What is Multi-Level Marketing?

Posted by

Hannah Wynters-Wright, Staff Writer

SoftwareSuggest.com, Featured Photo

“Hey boss babe, I just looked at your Instagram feed and you’re sooo pretty! I think you would fit right in with the products and mission I’m involved with. It would be such a great opportunity for you, I would love to add you to my team”.  

A couple of weeks ago a representative from the company ItWorks reached out to me via Instagram–, “Hey girl! I know this is random but I was looking at your page and was wondering if you’d be interested in my 90-day challenge! I think you’re so pretty and would love our products. You’d get my 40% discount for doing so! Would you be interested?”. I decided to play along to gather more information. When I told her I didn’t have enough money in my checking account to purchase the $99 start-up kit she suggested I open a credit card or spend my family’s stimulus check. “I 100% would open a credit card, think about what this can do for you so much sooner! The sooner you start the more money you can make”. 

Have you ever received a message similar to these? A mutual friend or a distant relative offering you the ideal job. One where you set your own hours and work from the comfort of your home while selling a product you love, that’s making you thousands of dollars a month. It seems too good to be true. These spam messages are a common tactic of Multi-Level Marketing companies. Multi-Level Marketing is  “a form of direct sales home business in which independent representatives sell products or services from a company to an end consumer. The multi-level aspect refers to each representative’s ability to recruit and train other representatives to start their own business, and earn a commission on their reps’ sales”. Although the concept of these companies may seem harmless, the income disclosure statements and manipulative tactics say otherwise.

On average 99.6% of people involved in these companies lose money, while only .4% either make a profit or break even. Even the most profitable MLM, LifeVantage, only nets an average of $556 annually, or approximately $46 per month. The goal of the company is not to sell the most products, but to recruit the most people under a “leader” , making it comparable to a pyramid scheme. Those at the top don’t have to do much work and can still be making six figures, because their downline is doing all the work for them, and they get a large percentage of the sales and recruitments of their downline. 

Besides the false financial promises, many MLMs have also had legal troubles. In 2017, LulaRoe, an MLM famous for their eccentrically patterned clothing and buttery soft leggings, faced two lawsuits including a complaint by three California women claiming that LuLaRoe encouraged its sellers to borrow cash and even sell breast milk to purchase clothing that they ultimately couldn’t get customers to buy. 

Both lawsuits also accused the business of unfair business practices and false advertising. From leggings to essential oils to weight loss coffee, Multi-Level Marketing companies have taken over the internet, specifically targeting vulnerable women. Although their tactics and products have evolved to fit in with the 21st century way of life their origins go back to the late 1800s. 

The first known Multi-Level Marketing Company was Avon, a company that sells beauty, household, and personal care products. They began in 1886 when it was more common for marketers to go door to door selling a product. At this time the majority of people who were home during the day were women. Most women were confined to a childbearing and homemaking role while men worked a typical 9-5 job. The creators of Avon saw this reality and decided to capitalize on it. Avon along with other MLMs such as Tupperware encouraged distributors to have in-home parties where they would invite women friends to their house in order to promote the product and discuss ways women could be making money while still fulfilling their duties as a wife and mother. 

According to the FTC, 74% of those involved with network marketing companies are women. This makes sense psychologically because women tend to seek out friendships and social circles more often than men do. This is important because, in reality, MLMs make money by signing up distributors to join a social group rather than selling an actual product. 

Multi-Level Marketing Companies target vulnerable women by capitalizing on the concept of feminism and the promise of having a community of women who will act as a support group. They often target their advertising at single mothers, women who speak English as a second language, military spouses, and women who have just experienced a traumatic event such as a death in the family or a divorce. 

MLMs have a unique effect on military spouses because they often lack a sense of community due to how often they have to move. Military spouses are often denied jobs because of their indefinite residence and most military bases are located at least 50 miles outside of a major city, making financial opportunities scarce. Having this permanent virtual “family” that MLMs offer provides people with a sense of community. 

Moreover, many women join these companies out of guilt. Representatives often shame women for neglecting their maternal duties by leaving their kids at daycare or in the hands of someone else because of their job. They’ll present this opportunity as a way that women can stay home and spend time with their children, while still making a livable income. One Reddit post from someone involved in the Multi-Level Marketing Company Unique reads “Did you know, you can make a full-time income and yet still be present with your kids? Did you know, you don’t have to put your kids in daycare, leaving them to be raised by someone else? Did you know, that you can have a role outside of being a mother, an identity, and goal-oriented purpose, a challenge that calls you to leadership and growth, all without the #momguilt of being absent from your children? Did you know that you CAN have it all? An income, a career, a purpose, AND a family?? You can have it with Unique”. 

According to the Organization For Economic Cooperation and Development women spend more time on unpaid labor than men which makes their free time scarcer. This makes the prospect of working from the kitchen while making their children lunch quite appealing. The advertising that Multi-Level Marketing Companies use is a carefully balanced equation consisting of guilt-tripping and false claims that are built on the exploitation of women. 

When I told her I had just gotten into college, she recommended I spend my time growing my business with her company rather than furthering my education. Although I was educated enough to know this wasn’t a good idea, many people aren’t, especially those who have lost their income due to the CoronaVirus.

Many of these companies are capitalizing on the outbreak of COVID-19, one MLM advocate stating that “There has never been a more opportune time” for these companies. Most people are home and are looking for any way to make an extra buck. A large percentage of Multi-Level Marketing companies sell health-based products such as essential oils, workouts, and protein shakes. Distributors of these companies have claimed that their products can help fight and prevent the CoronaVirus. 

One distributor from the company doTERRA posted on Facebook “Just received a new batch of doTERRA On Guard essential oil, so I am ready for you CoronaVirus, it’s so important to beef up your immune system”. None of these claims are regulated by the FDC, and the spread of this false information can be very dangerous and harmful. Although supporting or joining a multi-level marketing company that offers ‘financial freedoms’ may seem tempting in a hectic time like, if we examine the data it can be concluded that this is not a financially responsible choice right now, or ever. 

Works Cited

  1. Eagly, A. H. (2009). The his and hers of prosocial behavior: An examination of the social psychology of gender. American Psychologist, 64(8), 644–658.
  1. Islido, Mom Guilt (crosspost from r/workingmoms). 2019
  1. Swan, Lisa. The Untold Truth of LulaRoe. The List. 21 March 2017
  1. Szell, M., Thurner, S. How women organize social networks different from men. Sci Rep 3, 1214 (2013). https://doi.org/10.1038/srep01214