The Plague of Multi-level Marketing (Part 4) - What You Can Do

Hi, friends!

Now that I've gone into great detail about many reasons why pyramid schemes are manipulative, financially crippling, and overall horrible, I want to talk about what can be done.

If you know someone in an MLM, which pretty much all of us probably do, know that buying their products is not the way to help them. It's what they want you to do and it feels like you're being supportive, but that only gives them false hope. If they get a few people to buy something from them, that makes them believe that they really can earn money with that company and that belief can push them to invest even more of their time and money into trying to make it work. It's better to do things like encourage them to keep track of their income and expenses. Sales and recruiting might be bringing them some money, sure. Does that make up for the money they've put into the business or the taxes they should be paying as an independent contractor (or for the friendships they've potentially lost)? Probably not.

Obviously, you don't want to damage your friendship with the rep, so tread carefully. MLMs train their recruits to see any negativity toward the company as hostile, toxic, and false, so a direct confrontation could result in them blocking you. They may see your attempts to help them as an attack. MLMs are a lot like cults in that way.

If they aren't very familiar with how MLMs work and the dangers they pose, you could suggest that they watch the informative (though sporadically crude) John Oliver video about them. There's also a documentary called Betting On Zero that's available on Netflix and a handful of podcasts dedicated to exposing MLMs for the treacherous, despicable things that they are. A lot of the people who get recruited into MLMs don't realize what it is they're getting into until they've already sunk money into the company.


If you are in an MLM or thinking of joining one, I implore you to thoroughly scrutinize the situation. Look into the company and pay attention to how much money its distributors earn. It can be hard to find the statistics (because these companies don't seem to like admitting that barely any of their employees are actually making money). Ask the person who recruited you or is trying to recruit you about how much money they made with the company last year after expenses. Ask them what percentage of their profits came from selling products to people outside the company. Ask how much time they spend on their efforts per day or week and how long they've been with the company. Find out what the company's refund policy is like and what the requirements are for staying "active" over time. Learn about the products and whether or not they're worth the expensive prices. Has the company had lawsuits, scandals, or other issues? How complicated is the compensation plan?

If you want to earn money from home while taking care of your kids, there are legitimate ways to do that. I take surveys on my phone using an app called QuickThoughts and earn Amazon gift cards. There's also a website called Swagbucks that lets you redeem gift cards to various stores with the points you earn by taking surveys or other methods. You can get cash back when shopping online through the browser extension Rakuten (formerly eBates). If you want Google Play credit, Google has a survey app that will let you earn the credit for apps, books, or movies on the Play Store. None of those are likely to earn you enough money to live on, but they will help a bit and won't end up costing you money like an MLM will.
As stated by Dr. Jon M. Taylor in his excellent and comprehensive book, The Case (for and) against Multi-level Marketing, "MLM makes even gambling look like a safe bet in comparison." He also wrote that gambling is more honest than MLMs because everyone has an equal chance and gambling establishments don't pretend that their games are a business opportunity. In chapter seven of that book, Taylor shows that, according to his research, 99.78% of Nu Skin participants lose money, along with 99.84% of Tupperware participants, 99.91% of Amway participants, and 99.92% of Herbalife participants. The accepted average percentage of MLM participants who lose money is 99.7%, so this information isn't exactly surprising. Blackjack gives you better odds. So I guess gambling is another option you could pursue, but please don't.

Succeeding in an MLM isn't a matter of putting in the right amount of effort, it's dependent on how early you were to join the company. If and when you aren't able to profit from your MLM, it's not your fault. It's how they're set up! Please don't join an MLM. If you're already in one, please consider leaving the company before you lose any more money. You're not a "quitter" or a failure if you do. Getting out of an MLM is making a wise and difficult choice for your financial and emotional benefit.

Jake Peralta isn't someone I'd normally tell you to take advice from, but he knows what he's talking about in this case.

Thank you for sticking around through my barrage of words! Hopefully you learned something or at least got some entertainment out of it. This is a subject that I (clearly) feel quite strongly about. I've seen too many people get hurt in multiple ways by these companies. And not a single person I've known who's joined an MLM has had the success that they were promised. (On Mary Kay's website, I found an article from 2012 saying that there were about 5,600 pink Mary Kay Cadillacs on the road at the time and 2.4 million "beauty consultants" total. Of all the reps dreaming of one day qualifying for that iconic car, only about .23% actually get there. Yikes.)

Hopefully these companies will get shut down someday for being predatory and designed to scam their employees. Until then, I'll be here grumbling about how atrocious they are to anyone who will listen.

Love,
Lizzie