Delving into The World of MLMs

“Hey babe! I’ve just been taking a look through your feed/blog/account and think you would be the PERFECT addition to my team. Are you looking to quit your 9-5 and make money from home?” if the latter rings a bell (a potentially alarming one), then you my friend, appeared to have stumbled across an MLM scheme.

Disclaimer: There are some legitimate MLM programmes available, and by no means am I tarnishing every person and every business with the same brush, nor shaming anyone if they want to participate. I just disagree with the fake-friendliness and programmes that have negatively affected people’s lives.

What does MLM actually mean?

MLM stands for multi-level marketing. It’s a controversial method of network marketing and the illegal versions are called pyramid schemes. The most common form of MLM is for a person to be ‘recruited’ into a team; to sell products/services to family and friends. Doesn’t sound too fishy just yet? Well, they can be fraudulent and can cause the recruited member to actually lose money rather than make anything back. Losing money can also consequently land people in debt.

MLM participants and recruiters can come across very friendly, approachable, likeable and honest. It is a clever technique to lure people into the depths of a scheme that can cause more harm than good. Often the targets of these schemes are students, stay at home mums and people looking for additional income.

It’s a system that preys on the vulnerable and makes a mockery of true, hard-working business owners. It takes advantage of those less financially advantaged and with little to no knowledge on the truth behind MLMs. It’s not dissimilar to a form of brainwashing.

So what does MLM involve?

From my research online, and vast personal experience of coming across these participants daily, is that it works by signing up, paying for a ‘starter kit’, and selling *cough nagging* your family and friends into buying your products and/or joining your team to gain commission and profit. Can you see how the cycle continues? It appears most money comes from the recruiting aspect and the commission gained from recruiting others into the business. This is where the ‘pyramid’ aspect starts to make more sense.

Photo by John Schnobrich on Unsplash

 

So what is a pyramid scheme and how does this differ to MLM?

If you picture a literal pyramid shape, it starts at a point at the top and gradually widens out into a lower, wider level. So business CEOs recruit and enroll people at the top-level and work their way down continuously in a chain. All the while promising payments and rewards for recruiting others rather than selling a product/service.

An article by Randy Duermyer states; “To be legal and not a scam, money needs to be primarily earned from the sales of products and services rather than the recruitment of new members. MLM programs with no or a low-quality product or a focus on getting paid per recruit could be an illegal pyramid scheme”.

The lower level earns little to no money, and the big bosses at the top walk away with the cash. Some invest thousands into these businesses with the hopes that they can quit their job and get rich from home. But they don’t get rich, and they end up worse off. It’s a false sense of security.

So in short MLMs are pyramid schemes, just not always illegal ones.

How do MLMs/pyramid schemes work?

If you know what warning signs to look out for – you can become a pro at spotting an MLM recruiter from a mile away. I delete multiple DMs a week, which have all been from young women. They claim to be business owners, travel agents and “entrepreneurs”, but this could not be further from the truth. You may be enticed into what seems like a generic, friendly conversation. The second you reply, you are bombarded with over-friendly, pushy messages.

A few messages in, you may be hit with “have you considered earning extra money from home?” or “I’m part of an amazing business opportunity I think you would be great at, would you like to hear more?”. Their pitches are quite obvious, so shouldn’t be hard to spot. Voice messages are now a common form, which makes your invite look personalised when they’re more than likely following a script and changing the name each time.

The so-called “benefits” of these schemes can involve all expenses paid trips, winning a car and luxury prizes. So to people who are struggling to put food on the table and have no idea what MLMs are, it looks like a life-changing opportunity. The problem is how morally wrong they are, as well as financially.

Photo by You X Ventures on Unsplash

Examples of MLMs that you may recognise are:

  • Avon (who have built reputability and personally, I have used and still use Avon as a consumer, as it’s a better established, legitimate business that just uses MLM techiques with its Avon reps)
  • The Body Shop has been a new and upcoming one
  • Arbonne
  • Herbalife
  • NuSkin
  • Juice Plus

How did it all begin?

Network Experience state “The first direct seller that made the breakthrough was the “California Perfume Company” established in 1886. California Perfume Company was renamed as “Avon Products” in 1939 and is still at the top of the MLM industry. ” so they weren’t the creators of this type of business model, but they seem to have paved the way. In 1945, another company changed its name from the California Vitamin Company to Nurti Lite, which practiced MLM strategies still used today to sell their products.

It appears the earliest MLM business was JR Watkins Medical Company in 1886, explained by Tony on Quora.

But WHY can they be so bad?

The primary reason is because it’s a predatory method that preys on unknowing and vulnerable communities worldwide. It seemingly offers care-free income and great prospects which most of the time, is not true. A fantastic in-depth article I came across by Eliza Romero describes that “Using the language of third-wave feminism and borrowing quotes or phrases from real female CEOs helps recruiters and recruits see themselves as legitimate professionals, no different from a founder of a startup company”.

It’s all a facade and a beautiful lie. It is psychologically manipulative too, giving people sales pitches and leading them into a false sense of security. They have also kept going since the start of the Covid pandemic, which I think is a disgusting technique when people are facing so much personal and financial devastation.

It’s hard to locate UK statistics for MLM schemes, but they are vast across the US.

“Among the more than 20 million Americans who participate or have participated in multilevel marketing (MLM) organizations, 90 percent say they got involved to make money. However, nearly half (47 percent) lose money and a quarter (27 percent) make no money, according to a new study released by AARP Foundation.” – quote from PR Newswire

Where can I find out more?

I remember watching the BBC documentary by Ellie Flynn which gave an insight into the households directly affected by MLMs and it was shocking. One of the young women involved ended up £3000 in debt due to the false promises of an MLM scheme. She invested expecting to seek results, and gained nothing in return.

I, among many, find the fake friendly conversations by MLM recruiters insanely tiresome and annoying. I know family and friends that are involved who thankfully, do not seem disadvantaged thus far. There are some legitimate schemes, but please do your research if you are interested. I am not here to promote these models of “business” but to raise awareness into the dangers and toxicity of the majority of them. The truth behind the true earning success rates of these businesses needs to be shared more publically to avoid others falling into the same trap.

I’m really interested to hear your thoughts and experiences with MLM in the comments down below.

Until next time,

Emily x