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How to leave an MLM

Have doubts about the network marketing gig you invested in? Here's how to get out of an MLM.

Maybe you initially signed on to a multi-level marketing company to help a friend smash the goals of her fledgling makeup business. Or perhaps you watched a well-meaning loved one fall prey to the promise of passive income from network marketing.

When you’re ready to quit your MLM, put that time and tenacity your upline preached toward leaving the multilevel marketing pressure behind.

How to get out of an MLM

Popular MLMs work within an atmosphere of familial exclusivity. They use self-empowerment jargon, make pseudoscientific claims and “play by rules” designed to draw you in—and keep outsiders at bay.

Dubious MLMs rely on steadily increasing conditioning and coercion techniques that keep you recruiting, marketing and believing success is just around the corner. If you aren’t successful, you’re told it’s because you haven’t faithfully followed the company’s foolproof system.

This isn’t proof that you’re a fool. Rather, you’re a victim of successful, deceptive business practices constructed to part you with your money and keep commissions flowing upward.

When you’ve had enough, move forward on all fronts:

  • Cut ties to your upline. Remove yourself from group chats, shut down your social accounts and ignore texts to avoid the guilt, blame or pressure from those who directly benefit if you stay.
  • Unload your products. Take advantage of buyback or return policies. Put out the word that you’re selling off stock at a discount. And cancel any automatic shipments you signed up for.
  • Reach out to loved ones. You may have pushed away friends and family as you drew deeper into your MLM. But you’re going to need support as you pull back. Reconnect, explain your situation and apologize if necessary.
  • Be honest with your downline. You can decide how much to reveal about your decision. A simple apology with the promise to explain at an appropriate time is a good start.
  • Breathe and let go. You’re not at fault for failing to reach the 6 figures your upline claims they make. The majority of MLM businesses are set up for failure.

If you’re concerned about the conduct of a specific multilevel marketing company or think you’ve been scammed, consider filing a complaint with the RCMP.

How to get a friend or family member to leave their MLM

It will be hard to convince your loved one to walk away from a project they’ve put so much time and energy into. Especially with an upline insisting that one more recruit, one more order or one more month is all that separates them from financial success.

You may be able to help without pushing them away. But it takes starting and keeping a conversation going without cuing the defense mechanisms we depend on in uncomfortable situations.

  • Resist confrontation. MLMs play heavily on emotions. Rather than criticize, approach with kindness, listen openly—and leave your research at home.
  • Focus on support. Start by talking about their family. Reminisce about life before their MLM. Work up to gentle questions about their financial goals and progress.
  • Delicately educate. Propose a simple cashflow statement that highlights how much they’ve put in. Ask how they’ll handle sales taxes this year. Simple questions can be eye-opening.
  • Don’t expect it to work. At least not right away. You’ll need to invest more than one chat to break the spell of the network-marketing mind games.
  • Avoid their tactics. Resist buying the products they’re shilling or don’t join their downlines, no matter how much you love them.

What does it cost to leave an MLM?

MLMs build up their distributors to feel like they’re an irreplaceable member of the company. But the people who sell MLM products are like any other customer.

Typically, your costs end with your last order, though your MLM could charge a one-time inactivity fee.

You may have racked up debt to buy stock, meet quotas or attend conferences or training. If you need help paying off MLM-related debt, consider consolidating your debt with a loan or getting a low interest personal loan. A personal loan can give you a little financial breathing room, even if you have bad credit.

After you stop selling and promoting MLM products or services, wait out the probationary period. Ignore any upline pressure to meet your sales quota or keep your downline position and rewards. When you fail to reactivate, you’re eventually terminated as a distributor.

What is an MLM company?

What does MLM mean? Multi-level marketing companies, or MLMs, follow a business strategy built around independent distributors who sell a product or service.

When you join an MLM, you become the “downline” to the person or team that recruited you, helping your “upline” to earn a percentage of your profits each time you make a sale. With most MLMs, you’re aggressively encouraged to meet sales quotas or sign on your own recruits to keep money flowing up the chain.

MLM companies range from the seemingly innocuous Mary Kay and Pampered Chef, to controversial health companies like Young Living, DoTerra and the contentious Amway.

How much you earn for your upline depends on your MLM’s compensation plan that’s often tiered by a distributor’s status. These plans can be difficult to understand, but most concentrate commissions, bonuses and profits among top-tier distributors — the people who got in early. The only way to move up the ranks is to recruit other distributors under you.

MLM companies tend to change up their terminology to avoid the reputation of “multilevel marketing.” Look for variations of terms like:

  • Direct sales
  • Network marketing
  • Referral marketing
  • Consumer direct marketing
  • Referral-based income

How to identify an MLM

MLMs generally market themselves as small businesses looking for enterprising entrepreneurs. Newcomers to the market have gotten so good, you may not even be aware you’ve joined one.

