Why Multi-Level Marketing Can Be A Dangerous Career Venture
⌛ By Kaylin R. Staten ⌛
We have all received at least one message of someone trying to invite us to a party with “innovative” products or asked us to sign up to be on a team underneath their leadership.
They sometimes go like this catch-all script, complete with impersonal generalizations and emojis:
“Hey hun! 🌺 I know we haven’t talked in FOREVER😆 , but I love seeing your posts on social media! ☕️🌮🍾 I know this is random, but I just saw your post and wanted to reach out to talk about this 💥 amazing opportunity💥 ! 📞 I think you would be a great addition to my team of boss babes! 🎉💟💡 I work from home and work when I want while making 💥 MORE💥 money than I did with my regular office job. 🤑🏆💸🍀 📈 My life has 💥 COMPLETELY💥 changed, and I LOVE sharing this with others! 🙌💋 🙏 🙏 🙏 Would you like to hear more about this 💎 once-in-a-lifetime💎 opportunity to improve your happiness and make more money? 🙌🏻 🙌🏻 🙌🏻 ”
Read more scripts here.
Before I go any further into this deep dive into messages like this and multi-level marketing companies, also known as MLMs, I have to say this: I am in no way shaming anyone who is part of them or has been involved in one in the past. I will admit, I have purchased my fair share of Avon throughout my life. I have the vintage collectible perfume bottles and makeup palettes to prove it. I know this won’t be the most popular with some people, but I feel as though it’s my due diligence as a business owner and communicator to shed light on dangerous business practices. (The truth isn’t always popular.)
As someone with a sole-member LLC and someone who communicates for a living, I am always interested to learn more about other business structures and happenings. Over the course of at least 9 months, I have logged hundreds of hours watching anti-MLM YouTube videos, reading articles, examining content in the wild, following social media accounts, listening to podcasts, and reading through subreddits.
MLMs FASCINATE me. While this is purely my opinion, which I share with a growing community of others, I believe MLMs take advantage of people in more ways than one. This blog post will aim to shed light on the dangers of MLMs if you find yourself flirting with the idea of joining one or know someone who is part of one and want to give them ways to escape. Or it could help give you your own script to politely decline to support someone’s MLM “business.”
What is an MLM?
A multi-level marketing company sells their lines of products and services through person-to-person sales. It is a branch of direct sales that has grown in popularity due to its ease of access. You can sell to people online and in-person. Often an individual signs up to be an independent distributor, consultant, or some other fancy term for a subcontractor. These distributors then make money by selling products directly to customers who may or may not be involved in the MLM venture and also by recruiting a downline of a team of distributors underneath them. Thus, the original consultant will earn commissions on what their team members’ sales (both internal and external sales).
In 2018, more than 18 million Americans were part of an MLM, according to this blog post.
If this sounds like a pyramid scheme, you are not alone in your thinking. The Federal Trade Commission has an entire section on its website outlining the dangers of MLMs and how to tell if they are pyramid schemes or not. Even if MLMs are technically legal, more and more of them are getting into hot water over false income and product claims.
In fact, the Federal Trade Commission issued 10 warning letters to several MLM companies in April to immediately remove health and earnings due to COVID-19 for products like essential oils and other products.
And oh yeah, the entire state of Washington is suing LuLaRoe in a class action lawsuit, so there’s that.
Here are some warning signs that a company may be using pyramid-scheme tactics as an MLM, as adapted from the FTC:
Most people who join MLMs don’t make much a profit or lose money, due to the pressure to purchase items themselves to have inventory; some people end up deeply in debt
Anyone promoting the MLM (in any section of the chain of the pyramid) make earning claims that are too good to be true
You have to recruit others in your downline, which is the “real” way to make money -- not selling the actual product or service
Promoters overplay on emotions and urgency to sell products or recruit others into the downline fold
You are encouraged to buy more inventory than you can use or resell in order to remain an active member of the company and receive bonuses and other rewards.
