What’s the problem with Multi Level Marketing/Network Marketing?

27 May 2019

*receives message request on Instagram*

“Hey babe, I love your Instagram feed. I have a business opportunity that I think you’d be amazing at. I’d love to tell you more information about how you can leave the 9-5 job, travel, have financial freedom and be your own boss”

No. Thank You.

It would be reasonable of me to say I receive around 4 - 5 of these messages a week.

Me being the sceptical human I am, screams the words “SCAM. SCAM. SCAM” as soon as these messages land in my inbox. It wasn’t until I nearly got sucked into one by a friend of mine where I learnt more about the world of Multi Level Marketing (MLM) or ‘Network Marketing’ as some like to call it. 

If you have been lucky enough not to receive one of these messages, they are basically what is used to entice people into becoming a consultant/adviser/salesperson/recruiter for a Multi Level Marketing organisation. Think beauty and lifestyle brands, Nu Skin, Arbonne, Herbalife, Mary Kay and LuLaRoe. 

To become a seller/member of a MLM, you typically pay a singing on fee and buy an initial set of stock as the advice is that you need to switch your whole beauty collection to said brand in the belief that ‘you need to believe in what you are selling in order to sell it’. Pretty expensive.  Then, you create a platform in which you sell (seemingly average) products to family, friends, strangers, your dog AND convince other people to join your team of sellers.

Sound good? Carry on reading.

MLMs rely on average products where you, the sales person receive commission for every sale made, and your manager (the person that recruited you) gets a bonus on top of that, and the people that recruited them get a bonus. And so on. Which is where it gets a bit fuzzy - in order for everyone in the scheme to secure that financial freedom that was mentioned in the initial message that landed in your Instagram message requests, there needs to be an endless supply of customers buying the semi average products. And more importantly, there needs to be a constant stream of individuals that want to be members, and are willing to part ways with their hefty sign up fees, which then end up in your pocket, putting pressure on you as you need to recruit a certain number of people to start making the pennies that they entice you in with. AND SURELY, no-one wants to be that annoying person that sends the recruitment messages on Instagram?

So what’s the difference between a pyramid scheme and Multi Level Marketing/Network Marketing?

A pyramid scheme is a form of investment (illegal in the UK and elsewhere) in which each paying participant recruits further participants, with returns being given to early participants using money contributed by later ones. Basically the more people you recruit, the more dollar you receive. You only gain big amounts of money if you go on to recruit others. 

Whilst Multi Level Marketing/Network Marketing is a strategy some direct sales companies use to encourage existing distributors to recruit new distributors who are paid a percentage of their recruits' sales. It’s also involves the direct selling of products using consultants/sales people.

Coincidental that they’re slightly similar? I think not.

What’s so upsetting is that these recruitment messages aren't only targeted at influencers because of their aspirational feeds which portray an aspirational lifestyle that MLMs use to entice others into  buying into the scheme. They're also targeted at vulnerable individuals such as young mums who are captivated by the sound of a stay-at-home job, flexible career, free vacation, and six-figure income. MLMs capitalise on something that people already do, this being share their favourite products online, or talking and networking about them within their social circles. They (the use of 'they' makes them sound like very bad people, they're not) also prey a lot on timings, I noticed a lot of these ‘I have a great business propositon’ messages land in my inbox around the Christmas period, where more people will be struggling to make ends meat and provide a good Christmas for their family. Tactics that target the vulnerable and are just unfair.

Yet a recent BBC documentary fronted by Journalist Ellie Flynn, interviewed women that had lost thousands after being sold these hopes and dreams. In the US, The Federal Trade Commission mailed checks to 350,000 people who lost money running Herbalife businesses. This is one of the largest settlements and distributions the agency has ever made. The 0.00000000001% at the top of the pyramid who actually make money, make their money by having people join the scheme. They pocket the fees and other payments made by those who join under them. So if you receive a message, the sender may think you have a great profile, but the primary reason for their message will be financially advantageous for them. And if and when the scheme collapses - the relationships, friendships and even marriages of lower level sellers can be damaged over money lost in the scam. All for a couple of extra quid from a mascara, and even that’s a maybe. Still worth it?

ANOTHER thing that gets me is that MLMs are often sold as an opportunity to have your own business. When I think of the prospect of having my own business, I have something legally owned by me working for oneself, yet with a MLM your only a sales person in a larger corporation, your business is overlooked by a white male in Utah, U.S.A (as that's where a lot of MLMs seem to be based). And yes, all business require that initial investment but maybe it's the fact that you have to pay for the right to sell semi average products, and participate in ‘training and development’ that are sold as a massive investment to you as an individual,  makes me feel more uneasy. 

The final moan of mine (you can tell I’ve been saving them up for this post) is that in these messages bombarding me on a regular basis, I notice a theme of female empowerment. Excuse my bluntness, but do you really empower other women by constantly pestering them to purchase a £35 mascara? 

Thanks for coming to my TED talk.


Outfit Details 
Blazer/Nasty Gal, Dress/H&M(old), Bag/Zara, Shoes/Primark.

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