We’ve all experienced it. That girl that we went to high school with 15 years ago sliding into our DMs with the overly familiar ‘Hi hun! How have you been? I’ve just started my own business and I think that you would be AMAZING at what I do! Would you like to know more? xxx‘ message, which seems super out of the blue considering that you guys NEVER EXCHANGED TWO WORDS WHEN YOU WERE AT SCHOOL TOGETHER.
Curious, and probably a bit befuddled, you go to their feed to see images of them boasting about how their new hair/skin/fitness regime has transformed their life, and how they are absolutely loving being a boss babe ‘business owner’ who is ‘working from their smartphone’ and living a lux life just by recommending ‘products that they already use’ to their family and friends.
It sounds amazing, right? We’ve all dreamed of travelling the world and running our own businesses from the beach as we sip piña coladas and rake in passive income.
It is this glittering image that multi-level marketing companies (also known as MLMs or network marketing companies) are selling, along with the promises that ‘anybody can do it’ and ‘running your own business is easy.’
Does all of that sound too good to be true?
Well that’s because it is.
However, it is sometimes difficult to get the facts from these notoriously vague ‘MLM huns’ (known as such because of their over-familiarity with people they barely know and excessive use of words like ‘hun,’ ‘babe’ and ‘chick.’). Because of this, I decided to put together a post designed to educate people about the realities of MLM schemes, to try and avoid more and more people being sucked in.
This post will define just what an MLM scheme is and why they are so bad, how MLM schemes differ from illegal pyramid schemes, how the worst MLM companies actually oppress women, and how they all employ shady cult tactics to recruit their victims.
It may seem a little off-topic considering this is a travel and human rights blog, but the way I see it, if a certain type of business is ruining friendships and relationships, causing people to incur huge amounts of debt and ensuring that less than 1% of employees ever achieve ‘success,’ (more on all of this later) then that is equivalent to labour exploitation and THAT, my friends, is a human rights issue.
Why MLM Companies Are the Absolute Worst
Anti-MLM Basics – What is an MLM scheme?
MLM stands for multi-level marketing, and these companies are also known as network marketing, direct sales or party plan companies (or, controversially – pyramid schemes).
MLM schemes have been around for years, and popular MLMs include Amway, Avon, Arbonne, Herbalife and even Tupperware! As of November 2018, more than 18 million Americans were involved in an MLM, and with the multi-level marketing industry as a whole generating a staggering $192 billion in 2018 alone, MLMs are not something that we can ignore.
Distributors in MLM schemes do not receive a salary, but instead earn money from selling products to people they know, also making commission from every person that they sign up to the company, as well as commission from the sales and recruits generated from THAT person, continuing down in multiple levels (hence multi-level). The people underneath you in an MLM are known as your ‘downline,’ and additional commission is earned from the initial ‘investment’ that everybody must make in order to join the MLM.
You see, in order to be part of an MLM, you first have to purchase their products in bulk as well as purchasing a training or starter kit. A Monat sales rep tried to get me to spend 299 USD to join her ‘tribe’ and be a Monat seller, but MLM startup costs can amount to thousands of dollars (Lularoe’s startup costs range from 5000-6000 USD – yes, you have to pay to work in an MLM).
Thus, if the person at the very top of an MLM scheme recruits 10 people, and each of those 10 people recruit another 10 people, and each one of those people recruit another 10 people, there is a lot of income trickling up to the top of the pyramid structure, and so the person at the top is making a lot of money, with the people at the bottom of the pyramid structure making the least amount of money.
The ultimate aim of somebody in an MLM scheme therefore, is to have as many people in their ‘downline’ as possible, enabling them to make large amounts of passive income for little work.
It is important to note that upon first reading, this may seem no different to a typical corporation in which the CEO makes the most money. However, in a legitimate company, the people below the CEO are guaranteed benefits and salaries, and do not depend on infinitely recruiting new members to the company. This is in stark contrast to the people in an MLM, of whom 99% actually lose money.
What Are the Worst MLM Companies?
All MLMs are bad, but some are worse than others. Below is a list of MLM schemes that have either faced lawsuits, are notorious for making people lose money, or are generally just shady (even for MLM standards).
The worst MLM companies include:
- LuLaRoe – sellers pay up to $6000 dollars to join this women’s leisure-wear company and receive bad quality clothes in prints they cannot choose. LuLaRoe is currently facing over a dozen lawsuits.
- Herbalife – the FTC mailed cheques to 350,000 people who lost money selling Herbalife products and ordered it to significantly restructure itself.
- Monat – haircare company plagued by lawsuits for making people’s hair fall out.
- Jeunesse – skincare MLM facing a billion dollar lawsuit for operating as a pyramid scheme.
- doTerra – essential oils company claiming its oils can cure almost anything. Sellers have been known to suggest that people turn away medical treatment in favour of using oils instead.
- Amway – has been investigated multiple times in many countries for pyramid scheme allegations.
- Younique – bad quality makeup sold by ‘makeup artists’ who have not had any training.
- Arbonne – very overpriced makeup and little chance of making money, this MLM scheme preys on women, with 75% of its consultants being female.
6 Reasons Why MLM Companies Are The Absolute Worst – The Anti-MLM Chronicles
1. 99% of People in an MLM Lose Money
Do people actually make money from MLM schemes?
Let’s start with the numbers, shall we? After studying 350 MLMs, the FTC found that 99% of people who join multi-level marketing companies lose money. This statistic does not just apply to the worst MLM companies. It applies to ALL MLMs.
That’s right. If you join an MLM scheme then you only have a 1% chance of not losing money. Not a 1% chance of getting rich. A 1% chance of not losing money.
