When the Women in Your Life Join MLMs

Woohoo, it’s Women’s History Month and we get to discuss how women get screwed over when they join MLMs! What flagrant joy be the day when I discuss this predatory type of business with questionable legality and unquestionable dishonesty!

I consider MLMs in a whole ‘nother job category of the job scams we’ve looked at before. MLM stands for multi-level marketing, amongst other things:

MLM = most lose money. 😝

— Moving & Baking (@movingandbaking) March 5, 2021

As a personal finance nerd who actually wants you to reach good financial footing, I already despise MLMs on principle. But my repulsion goes deeper than that, with roots going into my childhood. I have memories of my mother hosting at least two MLM parties during my childhood, once for Pampered Chef crap and the other for some kind of skincare “company” (maybe Mary Kay, can’t recall for certain). My spy on the inside (aka my brother Gio) is now reporting my mother has, once again, fallen into the siren song of bossbabes and hunbots. This time, it’s all about Norwex, an MLM for cleaning products. Unlike her pre-2010 forays, this time she’s got enough social media know-how to post about it on Facebook. And maybe message people she hasn’t seen in thirty years to come buy what she’s selling. Sigh.

I’m estranged from both my parents so I’m not in the position to try saving my mother from herself. We are not on speaking terms, let alone a comfortable enough relationship where we can discuss finances or why she shouldn’t do this. What I can do is warn all of you lovely people against joining an MLM, as they are set up to swindle you in the name of entrepreneurship and self-sufficiency.

What is an MLM?

If you’re a little lost on what I’m talking about, I hope you know I am super impressed at your life of straight purity and innocence. A MLM company is a rebranded version of Ponzi and pyramid schemes. Company reps can deny this all they want, screaming it’s not the case because such schemes are illegal and they’re doing nothing criminal!

Sure, pyramid schemes are indeed against the law. In much the same way as stock market manipulation is against the law, but corporations find legal loopholes alllllll the time. Technically speaking, MLMs avoid the long arm of the law by the skin of their teeth. They have decided “hey, we like pyramid schemes so we’re going to do that, but we’re going to add a smokescreen of shitty product commissions so we can pretend it’s NOT a pyramid!”

Yep: you can totally get away with a Ponzi scheme as long as you add some physical product to the mix. If you’re just scamming people that’s one thing, but if you’re scamming people while giving them worthless merchandise you can avoid fines and jail time altogether! Huzzah!

How Do MLMs Work?

Since they’re desperate to avoid Lady Justice, MLMs do not reveal their true nature right away. Their targets are people either barely scraping by or desperate for a job change. Their go-to strategy is luring folks in with promises of serious wealth that do not require fancy connections, training, or any uppity job skills to acquire. Anyone can do this, including you!! Just buy the product from us, sell it for a higher price, and you can continue to make money that way from our proven formula 😊

Sounds great, right? The targets definitely think so, eagerly buying merchandise to pawn off to others in their social circles. Sometimes they start out doing awesome and making their first few sales. For 999 out of every thousand, however, there’s not much money to be made. Say a MLM rep sells something for $10. That $10 isn’t straight profit. Buying the product in the first place may have cost them $5. And that $5 dwindles further when other members of the company get to claim commission on the sale.

Yep, turns out reps make very little selling actual products.

MLMs are set up so the person who recruited a rep is the one that gets a commission; the person who recruited that recruiter gets a cut, too, which continues all the way to the fuzzily-defined top. Reps figure out fast it’s not actually the products that will get them a significant amount of money. No, instead the money must come from recruiting other people and have them sell the product for you!

Which still doesn’t solve your issue of recruiters up the chain taking a slice of the pie. You could recruit dozens of people to sell for you and still make a pittance thanks to that. One MLM rep in an article from The Cut gave us specific numbers for this: she managed to recruit 67 people underneath her, which gave her a grandiose title of “executive director” and a grand total of – wait for it – $800 a month. Or $9,600 a year.

For every person this woman recruited into her MLM, she got an extra $12 a month on average. For reference, you can make more money working a part-time, $10 an hour job. And this is without the loss of income once your recruits wise up and quit… which 50% do in the first year anyway.

Many a hopeful individual has been duped by these MLMs, especially nowadays with COVID wiping entire industries off the map. Oftentimes the MLM intro is as innocuous as a DM from an old acquaintance, usually starting with “Hey hun!” and congested with emojis. A partial list of the most prevalent MLM companies include the following, alphabetized for your convenience:

• Amway
• Arbonne
• Avon
• Cutco
• DoTerra
• Herbalife
• It Works!
• LuLaRoe
• Mary Kay
• Melaeuca
• Monat
• Norwex
• Pampered Chef
• Paparazzi
• PureRomance
• Rodan and Fields
• Scentsy
• SeneGence
• Vector Marketing
• Vemma
• Young Living
• Younique
• Zyia

If you see or hear of any of these companies, run.

This shit is prolific and hurting scads of people, but especially those of the feminine persuasion. I will begrudgingly give MLMs their due: they sure do know their target audience of the oppressed and/or resourceless.

Why Women Overwhelmingly Join MLMs

Knowing how MLMs operate, you wouldn’t be surprised to hear the reps are overwhelmingly minorities without access to better, non-scammy job opportunities. You might, however, be surprised to find out you’d be wrong on that front. The overwhelming amount of people who join MLMs are white women in the 35-54 age demographic. Shave half a decade off my mom’s age and she’d fit into this range perfectly.

