No different than unsavvy people overinvesting in any other type of business.
In an MLM or franchise model, there's an organization there that can be blamed to make the unsuccessful person feel better and absolved of responsibility for the outcome, as if it were something that happened "to them". But for any other business from restaurants, to tech startups, to dry cleaners they have to confront it differently as something they did to themselves (though people will still tend to blame outside forces like the bank or the economy).
Not much different between the naïve person who gets all spun up and dumps $50k into MLM product they're convinced will just fly off their garage shelves, and the naïve person who decides to start a lawncare business and then go out and buy $150k of new equipment up front on loans and credit, without proving it out first. Once they both realize they're not really cut out for their respective ventures, they have to deal with years of collections a cash problems trying to dig their way out.
I had a very dear friend who's dad just lost their house trying to make a business out of a used book store in a major city. It was doomed from the start, as this guy had no business sense whatsoever. Most people like that aren't savvy enough or have the drive or wherewithal to go and start a business of their own creation, or even a franchise opportunity.
MLMs just make that a much lower barrier to entry for foolishness, unfortunately, and frankly for people who have no business going in to "business" at all (pun intended). The reality is it takes the same skillset and drive to be successful with an MLM that it does to be successful in any other type of business, and the same people who aren't cut out to make it in traditional businesses aren't cut out to make in in MLMs, but the one's who are, are. That's the harsh reality (true pyramid "schemes" notwithstanding).
I'm not defending MLMs, as I'm not a big fan of the direct selling models, but I am very familiar with them via friends and family involvement and consulting work. They're not outright fraudulent, they just make it too easy for unsavvy people (who would likely fail in any business venture) to over invest without their usual inhibitions, thinking that the road to success is already paved for them.
I'm just a believer in individual accountability and that people control their own densities, win or lose. Participation in a free market as a free people implies accepting risks and rewards based on individual decisions, choices, and performance. It's not the duty of society to child-proof the world so that nobody can ever lose or get hurt.
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Originally posted on Nov 24, 2021 at 2:22:31pm
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