Many of the top multilevel marketing companies embrace one or more common elements:

  • A cryptic “opportunity.” If you’re contacted by a recruiter who’s unwilling to tell you more without a phone call or in-person meetup, it could be an MLM.
  • Multiple fees. Every nonrefundable joining, startup, distributor, marketing, website and status fee keeps money coursing up the line. So does the threat of losing your status with inadequate sales.
  • Ongoing purchases for commissions. Be wary of companies requiring sales quotas, workshop attendance and costly tools to advance your revenue or move up the ranks.
  • Pricey products. MLMs legally differ from pyramid schemes because they’re built around selling a product. Typically, quality doesn’t make up for the expensive price tag that supports distributing commissions up the line.
  • Dangled incentives. Star-studded conventions, annual galas and periodic trinkets are designed to dazzle you away from unrealistic promises of wealth — and draw you deeper into the hype.
  • 5 or more distributor levels. The more levels, the more commission to your upline on each sale.

What is a “hun”?

The Internet’s noticed that distributors of MLM products tend to start their online sales pitches with “Hey, hun!” And so it’s used when poking fun at—or poking holes in—multilevel marketing schemes and the people who promote them.

Many MLM companies provide pitch scripts to their distributors designed to disarm and distract prospective recruits, no matter how tenuous the relationship. These impersonal pitches might include a word salad of “residual income,” “financial freedom” and “limited spots” on a team.

MLM vs. pyramid scheme

MLMs involve moving a product or service. This is what separates MLMs from Ponzi schemes or pyramid scheme companies. In Canada, operating a pyramid scheme is considered a criminal offense punishable by fines and/or imprisonment.

Both MLMs and pyramid schemes are business models built on tiered recruits. Many unethical MLMs tread a fine line by appearing to emphasize recruitment over sales, manipulating and putting pressure on distributors to recruit friends, family and coworkers. The rise of the Internet and social media has only expanded those pyramids.

But an MLM must focus on selling something—for example, essential oils, weight-loss patches or makeup. It must also allow distributors to sell these items directly to customers without requiring them to sign up as a distributor too.

Yes, MLMs are legal in Canada but must follow certain rules.

Canadian law prohibits multilevel marketing schemes from making claims about compensation without “fair, reasonable and timely” disclosure of the amount that program participants typically receive (Competition Act, Section 55).

The Canadian government has made an effort to distinguish between multilevel marketing and pyramid schemes through Section 55.1 of the Competition Act. According to this legislation, a multilevel marketing business may be found guilty of pyramid selling if it includes one or more of the following:

  • Compensation for recruitment
  • Participation based on required purchases
  • Inventory loading (buying an excessive amount of products to participate in, or benefit from, a program)
  • A lack of a buy-back guarantee on reasonable commercial terms

What are the risks of multilevel marketing?

The primary risk of an MLM is the inability to recover your initial investment or sustain a real income—the very promises that prompt people to sign up in the first place.

Most MLMs employ tactics that all but guarantee you’ll sink more and more money into a limping business:

  • The lower your tier, the weaker your potential. No matter when you sign on, you’re the downline to people who got in earlier—and earn stronger commissions and benefits.
  • Sales quotas. You’re under a constant threat of losing commissions and rewards if you fail to sell enough product. Monthly or quarterly quotas can tempt distributors to buy the “stock” required to stay active.
  • Market saturation. The key to MLMs is recruitment. But by signing on your friends and family, you’re no longer the only game in town. No matter how much you earn from a new recruit, you’ll work harder to meet your own revenue goals.
  • Pressure to #bossbabe. The relentless strain of aggressive pressure on you to sell and recruit can wear you down. Especially when you’ve got an upline insisting you’re just not working hard enough.
  • Outright manipulation. Independent studies focused on MLMs reveal that nearly all depend on deceptive recruitment backed by misrepresenting how much a participant is likely to earn.
  • False or misleading claims. Think twice if an MLM hypes its “natural” products as alternative medicine. Recent lawsuits suggest these exaggerations can harm the friends and family you sell to. And your contract may render you responsible for liability.
  • Affinity marketing. MLMs rely on network marketing beyond the Internet. They can financially and emotionally exploit the needs of military wives, churchgoers, stay-at-home moms and vulnerable low-income populations lured in by the promise of money and independence.

Is multilevel marketing worth it?

It’s tempting to label all MLMs a scam. But if you’re not looking to make a full-time income and are content with getting a discount on the makeup, diet shakes or home scents you already use, becoming a distributor may be worth it to you.

Still, these products aren’t often known for their quality, despite company claims. You can find similar, less expensive alternatives free of the convoluted commission schemes, continuous pressures to perform and little chance of sustainable income that’s typical of many MLMs.

Unless you’re at the top of the chain, you’re likely better off at your local retailer.

Bottom line

Getting out of multilevel marketing companies can be more difficult than getting in. But MLM distributors aren’t much different from the average customer. Quit your MLM completely, reach out for support and don’t look back as you shake off the dust.

Want to learn more about ways to start earning extra? Check out the following guides to compare options for growing your money.

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Written by

Kellye Guinan

Kellye Guinan is a freelance editor and writer, specializing in consumer lending. Her writing and analysis has been featured on Bankrate, MSN and MediaFeed. She holds degrees in anthropology and German language and literature from Middle Tennessee State University. See full profile

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