This isn’t to say POC get to avoid this evil BS altogether. Unfortunately, they are just as vulnerable to these schemes as anyone. Men aren’t excluded either; they make up a quarter of folks who fall prey to MLMs. I imagine many nonbinary individuals also get wrapped up in losing what little money they have, as do other oppressed groups searching for a way out of poverty with limited job skills.

So how is it that middle-aged women are the ones suffering the most? “Enduring sexism” is the simplest answer. More legitimate sales jobs tend to be roles involving frequent travel and being alone with total strangers, which are recipes for disaster if you identify as a woman. Coronavirus has also forced millions of women out of the workforce to take on childcare roles; daycare costs have been skyrocketing even before COVID-19 hit.

These women want to achieve the American dream despite the restrictions their community, religion, or family situations may place on them. MLMs seem like their ticket to proving their own worth, until they turn out to be a crushing dead end. Continued gender inequalities seriously cripple women’s potential earnings, so it’s not too hard to grok why women will eagerly join these sugary liar MLMs in droves.

Can You Make Money from an MLM?

But hey, what do I know? Maybe I’m so put out from the weird Tupperware-esque parties of my youth that I’ve got an unfair bias against MLMs. Since these MLMs are part of the American landscape, wouldn’t there be some kind of truth to their claims of riches and freedom? After all, we’re a nation that believes hard work is rewarded. Surely hard work in an MLM will translate to good things, right?

According to me, the answer is no. According to the hard facts and figures of MLM statistics, on the other hand, the answer becomes hell no.

For literally 99% of the people involved: no, you don’t make money.

For the 1% that do, it’s only a little bit. Think $200 for an entire year. And that’s making more money than 99.5% of your fellow huns at work.

Here’s another stomach-churning fact about MLM operations: that 99% actually lose money. If you focus on recruiting tons of people into your MLM, they’re going to end up leaving faster than you can replace them. And if you try to go the merchandise route, your chances are exponentially worse. Remember, you have to buy your own products in order to sell them, with who knows how many recruiters eating into what little profit you make.

Once you wise up and GTFO, you’re then stuck with all of this product you’re no longer eager to sell. If you’re like my mom, you end up keeping it around forever as part of your hoarding disorder. You might end up giving some away as Christmas presents 10-15 years later; I can say this with authority as my mom sent me a Pampered Chef scooper for Christmas.

There is no significant money to be made in an MLM. Ever.

Understanding the Reasons Behind Joining MLMs

Anecdotally speaking, it’s sad to see my mom go through this again and again. She’s just started making six-figure money at her oncologist day job (I know) having been in the same career for almost four decades. But even a seven-figure salary means little if you don’t know how to manage your money, hence the struggle. I know she also doesn’t like the work – it’s long hours with often-terminal patients that is rarely rewarding. I remember her main reason for going into it was because the state lacked enough oncologists and offered to pay people like her to study it. That is a hard offer to pass up, especially if you’re one of ten kids born to immigrant parents (which she was). College money was nearly nonexistent; of course she’d take that lifeline. It gave her a living, but not lifelong fulfillment.

Add to the mix a child (my older sister) with severe disabilities and it’s easy to understand why my mom would jump at a chance of making good money while working from home. You can’t exactly do that in the oncology field; it’s also a field with very few transferrable career skills. So when these MLMs come a-knockin’ with honeyed promises for beginner wealth, why would she pass it up?

Practicing Compassion Against the Ugliness of MLMs

This is not to say the people participating in MLMs should be forgiven of foisting overpriced/shitty products onto anyone they can. Or of luring even more people into the corporate ruse that alienates them from friends and loved ones. I hope you know enough now to stay away from MLMs, but odds are you’ll know someone who will fall for it.  

The reason so many folks are part of MLMs in the first place is, in my opinion, because of a startling lack of compassion on a systemic scale. I don’t expect to see much movement on declaring MLMs illegal as rebranded Ponzi schemes, either, unless they one day begin harming enough men/people in power that prompt some call to action. There are few programs and resources for women to turn to for education, job opportunity, or family aid in this country. What programs do exist are overwhelmed with increased demands from pandemic-stricken household everywhere. Add to that the stigma against accepting charity and you’ve got people in need who are increasingly isolated and unable to see a way out.

We don’t yet have a way of permanently fixing these societal shortcomings, but we can practice individual compassion with these women (or others) who join/have fallen prey to MLMs. Find the reasons for why MLMs are appealing to them, which are not to be confused with excuses. Everything I’ve written about my mother here is based on me practicing compassion and drawing understanding from what I know about her. If you want to help someone who’s been sucked into a similar situation, approaching them with that understanding will do a lot more than accusations and upset will.

Financial Independence and MLMs

Which is all to say: any multi-level marketing scheme out there is one made to give someone else your hard-earned money. It does not help you achieve financial independence. It will not give you a steady or decent income, let alone a six-figure one.

There is a way to reach significant wealth when you have few job skills and opportunities right now, as I’ve proven with my own career and investing strategy. The difference is in how you approach it:

• Accepting that wealth will take years to build
• Taking the time to learn an in-demand skill employers want
• Knowing when to quit a toxic, no-good job
• Understanding how to manage your paycheck so you can save and invest more

None of these line items are only accessible after buying my starter kit or paying consultancy fees. If you are forking over money, it better be for something you know has value. MLMs have consistently proven to be anti-women and pro-manipulation; they care about squeezing as much out of you as they can in the guise of career empowerment. If you know women who have decided to join an MLM, they deserve your pity, harsh as that may be. This is very much not the way to financial independence.

Cover image credit: Chelsea Gates via Unsplash