Multi-level marketing companies and the disinformation they sell (2023)

This rebroadcast originally aired onSeptember 30, 2021.

Multi-level marketing distributors promise big moneyin a way that fits into your life.

But for many people who sign up, they quickly discover a problem.

"Their entire industry is founded upon disinformation," Amanda Montell says.

And that disinformation is metastasizing into conspiracy theories.

Today, On Point: Multi-level marketing companies and the disinformation they sell.

Guests

Amanda Montell, writer and linguist.Author of "Cultish: The Language of Fanaticism." (@AmandaMontell)

Stephanie McNeal, senior culture reporter for BuzzFeed News. (@stephemcneal)

Also Featured

Jessica Hickson, former It Works distributor.

Transcript: Jessica Hickson On The Perils Of MLMs

Jessica Hickson runs a successful YouTube channel where she shares about her experience with multi-level marketing schemes (MLMs), and warns others about the perils of MLMs.

(Video) Multilevel Marketing | Bonnie Patten, TINA | Merchant Risk Live

When she left It Works in 2020, she lost everything: her income, friends and daily routine. In January of this year, with encouragement from her neighbor, she began sharing her experience on YouTube. Below, she tells her story:

My name is Jessica Hickson. I am 30 years old. I currently live in St. Louis area and I was a part of It Works for five years.

[Tape from Jessica's It Works marketing videos]:"Hey guys, I just wanted to make a quick video and tell you guys my why. Why I decided to join It Works and why I do what I do."

It Works sells a variety of ... what they call health and wellness products. They were initially known for their skinny wrap, is what they call it. So it's just a wrap you put on that allegedly contours you.

[Tape from Jessica's It Works marketing videos]: "Anyway, so I tried this wrap and in the morning I took it off and I was like holy crap. It works. It really works!"

I actually didn't know what an MLM was before I joined one. I just saw my friend posting about it and she was talking about money that she was personally making. At the time, my husband had just gone to active duty and we were at our first duty station and so we were sharing a car.

I was nannying here and there, but other than that, it was really hard for me to work outside of the house with his schedule. So I thought, if this is my friend and I know her personally and she's making money with it, then I might as well give it a shot because I can't work outside of the house really anyway.I was like, all right, let's do this. I'm going to do whatever it takes. I did research on how to be successful.

I think the difference in my story and other people's stories when they were in MLMs is that the majority of people we know lose money. But the difference with me was that I was bringing in more money than I could have ever imagined bringing in with a regular job. And so that was a large part of me ... sticking it out. Because I thought if I'm making this amount of money, other people can, too.

I saw red flags along the way. But when you're surrounded by everyone who believes the same thing, you're taught to turn off that voice inside your head that it's telling you these are red flags, you need to run away.

We didn't actually have to, like, carry an inventory, which is one of their big selling points. However, with that being said, we were highly encouraged to keep product on hand in case someone wanted to buy it off hand or to show that you were using the products. And a lot of leaders wouldn't even speak to someone beneath them if they weren't running their monthly auto shipment.

(Video) A Former MLM Top Earner Breaks Down The Reality Of The Industry

The compensation plan was structured in such a way that if you weren't maintaining ranks, you weren't getting bonuses and you weren't making a significant income. So a lot of people had a huge incentive at the end of the month to buy a bulk order of products in order to maintain that rank so that their paycheck wasn't cut in half the next month.

The biggest thing with the products is that they're all made out to be a quick fix. I have a before and after photo that is floating around, it works because I did have good results with the products.But the problem with it is that they are leaving out huge details about my weight loss. So in the before photo, I had just had my daughter. And I had two babies in two years.

And I wouldn't go as far as to say that I had an eating disorder in the photos that are circulating of me right now. But I would say that there were times that I went a little more hungry than I should have or I worked out far too much, you know, just to have those before and after photos to show people that my products are working.

My husband was deploying. And at the time I had, I think, a two and three year old. And so the months leading up to his deployment, I just wanted to spend with my family. I didn't get on any of our team calls, which we had one weekly. And so my husband ended up leaving.

I was talking to my upline shortly after. She had called to do like a check in on me and just say, how are things going? And at that point it was very fresh and new, him leaving. So I was a wreck. I was just crying. I was like, I don't know how I'm going to do this.

And then at the end of the call, she just said, OK, well, I just wanted to let you know that I have removed you as a leader in our team page because we need someone who's going to lead by example. And you're not doing that right now.

Everything that someone above me said was taken as fact.

[ARCHIVAL TAPE] It Works promo video: "It always works. Everything about our company works. The compensation plan works. The people work, we work, the products, all of the above. I love this company."

