It really didn’t answer your questions. I’ll give it a go:
MLM is a short expression for “multi-level marketing.” In multi-level marketing, people are recruited into a sales structure that relies on recruiting to generate income. In other words, a portion of the sales generated by the people you recruit goes up the ladder to you and to those above you who are in the recruiting line to which you belong.
These are called “uplines” and “downlines.”
In order for MLM to be MLM, recruiting by participants must happen. There would be no uplines or downlines if the parent company was doing all the recruiting. Most traditional businesses operate this way, and it’s one of the primary distinctions one can draw between MLM and traditional business models.
One of the major problems with the MLM model is that it adds expense to a product whether or not the person(s) being paid added any value to the transaction. If you are the 10th person in a line of sponsorship, everyone in that line gets a portion of any sale, even though they had nothing to do with the transaction.
This is also a major distinction between MLM and traditional business. In a traditional business, every step a product takes from manufacturing to end sale is a “value added step.” The manufacturing is (obviously) necessary, the transportation and handling of the product to get it to a distribution warehouse is necessary. The wholesaling and transportation of the product to a retail outlet is necessary, and the sale of the product to the customer is necessary.
Everyone who participates in each of these steps is adding value to the product, and (at least in theory) is paid for it. (I have a few issues with companies like WalMart for minimizing the pay of people who add value to their products.)
Now, to make an extremely long post a little shorter, you’ll NEVER feel like you’re in a cult if you are in one. The leaders give you reasons and illustrations that deny a cult-ish connection. When I was in MLM, they used to say, “Oh, you mean you’re in a cult if you do everything the leader tells you to do? Well, I’ll tell you, no one in MY forum does everything I tell them to do. So we can’t be a cult.”
That’s a smokescreen. Cults are not defined by “the members do everything the leader tell them to do.” It’s not a cult if you go about town with a glassy stare and chanting.
Cults are defined by control techniques, usually contrived to keep you involved in them:
If they strongly discourage contact with outside news or criticism about them, it might be a cult.
If they seek to discredit or mock critics and make a member feel guilty for criticizing the forum or considering quitting it, it might be a cult.
If they try to separate a member from family or friends, it might be a cult.
I think I’m starting to sound like Jeff Foxworthy, so I’ll stop here.
There are web sites that describe cults and organizations that come close to being cults. And some of those sites offer information about how to deal with exiting and cult or dealing with family members who are involved in them. Many of the traits that are described by experts on cults and cult-ish behavior can be found in motivational organizations associated with MLM.
Finally, let me be clear: Being involved in an MLM does not necessarily mean you are involved in a cult. It’s the methods the organizations use to get you involved and what they do to keep you involved that defines it.
With MLM, very few participants make money, and money is a huge motivator. If you are making money in MLM, you’ll stay in MLM. The existence of motivational organizations associated with MLM should be a clue about how much money you’re likely to make in MLM and how they’ll keep you involved if you’re not making money.
MLM may not be a cult, but it is often very cult-ish.
And one post-script: There must (MUST!!) be a definable product or service being retailed in order for any sales organization to be legitimate. Those sales must (MUST!!) be made to people who are not involved in the money-making side of the business. In other words, the customers cannot (CANNOT!) be purchasing products in order to meet quotas or to generate volume points. It must (MUST!!) be genuine retailing.
The movement of money through an organization without the presence of outside customers is a HUGE RED FLAG for a pyramid scheme.
Motivational organizations often sell books and audio products to participants, and these materials have no resale value outside the organization. It is these kinds of sales, and the frequent secrecy of the profits made in them, that are the basis of “pyramid scheme” accusations. That’s much of the reason you’ll find these materials being sold on eBay at a fraction of their original price. No value is you’re not involved.
Hope that helps.