The statistics available on the income disclosure statements of the MLM schemes themselves don’t seem to do much to contradict this. In Arbonne, 66% of ACTIVE consultants (read: those not in the 99% of people losing money) make an average of $839 per year – this meagre sum does not include expenses incurred by the consultants on buying the products in the first place or ‘promoting their business.’
In It Works! ‘distributors’ (accounting for 83.2% of the company) made an average of $47 a month, and ‘executives’ (accounting for 6.53% of the company) made an average of $223 per month.
I’ll repeat – I am not talking about the income disclosure statements from just the worst MLM companies. The numbers remain shockingly low across the board.
Of course, when you have a business model that involves actively recruiting your own competitors (resulting in an oversaturated market), no base pay and fees to join and participate, the only money to be made in an MLM scheme is at the top of the pyramid triangle, where your income depends on the failure of those beneath you.
Nice, huh?
2. MLMs Alienate You From Your Family and Friends
Being a network marketer means that you, by default, become annoying. With your only potential customers being your family, friends and social media followers, you have no choice but to endlessly bug those around you to buy your products.
We’ve all seen those girls on our friends lists whose entire feeds are aggressively promoting Monat shampoos or Arbonne face creams, and even the posts which are not explicitly selling products are promoting the MLM ‘boss babe’ lifestyle. I actually saw an Instagram Arbonne babe posing with her friend’s newborn baby with the caption ‘It’s days like today that I’m grateful I work for myself…I didn’t have to ask a “boss” if I could take the day off.’
Yep, that’s right. MLM huns are exploiting using their friends’ babies in order to recruit people to their downlines (if you think that the aforementioned caption was anything but clever marketing then you’re a dummy), and it doesn’t stop there. I’ve seen MLM gals use everything from their friends’ cancer diagnoses and deaths to terror attacks as an excuse to guilt-trip people into buying their products (not surprising why so many people are anti-MLM when you think about it).
As if all that isn’t doing enough to alienate MLM huns from their friends, MLM schemes actively encourage their distributors to cut ties with anybody that isn’t supportive, saying that they should just forget about what everybody else thinks, cut out the ‘haters’ and focus on living their best #girlboss life.
Anyone in an MLMer’s life who questions the pyramid scheme multi-level marketing scheme and whether their loved one is making the best decision in investing into it is dismissed as a ‘dream stealer,’ or someone who is ‘stuck’ in their 9 to 5 and ‘brainwashed by society.’
It may sound dramatic, but MLM destroys families.
3. MLMs Blame You For Not Succeeding
In a system that is totally stacked against you, where 99% of participants lose money and the vast majority of those that do make money do not meet the national minimum wage, people in MLM companies are trained to blame you, the victim, for failing in a system that is designed in a way that makes it statistically impossible to ‘win.’
Despite the initial promises of ‘you can get paid to post on Facebook,’ and ‘become a millionaire using your smartphone!’ that imply a ‘get rich quick’ deal, as soon as MLM participants begin to crack under the immense pressure from their uplines to recruit recruit recruit, they are told that ‘you just aren’t working hard enough,’ and ‘if you wanted it badly enough you’d try harder,’ and ‘you have to spend money to earn money.’
People that give up the ‘boss babe’ lifestyle, often in thousands of pounds worth of debt, are shunned by the MLM community and the ‘friends’ that they thought they had there. Told that they just ‘didn’t have what it takes’ and ‘weren’t meant for success,’ they are made to believe that it is down to some fault of their own that they are not swanning around on a yacht dripping in diamonds.
4. You Are an Unpaid Sales Rep, Not a Business Owner
One of my biggest MLM pet peeves, and one of the reasons why I am so anti-MLM is the fact that everybody in a multi-level marketing company seems to enjoy telling the world that they are a ‘business owner.’
No, honey.
You are an independent contractor. While this does not technically make you an employee of the company, it also does not make you a business owner. Come on now.
People working in MLM schemes do not get to choose the products they sell, how much they sell them for, what the returns/refund policies are, and the rate of commission that they receive from their downline. They do not get to create their own business strategies, change the company name, or anything else that you might expect a business owner to do.
Despite their cries to the contrary, people working in MLMs are kept on a very tight leash. Not only are they under constant pressure and scrutiny from their uplines to reach unrealistic targets every month, but their social media activity is closely monitored (with MLMers being required to post a certain number of things and cold-message a certain number of people every day), they are expected to attend online team meetings and webinars (all unpaid), ‘check in’ with their uplines (wait – I thought you didn’t have a boss?), and even do required reading of self-help books every day!
The idea that joining an MLM company can result in you being your ‘own boss’ is nothing more than a big fat lie. After all, if you really were your own boss then why would you be moving up the ‘ranking’ system? Why would your job title be ‘area manager’ or ‘product distributor’ rather than CEO?
You’re a sales rep. A sales rep that doesn’t get paid.
5. MLM Schemes Prey on Vulnerable People
A big reason to be anti-MLM is that MLMs prey on people who they see as being desperate. Stay-at-home moms, college students and military wives are often prime targets for MLM huns because they are often bored, eager to make money from home, and with broad social networks ripe for recruiting. Chronically ill people are also attractive to MLM recruiters because they can be told ‘hey – want to make an income while you’re too unwell for a regular job?’
Stay-at-home moms are especially vulnerable because they can simultaneously be guilt-tripped (‘don’t you wish you could financially contribute to the household?’) and have their loneliness taken advantage of. MLM recruiters know that new moms are often isolated and craving adult company, and so they promise to connect them with other moms and provide them with an entire community of supportive new ‘friends’ who understand exactly what they’re going through and will be there for them.