So even if I truly in my heart believed that it wasn't true, I had to portray it in a way that it was true for my team. And then once you do that so much, you start to believe it yourself.

[ARCHIVAL TAPE] It Works promo video: "The biggest obstacle everybody needs to overcome is your belief in yourself."

(Video) The Path Towards Resiliency – Building the Healthy Information Environment of the Future

MLMs would not exist if they weren't able to tell any lies at all.

Interview Highlights

What are MLMs?

Amanda Montell: "MLMs, which stands for multi-level marketing, also known as relationship marketing, direct sales, I often refer to them as the legally loopholed fraternal twin of the pyramid scheme. They are these pay-and-recruit organizations powered not by salaried employees, but by coaches, affiliates, distributors, international business owners, whatever sort of euphemistic label the organization chooses for its recruits who are lured in with the promise of this amazing opportunity to become a 'mompreneur.'

"As often non-working wives and mothers are the target for most of these MLMs, they can earn a full-time living with part-time work. All they have to do is pay a buy-in fee and then meet certain monthly quotas. ... They need to unload product. It doesn't matter on who, they could buy it up themselves. And they also need to recruit their friends and family to become sellers themselves.

"The problem is that when you have so many people constantly recruiting, recruiting and recruiting, the market floods exponentially with the dearth of too many sellers. And you find a very small group at the top of this pyramid shape that are making money at the expense of a screwed over mass at the base."

How are MLMs today different from MLMs of the past, such as Amway or Mary Kay?

Amanda Montell:"MLMs are expert rebranders. And so while groups like Amway and Mary Kay and Tupperware, their sellers were the sort of Suzy Homemaker type that you might picture in the '40s and '50s when MLMs were promised to be the best thing that happened to women since they got the vote.

"Now, MLMs exploit the sort of Pinterest feminism and natural, holistic, organic proclivities of a younger audience. MLMs will have chicer, updated packaging. They will use language like Girl Boss, Boss Babe, Fempire, SheEO. They'll capitalize on whatever trendy pseudo-feminist buzzwords are resonating with people at the time."

On the 'cultish' behavior behind MLMs like LuLaRoe

Amanda Montell:"There was a lot of language at play here that made the company so much more than a company and so much more than a scam. So MLMs are not just your average financial scam. They are these complex and life consuming organizations with a language and a culture of their own. They have these strong and pervasive ideologies that are missionary in character. And they have these founding leaders that that recruits come to worship on the level of a spiritual guru.

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"These leaders are thought to be all-knowing, charismatic, enlightened. And there are measures in place to make sure that you do not question them. Everyone in the company is uplifted with labels to make them feel like they're superior to everyone else in the economy. And there are labels there to lambast everyone who's not involved with the business.

"In fact, recruits are encouraged to either get people they know involved or sniff them out of their life. So incredibly co-dependent relationships form within these groups, especially because financially you're depending on the selling and recruiting of everybody above and below you. So under that type of pressure, things can get quite cultish."

On how MLMs can spread conspiracy theories

Amanda Montell:"Think of a Venn diagram with MLMs in one circle. Anti-vaxers, wellness warriors, new agers in another circle. And classic conspiracy theorists, say QAnoners, flat-Earthers, Holocaust deniers and the like in the third circle. The convergence there is a deep mistrust of mainstream institutions. Whether that's bureaucratic business, the mainstream media, the government, the health care system. During times of social crisis and turbulence — and I think we're in one of those times right now — alternative affiliations tend to spike.

"We saw that in the late '60s and '70s with the Vietnam War and the civil rights movement, the Kennedy assassinations. And now with so much ideological separation and political turbulence, the pandemic and certainly the internet, there is now a cult for everyone. And if you've lost trust in these mainstream institutions, if you've internalized a message of sovereignty — the idea that you should take your own health, your own life, your own career into your own hands — you're going to be able to find others who believe the same."

On solutions to stop the spread of disinformation from MLMs

Amanda Montell:"MLMs are legally loopholed because of a precedent-setting case involving Amway from a few decades ago. The government is incentivized to keep their ties with the direct selling association because they have very strong political ties and donate handsomely to mostly Republican presidential candidates coffers. So there is this sort of toxic symbiosis between the direct selling association and the government there.

"The government is not really motivated to completely shut down the direct selling association or MLMs in general because they benefit from the industry. I also want to comment on the commenter from before that not every MLM will employ equally cultish tactics. However, the direct selling association in general is its own sort of pyramid scheme.

