MLM

In a cultural era that pushes women to be their own self-starter boss babe, it comes to no surprise that companies worldwide have tapped into this incredibly profitable market.

In particular, multi-level marketing businesses — typically referred to as MLMs — have capitalized on women’s desires for financial freedom and empowerment in a monstrous way. 

The MLM industry  — a business model that, despite its controversy, has sustained itself since the early 1900s  — was largely influential in begetting the first wave of “girlbosses.”

Over 20 million adults in the U.S. currently work or previously worked for this $36 billion industry, in companies ranging from beauty and skincare brands like Avon and Mary Kay to dietary supplement providers such as Herbalife and more, according to the American Association for Retired Persons (AARP). 

While MLMs pride themselves on being legitimate businesses, hiding underneath their gleaming exteriors is a culture of manipulation and exploitation — one that preys particularly on women. 

Comparing MLM businesses and pyramid schemes

According to the United States Federal Trade Commission, MLMs, unlike other retailers, sell their products through direct, person-to-person sales. Much of the appeal of these businesses is that they give individuals the opportunity to be direct sellers from the comfort of their own home. 

People who work for MLM companies — often referred to as independent distributors, consultants or participants — typically make money through two ways: selling products to customers or earning commission from recruiting new consultants.

Pyramid schemes, on the other hand, are illegal. Some MLM companies present themselves as legitimate businesses but are actually these illegal scams.  

In pyramid schemes, a majority of participants’ income is based on the number of people they recruit rather than the amount of products they sell. Oftentimes, MLM distributors are strongly encouraged or required to buy products before they can officially work for the company, which means doling out a great deal of money while making little profit.

The more people participants recruit, the more income they earn, putting them at the top of the pyramid. At the bottom is everyone losing money to maintain the scam.

Direct selling in history 

Founded by former book agent David H. McConnel, the California Perfume Company, established in the United States in 1888, was one of the first direct selling businesses according to the CPC historical website

“I learned during this time that the proper and most advantageous way of selling goods was to be able to submit the goods themselves to the people,” McConnel said in an autobiography from 1903.

After employing canvassing agents Persus Foster Eames Albee and Emma Lawson, the company began selling a line of five perfume scents directly to consumers: Violet, White Rose, Heliotrope, Lily-of-the-Valley and Hyacinth.

At a time when women were unable to generate wealth of their own, McConnel envisioned CPC as a company that empowered women and helped them attain financial success for themselves.

Much like modern-day MLMs, CPC promised representatives the opportunity to be their own bosses, make money and earn rewards. Canvassing agents were encouraged to earn commission by recruiting new sales representatives, similar to how MLMs recruit new members today.  

By 1921, CPC had over 20,000 sales representatives traveling across the country selling goods directly to the front doors of the public, according to a newsletter published by CPC in 1921.

In 1939, CPC changed its name to Avon Products, Inc. and eventually expanded their product line to include makeup, clothing and jewelry. Today, Avon continues to be one of the largest and most well-known direct sales businesses in the industry.

According to the Direct Selling Association, the direct selling industry expanded exponentially during the 1950s and the popularization of companies like Amway, Mary Kay and Tupperware represented an important shift in economic opportunity for women. 

No longer did women have to act solely as homemakers; they could earn extra income as sales representatives while taking care of their families. 

Since the 20th century, women have continued to dominate the MLM industry. Today, over 60% of MLM participants are women, according to the AARP. 

Promising financial success 

The opportunity to make quick and easy money is an enticing, albeit dubious, offer that MLM companies frequently advertise to potential distributors, namely women.

According to a 2018 study conducted by the AARP, out of 1,000 survey participants, 91% of current or former MLM sales representatives said at least one reason why they decided to join an MLM was to make money. 

Yet, in the same study, 73% who joined reported either losing money or breaking even. Only a quarter of survey respondents said they turned a profit. 

Missouri State University alumna Shelby Morrison said after joining MLM company LipSense, in the hopes of making extra income, her optimism about the company quickly dissipated. 

“At first, I really loved LipSense,” Morrison said. “I decided to try to be a seller while I was still in college and was hurting for money. 

“I can’t remember the exact cost of ‘starting,’ but it was a few hundred dollars, which I had to take out of savings and student loans. The entire thing was such a rip-off. I wasted so much money, and you had to buy a certain amount of product per order to even get the order and make a purchase every three or so months to stay active.”

While there are MLM sales representatives who do make substantial income from selling products, they are few and far between and reside at the top of the company’s pyramid.

