You mentioned that the Multi-Level Marketing scheme is unethical [during the evening service on 9 December 2001]. Could you explain your assertion?
I have actually been asked my opinion about Multi-Level Marketing (MLM) schemes a number of times but, because of ignorance, was never really able to answer it except to point to an article written by Dr. Eryl Davies in the Evangelical Times on the cultic practices of Amway. But I understand that there are hundreds of MLM companies today, and that most, in their bid to recruit distributors, will seek to distance themselves from Amway and will deny that they have anything to do with pyramid marketing schemes. I had thus kept happily silent and neutral on the issue.
But in recent days, it has come to my attention that these schemes (also known as “network” or “matrix” marketing) are getting more popular in Singapore even among Christians; and that in some churches and families, relationships have been strained because of involvement in the schemes. At the same time, I was also made more aware of the mechanics, dangers and ethical issues pertaining to these schemes. This was especially through an article that someone has kindly sent me entitled, “What’s Wrong with Multi-Level Marketing.” It is written by a Mr. Dean Van Druff and is posted athttp://www.vandruff.com/mlm.html. I don’t know anything else about the author, but in my opinion his arguments are basically sound. I had also spent some time reading some other articles on the subject on the Internet (there are plenty, and mostly critical), and am convinced that there are real problems with the MLM approach, and that Christians ought to be warned about any involvement in them.
Let me summarise some of my thoughts.
Foremost, I understand that MLM schemes are a way of selling some products through distributors. Typically a company begins with one or more persons recruiting a number of distributors to sell some products, and these in turn are encouraged to recruit (or sponsor, in MLM lingo) a number of next level distributors, and so on. How do these companies encourage individuals to sign up to be a distributor or to recruit others to be distributors? Well, typically, it is through monetary incentives. Pyramid schemes (outlawed in many countries) offer commissions for recruiting distributors, whereas other schemes offer commissions both for the sale of your goods and those of other distributors recruited by you, and possibly also those of the distributors recruited by your distributors, and so on. So, potentially, if you are persuasive and aggressive enough, and are able to recruit other persuasive and aggressive distributors, you can be earning a lot of money through commissions, so that in no time, you really do not have to work anymore, but simply wait for the commission to roll in. The MLM advocates call this “happy” state of affair, “financial independence.”
All these sound very good, but is it really advisable for a Christian to participate? I personally do not think so.
In the first place, despite the claims by most MLM distributors that they “believe in the product,” most are attracted to be distributors and sponsors not because they really want others to enjoy the benefits of the products, but because of the potentially great monetary benefits that could come of it. While it is legitimate for a believer to want to earn some supplementary income, any Christian thinking of venturing into MLM salesmanship ought to ask himself if his real motivation is greed, for it is quite well known that most MLMs recruit distributors through testimonials of success stories, which overtly excites covetousness. The Scripture teaches us that “godliness with contentment is great gain” (1 Tim 6:6) and that “the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows” (1 Tim 6:10). It is sad that many Christians only come to understand the gravity of Paul’s warning after they have immersed themselves fully into the schemes and find it hard to withdraw.
In the second place, many MLMs require a distributor to invest stocks of the products (at distributors’ price) before selling it himself. When he does so, his sponsor, and his sponsor’s sponsor and so on get various percentages of commissions. Often the distributor is encouraged to buy more with a money-back guarantee. But the fact is that very few distributors will actually return the stock if they do not succeed in selling them. With all the motivational videos and conferences, and pep talks, by their sponsors, anyone who wishes to back out and ask for a refund will feel like a loser and a failure in life. The result is that many MLM sponsors are actually earning commissions at the expense of the distributors below, who are in fact facing financial losses because of the “inventory” which they cannot sell. And the fact is that, because of the incentives to recruit more distributors, there is always a potential in every MLM to have an oversupply of distributors either as a whole or in some community, with the result that many distributors are bound to be unable to sell their inventory even if they have any salesmanship inclination. Thus, those who are earning “big money” in such MLMs will at some point be earning more commission from failing distributors than from successful distributors. Somehow this is akin to exploiting the poor (cf. Ps 12:5), and is unquestionably dishonest. This, of course, may not apply to every MLM, but any believer who intends to join an MLM must make a very careful study of the ethical questions that will inevitably arise from any scheme. And my advice is to avoid involvement if there is any doubt at all (Rom 14:23).
