TikTok Is Banning MLMs – Motherly
MLMs are no longer welcome at TikTok.
The company is the first social media platform to officially prohibit multilevel marketing programs.
If you’re not familiar, an MLM is one type of company that doesn’t pay its employees direct wages or benefits. Instead, they earn commissions by selling products and recruiting others to join the company.
Tupperware and knives sold generations past; Today it’s leggings, make-up and candles.
MLMs are controversial and no longer welcome at TikTok.
When the company updated its Community Guidelines this week, it added MLMs to the Fraud and Fraud section.
“We don’t allow anyone to use our platform to gain user trust and cause financial or personal damage,” the company’s website said. “We are removing content designed to mislead people into order to gain unlawful financial or personal gain, including measures designed to defraud individuals or steal assets.”
Users are cautioned not to upload content that “promotes ponzi, multilevel marketing, or pyramid schemes”.
What’s the Big Deal when it comes to MLMs?
Their business model is similar to pyramid schemes, which are often illegal because the compensation structure is unfair and predatory.
A pyramid business model enables participants to earn money only if they attract others to the program. You are promised a percentage of their commissions for every person you hire – and for everyone they bring in.
It’s lucrative for the people at the top. For the newest entrants, making money at all can be difficult.
Because MLMs can sell products and their subscribers can earn a commission through sales, MLMs are legal in the United States.
However, MLMs also typically make commissions through recruiting, such as B. Pyramid Systems.
And that’s why many feel predatory.
Imagine the following scenario:
Let’s say your neighbor Jane tells you about her latest investment in a legging MLM. She tells you how to work from home, set your own hours, be your own boss, and make a profit. Jane tells you that she can help you join MLM too. You can join their team!
When you join MLM, you will need to purchase hundreds, if not thousands of dollars worth of goods and training. But once you have your leggings you can be like Jane and set your own hours and make your own money!
So you do it. You make the financial investment, complete the training and join Jane’s team. Now all you have to do is sell the product. You reach your other neighbors, but they have already bought leggings from Jane. They reach out to friends and colleagues and make some sales. But nowhere near enough to get your investment back. What happens then?
Depending on the MLM, you usually get stuck with the goods. Officials within the organization may advise you to work harder or recruit other people so you can earn some of their commissions. But how can you ask other people to join this company when you’ve just lost money so far?
And that’s a very real possibility.
A survey found that 73 percent of people who participated in MLMs lost money or made no money at all.
The Federal Trade Commission released a report that estimated that over 99 percent of all individuals who join MLMs will not make a profit.
Is this why TikTok prohibits multi-level marketing?
TikTok users are young, so protecting teens and young adults from a naive investment could be imperative for the company.
TikTok’s parent company, ByteDance, is based in China, where it is against the law for a salesperson to receive a commission from someone they recruit for the company.
What effects will this ban have?
Multi-level marketing companies don’t go away.
MLMs are popular because they offer flexible work opportunities. They are an opportunity to stay home with your children and make money for your family while you set your own hours and goals. This is an attractive prerequisite, especially as unemployment rises and women are disproportionately pushed out of the workforce during the pandemic.
It’s just not very realistic.
Will TikTok’s Ban Affect How MLMs Recruit In America? We will see.
In the meantime, if you are considering joining a tiered marketing company to make some cash, we recommend doing your research.
There are women who have joined in their experiences and loved them. There are many who haven’t. Do your due diligence and research potential business opportunities.
If you want to work from home but aren’t sure where to start looking for a job, we’ve put together a list of side appearances for SAHMs here.
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