Other people that fall victim to unscrupulous multi-level marketing companies are undocumented migrant communities who are desperate for work and lacking the knowledge to properly understand what it is that they are getting into. The Netflix documentary Betting on Zero talks to several Latina families that lost their entire life’s savings to Herbalife after being told that it was impossible not to make big money in the company (Herbalife was later fined $200 million and ordered to ‘start operating legitimately.’)
It would be one thing to recruit vulnerable people if you were genuinely providing them with a great business opportunity, but when you KNOW that there is a near impossible chance of these people making any money (because you yourself are statistically not making any money and your recruits will make less than you) and proceed to encourage them to invest their last $200 into an MLM regardless, you are almost as bad as the dude sitting on top of the pyramid cone-shaped object.
6. MLMS ARE PYRAMID SCHEMES
If you’re STILL asking yourself ‘why do MLMs still exist?’ then I shall leave you with this final point.
MLM companies are nothing more than pyramid schemes that found a loophole and thus manage to operate legally.
The issue of multi-level marketing schemes vs. pyramid schemes is a huge one that not even the FTC can fully grasp, but I will attempt to explain it in brief here.
In a very small nutshell: pyramid schemes are illegal because their only focus is on recruiting others to the business and not actually selling a product. Multi-level marketing companies sell products as well as recruiting others to the company (sticking to the 70/30 rule of 70% product selling and 30% recruitment), and so they can be seen as legitimate companies.
HOWEVER, when you realise that the people buying the MLM products are actually just the ‘independent contractors’ of said MLM in order to sell them on to future ‘independent contractors’ of the same MLM, you have to wonder if any regular, non-MLM person is actually buying these products or if they are destined to remain within the MLM forever.
Technical BS loopholes aside though, the fact that MLMs have products doesn’t really make a difference, even if some of those products do make it out to the general population. Given that the vast majority of participants cannot make a net profit and overwhelmingly make losses, MLMs function as pyramid schemes, whether the law has caught up or not.
With a business model that is designed to generate profit for only a tiny number of people at the very top levels of the pyramid triangle, it isn’t difficult to argue that all MLMs are pyramid schemes; some just come with protein shakes.
SO, that concludes the first post in The Anti-MLM Chronicles about just why MLM companies are so bad! While MLM babes can gloss over the fact that their ‘business’ alienates them from their friends by saying that their friends ‘just don’t support them,’ what you CANNOT hide from is the numbers. 99% of people in an MLM will lose money, and if you take away ONE THING from this article, then let it be that.
Did you enjoy this post? I know that it’s a big change from my usual posts but this is something that I feel so strongly about as it disempowers women and can legitimately ruin lives. Please let me know your thoughts in the comments section below, and if you have personal experience of being in an MLM then I welcome your comments even more – disagree with me by all means, let’s talk!
Until next time, xoxo
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You’re inaccurate in many areas. Mainly Network Marketing companies are not a pyramid. All organizations are diamond in shape if you actually look at a downline report, Its not a pyramid shape like the ones in Egypt.
Secondly, you’re not a distributor just because you buy a distributor kit. The high failure rate, do to speak, is human nature. It’s not the business models fault if the rep fail to share their products and services to anyone out of fear and procrastination.
Thirdly, let’s examine the failure rate of:
– Any traditional business.
– Real Estate Agents
– Insurance Agents
– Car salespeople
Are those professions a scam as well? Why not? If a Real Estate Agent spends $2,000 to get certified and another $1,000 to list on MLS and they don’t hustle and never make any money isn’t that a $3,000 scam then?
Franchises can cost $100,000 to over $1,000,000 to buy.
Network Marketing?
$50 to $1,000.
Are franchises a scam?
Yes there are bad Network Marketing Companies. Guess what? There are bad companies and people in Wall Street as well. The day it was learned that Bernie Madoff actually made off with over $70 Billion dollars guess what happened the next day? IPO’s opened. People still invested in Wall Street. Isn’t Wall Street a scam since one person is able to defraud the public of $70 million? When was the last time you heard in Network Marketing that a company or individual defraud individuals of $70 Billion? How about never!
I’m any sales model the 80/20 rule applies. Why? Because you’re dealing with people. All of us join something and never use them.
Want to know the drop out rate at gyms? Google it. Aren’t they a Scam if I join a gym to lose weight but I don’t because I didn’t combine common sense of diet + exercise on a daily consistent basis down at the Gym
Aren’t gyms illegal them by collecting membership fees when members actually never go to the gym month after month? I’d that the gyms fault of the member?
Hmmm…
Seems you’ve never joined a program and actually rolled up your sleeves and did some work. Rather, you’re looking from the outside in listens to people who quit too early, or they had or were told unrealistic expectations about how sales and building a legit organization.
There are many companies that have zero sign up fees or where you have to personally buy products you’ll kick yo the curb just yo qualify for commissions.
If you’d apply the same scrutiny to all sales professions I think you’d be amazed at how high the failure rate is!
Network Marketing pays out globally over $100 million dollars a day in commissions to people who actually opened their mouth to a family, friend, co-worker or a complete stranger.
It’s a volunteer army in Network Marketing. You’re not an employee. And, you aren’t on a salary. You are 100% commission.
I’ve being doing this for 40 years.
I don’t compare MLMs to pyramid schemes because of the triangular structure. You are correct, many businesses have a triangular structure. I compare MLMs to pyramid schemes because of the emphasis on RECRUITMENT, and how most MLMers focus on THAT rather than the actual product, the product being nothing more than a loophole the vast majority of the time. Most people in an MLM make their money from signing up others, NOT from selling haircare products/health shakes etc.