Keywords like “boss babe,” “tribe,” even “girlboss”
Whether you think they have pyramid scheme tendencies, there is no denying that MLMs use some questionable marketing strategies and tactics in order to push their company’s missions and bottom lines.
And sidenote: This has been one of my crowning achievement media mentions, where I was quoted in The Huffington Post’s 9 Signs That Exciting New Job Opportunity Is Really An MLM Scam:
“As someone at the helm of her own company ― one which I started from my own seed of a dream ― I am always on red alert when I get the ‘Hey girl’ messages in my DMs,” said Kaylin R. Staten, founder and CEO of Hourglass Media. “I automatically know this person will attempt to add me to his/her downline and I will be fed strategic messages of empowerment and independence.”
What are some examples of MLMs?
There are so many MLMs to choose from, so I’m just going to do a basic list below of ones you will most likely recognize from pitches on Facebook to vendors at your local events.
Avon - beauty products
Mary Kay - beauty products
LuLaRoe - ugly leggings (I mean, leggings)
Tupperware - plastic containers
Pampered Chef - cookware
Beachbody - health and fitness programming
Monat - hair and skincare
Arbonne - beauty products
Rodan + Fields - skincare
doTerra - essential oils
Herbalife - health and wellness
It Works! - nutrition, weight control
Younique - beauty products
Scentsy - candles and wax bars
LipSense - long-lasting lipstick/stain
Thirty One - purses, totes, and bags
Origami Owl - jewelry
Thrive/LeVel - capsules, shakes, patches
Paparazzi - jewelry
Park Lane Jewelry - jewelry, obviously
Also, check out this handy “Is this an MLM?” generator to see if what that latest Facebook group request selling a product is all about.
So, what makes MLMs not the most viable option?
MLMs are not reinventing the wheel. They’re borrowing from decades worth of preying on people’s weaknesses and pain points in order to launch the top 1 percent into “success.
Often, these companies promise you the moon without giving you the path to get there. It sounds really appealing to make extra money or your own new income. You could maybe quit that job you hate. You can write off all kinds of deductions on your taxes, save precious time, work your own hours, and be the boss babe you always wanted to be. MLMs heavily target women, especially those who are desperate for change and want to make their own money. You can find MLMs in all communities, but they prey on military wives, churchgoers, stay-at-home moms.
But, all of that comes at a cost, especially for that pay-to-play starter kit and influxes of inventory you have to keep at your disposal to retain membership in the company.
Many consultants say they own their own businesses, but they are really borrowing from an already established business -- not creating something from scratch. For example, it’s much different than being a franchisee for a restaurant chain, where you have more ownership stake in the company and a repertoire of responsibilities.
Sure, it could be fun to host parties, attend craft and community fairs, and outreach to 50 people a day on Instagram, but are you making any kind of profit?
The reality is, less than 1 percent of people who join an MLM will ever profit from it. Those who profit from it got in to a company’s initial consultant group years ago and have used their downlines to acquire profits. This was also before the market was insanely saturated with MLMs in every possible category, from makeup to the vitamin patches that are supposed to holistically improve your health.
BITE Model
In Steven Hassan’s BITE Model and book Combating Cult Mind Control, we can see how “undue influence” affects a person’s free will and judgments. Using such an influence can break up family dynamics, cause you to spend copious amounts of money (like putting your “business” expenses on a credit card to start out), and cause you to lose your own authentic sense of self through copy/paste lifestyles and controlling (and sometimes abusive) behaviors.
MLMs are often compared to a form of undue influence. After all, you are told to pursue leads however you can get them, from a long-lost acquaintance from high school to your own mother.
Examples of how MLMs fit into the BITE Model are below. I know that not all consultants are inherently using these tactics, but there are so many examples of MLM companies pushing these agendas down everyone’s throats.
