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Why Joining An MLM Will Ruin Your Life

November 04, 2019 in Personal

Everyday, people get sucked into the lure of MLMs (“multi-level marketing” or “network marketing”) and I can’t stress enough the need to stay far, far away from them. These include Herbalife, Arbonne, LuLaRoe, Younique, Rodan + Fields, and Amway among many others.

I understand the need for flexibility, especially if you are a full-time student or are raising young children. Believe me, I also understand getting a job that allows you to create your own schedule and work remotely takes Hunger Games level competition. I am always surprised when I see college educated women sucked into these things. But it’s telling about other issues, like childcare, maternity leave and corporate culture in the US.

The danger of MLM companies cannot be overstated, no matter how family-friendly, female-friendly and diverse they might market themselves as being.

MLMs are pyramid schemes.

They are extremely predatory because the only way to make any money is to sign up more and more people under you which will just ruin your social relationships and make you a pariah where it matters most: your friends and family members.

Here is how they mostly work: You sign up and pay the buy-in fee to receive your startup kit, and then you start clogging everyone’s social media feeds about your new venture and beg your friends and family to join you on your “journey to financial success”. You host a bunch of fake parties and wine tastings or worse, you meet up one-on-one to catch up and the whole thing turns out to be nothing more than a demo and sales pitch where you guilt your friends into buying stuff they don’t want or need. After you subject them to that, you then try to recruit them to join your team of consultants, or whatever term your particular MLM uses.

As with all MLMs, the real money to be made isn’t in selling their products but in recruiting more people to join your team (basically, doing the work for you).

So the real winners are the person who started the business and the very first people she recruited. This top of the pyramid is also where all of the success stories tend to come from.

Among the most vulnerable to these pyramid schemes are people in smaller towns and rural areas.

Market saturation prevents growth in a small town, because once everyone you know starts selling it, no one can make any money and you’ve essentially created your own competition.

“MLMs very rarely emphasize the extreme likelihood of failure, or the extreme likelihood of financial loss, from participation in MLM. MLMs are also seldom forthcoming about the fact that any significant success of the few individuals at the top of the MLM participant pyramid is in fact dependent on the continued financial loss and failure of all other participants below them in the MLM pyramid.” (Wikipedia)

Women, especially stay-at-home moms, are the primary target of many MLMs because they often have broad social networks and desire paid work that they can easily do from home and on a flexible timeline.

There are many MLM companies with a foothold in Utah for exactly this reason. Utah has the highest percentage of stay-at-home moms of any state in the country and is also home to a large population of practicing Mormons. Generally speaking, Mormons highly value community, large families, and proximity to those with similar lifestyles and beliefs. As such, populations like those in Utah offer MLMs the perfect entryway into a vast network of people who are often close in connection and ideology as well as geography. Basically, Mormon stay-at-home moms are valuable to these companies because of their larger community ties. (Mona Bushnell, MLMs Are Preying on the Dream of Entrepreneurship)

Women are encouraged to use images of themselves and their families on social media to push products and gain recruits. Many MLM Instagrammers use hashtags like #leanin (a la Sheryl Sandberg), #thefutureisfemale, #momboss or #entrepreneur. Using the language of third-wave feminism and borrowing quotes or phrases from real female CEOs helps recruiters and recruits see themselves as legitimate professionals, no different from a founder of a startup company or a C-suite executive. (Mona Bushnell, MLMs Are Preying on the Dream of Entrepreneurship)

“Joining an MLM is appealing to women who find hope in their promises of a better life: freedom, economic independence, and an endless supply of cheery trinkets. Despite professing quick-income prospects though, it’s difficult for MLM consultants to earn more than pocket change. When glitzy recruitment videos yield to the reality of suburban cul-de-sacs, people selling for MLMs can be plunged into debt and psychological crisis.” (Quartz)

Right now, MLMs are preying on lower-income, often undocumented immigrant communities and taking advantage of their lack of knowledge and finances.