"Because let's say you get involved with one MLM and it doesn't work for you. Odds are the pattern shows that you're going to get involved with another one. That's what a lot of people do. And just because one given MLM may not have negatively affected you, it doesn't mean it didn't negatively affect lots of other people. I often like to make an analogy to toxic one-on-one relationships, abusive relationships. You can have a very good relationship with someone who used to abuse other people. So it's all about perspective."

From The Reading List

Bustle: "LuLaRoe Isn’t Just A Scam — It’s A Cult" — "Ifirst learned of the 'leggings cult' in the small hours of a 2017 winter morning. I was approaching the event horizon of a Facebook black hole when I came across a post that sent shivers down my spine: my former high school English teacher was trying to shill a scam to her hundreds of digital 'friends.'"

(Video) The 1 Secret Trick I Used To Recruit Thousands Into My Network Marketing MLM Home Based Business!

BuzzFeed News: "Gen Z Moms Are Building Their Brands Around QAnon" — "Last June, Alexis, a 23-year-old mother of two from Tennessee, created an Instagram account aimed at sharing the bogus narratives tied to QAnon, which she had recently discovered."

FAQs

Is multi-level marketing fake? ›

Multilevel marketing is a legitimate business strategy used by some direct sales companies to sell products and services. Existing members are encouraged to promote and sell their offerings to other individuals and bring on new recruits into the business. Participants are paid a percentage of their recruits' sales.

Is MLM just a pyramid scheme? ›

Pyramid Schemes are, however, fraudulent schemes, disguised as an MLM strategy. The difference between a pyramid scheme and a lawful MLM program is that there is no real product that is sold in a pyramid scheme. Participants attempt to make money solely by recruiting new participants into the program.

Is MLM real or fake? ›

Most people who join legitimate MLMs make little or no money. Some of them lose money. In some cases, people believe they've joined a legitimate MLM, but it turns out to be an illegal pyramid scheme that steals everything they invest and leaves them deeply in debt.

Why you shouldn't buy from an MLM? ›

By buying from an MLM rep you are contributing to the illusion that they'll make a success of this and one day attain the wealth their uplines pretend they enjoy. And the longer they stay in their MLM, the more money they're likely to lose, according to the research.

Is Walmart a pyramid scheme? ›

If you're part of an MLM, you're going to get that pressure. So while the corporate structure of Walmart (or any other legitimate business) is shaped like a pyramid, it's not a pyramid scheme in the way that an MLM is.

What makes an MLM illegal? ›

If the opportunity for income is primarily derived by recruiting more participants or salespersons rather than by selling a product, the plan probably is illegal. Several courts interpret greater pressure on members to sponsor new recruits than to market company merchandise as evidence of an illegal pyramid.

Is Mary Kay an MLM? ›

Business model

Mary Kay sells cosmetics through a multi-level marketing model. Mary Kay distributors, called beauty consultants, can potentially make income by directly selling to people in their community, and also receive a commission when they recruit others to begin selling under their distribution network.

Is Pampered Chef a pyramid scheme? ›

Like Tupperware, Avon, and Mary Kay, Pampered Chef is a multi-level marketing company. No, it's not a pyramid scheme; those are illegal. Doris Christopher, a home-ec teacher then stay-at-home-mom, started Pampered Chef in 1980, selling cookware and doing “kitchen shows” in her friends' homes.

Do MLMs actually make money? ›

Making Money in an MLM

The short answer is yes, but in reality, only a tiny percentage of representatives actually realize the high earnings advertised in MLM promotional materials and at meetings. Some people don't make any money at all, and some people actually lose money.

Who is the No 1 direct selling company in 2022? ›

1. Amway India Enterprises Private Limited.

What is the highest paying MLM company? ›

Top 20 Best Highest Paid MLM Companies 2022 | MLM Companies to Join in 2022.
  • Mary Kay: $3.25 billion.
  • Avon: $5.7 billion.
  • Amway: $8.8 billion.
  • USANA: $1.01 billion.
  • Herbalife: $4.5 billion.
  • Forever Living.
  • Tupperware: $2.21 billion.
  • Vasayo.

What MLM makes the most money? ›

The Top 25 Multi-Level Marketing Companies List
  • Amway: $8.8 billion. ...
  • Avon: $5.7 billion. ...
  • Herbalife: $4.5 billion. ...
  • Vorwerk: $4.2 billion. ...
  • Mary Kay: $3.5 billion. ...
  • Infinitus: $3.41 billion. ...
  • Perfect: $3.06 billion. ...
  • Quanjian: $2.89 billion.

Why do people quit network marketing? ›

A lot of people quit because they fail to carryout a proper reseach of the company and it's offers. Frustration sets in after lots of effort that results in little or no earnings at all.