Behavior Control
Regulates diet, especially for the health-oriented MLMs
Discourage individualism by promoting group-think
Heavily suggests discarding relationships if a loved one doesn’t agree with the MLM venture or support it
Financial exploitation by upselling to pain points, especially to those who need money quickly
Information Control
Withholding information, especially to the public, about earnings claims
Propaganda, including team call scripts, cold-call messaging, website content, and more
Using information out of context
Minimizes opposing opinions, some of which contains outright vitriol (this happens a lot to anti-MLMers and former members of MLMs)
Thought Control
Allows for only black-and-white thinking - a lot of the internal messaging from corporate and uplines is that everyone else is wrong and the MLM is the only “right” party
Overuse of buzzwords, emojis, cliches -- which reduces critical thinking
Encourage only the positive thoughts, a la toxic positivity
Introduces and only promotes their own versions of reality
Emotional Control
Promoting negative emotions and thought processes, such as not having enough money, that an individual’s “regular” job is pointless, you won’t reach your full potential unless you sign up with this MLM, your family isn’t supportive of you, everyone who is against you is Public Enemy #1
Upselling pain points related to money, time, business aspirations, luxurious lifestyles, vacations “paid for by the company” (NOPE), family structures, product promises
Love bombing, which allows the consultant to woo a potential customer or downline member
Instills the fear of failure in order to make downlines work harder
In case you hadn’t already guessed, MLMs have some strong cult tendencies. Some anti-MLMers compare MLMs to cult-like experiences. In the podcast, “Toxic Positivity” (which I HIGHLY recommend), this comparison comes to full light.
You can download the BITE Model whitepaper here.
I plan to do a separate blog post about this subject entirely, but I wanted to touch on it here, in our overview of MLMs. There is a reason why “life and motivational gurus” like Rachel Hollis and Tony Robbins are so popular in MLM communities. They use the BITE Model to influence followers and even appear consistently at MLM conferences. Since this epiphany, I do not consume such content anymore.
Birds of a feather flock together, as my family would say.
My Thoughts
I will admit that I have purchased items from MLMs, whether it’s to support a friend in a new side hustle or because of the nostalgia factor, a la Avon. I purchased a simple gold-and-glass locket from Origami Owl because I was able to put personalized charms in it. I love lockets and customization, after all. When we know better, we do better.
Again, people who join MLMs are not bad people (most of the time — there are always some bad eggs). I really think MLMs are predatory when people can be at their most vulnerable points in life or desperately are looking for a change. Honestly, it would be WAY better to start your own company from nothing than to join a dime-a-dozen MLM. You do not own your own company. Plain and simple. If you are filing a 1099 as a subcontractor only, you do not own your own business. The parent company does, and you are a cog in the community wheel.
Start a company (protected, of course) based on why you joined the MLM in the first place. Use your passions and interests to drive you to create your own manifestation of a dream. You will have more control over the journey and outcome. You will be disillusioned at times, but that happens with everything. You will OWN the blessings and the messes. Accountability -- and all of these things uplines preach -- will actually be yours and yours alone.
Then, and only then, will you be the boss you really want to be.
Here are some of my favorite content about the inner workings of MLMs:
The aforementioned The Huffington Post’s 9 Signs That Exciting New Job Opportunity Is Really An MLM Scam
YouTube channels: Kiki Chanel, Emily Leah, SAVVY Writes Books
Documentaries: LuLaRoe, YouTube search
Podcasts: Toxic Positivity, The Dream
Stay tuned for more MLM content this fall!
Kaylin R. Staten, APR, is an award-winning, accredited public relations practitioner and writer based in Huntington, WV with 18 years of professional communications experience. As CEO and founder of Hourglass Media, she uses her compassionate spirit and expertise to delve into the heart of clients’ stories. She is a recovering perfectionist, mental health advocate, wife, Luke’s mom, cat mom, and Leia Organa aficionado. Connect with Kaylin on LinkedIn.