Promoters are especially well-practiced in manufacturing idealized images of what life as a sales representative looks like: substantial income and success. In reality, this is a grossly unfair representation of the truth. 

Selling the girlboss fantasy 

Many MLM consultants begin cold sales messages to women they’re trying to recruit with, “hey, hun!” or “hey, girly!” to foster a sense of female solidarity and friendship. These distributors are commonly referred to to as “huns” or “hunbots.”

Junior non-traditional student Allie London said “hunbots” frequently take advantage of vulnerable women by convincing them to join the MLMs they work for.  

“(MLM companies) tend to prey on new moms because they’re emotionally and, sometimes, financially vulnerable,” London said. “(MLM companies) target lower income — lower middle class to below poverty line — women, especially in small towns where opportunities are limited. 

“They want a side gig that can work around the jobs they already have. A lot of ‘huns’ call (them) remote opportunities to stay home with their kids, when any actual remote job takes up your attention enough that you might still need childcare. There’s a lot of pressure on women to ‘do it all’ when it comes to careers and kids, and they are held to impossible standards.”

It is no accident that numerous MLM companies — Arbon, Nu Skin, Pure Romance and more — sell products geared toward wellness, beauty and weight loss — all social expectations women are expected to uphold. 

“I have received a plethora of messages from just about every MLM: Beachbody, LuLaRoe, itWorks etc.,” MSU alumna Lexi Messenger said. “The majority of the constant messages come from people addressing my weight and encouraging me to join their bootcamp or get their skinny tea.

“I received a message from a Beachbody consultant three days after giving birth. They see one picture and make an assumption that I am miserable in my body and want to change myself. Fortunately, I have high self-worth and don’t value the opinion of someone on the internet; however, that’s the perfect ‘prey’ for many of these boss babes.”

To lure women into buying their products and joining their businesses, MLM companies often employ marketplace feminism, the “mainstream, celebrity, consumer embrace of feminism that positions it as a cool, fun accessible identity that anyone can adopt,” according to Andy Ziesler’s book “We Were Feminists Once.”  

Cheap feminist lingo like “girlboss,” “boss babe” and “girl power” instill optimism in women that selling products for these companies will not only help them make money but also help further female empowerment. 

In Amazon Studios’ new four-part docuseries “LuLaRich,” directors Julia Willoughby Nason and Jenner Furst expose the dark underbelly of multi-level marketing fashion company LuLaRoe.

While LuLaRoe touts itself as being a feminist-forward company, several former LuLaRoe consultants featured in the documentary accused LuLaRoe of reinforccing antiqued ideas about womanhood, such as the notion that women should be submissive to their husbands. 

Described as a toxic and cult-like business, LuLaRoe, much like many MLM companies, is responsible for scheming and misleading thousands of women — specifically white, millennial moms looking for a “side hustle.” 

MLM promoters often take advantage of social media to sell their products and recruit people to join their company. This has become such an issue that social media groups have initiated strict rules banning MLM consultants from recruiting in their spaces. 

Elizabeth Truitt, MSU alumna and moderator for Missouri State Gals Sell Your Stuff!!! — a private Facebook group home to nearly 11,000 current and former female Missouri State students — said MLM consultants are not allowed to promote products or recruit women in the group. 

“The rule is in place to protect young women from the predatory practices of MLMs rather than prevent the women selling the products from succeeding,” Truitt said.“(MLMs are) predatory because, of course, young women want to follow their girlboss ideals and start their own business, but unless you’ve done extensive, unbiased research, they don’t realize that the system is designed where the bottom of the pyramid makes no money.” 

Spotting a scam

The perks of joining an MLM often sound too good to be true, and that’s because they are. While it may be tempting to jump right into joining an MLM, it’s important to consider the risks of doing so.

The FTC provides the following warning signs that an MLM is actually a scam:

  • Promoters make extravagant promises about your earning potential

  • Promoters emphasize recruiting new distributors for your sales network as the real way to make money

  • Promoters play on your emotions or use high-pressure sales tactics, such as saying you’ll lose the opportunity if you don’t act now and discouraging you from taking time to study the company 

  • Distributors buy more products than they want to use or can resell, just to stay active in the company or to qualify for bonuses or rewards

Above all else, it is important to do research about an MLM before joining. Not doing so could mean leaving the company more financially unstable than you started. 

For more information about how to spot an illegitimate MLM, take the AARP’s MLM self-assessment to find out if an MLM is the right fit for you.

 

Follow Paige Nicewaner on Twitter, @indienerdtrash

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