When Market Declines, Hire More Sales People?

Economic Recessions always produce new scams. They also expose existing ones.

For example, the current Recession exposed Bernard Madoff’s Wall Street Ponzi. Many of Madoff’s investors suddenly needed cash when their real estate and stock market investments sank. When they asked to withdraw their money Madoff could not do it because he had already transferred their funds to earlier investors or used it himself. He could no longer hide his fraud so he confessed. Investors lost $50 billion when his fund collapsed.

It was the Recession that exposed Madoff’s scam. Government regulators were not even investigating him and the media had not raised a serious question.

In the case of multi-level marketing (MLM), the Recession is both spawning new MLM scams, e.g., Donald Trump’s new scheme, and exposing the fraudulence of
existing schemes.

The revelation of MLM fraud, which the Recession provides, is this:
As the markets shrink and fewer people buy goods, MLMs are ramping up recruitment of salespeople! Here is proof positive that MLMs make money off the recruits themselves, not from their “sales.” The Recession reduces the ability of MLM recruits to sell, but increases the ability of MLMs to recruit salespeople. More people are unemployed and desperate – perfect candidates for recruiting to invest in the MLM “income opportunity.” Of course, they will not be able to sell products, but the market for MLM recruits (who are destined to lose) has increased.