If you use social media, there's a pretty good chance you've seen at least one of your friends post about some revolutionary product/company that's helping them earn money while they sleep or letting them own a small business while staying at home with their kids. And if you've been friends with me for a while, you've seen me share huge walls of text about why those companies are horrible scams that ruin finances and friendships. I've never done a proper "why pyramid schemes are the worst" post on this blog and I can add links and pictures more easily on here than in a regular Facebook post, so I think it's time. (If you missed it, I did make a post about products you can buy if you like the kind of thing an MLM sells but don't want to support the predatory business model.)
So, what exactly is a multi-level marketing company and how is it different from a pyramid scheme, which is technically illegal? MLMs get away with what they do because they have products that people can buy. Pyramid schemes are all about recruiting other people to join the company and they don't have a product to sell, so the only way a member can make money is by getting other people to join. In theory, MLM company representatives could make money by selling products, but they're usually still pushed pretty hard to get recruits because that's a much more effective way of getting money out of the situation. Distributors for companies like Younique, LuLaRoe, It Works!, Nu Skin, Young Living, and Rodan + Fields just love to point out that pyramid schemes are illegal and their company totally isn't one because they have things you can buy. Sometimes they'll even try to claim that regular jobs (y'know, the ones that pay you) are the real pyramid schemes because people higher in the company make more money than the regular employees. That's... not how that works. MLMs are essentially pyramid schemes under a different name.
On a somewhat-related note, that "secret sister gift exchange" thing that gets shared on Facebook every December is another type of scheme to avoid. If you've been lucky enough to avoid seeing that, the premise is that you'll send one $10 gift to someone, get a few other friends to be part of the gift exchange as well, and you'll get multiple gifts from other people. It's not mathematically possible for that to work out and it's illegal anyway.
 |
| If you recruit six people to join the gift exchange, who gives those people their gifts? The six people they each recruit would. But then who gives them gifts? The people that they recruit. But... You see where this is going. |
MLMs are particularly prevalent among stay-at-home mothers and religious people. They love to target women who either wish they could quit their job and spend more time with their kids or wish they could continue to take care of their kids during the day while also earning money to help with the bills. Sales reps say all kinds of things to convince their friends to join the company, making it seem like a safe investment that will definitely be successful and allow them to make easy money. Sometimes they'll even go with a mom-shaming approach and try to make their potential recruit feel guilty about not spending enough time with their kids or not contributing financially to their family. Stay-at-home moms sometimes feel isolated and miss opportunities for regular socialization, so the popular "This company is more like a sisterhood! You'll make tons of friends!" angle might also be appealing.
Since you tend to trust and love the people you see at church every Sunday, that trust may end up getting used against you when someone in your congregation joins one of these companies; you'd never expect that one of your friends would recruit you into something they know doesn't actually work very well. Most religions I'm aware of want their members to be honest, helpful, caring people who serve others. Convincing your friend to join a company that is nearly guaranteed to make them lose money is not a Christlike thing to do.
There have been studies, warnings, lawsuits, books, and documentaries explaining that making money from an MLM is highly improbable. If 99.7% of people who join MLMs lose money, how in the world are they still around? There are a lot of tricks that these nasty companies use to get people to join and prevent them from leaving. For the rest of this post, I'll talk about some of those tricks.
Upline Pressure
I've read several stories from former MLM reps about how their upline (the person who recruited them) made them feel awful about themselves, told them that any negative information about the company was to be ignored, and insinuated that they would be making money if they were doing better at one thing or another. If you express doubt or fail to meet goals, your upline might berate you and make you feel like you're failing them as a friend. At some point, you did like this person enough to sit through their sales pitch and sign up under them, which means they probably have the ability to make you feel guilty about disappointing them. There's also a risk that you quitting the company will result in them unfriending or even blocking you.
Empty Promises
Something a lot of people are told when they join an MLM with a starting kit/fee is that they'll easily make back that first investment within a certain amount of time, which isn't likely to actually happen. They may be told that they'll make a lot of friends through the company only to find that when you're all trying to sell the same products to anyone who will listen, there's more of a competitive feel than one of sisterhood. (Imagine opening a Domino's franchise, convincing your friend to open one right next to yours, and then still somehow being friendly with them despite fighting for the same customers. Not likely.) One of the big draws is that stay-at-home moms will have plenty of free time to spend with their kids while still having this "side biz" to help them earn money, but they seem to end up spending a lot of time on social media trying to get algorithms to work in their favor and curating the perfect posts to share.
If you really want to stump someone who's trying to recruit you, ask if they'd be willing to pay your initial fees since it's such a sure thing that you'll be able to pay them back for it in a few weeks. If it's not a risky move for you, it shouldn't be a risky move for them, right?
