Recent high school and college graduates have found it harder to obtain the same level of success that generations prior have. Higher education costs have skyrocketed since the late 60s and the cost of living increased without adjusting to inflation.
As a result, more people participate in the student loan debt crisis. Moreover, they graduate to an unstable, competitive job market with lower wages relative to previous generations.
This creates the perfect storm for programs that claim participants can take a short-cut to financial liberation. One specific entity that falls within this realm is multi-level marketing, or MLM, as it is known.
MLMs are direct sales operations in which an individual sells a good or service on behalf of the business. On the surface, they operate in direct-sales, often with a tangible product such as fitness products, leggings, herbal supplements, etc.
However, the real money maker for most MLMs is through recruitment. Typically, there is some sort of fee associated with joining, which is often pitched as an investment.
The person recruiting you will make a commission from recruiting you, and the person that recruited them will take a cut of that commission as well. This process can differ between MLMs, but the most common method is that the recruitment commission gets split all the way to the top of the MLM hierarchy, whereby the people or person at the top will always have this income so long as the operation continues. This is also bolstered by whatever product the MLM is selling.
MLMs use a variety of compensation plans, but the most typical are binary and matrix. Binary plans require that members recruit and sponsor two new recruits to join.
The sponsor is responsible for the people directly below them and they can be seen as the sponsor’s left and right leg. Any additional recruits from one sponsor is considered spill, and carries over to the next line of the binary.
In a matrix plan, the structure is similar, however, the sponsorship and limits are different. Whereas binary plans can build indefinitely, matrices are fixed in their growth. Also, you report to multiple sponsors as opposed to the one directly above you.
MLMs often take advantage of people in unstable financial situations that do not have a solid career foundation. Therefore, many target recent college graduates struggling to find employment.
They post vague ads on employment search engines such as Indeed and Glassdoor under the guise of other industries such as public relations, event planning and marketing. Many use ambassadors on social media, posting pictures and videos in lavish hotels with expensive items, to lure people into the idea that their involvement can bring them immediate wealth.
When I spoke with Kelsie McDaniels, who does short-term trades on the foreign exchange market, or Forex, she said that she does this as a way of earning a decent income. She learned about Forex trading when she was working at LA Fitness, and trades with some of her friends and said she brings home a little over half her income with Forex trading.
“It’s there 24 hours a day, so, like I said you’re not waiting on a paycheck to come. I do most of my trades at night. So, I put them in before I go to sleep and I’ll wake up and about four, five, or six [o’clock] in the morning and check or close them out if I’m happy with them. Then I don’t have to trade for the rest of the day,” she said.
While there may be some individuals like McDaniels who can turn a profit from Forex trading, there are many others who use the assumed lucrativeness of Forex trading as a way to get into the pockets of others.
As McDaniels said she trades privately with her peers and paid an upfront cost of $225 and pays $165 monthly to retain access to the mentorship and educational resources, she also adds that there isn’t any real benefit to recruiting.
However, dozens of forex companies popping up expect you to recruit. IMarketsLive is one of these and they pitch the idea that any regular schmuck can make it on their lunch-break.
This is a classic bait-and-switch, one that IML does by immediately changing their primary goal from mentoring members to using them for recruitment. On top of the cost, $200 upfront and $170 a month, you are expected to not only trade and profit for your personal investments, but also to add members into their pyramid.
One glance at the Better Business Bureau page for IML will show a slew of complaints claiming users were not reimbursed their upfront costs (which the website clearly says is refundable before the end of a seven day period), as well as claims of the company encouraging members to overstate the score with positive feedback. This, and the fact that the headquarters is listed at a non-specific address in New York, New York, should be immediate red flags to anyone interested.
Others that profit from quick income seekers are signal sellers. These are individuals who promise access to their secrets by selling varying memberships. Tradwithbruce.com is a website that promotes one of two packages costing $150 and $300, respectively (and offer no refund, of course).
Coincidentally, Facebook is the only contact information provided by Bruce Webb, owner of Tradewithbruce, on the website. I requested access to his private Facebook trading group, Constant Forex Pips, which at the time of writing has 44,446 members.
Pip is short for points in percentage, which are changes in the comparative values of two currencies.
This group’s content has the same few prominent members promoting access to Webb’s highest tier package and singing the praises of the benefits and how much said individual had made by using its benefits.
There is nothing illegal about signal selling in this way. The problem is that this information is available for free through various resources. Also, signal sellers typically only show their gains and rarely their losses to obfuscate their success rate.
As you can see, while some individuals can make legitimate earnings from forex trading, there are more people that use the complexity of forex trading to confuse quick income seekers and those that find themselves in underprivileged financial situations into getting involved with get-rich-quick schemes.
It is important that individuals maintain a critical eye and remain skeptical of financial opportunities that seem too good to be true.