or sign a contract in an ‘opportunity meeting.’ Take your time to make your decisions. Ask for the compensation structure, potential expenses, support for claims about how much money you can make, the name and contact of someone at the company who can answer your questions, etc. Get this info in writing. Keep in mind that when you recruit new distributors, you’re responsible for the claims you make about how much money they can earn. Be honest and realistic.”
4) Ask questions.
“Ask other distributors tough questions and dig for details. Their responses can help you detect false claims about the money you make and whether the business is a pyramid scheme. What are your annual sales of the product? How much product did you sell to distributors? What percentage of your sales was made to distributors? What were your expenses last year? How much money did you make last year? How much time did you spend last year on the business? How long have you been in the business? How long did it take before you started making money?”
If you’re considering investing in a direct sales company, also known as multilevel marketing (MLM), make sure you understand the ins and outs of the specific company that has your interest.
Not all MLMs are legitimate companies. If you make money based on sales to the public, it is probably legitimate. If, however, you make money based on the number of recruits you make and/or your sales to them, the MLM is probably an illegal pyramid scheme.
Pyramid schemes are often disguised as simple business strategies that start with one person who recruits a second person who then is required to invest a certain amount in the company, paid to the initial recruiter. The plan eventually falls apart when there is no one left to recruit and the cycle cannot sustain itself — causing people to eventually lose their money.
Be aware of ‘lies’
As far as legitimate MLM business models, they do allow a person to transition into a business owner role much easier and cheaper than opening a brick and mortar company. But there are some “lies” to be aware of in almost every MLM network, according to Robert FitzPatrick, co-author of “False Profits: Seeking Financial and Spiritual Deliverance in Multi-Level Marketing and Pyramid Schemes.”
Lie No. 1: Success in MLM is easy.
“Friends and relatives are natural prospects. Those who love and support you will become your lifetime customers.”
Truth: “The commercialization of family and friendship relations or the use of ‘warm leads’ which is required in the MLM marketing program is a destructive element in the community and very unhealthy for individuals involved,” FitzPatrick wrote. “Capitalizing on family ties and loyalties of friendships in order to build a business can … place stress on relationships. … Beyond its destructive social aspects, experience shows that few people enjoy or appreciate being solicited by friends and relatives to buy products.”
And for some Christians, the church seems like the perfect storehouse of friends and family, or in MLM terms, prospective customers.
Lie No. 2: You can do MLM in your spare time.
“As a business it offers the greatest flexibility and personal freedom of time. A few hours a week can earn a significant supplemental income.”
Truth: “Decades of experience involving millions of people have proven that making money in MLM requires extraordinary time commitment as well as considerable personal willingess, persistence and deception,” according to FitzPatrick. “Beyond the sheer hard work and special aptitude required, the business model inherently consumes more areas of one’s life and greater segments of time.”
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