As for the failure rates, yes, there will always be people who don’t try to succeed in something and who fail as a result. 40% of new business fail within their first year – your odds of becoming a millionaire from starting your own business are SLIM but POSSIBLE. The fact that 96-99% of people who join an MLM either don’t make any money or LOSE money is nothing to do with people simply not TRYING. It is a problem with the business model itself. That’s why we don’t see similar numbers in franchises or other types of business. MLMs are the only ones where literally 1% of people make any kind of real money. But your attitudes of blaming the workers for ‘not trying’ is definitely in line with what I have seen others in your industry do.
As for your point about joining the gym – yes, most people will drop out. But that is nothing to do with the gym itself or the odds being stacked against them. With hard work and dedication, they WILL get results. They choose not to. The same cannot be said for MLMs, where the system literally does not ALLOW for a large (or even more than 1-4%) of people to succeed. It is statistically impossible.
Yes, you are not an employee or on a salary. You are on 100% commission (I think businesses that only pay in commission are highly unethical anyway but that’s just personal opinion). This does not make you a ‘business owner’ as so many MLM people claim. It makes you an independent contractor. However, as I’ve said, it is statistically impossible for the majority of people who join an MLM to make money. Not due to lack of trying. But due to the fact that there are simply not enough people on this planet for the scheme to keep growing and generating revenue. That, to me says that by their very nature, network marketing companies are predatory and morally bankrupt.
Congratulations for being in the 1% and making a career out of delivering false hope and exploiting vulnerable people.
You shouldn’t be advocating for banning something because you don’t like it. If businesses are willing to offer commission based compensation for certain services and there are people willing to accept commission based compensation for their services, they should be allowed to do so. As long as no force or fraud is involved, it should not be illegal. It is a business owner’s right to offer commission based compensation for services and it is my right to accept that offer if I choose to do so.
You raise an interesting point, but you’ll be surprised to hear that I actually agree with you.
While I think that commission-based compensation plans are UNETHICAL, I don’t believe that they should be ILLEGAL, as it is a person’s right to choose to accept those conditions if they choose to, as you rightly pointed out.
MLMs however, are extremely different from commission-based compensation plans in a number of ways – first, you have to actually PAY to work, so you are beginning your journey at a loss. Pro-MLMers may contend that many businesses have start-up costs, but the percentage of people who start their own businesses that make a loss in the first year is 40%, in contrast to people in an MLM where 99% of people either make no money or actually LOSE money. Therefore the business model functions as a scam, not giving people a realistic opportunity to make any money, as opposed to genuine commission-only sales jobs, that have an actual marketable product rather than ‘products’ sold by MLMs, whose primary customer is actually the distributor rather than the general public. This simply cannot be considered a viable business model.
You also mention fraud, which I find very interesting. Sure, *most* MLMs (not all by any stretch) have income disclosure statements online, therefore they cannot legally be considered as fraudulent companies – after all, the data is there if somebody wishes to look. However, the distributors promise 6 figure salaries and the opportunity to be ‘financially free’ which is incredibly misleading seeing as only 1% of people in an MLM will ever be ‘financially free.’ The facts are that nobody would join a business if they knew there was a 99% chance that they were going to fail, and so MLM recruitment tactics can definitely be considered fraudulent.
Actually the 99.7% loss figure is misleading because the ones makin money at the top remain year over year while the 100% who join annually lose money. For anybody joining now, the loss rate is 100%.
True!
Wow! Traveling Jezebel, I am so glad you are doing this work. With Covid destroying people’s economic outlook many more people will be tempted to put the little income they have into one if these black holes.
Keep of the good work.
thanks so much!
You are extremely exaggerating! im not saying all MLMs are good, but the structure itself is amazing not by how you analyzed it. do you think friendships are not creating networking? an organization doesn’t it form like networking?. your not really a good entrepreneur but a social climber….
Sorry but I’m not really following your comment so I don’t quite know how to answer. And I’m not a social climber, haha. I have 3 businesses of my own (all registered as my OWN businesses btw), plus investments. I do pretty well.
Thats right, so DO I? u formed a networking because u also have down lines who work with u to run your business isn’t it? try to understand the structure of MLMs business.
Thank you. Was thinking the same.
