A friend of mine (originally my personal trainer, I don't see him any more, but we keep in contact) is caught up in a MLM scheme. This is a well known scheme and there is a lot of info out there about why it is bad, and the vast majority of people who get involved will either make nothing, or lose money from it.

From the outside it he appears to be having a good time with it. He goes on regular "conference trips" (almost certainly self-funded) and he seems to be enjoying being part of the community. But I've got no idea if things are working out for him. I'm concerned he might be pouring money into nothing, and even worse struggling to get by because of it. The scheme does a great job of convincing you that you have to put in the "investment" then you'll start reaping the benefits, something that I know really appeals to his independent, hard-working ethic.

I want to warn him about this scheme and show him that in all probability his hard work will come to nothing, but I really don't know how to even approach it. He's not a close friend, but he's a nice guy and I don't want to turn things sour. I know I could just say nothing and let him be, but that doesn't feel right.

How can I enlighten him without ruining the friendship? I want him to at least have some idea of what's going on, even if he chooses to keep pursuing it.

closed as too broad by Arwen Undómiel, Mister Positive, A J, JAD, Tinkeringbell Dec 7 '17 at 14:58

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  • Is your friend aware that this is a multi-level marketing scheme, or what such a scheme is, in general? – HDE 226868 Dec 7 '17 at 4:39
  • @HDE226868 most likely not – Phill Dec 7 '17 at 4:58
  • 1
    This already has an answer here and here on MoneySE. – JAD Dec 7 '17 at 8:09
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    @ArwenUndómiel meta: Are questions that lack a location tag really too broad? – Em C Dec 7 '17 at 14:26
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    What @EmC said. How does adding a location to this question help anything? – Jess K. Dec 7 '17 at 14:37

These schemes are always revising their image so they seem like something new. Perhaps showing him some research on similar schemes would help? If you directly attack what he is doing now then he might take it personally. He needs to come to the realisation himself - you can only put the information in front of him and let him make his own choices. Showing him research from the past or other schemes might make him realise this is nothing new - companies have been making similar empty promises for decades.

While there are people and schemes out there trying to rip you off, from my personal experience with 'pyramid schemes' as they are sometimes known I don't perceive too much personal risk. They promise people they can get rich off them, but only the people at the top of the scheme get rich. Those at the bottom don't so much lose money, they just earn nothing or next-to-nothing. I'm not saying your friend isn't getting ripped off, I'm just suggesting that you may be worrying too much. If he's just selling stuff from a catalogue and taking a commission then there isn't too much outlay; all he may be wasting is his time, a bit of fuel in his car and whatever he's payed out for these 'seminars'. The worry is, as you say, if he is investing serious money into this.

Has he tried to recruit you? A question you might ask him is:

If this scheme is so good, should I do it too?

Here's my experience with this: I got a phone call out of the blue from an old junior school friend I hadn't heard from in 20 years. This is a kid I played with when I was 10 years old - we hadn't stayed in touch through high school or beyond, we were barely acquaintances. He told me that he had a 'business proposition' for me, but wouldn't say over the phone what it was. Reluctantly I said he could come and see me. Twenty minutes later he turned up in a suit with a massive fake grin and an exaggerated handshake; he then tried to sign me up to selling 'Amway' products - one of the oldest and well known pyramid schemes. I asked him why, if this scheme was so good, was he trying to sell it to someone he hadn't spoken to in 20 years? If he believed it was so good, why not sell it to his close friends and family? If it was so safe, why can't you sell it to a complete stranger in the street?

And that's the point - the reason they try to sell it to people they 'kinda know' is because it is part of the confidence trick - turn up 20 years later in a smart suit and look like you've been amazingly successful. Of course they won't call it a 'confidence trick' at the seminars your friend is attending - they will call it 'networking', encouraging them to reach out to the wider network of people they already know beyond their immediate family and close friends.

This is just my experience - there will be countless more online. Read up a bit and through questions like the one above try and get him to reason this out himself.

Hope this information helps you.

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