“Hey hon, would you like to come to my product party next week?” is a sentence many American’s have heard. It indicates that the person they are speaking with is a “consultant” for a multi-level marketing company, like Young Living, Pure Romance or Herbalife. It indicates that the person they are speaking with has been taken advantage of by one of the worst manifestations of the American corporate world.
MLMs are essentially pyramid schemes, the only difference being that MLMs do sell actual physical products, although these products are often low-quality, unpopular or downright dangerous. The organization of an MLM is pyramid-shaped, with one person at the top recruiting people underneath them, known as their “downline.” Those people then recruit more people for their downline, and so on and so forth.
Recruiting new sellers is the main way a person in an MLM gains money, because each person receives a percentage of their downline’s revenue. The people in the higher levels of this hierarchy, who are “up line,” eventually make almost all of their money from the people below them.
This organization of sellers and recruiters could possibly work, spreading a natural, networking-based sales solution out into the world and getting the products these companies are trying to sell right into the homes of potential buyers, if the products they were selling were useful, safe or in-demand. They are none of those things.
According to statistics gathered by the AARP, at least 73% of all MLM contractors make no money from the business, or they lose money from purchasing stock that nobody will purchase. Another study by Jon Taylor of the Consumer Awareness Institute, suggests that the percentage may be even higher, up to 99% of all MLM sales contractors.
Financial risks aside, MLMs are also extremely damaging to people’s interpersonal relationships. Because a sales person is being trained by the MLM to sell to their friends and family through “word-of-mouth marketing,” they are incentivized to encourage their close friends and family whenever possible, especially on social media. The internet is rife with tales from close friends, family members and significant others of MLM-involved people, and the stories are never good. Wasted money, emotional distance, endless fights and massive personality changes are some of the hallmark symptoms. The story usually ends with the person cutting off contact with the MLM-obsessed individual.
MLMs primarily target women, offering them the chance to “start their own business, work from home, and become a boss babe.” College-aged women, poor women or military wives whose husbands are stationed abroad are targeted with particular focus by these companies, turned into selling machines with little regard for the actual viability of the business they believe they are running.
MLMs are incredibly dangerous companies of dubious legality, which use predatory practices to squeeze revenue out of vulnerable people. They should be avoided like the plague and outlawed.
Photo from Pixabay