What happens when you leave an MLM? ›

MLMs build up their distributors to feel like they're an irreplaceable member of the company. But the people who sell MLM products are like any other customer. Typically, your costs end with your last order, though your MLM could charge a one-time inactivity fee.

Why do so many people fail at MLM? ›

Most of the multi-level marketing organization fail because of poor financial management. Always go for a progressive, revolutionary, and steady company. At times, you dreamt of becoming the most flourishing network marketer, but you just never get on your track. You set a goal but don't take any concrete action.

Is Bitcoin a pyramid scheme? ›

Ponzi schemes are scams in which fraudsters use money from new investors to pay rewards to the existing ones, without ever generating any revenue. Bitcoin is a high-risk investment, but it has many traits that do not chime with being a Ponzi scheme or a scam.

Is Walmart owned by a Chinese company? ›

It's not China. History and look at the biggest shareholders in the company. Since opening in 1962 in Rogers, Arkansas, Walmart has grown to approximately 10,500 stores and Sam's clubs in 24 countries, according to its corporate website.

Do people lose money in MLM? ›

99% of MLM participants lose money

According to research at the FTC, a whopping 99% of recruited sellers lose money in an MLM venture. That means just 1% actually turn a profit. That is generally just those at the very top of a recruitment structure.

What percentage of MLM make money? ›

Only 25% of MLM participants turn a profit. While the FTC reports that 99% of MLM participants lose money, the more recent AARP study finds that the numbers aren't quite as stark. The AARP found that 25% of those surveyed made a profit, while 27% broke even. Only about half lost money.

Why is pyramid selling illegal? ›

Legitimate trading schemes rely on valuable goods and services, while illegal pyramid schemes focus simply on recruiting more and more investors. Using hard-sell techniques, fraudsters try to pressure you into making rushed decisions, giving you no time to consider the nature of the investment.

Is Scentsy a pyramid scheme? ›

To anybody wondering, is Scentsy an MLM, yes. Scentsy is an MLM. In 2004, a struggling entrepreneur with several failed business attempts under his belt bought Scentsy. His name was Orville Thompson, and today Scentsy is owned by Orville and his wife, Heidi.

Is Kay owned by Katrina? ›

Katrina Kaif, Co-founder of Kay Beauty said, "My vision for Kay Beauty was to create a diverse and inclusive brand that would resonate with makeup lovers and specifically cater to Indian skin requirements.

Which is better Rodan and Fields or Mary Kay? ›

Rodan and Fields's brand is ranked #- in the list of Global Top 1000 Brands, as rated by customers of Rodan and Fields. Mary Kay's brand is ranked #821 in the list of Global Top 1000 Brands, as rated by customers of Mary Kay.
...
Rodan and Fields vs Mary Kay.
63%Promoters
17%Passive
20%Detractors

Does Warren Buffett own Pampered Chef? ›

The company was acquired in 2002 by Warren Buffett's Berkshire Hathaway corporation.

Does everyone make money in a pyramid scheme? ›

Since there are only a limited number of people in a given community, all pyramid schemes will ultimately collapse. The only people who make money are those few who are on the top of the pyramid. Legitimate multi-level marketing companies, on the other hand, can be around for a long time.

Is there a monthly fee to be a Pampered Chef consultant? ›

No, Pampered Chef does not charge you any other fees throughout the year. The only other thing you HAVE to have is catalogs. You'll want to replenish those when needed since your catalog is your BEST marketing tool you have!

Which MLM product is the best? ›

MLM Rankings: The Top 5 Multi-Level Marketing Businesses
  1. doTerra. doTerra is one of several MLM companies selling essential oils for health and wellness. ...
  2. Jeunesse. With its anti-wrinkle cream and other products, Jeunesse promises to reverse the signs of aging, if temporarily. ...
  3. Younique. ...
  4. Digital Altitude. ...
  5. Tecademics.

Which is the fastest growing direct selling company? ›

Check out our list of 2021's fastest growing mlm companies below.
  • #8. Pola. ...
  • #7. Younique. ...
  • #6. Le-Vel. ...
  • #5. Nu Skin. ...
  • #4. Plexus Worldwide. ...
  • #3. Jeunesse. ...
  • #2. Melaleuca. ...
  • #1. doTERRA. DoTERRA, which markets essential oils and other wellness products, has enjoyed rapid growth since its founding in 2008.

What businesses will boom in 2022? ›

Fastest Growing Industries in the US by Revenue Growth (%) in 2022
  • Oil Drilling & Gas Extraction in the US. 87.0%
  • Cruise & Travel Agency Franchises. 76.4%
  • Wedding Planners. 75.5%
  • International Airlines in the US. 64.0%
  • Travel Insurance. ...
  • Tour Operators in the US. ...
  • Hotels & Motels in the US. ...
  • Sightseeing Transportation in the US.