Mate no matter what you tell her she’ll stick to what she believes in . You know those kinds they’ll believe only in what they believe and no matter what you tell they’ll not listen. BTW 1% only make money because those one percent stick to 5-7-10 years and don’t give up. Most are looking for instant gains and quit . Not fail or loose money quit . But if only 1% according to you make money then how come the industry is worth 200 plus billion dollars and where does it go to ? Oh distributors wow magical and still they don’t get rich . And if that’s the case then how come in the past 35 years 72% new millionaires have come out of this industry . And the way you’ve explained it sorry it doesn’t work like that and as far as recruiting is concerned. No one makes money from recruiting in an MLM only sales of products or services . Anyways I don’t care what shell say I give her opinion a rats ass since she ain’t paying my bills . So she can have her opinion and choose to stay arrogant and ignorant her loss . If what she says is correct then according to her Warren buffet Is also a scamper who owns three of these mlm companies and says its the best investment he ever made . Yes there are bad players and btw as far as traditional businesses are concerned 99 percent also fail and loose money in the first 10 years so then no one should start a business. Everyone should do go to work cone back home , go to work come back home go to work come back home go to work come back home go to work come back home 2 days off and few leaves do it 250 days a year for 40 years and live on budgeting and after retirement die broke I mean seriously how stupid can one be . And I can tell you this I don’t know why you’ve written this cause clearly you haven’t done your research and have had bad experiences with unprofessional networkers . The times are changing and things are going e-commerce and no one who is doing it ethically will run after people to buy their products no more of hoarding stuff in garages . That was earlier because of lack of technology that one had to buy kit and stuff that’s bs . I mean we’re in 2021 why does one need to hoard their garages etc. And btw if I bought an iPhone from the market did I loose any money no cause I bought a product worth that value . So no one loses any money people quit too soon like I said the success time period on an average is 5-7-10 years some make it earlier some late but not 6 months or 1 year or even 2 years and it’s not easy people quit because they come with the wrong expectations . Make fast money people come out if greed they want easy fix solutions and don’t want to work.hard . I’m sorry whether it’s this or any where else consistency following the process , rules ,policies etc . The ones who follow stay consistent keep persevering , don’t back down from challenges and put in tbe required years do and there are millions who have changed their lives it’s probably you havent met anyone successful here or if you have you haven’t believed it be true or the most classic case you’re friend became successful who you didn’t believe and now you’re just jealous and venting it out . GROW UP
Let me guess, you’re “still hustling.”
Your figures are totally off, MLM is the only industry with such a high failure rate, as I said in the article. People starting their own businesses have nowhere near as high a failure rate as MLMs. Please do your research (ACTUAL research, not just listening to your upline) before commenting again.
Oh, and I don’t doubt that MLMs make money. But that money goes to the top 1% of distributors, not the 99.
I’m not in MLM, but I’m doing my research. I can’t help but think as I read your blog post that you don’t fully understand the world and sales. There are easy ways to accomplish things, and there are hard way. There is risk and there is reward. It’s common knowledge that the more reward there is the more risk there is. IE: I can invest in small cap stock that have a high risk, but I have the potential of high reward. Everything in live requires investment as we live in a capitalist system.
My ex-wife wanted to be a teacher, so we invested 60K for her to acquire a degree in teaching. However, once she started looking for a job, she found that the market was totally saturated, and had to take a position making far less than she wanted. It took years for her to pay off that initial investment. Did she get rich? No, she made 30K a year.
What about restaurant servers? They make far below minimum wage with the HOPE of making tips based on the level of their service. Isn’t that also unethical for a restaurant owner to essentially pay slave wages? Why is this? Because to be a server requires little risk and investment to train.
Your assumption that 1% make money in an MLM assumes that everyone continues in the “scheme”. Just like when I went to college for Computer Program, very few had the ability to actually graduate. If everyone did, I would have not found a job as the job market would be saturated. I counted on the fact that many would fail, and that is why the pay is high. Few can do it.
What about a regional sales manager of a “legit” company? He gets paid on his team’s sales based on how he trains, motivates, and manages that team. What happens if his team does poorly? He loses his job.
You fail to realize that in America there is a top 1% of folks who are making the majority of the money. A middle class person may make 100K a year, but most likely, unless certain risks are taken, he will never make the millions the CEO makes, or the owner of a small business.
If open a business that is Non-MLM, then I have to invest a lot of money to get that business up and running. How do I make a passive income? Buy hiring people to run that business for me. I pay them based on what the market rate is. Most of them can barely pay rent, but I’m profiting nicely from their work.
If MLM does not work, and it saturates the market, then explain to me how Avon has been in business since 1886? Is an Avon rep raking in millions? No, but they earn an income based on the amount of work they put in, how good they are at selling the products, and how well they train and motivate their people… just like a sales manager does.
To address the cult like approach you claim they have, consider this. You are the sum total of the 5 people you associate with. I don’t know how many times when I simply wanted to change jobs, change a church, or buy a house, how negative my family was. “You are making a mistake.”, “you should be happy with what you have” etc. I back away from those people. I don’t want negative people in my life. do I love them? Yes, but will I listen to them? No. Why would I listen to a sister that makes $10 an hour in a job she hates when she is trying to tell me not to change jobs to gain a $30K a year raise?
If we did not distance ourself from naysayers, America would never have been founded. Steve Jobs would have never created the products that he did.
You really should think about this a little deeper in the context of sales, capitalism, risk vs. reward, etc. It’s clear you were burnt by an MLM, but they do not operate much different than the rest of the world.
Well thank you for such a presumptuous and condescending comment 😉 Actually I have never been burnt in an MLM because you could not pay me enough to ever join one. I’d rather pull off my fingernails than join an MLM if I’m being honest.
I did not ‘assume’ that less than 1% of people in an MLM make money. It is a mathematical fact. You can fact check me by using the sources that I provided, or by doing your own research. You will find that every income disclosure statement out there backs up my research.
A business model where 99% of people lose money is insane. I would love for you to show me something similar. All of the examples you have used are not valid because I can promise you that 99% of people in those industries are not losing money. Your wife making 30k a year after investing 60k is actually very successful, no? In 2 years, she would have earned back her initial investment. I will repeat – 99% of people in an MLM LOSE MONEY, and NEVER earn back that initial investment. The two are not comparable.
You mention paying people what the market rate is. Exactly. It may not get them rich but they are paid minimum wage, or more. You don’t expect them to work endless amounts of hours, pay YOU for the privilege and never make any money. Because THAT would be insanity. MLMs do this.
And yes, you speak about people working in hospitality in the US (people from America seem to have this strange assumption that everywhere in the world operates just like they do, lol). Actually, most places in the world do NOT operate like this because it’s highly unethical. Servers all across Europe get paid a living wage in ADDITION to tips. Again, not comparable.
