They are preying on your anxiety, loss of income, and fear
I never knew much about the world of multi-level marketing (MLM) until I became a stay-at-home mom in my early thirties. We moved across the country for my husband’s job, and I found myself in a new city with no friends and a one-year-old. I joined a few mom’s groups, and luckily, met some genuinely great people.
However, in only a few months, I found myself inundated with invitations to at-home parties — Pampered Chef, Mary Kay, Arbonne, Isagenix, Plexus, Juice Plus, and Melaleuca, to name a few. I’m embarrassed to admit I bought a ton of products I didn’t need. Luckily, I never signed up as a distributor (what the industry calls its sellers.) However, these representatives hounded me (and still do) to join the long list of entrepreneurs who made enough money they could retire before their husbands.
Set your hours. Work from home. Raise your family and own your own business. Pictures of women at large conferences celebrating all the money they’re making make it seem like they’ve got cash to burn. It’s hard not to experience FOMO when you’re burned out from your current job or clipping coupons to stretch your grocery budget.
Eventually, I either unfriended or told these people in straightforward language to go away. It only takes a few Google searches to see just how predatory these representatives can be. Not only did I not believe the promise of quick money, but I realized the products they sell are often far more expensive and often of less quality than what you can buy at the store.
As the pandemic hit, I started seeing more and more questionable posts from MLM representatives (I couldn’t unfriend them all as some are family or good friends in other respects.) With rising unemployment rates, they’re claiming you can start your own business for minimal money upfront. And, worse yet, some claim their products can boost your immune system and prevent you from getting sick.
These practices are the lowest of the low. And many are finally getting hit with notices from the Federal Trade Commission (FTC) to stop. Here’s why you should avoid falling into their trap.
Their Medical Claims Are Often Illegal or Misleading
It didn’t take long before MLM distributors selling health and wellness products started using the coronavirus to lure new customers. A Forbes article mentions some MLMs, like Plexus and Youngevity, were warned for claims that their products could treat or prevent a COVID-19 infection when no scientific evidence of their efficacy against the coronavirus exists.
“The Federal Trade Commission sent warning letters to 16 multi-level marketing companies over claims made by their representatives on social media, saying the products they’re selling can treat or prevent the coronavirus, or about earnings participants can make by investing in the business after losing income due to the pandemic, as the agency works to protect consumers from scams related to COVID-19.”
The FTC cited a social media post saying, “#VIRUS_CORONA Worried? I’ve been boosting my immune system for several years with high-quality Plexus supplements. You can too!” Other warning letters were sent to Isagenix, Melaleuca, The Juice Plus+ Company, Vivri USA, Arbonne, doTerra, and Rodan & Fields.
An article in TIME highlights several claims their reporters found, including:
“With the flu and coronavirus spreading throughout the US, things are selling out,” wrote a seller for doTERRA, an essential-oils MLM. “If you are running low on these immune-boosting protection items, now is a good time to replenish.”
If you’re seeing similar posts on social media claiming you need an MLM product to boost your immune system, be wary. Fruits, vegetables, exercise, sleep, and Vitamin D are cheap and proven ways to improve your health.
They Are Exploiting Your Financial Insecurity
We’re all aware the pandemic has left millions of people unemployed or worried about their financial security. Many representatives are bragging about the money they make with their side hustle and how you can change your life if you sign up underneath them.
“In one promotional video cited by the FTC, Texas-based Pruvit Ventures, which sells health supplements, claims that selling for an MLM is ‘a great stimulus package because you get to teach somebody how to go earn $1,730 literally in the first ten days with the business.’”
However, extensive research by the FTC shows an average of 99.6% of people who join an MLM will lose money when expenses are taken into account. The report even labels some MLMs under investigation as pyramid schemes.
MLM distributors make money either by selling a company’s products or recruiting others to do the same. They earn a commission or bonus based on the sales of those they recruit. After signing up members of the family and close friends, they’re left reaching out to their extended list of social media friends (hence the DMs from people you haven’t spoken to in years.)
Once the market becomes saturated, most end up neck-deep in a product they can’t sell or spending money to attend conferences and training sessions. They’re told if they can’t sell the product, they’re not working hard enough. Illyssa Demarino, 31, a Phoenix bartender who tried three MLMs and spent thousands of dollars without making any money, told TIME:
“They tell you if you don’t go to a training, if you miss a single training, you will never be successful. It’s so easy to get wrapped up in the cult-like mindset.”
TIME goes on to say MLMs are not illegal, but many are at best financially risky. The chances of financial success are so grim that the Direct Sales Association president, Joseph Mariano, has called participating in MLMs an activity rather than a job.
More Than 80% of MLM Reps Make Nothing
The Talented Ladies Club published the following statistics taken from information each of the companies reports:
- 86% of U.S. Herbalife distributors earned nothing.
- 85% of Nu Skin distributors earned nothing.
- 88.6% of Forever Living reps earned nothing.
- 88% of Arbonne consultants earned nothing.
Many make less than $200 per month, not counting what they spend on products, product samples, house parties, and promotional supplies.
In it’s warning letter to Melaleuca, the FTC stated:
“Income claims about the potential to achieve a wealthy lifestyle, career-level income, or significant income are false or misleading if business opportunity participants generally do not achieve such results.”
There is a small percentage (less than 1%) of representatives making large sums of money each month with MLMs. These people generally got in early when the product(s) was young, and the market not saturated.
I’m always skeptical, but recently a friend on social media posted she was quitting her $900K business with Isagenix to start a new venture. I don’t know many people willing to walk away from that kind of money to begin again, especially in the MLM world. She wouldn’t be the first to lie about her income (or not tell the whole truth) to attract recruits. Many boast about large paychecks when the statistics don’t add up.
Herbalife, an MLM selling health and personal care products, claims to have 2.3 million distributors. According to the company, of those who received earnings, approximately:
- 50% made less than $370 a year.
- 10% made just $6,965 a year.
- Only the top 1% earned more than $108,802.
At 2.3 million, only 23,000 make a substantial living, and it’s far from the millions many claim. Keep in mind, more than 80% made nothing at all.
If you think becoming a distributor for an MLM is something you’d like to do, make sure you research the company’s reported earning potential and the saturation of the market you’d be targeting. Some people join solely for discounts on the products and never intend to recruit, which may be the best route.
COVID-19 related scams are everywhere right now, so it pays to investigate any offer for miracle treatments, cures, or financial security. Past recessions have proven to be big boons for MLM companies, as they aren’t afraid to take advantage of human tragedy.
Most good things come after a lot of hard work and effort. Anyone promising you can sit on the beach while earning thousands in passive income is full of it, in my opinion. Maybe you’ll end up in the top 1%, but statistics say you’ll spend years (and a lot of money) getting there. You’d be far better off spending that money on advancing your career in other ways.