Article one of a five-part series

Have you ever wondered about those annoying followers you get on Twitter promising to whiten your teeth for free, make you rich in the Trump network, or help you attract thousands of followers?  I’ve been curious about these folks and how they could possibly make money off these spurious claims.

So, I figured if I was wondering, you might be wondering too.   Over the next few blog posts, I’ll try to lift the veil of mystery surrounding these business models. To understand many of these scams, you need to start with the basics of …

Multi-Level Marketing (MLM)

First let me be clear that there are many successful and legitimate “real-world” MLM businesses like Mary Kay, Discovery Toys, and Pampered Chef.  These business models rely on independent distributors to sell directly to their friends and families. The distributors profit from the sale of real products and from commissions for recruiting new distributors — so the more “levels,” the more profitable they are.

However, Internet MLM schemes seldom rely on the sale of a physical product or legitmate service.  Instead, the Twitter-variety MLM’s primary objective is to recruit new members, with revenue generated from the start-up and “maintenance” costs paid by new members to take part in this “can’t miss” route to riches.  The MLM pyramid scheme takes your money and then uses you to recruit other suckers distributors to send their money.

Does it work?  Obviously data on a shadowy industry like MLM is difficult to obtain, but an article from wikipedia.org opines:

“The vast majority of MLM’s are recruiting MLM’s, in which participants must recruit aggressively to profit. Based on available data from the companies themselves, the loss rate for recruiting MLM’s is approximately 99.9%; i.e., 99.9% of participants lose money after subtracting all expenses, including purchases from the company.”

Telltale signs of an MLM pyramid scheme:

1) Requirement to “invest” a large amount of money up front to become a distributor.

2) Upfront costs to buy “inventory.”

3) No mention of an actual product or service.

4) Plan designed so that you make money by recruiting new members rather than through your own sales efforts.

Another difference between these web-based pyramid schemes and the traditional Mary Kay-style MLM is that a great deal of it has become automated, which accounts for the sheer volume of annoying tweets we suffer through.   The automation tools (or “bots”)  they employ make it easier to spread their links more quickly.

In fact, there are lots of websites and even huge conventions dedicated to helping these MLM spammers find new spam-generating automation tricks for clicks.

And here’s a surprise …

People actually do click on the links.  URL services like bit.ly allow you to track the clicks of links hosted there, and if you take a look at any one of these spam messages, people are actually clicking on them. Whether they make appeals to the rough economic times or high unemployment, teeth whitening, weight loss, or whatever, there are lots of people who click, even if you and I wouldn’t.

Like you, I get strange Twitter followers almost daily wanting me to sign up for EXTREME WEALTH!  In an effort to provide a balanced report, I contacted more than a dozen of these MLM marketers for their perspective, but none of them responded to my requests.

Part 2 of this series on Twitter’s Biggest Scams:   The teeth whiteners

Part 3: Building wealth through Twitter follower lists

Part 4: The Trump Network

Part 5: What to do about Twitter scams

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