So, I think that it is YOU who should do a little more research. Look at the numbers. Or better still, join an MLM and let me know how it works out for you!
I really want to address the fact that how you define “losing money” is somewhat subjective and based on the type of MLM that you join. If I buy a subscription for a product off of a website, then I am paying for that product because that product is of value to me. No one could rightly tell me I am losing money because I’m purchasing a product I want.
It is no different if it is being done within the structure of a MLM that offers a legitimate high quality product. The only difference being that you may have to pay a “business” fee to get access to the resources you need to make commission.
Being someone that truly cares about people I can totally see your perspective on how such models can become predatory. And this is something that is unfortunately a consequence of greed, in my opinion.
The issue here though is that the products aren’t the main thing being sold. Participants in mlms are trying to make money off of those below them, not just use the product. And if the product is good then great, but most mlms require that participants buy the products in bulk for a high price. Does the participant need dozens or more of the same thing? Probably not- her aim is to sell. Well when the mass shipment of items is received by the participant, her immediate thought is “wow I’m going to be super rich once I sell all of these products” without realizing that not enough people are actually going to buy them and she’s left with a surplus of “amazing” products that she can’t get rid of and at least hundreds of dollars down the toilet. And that’s just the cost of buying the products, not including the membership fee.
YES, amen!
Losing money is the simple act of spending more money than the MLM compensates you in commissions. Product consumption is not the only cost. Apart from the sign-up fee and starter packs, MLMs will also sell you marketing and training materials, monthly online access subscriptions, seminars, conferences and even tickets to national conventions. They will also suggest purchasing books from the Kiyosaki’s of this world, or perhaps attending a Landmark Forum event. And let’s not forget the “Corporate” store where you can order tee shirts and wall placks.
Amazing post! It’s always been shady when Acquaintances from high school would randomly hit me up about “incredible opportunity” and how I’d be financially independent, work for myself, etc and you did a great job articulating everything. I’m just shocked how brainwashed people are even after you present the obvious facts.
Oh my god, I know – as soon as I hear the words ‘opportunity’ or ‘financial freedom’ I’m like – RUN!!!!! Hahahaha.
It’s insane, go and check out some of the hate comments on my other MLM posts if you want a laugh, haha.
Absolutely. And don’t be surprised if Mark and Robert Blackman are on some MLM’s payroll. They have aggressive marketing campaigns to silence folks like you trying to warn people. Keep up the good work!
Thanks so much!
A. I love everything about this post! It’s so important to educate more people about mlms.
B. LOL I am living for your responses to all the negative comments! Couldn’t have said any of it better myself.
Thank you for this!!!
Hahahahahaha thank u so much!! xo
This was so well written. I really enjoyed reading your post. I have been getting invited to “virtual MLM parties” now w the pandemic. At least pre-Covid, I’d suck up the lame “games” and sales pitches, but at least get to see some friends. Now, if I join an “online party” out of obligation to the host, I have a week of nonstop posts and notifications about these annoying products. Lol sorry just venting but I really hate these companies so much and how they seem to target SAHMs from my perspective and like you mentioned – other vulnerable populations.
Haha oh my god, please don’t apologise, I could vent about MLMs all day! I’ve never been to one of those online parties and now I’m so glad haha, I can imagine how annoying it must be afterwards!
Sorry the huns are coming for you. Great article! I agree 100% with the FACTS in this artcile. My personal favourite is when a hun’s post is filled with comments like “sign me up!” and “I’m in!”, then when you click on the commenters profiles you see they are all from the same MLM team and have the same post on their profile, because no one else actually wants to try the products. Soooo disingenuous. Y’all fake af. MLMs are literally the greasiest.
Tysm!! Oh my GOD I know, every single comment thread on an MLM hun’s wall will be people in their down/upline just acting like cheerleaders hahaha.
Yesssssssss this is spot on! Well written, well researched, and THANK YOU for spreading the truth. These companies need to die out, the way they operate makes no sense at all and I can’t understand why so many people are still getting taken in by them.
I don’t understand either, it really doesn’t take a lot of research to find out the truth! People are just too trusting 🙁 thank you so much!
Hello Travelling Jezebel,
I came across your blog while searching the internet for “unethical organizations” as part of the research for my paper due this week for school. Bravo. Before I get accused of being burned by an MLM for supporting your writing, let me assure you that this is not the case. As you stated above, any business model where 99% lose money is insane – End of Story – period.
Thank you for the two responses/replies that you so eloquently crafted. They made me smile while tightening and shaking my fist at my computer screen whilst cheering you on.
Thank you for exposing these MLMs for what they are; scammers.
D.D.
Haha, this comment made the day. My aim is to make people smile whilst also shaking their fists at the computer screen hahaha.
Also “any business model where 99% lose money is insane – End of Story – period.” <<< THIS
Well-written article. Thank you! And I enjoyed the memes also! I read it because I know a girl who recently started posting about Monat on her ig and I made a note to self to distance myself from her because I’ve had bad experiences in the past:
1. Once when I lost my job, a client of the place where I had worked invited me for coffee. She was going to talk to me about another job. She ended up trying to get me involved in her MLM. I was so confused and taken aback. It was one of the most awkward moments ever. I just said, “I’m confused…I thought we were just having coffee.”