"Fake It 'Til You Make It" / Constant Positivity
Recruits are often told that they need to make their social media presence very positive and glamorous, even if they're struggling. It needs to seem like they're perfectly happy and having a great experience with "being their own boss" and being part of the company. Some uplines even assign homework of sorts, requiring a certain number of posts per time period or dictating what kinds of things to post. (One recipe/meal, one picture of a kid, one inspirational quote, one post aimed at getting lots of responses, one post featuring products, etc. See this link for a Younique example that I found online. It disgusts me that they put a quote from an LDS apostle on it even though the Church leadership has warned against these kinds of schemes.) They want to duct tape rose-colored glasses onto their friends' eyes and make people think that they aren't at all having trouble getting people to buy their expensive skincare or hideous, shapeless dresses. That way, when they go to recruit someone, they can point to their posts and say, "See? Look how well I'm doing! You could be this happy, too! Just sign right here and enter your credit card information."
Echo Chamber
The people at the top of the pyramid know that looking into the company too much will result in discovering the truth, so they like to make sure the recruits don't ever hear anything negative. If they do, they're trained to think of it as just a bunch of lies made up by people who are jealous because their job is inferior somehow. (I think getting a regular paycheck seems nicer than only getting paid a small amount per pair of paper-thin leggings you convince your friends to buy, but whatever.) MLM representatives are told that they shouldn't pay attention to people who say bad things about their company and are often added into Facebook groups and group messages with a bunch of other representatives. They're told to befriend other sellers, interact with their posts, and even unfriend or block the "haters" who try to point out red flags. I've personally been blocked by a couple of people at this point because I do things like recommend inexpensive products and share articles about the dangers of MLMs. I guess trying to help my friends not waste money makes me a jealous hater.
"Just Use Credit!"
When the money is inevitably not rolling in as promised, some reps start to worry about the state of their finances. If they voice those concerns to their upline, they might be told to just keep trying and use a credit card to fund the expenses of their new business. This is, of course, terrible advice. Ideally, credit cards should be used for A) things you have the money to pay for and B) emergencies/essentials. It's best to be able to pay off your credit card(s) before any interest accumulates so you don't pay more than you need to. That isn't always possible, especially for the people who get targeted most severely by these companies, but definitely don't use a credit card to pay for the opportunity to lose money in a pyramid scheme.
 |
| There are so many things wrong with this post "debunking" reasons to not join Monat. Don't open a credit card to join an MLM. You won't make your money back at all, let alone in the first month. Selling Monat does not help others in any way. Your hair will not be beautiful or healthy if you use Monat and, frankly, you'll be lucky to have any hair left if you do. |
"Anyone Can Do It!"
When you have someone trying to sell to you or recruit you, they're equipped with canned responses for all kinds of negative answers. If someone wants you to buy/sell makeup and you say that you don't wear makeup very much, that doesn't faze them at all, which is a pretty big red flag, in my opinion. "Oh, but anyone can sell Younique!" they'll say. No experience with makeup whatsoever? That's alright, buy the starter kit and broadcast a live video of yourself applying it anyway! Surely that couldn't possibly lead to anything embarrassing because everyone is great at using makeup when they first start, right? (No. No, they're not. Makeup takes practice and I, for one, would not want to have my practice be shared live for anyone on Facebook to see.)
It simply doesn't make sense that someone who doesn't have experience or practice with makeup would be successful at convincing other people to buy it from them, especially without being given any kind of training. If you've ever been to a Sephora or Ulta and had an employee offer to help you find foundation that matches you, didn't you check to see if their foundation matched them before accepting their help? Why would I take makeup advice from someone whose eye shadow is an unblended stripe? (As a side note, the woman who co-founded Younique isn't known for having very flattering makeup. I know I keep going after Younique specifically; I have a special hatred for that company because they sell makeup that is both terrible and ridiculously expensive. It can easily be outshined by just about any drugstore makeup out there.)
 |
| Would you buy makeup from this lady? I sure as heck wouldn't. This is Melanie Huscroft, co-founder of Younique. |
Sunk Cost Fallacy
After spending money to join the company (another red flag, by the way - you should never have to pay to start a job) and buying their products, it's easy for sunk cost fallacy to sneak in and convince you to keep trying for just one more month. Admitting that something was a failure, especially when you've put a bunch of money into it and made a lot of public posts about how happy and successful you are, is hard to do! If Jared and I hadn't had success with our calorie counting after a few months of trying, it would've been tempting to quietly delete my posts about starting to diet rather than owning up to our lack of weight loss. It stings to feel like you've wasted your money and effort, but it'll sting even more if you keep throwing money and time away by trying to make an MLM work despite the system being rigged against you.
Since this is already getting overwhelmingly long and I still have more topics I could cover, I'll continue talking about reasons why MLMs are terrible in future posts. For now, just say no to pyramid schemes!
Love,
Lizzie
No comments:
Post a Comment