Predatory companies use the exact same strategy in recent-immigrant communities, minority communities and lower-income international communities worldwide, as these groups are known for valuing family and community, are upwardly mobile, and have close, trusting connections. A single foothold in a tight-knit community is valuable for recruitment, because communities that value cohesion are likely to produce more recruits or, at the very least, more buyers — friends and family purchasing items out of a sense of community or social obligation. (Mona Bushnell, MLMs Are Preying on the Dream of Entrepreneurship)

Their reps lure them in by telling that they are giving them the tools to start their own businesses and that they can create jobs for their friends and family members. In the 2016 documentary, Betting On Zero, director Ted Braun talks to several Latino families who have lost their entire life savings to Herbalife. They were told by MLM reps that it’s easy work and that it’s not dangerous, and so they sold their construction businesses to invest in Herbalife.

The Filipino community, much like many immigrant communities, is ripe for the recruitment of participants in MLMs. Filipino immigrants can be particularly easy targets to exploit, as this Filipino-American writer can attest. They are easygoing and friendly. The ones with a college education understand and speak English very well. The community is crawling with network marketers hawking everything from cosmetics to travel packages to insurance products, courtesy of companies that promise the dream of passive income as well as incentives such as car bonuses and vacations.

How did MLMs start?

The first wave of MLMs were the likes of Avon, which was founded in 1886, and used the door-to-door model for selling perfume. From then and up until the middle of the last century, many women did not have the means to sample products and shop at a department store — or, in the case of African American women, they were simply not allowed to enter the store at all. And they certainly didn’t have the means to start their own business and earn a real income.

Fast forward to 2017. LuLaRoe is the biggest MLM for women.

“More than 80,000 women have paid around $5,000 for several boxes of low-cost clothing and worked as much as 80-hour weeks to outfit hundreds of thousands of suburban women in multicolored polyester. But according to a report that studied the business models of 350 MLMs, published on the Federal Trade Commission’s website, 99% of people who join multilevel-marketing companies lose money. Depending on how you look at it, it’s either a brilliant business model or a predatory practice — or a little bit of both.” (FTC)

It is almost impossible to stop the industry because of the amount of investors and lobbyists who are profiting from them.

“During the Obama administration, the Federal Trade Commission made its biggest-ever effort to curb this industry when last summer it slapped nutritional supplement–seller Herbalife with a $200 million fine and, as part of a settlement with Herbalife, demanded it restructure its business so that it would “start operating legitimately,” as FTC Chairwoman Edith Ramirez put it.” (Slate)

The current administration under President Donald Trump will be a completely different story and may very well be a boon for the MLM industry. Let’s start with Trump himself. In 2009, he licensed his name to an MLM, which eventually went bankrupt, along with many of his participants. Many in Trump’s cabinet have strong ties to MLMs as well: Betsey DeVos (whose husband is the president of Amway — by the way, DeVos family has donated $200 million to the Republican party over the years), Ben Carson, Carl Icahn (a billionaire who is also a major investor in Herbalife and holds five board seats at the company), and Charles Herbster.

Several companies like Amway and Herbalife have also expanded overseas to India, China and many Southeast Asian countries like Vietnam, Indonesia and the Philippines.

Amway’s CEO in India was arrested in 2013 for running a pyramid scheme. “Meanwhile, Amway’s donations to Harvard’s John F. Kennedy School of Government program have funded the training of more than 500 Chinese bureaucrats, who led that country to legalize direct selling, opening a new boom market that MLMs are now exploiting.” (Slate)

How MLMs defend themselves:

I’ve heard all the arguments. “How can it be a pyramid scheme if it’s legal?” Through some crafty loopholes. The fact that there is an actual product to sell allows them to operate and give the appearance of legitimacy. “You just haven’t found a good MLM yet.” Wrong. A good MLM is an oxymoron. “But how is this any different from any other major corporation where the CEO makes the most money?” Because the people below the CEO at legit companies get paid salaries and have actual benefits. They don’t depend on endless chains of recruiting new members.