2. I visited an acquaintance in another state who offered to let me stay with her…but the price of that was being pitched to the whole time for products and a “business opportunity” from an MLM. When she picked me up from the airport she had immediately told me that she “started her own business” and I genuinely thought she started her own business! But she was an MLM sales rep. Then she asked me to get on the phone with her colleague/boss/upline/whatever so she could practice a sales call. I became aware I was the intended audience for her and her colleague. It was the most awkward thing ever. Turns out staying with her wasn’t free after all. She messaged me later about a product I expressed a vague and obligatory interest in. I never bought anything from her.
Also, the girl who’s posting about Monat is posting herself on a yacht, with designer purses, etc. but….she’s an heiress to a major fortune, so….
Not even sure why she needs to involve herself in an MLM.
Oh god, both of those experiences sound so horrendously awkward! At least when they slide into your DMs, you can just politely decline or ignore – it’s a bit more difficult when you’re in somebody’s house! Ugh.
Hey. I am student from Malaysia. Yesterday ive been in the situation where i already being brainwashes from one of the amway mlm’s agent. She was saying that i could get up to 6digits of salary. And of course, im an university student so i believe her and already transfer several amount of money just to attend an alone class training and entree for amway. I dont know if i am doing the right thing or the way around. She met me when im working as retail worker. Im a sales assistant for Elianto Make Up. Im not sure if you ever heard about it. Then she finds me easily attach and im still young and energetic so she ask for my phone number because she wanted to offer me a ‘part time job’. But the part time job is to be in the amway scam. I dont know actually what should i do. She really deceived me by saying i could get a big amount of money if i join her 🙁 what should i do actually?
Please don’t join. If your instincts are telling you that it is a scam then trust them. Amway is the original MLM pyramid scheme, and the vast majority of people who join Amway lose money.
I recently had to end a two-year friendship and personal training relationship because she kept pestering me to join, with all the canned “it’s not a pyramid scheme” responses. I kept saying no, but because I was a customer, the last straw was when she pressured me to post about my weight loss (due to my own running, not the shakes), which is a very personal and painful topic. She wanted me to post about it AND invite ALL my friends to one of her endless FB “challenge groups” so she could try to recruit them and make more money. I was disgusted and stopped training with her a couple of weeks later. The saddest part was, I don’t think she even cared, since she doesn’t seem to want anyone in her life who isn’t in her downline or on her team. I really thought she cared about me. At least I never posted and embarrassed myself.
I am so sorry that this happened to you 🙁 people seem to completely change when they enter into these schemes.
I will be the first person to say that in some of your mindset I agree, and totally am on board with. However, being a single mother, a licensed Realtor, and knowing what some ‘costs’ involved with Network Marketing Companies and Real Estate costs, I am an advocate for Network Marketing. It is a relatively low startup cost investment, with decent reputable companies, which you can source if you know where to look (i.e. BusinessFromHome.org),and not all compensation plans are equal, I agree with you. You have to do your homework. I don’t think that bashing an industry that involves more money annually than national sports bring in (albeit, who really wants to watch them anymore) should be taken for granted. There are obviously better companies to work for than others. Sometimes it may take a few frogs to finally find the prince, but I don’t think that condemning the entire network marketing profession on a whole is a great way to go. Honestly, if you really think about life in general, isn’t your entire life set up as a network marketing component?
Example: OMG! I love Bombas socks (not, to my knowledge a network marketing company) So you promoting Bombas socks could be considered a great review and encourage others to try them; which in turn you send your friends your website link to try them off of.
Example: OMG, I loved my real estate agent, she was helpful and always there I highly recommend her! – another basic review but advocating someone’s real estate services. For example I send my past clients a gift card when they send someone to me un-solicited. Is that not the same market set up as a network marketer??
Point being (and I just used a few) is that we as a general public provide reviews, solicited or not, to all of our friends, family and anyone that will listen about something that we love. Why not capitalize on that? How is that wrong? Network Marketing is a great way to get out of your shell, make new friends and business colleagues, and spread the word about something that someone else may never know about! Oh, and it also makes you money…. Don’t let the age old pyramid schemes deter you from it. That is such a stigma that needs to be erased.
How many people do you talk to on a daily basis that want to know recommendations on a good restaurant? That is the same with a quality network marking group. And most of them charge a small affiliate fee to be able to share the product, again, not all products are created equally, but for $25 one time sign up fee, would’t you share and refer people?
Not here to argue, just making some updated network marketing (MLM) discrepancies.
It does bring in a tonne of money but that money only goes to 0.4% of people in the industry, with 99.6% of people losing money (and this study looked at over 350 MLM companies over a 10 year period). That’s my main problem with it – the vast majority of people either make no money or lose money.
As for affiliate marketing, I myself am an affiliate of a number of companies (Hostelworld, GetYourGuide etc.) but I don’t have to PAY to advertise their products. If I bring them custom, I get paid, if I don’t I don’t, but I don’t have to pay for the affiliate links. Same with influencing, if I promote a product or company on my Instagram page, I either get paid to do that or get the product for free – I don’t pay for the product, because that would be a) paying to work and b) free advertising for the company
I think the pyramid scheme comparison is valid, and actually, statistics show that you are MORE LIKELY to make money in an actual pyramid scheme than in an MLM – that’s how bad MLMs are!
A reflection on all of this ->
This is helpful. But it also makes it tough. I find reading content like this over and over continues to polarize me to the point of not being able to respect or have any decent conversations with my friend(s) participating in an MLM. It’s financially, socially, and ethically insane. What the heck are they thinking?! I’m constantly having internal conversations about this, where I’m replaying my argument against MLMs, trying to convince participants to quit them. But of course, none of these arguments work. We can see the terrible reasoning they use in some of the comments in this thread. And maybe, having the arguments at all, only helps them to reinforce their scripts.
