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multi-level marketing (MLM) harassment

Multi-level marketing harassment is a form of economic harassment in the work place whereby a superior uses his or her power to recruit a subordinate into a multi-level marketing scheme. Like sexual harassment, MLM harassment can be subtle or blatant. The most blatant form would be using the direct threat of not hiring or promoting, or even firing someone for not agreeing to become an "independent" MLM agent. Of course, talented managers know many subtle ways to suggest to their subordinates that their success with the company depends upon their saying 'yes' to the boss.

One of the most successful MLM companies is Amway. The basic formula is simple. First, there is the "Company", which has a product or array of products. Second, there are the independent distributors who (a) sell the Company product and (b) recruit new distributors who do the same, ad infinitum if possible. The reason distributors don't just sell the Company product is that they receive "bonuses" for sales made by their recruits. Theoretically, the richest independent distributor would have dozens, hundreds, thousands, even millions of subordinate distributors who would be doing the actual selling, while the Big One did little or no selling of the Company product at all. That is, the emphasis of MLM schemes is not selling the Company product but selling the Company itself.

It should be obvious, then, that the Big Cheese of a non-MLM company could stand to reap substantial economic rewards from having a little army of "independent distributors" (read "coerced employees who will buy the MLM Company products and recruit others to do so). MLM infestation is inevitable in non-MLM bureaucracies. The main bait may be the promise of extra cash to the subordinate, but superiors (managers, purchasers, personnel officers, supervisors, etc.) are really interested in their own extra cash. Superiors who have bought into the Unimagined Wealth Dream of most MLM schemes will not have many scruples recruiting their subordinates. It is possible that the superiors may even deceive themselves into thinking that they are offering bona fide economic opportunities to their subordinates. It is also quite likely that many employees will not feel coerced but will buy into the Unimagined Wealth Dream themselves. (Just as some bosses may delude themselves into thinking that they are really offering an opportunity to an employee's sexual happiness when they make sexual advances to a subordinate. And, just as some people who are seduced by their bosses, end up marrying the boss.) These facts complicate matters, and may sometimes make it difficult to prove harassment occurred. After all, if you are agreeable, how can anyone say you were harassed?

But it is not just large, bureaucratic businesses which may see MLM harassment. Schools, for example, may also be prone to MLM harassment. In fact, anywhere there is a person who has power over others, the opportunity for MLM harassment emerges. Fear of not being hired or re-hired and fear of not being promoted or of being fired can be powerful incentives to get on board the MLM bandwagon.

As far as I know, there are no laws prohibiting superiors of non-MLM organizations from recruiting inferiors into MLM schemes. Nor are there laws for discriminating against someone solely because they did not want to join an MLM scheme. Thus, even if you could prove beyond a reasonable doubt that the only reason you were fired from your last job as a structural engineer was because you refused to become an Amway agent when asked to do so by your superior, you may have no recourse in a court of law.

Because of the potential for abuse of power, one would think that companies and organizations would as a standard rule prohibit MLM recruitment. But how many of us have worked at a place which has a policy against MLM harassment? Very few, I think. The exception, of course, would be if you work for one of the Armed Services. Our military organizations know quite well how easy it is for superior officers to take advantage of those who are their juniors. And they have rules which forbid such behavior. For example, you will find the following rule in the Code of Federal Regulations (32 CFR Sec. 721.6)

Standards of conduct governing naval personnel

(c) Using naval position. Naval personnel are prohibited from using their official positions to improperly induce, coerce, or in any other manner improperly influence any person to provide any benefit, financial or otherwise, to themselves or others....

(e) Commercial solicitations by naval personnel. To eliminate the appearance of coercion, intimidation, or pressure from rank, grade, or position, all naval personnel are prohibited from making commercial solicitations or sales to DOD [Department of Defense] personnel who are junior in pay grade, or position, at any time or place.

Commercial sales, whether or not solicited, are prohibited between officer and enlisted military personnel....

(1) This prohibition includes, but is not limited to, the solicitation and sale of insurance, stocks, mutual funds, real estate, and other commodities or goods.

In fact, naval personnel are forbidden to engage in outside employment, with or without compensation, if that employment is

inconsistent with the requirements of this instruction, including the requirement to avoid actions and situations which reasonably can be expected to create the appearance of a conflict of interest.

How many private corporations include such protection against abuse of power in their employees' manual?

It should be emphasized that MLM harassment goes way beyond the kind of intimidation one feels when the boss brings in her kid's school candy bars and asks you buy them for the Save the World Fund. The one-time only or the once-in-a-while extortion is small change--however inconvenient--compared to having to become an MLM agent. The difference is like the difference between having to go to Church on Christmas and having to join a cult.

See also Amway and multi-level marketing.

postscript: Thanks to Diogenes, whoever you are.


reader comments

further reading

book

Fitzpatrick, Robert L. and Joyce Reynolds. False Profits - Seeking Financial and Spiritual Deliverance in Multi-Level Marketing and Pyramid Schemes (Charlotte, N.C.: Herald Press, 1997). See my review of this book.

websites

What's Wrong With Multi-Level Marketing?

FTC - Multi-level Marketing Plans

FTC- The Bottom Line About Multilevel Marketing Plans

FTC - On Pyramid Schemes

FTC's Online Booklet: "Net Based Business Opportunities: Are Some Flop-portunities?"

MLM Survivors Home Page

The Mirage of Multilevel Marketing by Stephen Barrett, M.D.

Internet Fraud Watch

Steve Hassan on Amway Last updated 10-Feb-2011

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