Now that companies can easily sell directly to their customers online, people look to social media to get their recommendations for products, and the popularity of subscription beauty boxes, not to mention the fact that there are so many retail stores even in the most far out suburbs, I don’t see how the network marketing model is necessary anymore. The only people who defend them are the people who were trained to. This is because MLMs love to brainwash you into defending them against naysayers and demand you go on the offensive to anyone who might disagree. They may still have wide-eyed hope. It’s sad and terrible. The sooner these pyramid schemes are declared illegal and go out of the business, the better the world will be.

For more information, John Oliver did a fantastic segment about the horrors of MLMs. The 2016 documentary, Betting on Zero, investigates the allegations that MLMs are nothing but legal pyramid schemes. This article also does a wonderful job of breaking down the reasons why MLMs are doomed to failure. I encourage anyone who is thinking about signing up for an MLM to watch these.

This is not some obtuse legal issue; it’s a moral issue. People’s lives are being destroyed and until MLMs are stopped, it will continue to happen.

Please also check out this film http://childrenofinvention.com/


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Bernie or Bust
Bernie or Bust

A Bernie vs. Trump election is a centrist’s nightmare. Fifty years ago, Bernie Sanders’ policies were actually mainstream. That he and Alexandria Ocasio-Cortez (AOC) and their supporters are portrayed as "extreme" shows how insanely far-right U.S. politics are now. He and AOC shouldn't be seen as radical at all. They should be the center. Democrats have pushed the center so far to the right that people like Obama, Hilary, and Warren are considered left of center, rather than the conservatives that they really are.

On Landmark Movies, the Oscars and the Uselessness of Media Representation
On Landmark Movies, the Oscars and the Uselessness of Media Representation

I’m often not a fan of a first-timer winning Best Actor or Best Actress without a proven track record of great work. Too often, they go on to be nothing more than one-hit wonders. The fact that the Academy has frequently awarded one hit wonders that have no lasting impact is what makes people think of the awards as culturally irrelevant.

Cancel Culture Does Exist...And It's Wrong
Cancel Culture Does Exist...And It's Wrong

The demand for moral perfection from everyone is ridiculous, especially when the goalposts keep changing. People who participate in cancel culture are just acting morally superior and self-righteous. It’s not progressive. It’s not at all liberal. In fact, it’s illiberal. And it doesn’t work.

Why Net Neutrality Is Something We Should All Be Concerned About
Why Net Neutrality Is Something We Should All Be Concerned About

Net neutrality is a topic that we all should be concerned about, including those without a computer or internet access at home. Almost everything is done online these days so people without internet access are already at a huge disadvantage. Restricting or blocking the internet will affect every single one of us, which is why the debate over net neutrality is something to be closely followed.

Since 2020 Is An Election Year, Here Are Some Things To Remember...
Since 2020 Is An Election Year, Here Are Some Things To Remember...

Politics was once framed as if it might be removed from the stuff of our daily lives, like it was some sort of fringe interest. Declaring a lack of interest in politics was the norm, especially among young people. The last election showed us that every part of our daily lives is political. In November, there is a strong possibility that Donald Trump will be re-elected, that we will have our first woman president if Elizabeth Warren is elected or that we will have our most left-leaning, progressive president ever if Bernie Sanders wins. Whatever happens, no outcome will go unchallenged. Get ready.

You Guys, It's MEGXIT: Fuck the Royal Family
You Guys, It's MEGXIT: Fuck the Royal Family

A couple of years ago, I was totally BASHED online for blogging that Prince Harry and Princess Meghan should run far, far away from the Royal Family, especially after seeing what they did to Princess Diana…I’m happy to say that that blog post has aged quite well.

