MLM – For Friend or Foe – Business Ethics Essay

MLM – For Friend or Foe – Business Ethics Essay
At some point in life everyone is exposed to the seedy world of multi-level marketing, or MLM for short. There is always that friend looking to demonstrate the fabulous world of Cutco Cutlery or the Mary Kay lady who is always having a party. But what is one’s cost for signing up to be a distributor for these companies, and are you ever able to enjoy the blatantly materialistic life that is offered to you by getting on board?

The legality of either a pyramid scheme or a MLM program is not really the question. The real issue resides in the moral and ethically questionable behavior that is encouraged by the founders of these organizations. Greed is used as bait for those looking to get rich quick. This unbridled greed simply makes for bad judgment.

MLMs seduce their members into putting aside their own values to promote the blatant values of the company. All of these scams involve meetings to motivate the representative into pressuring their friends and family into hearing the pitch. For years the classic Cutco opening line has been “Oh, I am not trying to sell you anything. I am just very new to direct sales and would love a chance to practice my presentation.” Who can say no to their struggling friend or family member who is asking for a chance to practice their sales skills on you? Furthermore this demonstrates the level of manipulation that is involved in learning the craft of MLM.

The flip-side of these peer pressure ridden motivational meetings is that all other areas of an MLM are extremely loose and flexible. However, because these organizations have such a loose structure there is too much room for both misinformation and product claims that are simply not true. So why would a reputable company want to have such room for abuse associated with their name? One could argue that an MLM is simply a machine for exploiting personal friendships and family relationships for corporate gain.

MLMs have their own unique sales techniques that often involve slander, rumors, defamation, and of course “studies” done by unknown scientists that backup all of these outrageous claims. The most publicly known case of slander was in 1991 when Procter and Gamble filed charges against the Amway Corporation and some of its distributors. Amway was found guilty for spreading rumors to the effect that P&G, maker of familiar household products such as Mr. Clean and Tide laundry detergent, is affiliated with the Church of Satan. Even though P&G won the case, these rumors are still alive in Amway folklore.

Another ethically questionable practice by MLMs is the worship-like behavior seen towards the founders of these organizations. The manner in which these people are depicted in their corporate materials almost portrays them in the same light as our founding fathers. These iconic images attempt to express the ideals most often associated with those individuals who have gained success through hard, honest work. It is easy to swoon in admiration of such powerful and visionary people dedicated to bringing these wonderful opportunities to the common American. Perhaps though, it is just an elaborate smoke and mirrors trick created to motivate the down line.

In most cultures throughout the world it is believed that misleading people in order to get their money is morally wrong. Pyramid schemes are illegal because they are exploitative and dishonest. They exploit the most vulnerable, desperate, and ignorant people. But add a product to the pyramid scheme, call it an MLM, and people are willing to hear the sales pitch.

As a general rule when things are too good to be true, they generally are. A real friend would never ask you to compromise your ethical beliefs to make a profit.

This paper was used for a 300 Level Business Ethics course. I received a B+. This paper is only 2 pages double space and I just find it hard to explore all areas of an issue in 2 pages.