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Multi-level marketing schemes aren't just unsuccessful — they're dangerous

Be it knives, makeup or clothing, multi-level marketing schemes exploit both their consumers and their sellers.  – Photo by Amy Shamblen / Unsplash

Everyone’s seen the tantalizing ads: “Work from home!” “Build your own business!” “Set your own schedule, be your own boss!” with promises of pay as high as $20 per hour. Even around campus, students have fallen for this seemingly easy way to make cash.

The ultra-glam lifestyle of these “#bossbabes” makes working like this seem like a dream. Private concerts with Kelly Clarkson and Selena Gomez, free cruises and the promise of powerful female friendships were displayed across recruiting flyers. For some women who have managed to escape the clutches of this work, it was more like a nightmare.

Recently, multi-level marketing (MLM) companies have been making the headlines due to the nature of their exploitative practices being brought to light. MLMs rely on a hierarchical structure (jokingly referred to as pyramid schemes by netizens), wherein constant recruitment is essential to keep the company afloat.

The average worker recruits employees under them and when they have enough people under them, they rise among the ranks within the company, making a certain percentage of what the people under them make. For those at the top, it means big bonuses. But, for the many struggling to sell products, it means losing more than you had to begin with. 

In order to join an MLM, one needs to buy a starter kit, which higher-ups and the company frame as an investment.

These are generally pricey: Skincare company Rodan + Fields asks for nearly $1,000 dollars for their starter kit, while clothing brand LuLa Roe has historically asked for between $5,000 and $10,000 dollars for starter kits (these have since gone down to approximately $500 dollars). More often than not, new employees are rudely awakened when these kits arrive, as many of them contain damaged goods or are not complete.

Many current employees claim that MLMs have provided them with numerous benefits in their time with their company but former employees state the opposite. In a documentary by Vice News, former LuLaRoe employees were interviewed, from those at the top to an employee. All of them stated that leaving meant losing so many friendships and connections they had cultivated over the years, leaving them feeling very lonely.

As seen by that video and others, MLMs have a tendency to be very predatory. These companies prey on people who can't work or haven't otherwise sought traditional 9-to-5 jobs.

Primarily, the groups that consist of this demographic are mainly stay-at-home moms (or moms with many children/responsibilities, as they're usually older) and military wives (due to their relative isolation on base with their husbands). Students are also targeted, as seen at Rutgers, when students (including myself) have been sent Canvas messages advertising free, easy money.

Most of the employees in MLMs don't make money at all. In fact, they tend to go into debt.

The only people that benefit from this exploitative system are the original employees. Many women believe that, especially in more isolated situations, companies like these are the only way to make friends, and their desire for friendship with other women is so strong that they risk losing money in order to maintain them.

The subreddit r/antiMLM consists of people who have formerly been in MLMs, been affected by them or generally hold a distaste for them. They refer to MLM employees as huns, a funny way of imitating the common selling vocabulary that so many of these people use. This subreddit provides anecdotal stories of how people left MLMs and what to do in order to avoid falling into their enticing trap. 

There are several warning signs of an MLM — if they promise excellent pay with low effort, it's either an MLM or otherwise a complete scam. They also advertise being your own boss, paired with phrases such as “work on your own time” and “build your own schedule!” These phrases in particular appeal to busy people who are looking for a lucrative side hustle.

Another red flag would be if they ask you to buy products before you're even integrated into the company and then urge you to continue to restock inventory in order to sell more. This just ends up giving the company more money and bleeds you dry. Continuously investing when you're only losing money in order to keep up with the trends sounds suspicious, don’t you think?

Finally, being extremely adamant about continuously selling to people despite the income level they appear to be at is a huge red flag. Many MLMs emphasize holding parties in which people (typically mothers) shop for products and are often coerced into purchasing expensive products. Many times, employees will stay for hours at a time in order to make a sale.

MLMs are predatory and harmful. They can lead honest people down a path of financial ruin, and the damaged relationships from the almost cult-like behavior they exhibit can take years to repair. If you or someone you know spots the warning signs, stay far away — unless you want to become a part of the hun cult. 

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