2019 Was An Embarrassment of Riches For Movies
2019 Was An Embarrassment of Riches For Movies

Today is the day that the ballots for the Oscars went out. We haven’t had this good of a year for movies…ever. Critics have long declared 1999 the best year ever for movies, and for a long time I agreed. Until now.

My Favorite Filipino Christmas (Pasko) Traditions
My Favorite Filipino Christmas (Pasko) Traditions

With the vast majority of Filipinos being Catholic, the most prominent holiday celebrated in the Philippines is Christmas (“Pasko” in Tagalog).

The Best Asian American Books of 2019
The Best Asian American Books of 2019

My favorite books by Asian American authors in 2019, in no particular order. I probably read about sixty books this year. Something that I’ve been thinking about a lot is that for all our fascination with technology, we’ve forgotten how transformative a simple book can be. 

If We're In Late Stage Capitalism, Does That Mean the End of Capitalism Is Near?
If We're In Late Stage Capitalism, Does That Mean the End of Capitalism Is Near?

At this point, the phrase is everywhere. Late capitalism, in its current usage, is meant to describe the stage of capitalism where things get so bad that a revolution happens. The term was popularized by a Marxist theorist and activist named Ernest Mandel in the mid-twentieth century. I think it sounds almost ominous because a “late” period implies that we are at the end of something.

Where to Find Me in December
Where to Find Me in December

After a relaxing Friendsgiving weekend bonding with my kasamas, it’s time to get back to organizing! Here are a few things coming up this month. Please check back regularly as this page will be updated as more events are confirmed.

Capitalism Sucks
Capitalism Sucks

Our free market is run by selfish, untrustworthy sociopaths. Corruption has become the norm. In the last 30 years, our checks and balances have been badly eroded. And it was only 25 years ago that the world celebrated the “triumph” of American capitalism. Is this a coincidence? No.

Only Colonizers Celebrate Thanksgiving: Saying NO THANKS!
Only Colonizers Celebrate Thanksgiving: Saying NO THANKS!

I may not be a politician nor do I have a lot of power. But I will use my voice to humbly say that looking back on the twentieth century, I find nationalism and exceptionalism really creepy. Next week, our country will be celebrating one of the worst holidays of all. To Native Americans, Thanksgiving is a day of mourning because it is a reminder that in return for their help, they were repaid with the loss of their land and destruction of their people.

Decolonize Your Bookshelves with Randy Ribay
Decolonize Your Bookshelves with Randy Ribay

Yesterday was my third Decolonize Your Bookshelves event and once again, I felt rejuvenated by doing my part to bring joy into the art of resistance. At this event, we celebrated the work of Randy Ribay, author of Patron Saints of Nothing, and a 2019 National Book Awards finalist. Randy is also a convener for Malaya Movement and based in the San Francisco Bay Area. His work--which is exhilarating, harrowing, uplifting and redemptive--is a powerful testament to so many of our experiences, and it is deeply resonant for me personally.

Public Libraries Are Socialism In Action
Public Libraries Are Socialism In Action

The public library system is basically socialism at its best. It’s one of the few environments that doesn’t judge anyone or take advantage of anyone. It doesn’t try to sell anything and it can’t be bought. It offers people dignity and nobility.

The Diversity and Inclusion Industry is Complete Bullshit
The Diversity and Inclusion Industry is Complete Bullshit

Can you really train people to be more accepting of diversity after making them sit through a 2-hour seminar? No. Let's be realistic. It's too conceptual. And simply outlawing bias doesn't make it go away. Never mind that almost every single training facilitator will do everything they can to avoid actually saying the word “racism".”

Why Joining An MLM Will Ruin Your Life
Why Joining An MLM Will Ruin Your Life

Everyday, people get sucked into the lure of MLMs (“multi-level marketing” or “network marketing”) and I can’t stress enough the need to stay far, far away from them. I understand the need for flexibility, especially if you are a full-time student or are raising young children. Believe me, I also understand getting a job that allows you to create your own schedule and work remotely takes Hunger Games level competition.