What sells the most 2022? ›

50 Top Trending Products to Sell Online At Your Ecommerce & Dropshipping Store in 2022
  • Laser Hair Removal Machines.
  • Portable Car Vacuum.
  • Baby Swings.
  • Matcha Tea.
  • Eyebrow Razor.
  • Seat Cushions.
  • Phone Tripod.
  • Portable Solar Panels.
25 Aug 2022

What is the oldest MLM company? ›

A company sea vegetable supplement company named Wachter's started as the first network marketing company in 1932, during the Great Depression of the 1930s.

Which is best MLM company in USA? ›

Best MLM Companies in USA
  1. Amway. Amway is the most popular direct selling company on the list. ...
  2. Avon. Avon is well known for its cosmetics and beauty products. ...
  3. Herbalife. Herbalife is the largest nutrition product-based network marketing company in the world. ...
  4. Natura & Co. ...
  5. Vorwerk. ...
  6. Mary Kay. ...
  7. Forever Living. ...
  8. Nu Skin.
12 Oct 2021

What is the best multi level marketing company to work for? ›

Top 16 Multi-Level Marketing Companies
  • Forever Living. ...
  • Young Living. ...
  • DoTerra. ...
  • eXp Realty. ...
  • PM International. ...
  • Tupperware. ...
  • Rodan & Fields. ...
  • Oriflame. It's a Swedish-Swiss company competing with other MLM brands selling beauty products.
4 Apr 2022

What Bill Gates say about network marketing? ›

Bill Gates says that network marketing is no doubt a great opportunity for those who do not have enough financial as well as intellectual resources for developing their own business, services, or products.

Who is the king of network marketing? ›

Turner, Turner, Turner : The King of Network Marketing by Glenn W. Turner.

Can I become millionaire by network marketing? ›

Be a network marketing millionaire will teach you how to: establish a new, more empowering belief system multiply your income and team size ten times in record time create a Duplication system for a lifelong passive income secret techniques to make a never-ending prospect list use effective social media strategy for ...

Is multilevel marketing safe? ›

A lot of multi-level marketing companies have been found to be illegal after people who became the victim of the MLM fraud and MLM scams brought the companies' illegal affairs out in the open to the notice of authorities.

Why is Multi-Level marketing Illegal? ›

Multi-level marketing is legal as long as it complies with disclosure laws and, as we noted above, provides customers with an actual product in exchange for their money. But people trying to make some easy money or break into the sales or business ownership world should be wary.

How successful is Multi-Level marketing? ›

99% of MLM participants lose money

According to research at the FTC, a whopping 99% of recruited sellers lose money in an MLM venture. That means just 1% actually turn a profit. That is generally just those at the very top of a recruitment structure.

How does multilevel marketing make money? ›

Multilevel marketing schemes are generally network based marketing schemes, in which a person has to add more people under him. The people obviously pay some money to “join” the business and then they add more people under them. In almost all the schemes, the person is incentivized for adding more people under them.

What is multilevel marketing called now? ›

Multi-level marketing (MLM), also known as direct marketing or network marketing, is a method of selling products directly to consumers using independent sales representatives.

How do I get out of multilevel marketing? ›

How to leave an MLM
  1. Cut ties to your upline. Remove yourself from group chats, shut down your social accounts and ignore texts to avoid the guilt, blame or pressure from those who directly benefit if you stay.
  2. Unload your products. Take advantage of buyback or return policies. ...
  3. Reach out to loved ones.
16 Feb 2021

What are the negative effects multi-level marketing? ›

The high degree of flexibility and autonomy also comes with a drawback. Distributors only receive limited support from the company. The lack of sales training or support from expertise may make their sales efforts very inefficient. Also, a multilevel marketing organization lacks control over its salesforce.

Is doTERRA a pyramid? ›

2. “Isn't this an MLM company or pyramid scheme?” “doTERRA® is a Direct Selling Company, which is very different from a Pyramid scheme. A Pyramid scheme's focus is to recruit new members, and pay bonuses for achieving recruitment goals.

How long does the average person stay in a MLM? ›

At least 50% of MLM participants drop out after one year.

The AARP found that more than 50% of participants drop out after one year, and more than 90% drop out before 10 years. In contrast, about 20% of small businesses don't make it past one year, while about a third survive more than 10 years.

What is the longest running MLM? ›

A company sea vegetable supplement company named Wachter's started as the first network marketing company in 1932, during the Great Depression of the 1930s.

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