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 piΓ±a 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 an anti-MLM series on this blog titled The Anti-MLM Chronicles.
The Anti-MLM Chronicles is aimed at raising awareness of just what an MLM scheme is and why they are so bad, how MLMs differ from illegal pyramid schemes, how MLMs 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.
This first post in The Anti-MLM Chronicles series will simply cover the basics of just why MLM companies are so bad and why you definitely, for the love of all things good, shouldn’t join one. Trust me – I could (and will) cover so many anti-MLM topics in future posts, but for now let’s keep it simple and kick off my anti-MLM series by discussing why MLM companies are so goddamn horrible.
Why MLM Companies Are the Absolute Worst – The Anti-MLM Chronicles
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).
MLMs 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.
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?
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 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.
The exact numbers vary but 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 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 MLMs 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 MLMs 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 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. MLMs 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 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
Youβre 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, youβre not a distributor just because you buy a distributor kit. The high failure rate, do to speak, is human nature. Itβs not the business models fault if the rep fail to share their products and services to anyone out of fear and procrastination.
Thirdly, letβs 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 donβt hustle and never make any money isnβt 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? IPOβs opened. People still invested in Wall Street. Isnβt 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!
Iβm any sales model the 80/20 rule applies. Why? Because youβre dealing with people. All of us join something and never use them.
Want to know the drop out rate at gyms? Google it. Arenβt they a Scam if I join a gym to lose weight but I donβt because I didnβt combine common sense of diet + exercise on a daily consistent basis down at the Gym
Arenβt gyms illegal them by collecting membership fees when members actually never go to the gym month after month? Iβd that the gyms fault of the member?
Hmmm…
Seems youβve never joined a program and actually rolled up your sleeves and did some work. Rather, youβre 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 youβll kick yo the curb just yo qualify for commissions.
If youβd apply the same scrutiny to all sales professions I think youβd 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.
Itβs a volunteer army in Network Marketing. Youβre not an employee. And, you arenβt on a salary. You are 100% commission.
Iβve 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 should be illegal 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.