In the third place, while some of the products offered by MLMs appear to be very good, numerous market surveys have shown that comparable products can often be purchased at the retail shops at a fraction of the prices despite the claims made in some MLM brochures. This is no doubt because the pricing of MLM products must be designed in such a way as to support the many potential layers of distributors. Moreover, one wonders: if the MLM products are as good as they are claimed to be, then why are they not released into the open market where they can compete effectively and honestly with comparable products? Could it be that it is because the founders of the companies know that it would be hard for their products to penetrate the market, or that these products will only enjoy the favourable (value for money) reviews of those who have a stake at their success? Would this not explain why the largest of the MLMs has admitted that only 18% of their sales were made to non-distributors (see “The 10 Big Lies of Multi-Level Marketing” athttp://members.tripod.com/~nomorescams/fitzpatrick.htm). While it would not be wrong for Christians to purchase from an MLM distributor, a Christian distributor may be involving himself unknowingly in misleading others to purchase the MLM product and therefore breaking the Ninth Commandment.
In the fourth place, because of the pressure to sell and to recruit more distributors, those who join the MLMs will often find themselves spending all their spare time in pursuing after the promised dream that after some months they would be financially independent. A Christian who is deeply involved in an MLM will therefore likely find himself having very great difficulties to keep the Lord’s command to seek first the Kingdom of God and His righteousness (Mt 6:33).
In the fifth place, ex-MLMers have testified that after a while, due to the pressure they were facing, they began to view their colleagues and, yes, brethren in church and family members as potential customers and down-line distributors! And because of all the hype and the dream of earning big money, many who are involved in them can become blindly religious about what they are doing so that anyone who refuses to join them, or says anything negative about their MLM, or dares to suggest that they have been conned, are likely to be viewed with aversion. The result is that unhealthy relationship tensions often begin to surface in churches and other communities that are infected with the MLM craze. In fact, in some churches, as I understand, so many members are involved (sometimes the pastor himself or his wife is involved too!), that members begin to view themselves as in orout. Those who are in view those who are out as potential customers, whereas those who are out view those who are in with suspicion and, often, hurt and betrayal. The result is that schism creeps into the church body, and members no longer have the same care one for another (cf. 1 Cor 12:25).
I hate to talk about things I know very little about, and that are really outside my domain as a minister of the Gospel. And it is not my intention to influence anyone in regard to their product preferences (I know of some who are genuinely pleased with the products offered by some MLMs, but have prudently avoided being involved in distributing them). But I have heard so much and read so much warnings and stories about involvement in MLMs that I feel it necessary to warn the flock about the potential dangers and ethical issues involved in participating in the schemes. Dr. Eryl Davies is quite right to observe that many of the tactics used by Amway and other MLMs are akin to what is used by cult groups. He is also right in his observation (as I recall), that many who are caught up in the frenzy will find it very difficult to get out (just as it is hard to get out of cults). So I would urge you to avoid these schemes, or to leave them before it becomes too difficult to leave. Do not allow your conscience to be hardened by the deceitfulness of riches, but repent and flee lest you allow Satan a foothold to ensnare you further. The Lord Jesus admonishes us: “the children of this world are in their generation wiser than the children of light. And I say unto you, Make to yourselves friends of the mammon of unrighteousness; that, when ye fail, they may receive you into everlasting habitations” (Lk 16:8–9). How much greater eternal benefits will arise from a Christian MLMer, who would turn his efforts and shrewdness in winning customers and distributors, into winning souls for Christ?