The only thing that seems to work is for participants to waste time and lose money. And even these aren’t enough to stop people from joining new MLMs time and time again.
In this time of mass unemployment due to COVID, I’m also having some other thoughts. Has this distraction given my friend something to wake up for? Are these hyper positive voices and smiling faces giving her strength to get through an otherwise hopeless year? And are these phony training sessions teaching her anything she can carry forward with her to future (legitimate) marketing gigs? Say, something in the social media space. I’m not sure, but I’m wondering if it would be healthy for me to consider a silver lining. Thoughts like: Yes, money will be lost, but it will be in exchange for some kind of service. I find thoughts like this help ground me in my interactions. At the very least, they keep me more respectful and cautious in my approach.
Bouncing back from that, I think, will any of these intangible gains of morale come crashing down when this all ends? And will this new low be worse to bear than anything prior? I find myself googling – When does a community become a cult? And when is it a problem? Is there long-term emotional harm to be concerned about? Or is it, for the most part, harmless and I should just let it be. I force myself to arrive at this conclusion for now, while obsessing over the details and subtleties of every single post.
It’s honestly impossible to navigate this as a close friend. So, for now, I’ll just avoid it.
You are so right, and it is indeed impossible to navigate as a close friend of somebody in an MLM. For me, the silver linings just aren’t worth it, but you raise some interesting points.
Love this post! Over past years, I’ve received many messages on social media about either joining a MLM or buying their product, but the emphasis was mostly on joining. This solidifies your point on their recruitment to make more money for the tier above them. I never joined or wanted to buy their products. Something in me always said, “don’t do it” so I trusted that. This is before I even researched MLM or even knew the term. I continued to follow them on social media, and all of those people ended up getting traditional jobs after the MLM, which is a clear indication of their unfortunate failure. If they kept their “membership” with the MLM, they were inactive, because I didn’t see anymore marketing content. I’m still waiting to see how some of them pan out.
I read some of the comments above and it’s amazing how different people can be! For every point, there’s another side of the argument. I suppose it depends on how risk averse a person is, even if they know all the risks. The worst part, to me, is that when MLMs prey upon people’s misfortunes and guilt (stay at home moms, functioning mentally/physically challenged, people that have trouble getting jobs) and turns those into empty hopes and dreams (“help contribute to the family”, “all you have to do is work hard”, etc). I truly feel terrible that they fell into the scheme. I just hope people take the time to read this post, as well as others like it, before they take the leap.
Yes, I especially hate the predatory element of MLMs.
I think ‘risk averse’ is being very kind, considering that 99.6% of people in MLMs lose money, haha.
There may very well be “bad” mlms out there but by no means are all of them that way. I make 6 figures with one & now live a life I had only ever dreamt of. Vacations, designer clothing for the entire family, luxury vehicles. There is a right way and a wrong way to work for one. I do it right & I work for a “good” one.
I implore you to sign up for a few bad ones & attempt to back up your statement in this article. If you feel so strongly about this then do some journalistic work & expose these companies you have such contempt for.
I would never sign up to an MLM because being successful in an MLM means that you need to have a substantial downline, most of whom will be losing money. Those are the stats. 99.6% of people in MLMs ACROSS THE BOARD lose money.
If you work for a good one, how about we review their Annual Income Disclosure Statement on here, just so we can set the record straight that your reported earnings are an anomaly and don’t represent the realistic earnings for 99.9999% who join?
Disagree with the article. Unless you tasted it! Breathed it! Made money in it! Lost money in it! Then you have no idea of what your talking about. I picked up this side gig and called some friends to sign me up Paid 500.00. And I’m not a recruiter but I can sell the services and get paid fantastically and still crate residual. I’m not a millionaire or financially free by any means but I can tell you in the first year I probably put in about 40 hours of actual work picking up the phone or placing ads on social media and I’ve come to be able to create enough residual income to cover my car payment. Anyways I’m just glad I don’t listen to people who live on fear. Funny thing you don’t mention is that with this mlms you literally have a home based business meaning write offs! something they never taught us in school and even if you make just a 100.00 or supposedly claim you lost your money…well great cause you can write it off legit. Talk to an accountant and you will learn that it’s always better to have a job and home based biz then Just a job. Since your tax bracket will drop and 99% of the time you’ll get a nice return usually two to 3 times the amount you might have invested in a mlm business. Again I realize mlm is not for everyone but trust me with a little bit of work and dedication you too can make an extra 300-500 per month and that’s not recruiting. Anyways that’s my two cents. There’s a lot of people that go there whole life in a miserable job thinking there’s no way out now that’s cult thinking. All I’m saying is unless you actually do it and actually put some effort into it then you really don’t know where your results will take you. I haven’t quit my day job yet but that is the next goal even if it takes me 15 years. Which is much better then 40 years to wait for that pension or whatever basically to live off 60% of what wasn’t enough to live off of in the first place.
Also I realize you despise mlm in your article and I sense a bit of bias. But what I’m truly interested in is what other options could you give this poor vulnerable people so you called them. People love to talk negatively and throw out advice but where’s the advice about other options. And don’t tell me a second job cause now your working for cents since your going to pay more taxes. Please do post a link or something where we can come up with other making money strategies that will also cost 500 or less and make money? That would be a positive way to end your article.
“Unless you tasted it! Breathed it! Made money in it! Lost money in it! Then you have no idea of what your talking about.” – does reading the income disclosure statements showing that 99.6% of people lose money count? I’d rather stick with the statistics than anecdotal evidence.
I totally agree with you
The MLM scheme is really screwed and I wish it will get regulated
Couldn’t agree more.