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Minnie Behn-Katz

Director of Publications

From Boss Babe to Bankrupt

From Boss Babe to Bankrupt: Why MLMs are not the way forward.

Most women share the distinctly unique experience of opening your facebook inbox and being faced with the elusive “Hey Girl!” paragraph. Maybe it’s from a childhood friend that you probably haven’t spoken to since before puberty, or perhaps it’s an acquaintance-of-an-acquaintance who found your instagram handle in their recommendation list.

 It doesn’t matter who the message comes from, the script all follows the same essence - laced with emojis and kitschy phrases like “side-hustle”, and “Boss Babe”, they invite you to join their ‘elusive business opportunity’. They’ll most likely feed you tall promises of doubled income and luxury car-sized rewards, they may even pull you in with the idea of working your current job and this exciting new one, all at once! 

Sorry to burst the bubble - if it sounds too good to be true, it probably is. 

A Quick History of MLMs

Multi-Level Marketing schemes, commonly referred to as MLMs, have existed since the 1880’s, and have flown under numerous aliases, such as pyramid selling, network marketing, and referral marketing. Since then, these businesses have drifted in and out of the public eye, touting skincare, haircare, nutritional supplements, and more, all supplied by ‘independent consultants’ of larger businesses, such as Arbonne, Younique, and (the OG MLM) Avon. 

Although MLM schemes appear to be an alternative way of selling and distributing products, the majority of their income actually comes from something called a ‘downline’. In an MLM-shaped business, employees (a generous word to describe what are essentially unpaid volunteers) are commonly recruited by another member, who usually offers ‘business advice’ and support for the newer consultants. Through this, the new employee becomes a part of the senior consultant’s ‘downline’, who then receives a percentage of every sale the recruit makes, even though they themselves didn’t sell the product. This structure continues with the downline recruiting more consultants, and so on. Essentially, the only way to actually make money through an MLM scheme is to be one of the first people recruited in the business.

It’s important to be aware of the distinct lack of transparency every MLM is culpable of; there’s always a catch behind the luxury holidays and free cars that are used as recruiting points for many MLM distributors. 

Why you probably won’t be the next Bezos with Arbonne...

MLM’s are shady businesses. It’s a harsh statement, but it’s very true. With traditional business (i.e. those run by a central management, with regular, agreed salary rates and structured practices), there is nearly always a sense of stability, as well as the ability to rely on third-party regulatory committees to ensure the business’ employees are being treated fairly. This is not the case with MLMs. 

You may have previously heard the term ‘Pyramid Scheme’. A pyramid scheme is essentially defined as a business that makes its sole income from the recruitment of others into the company - pyramid schemes are also illegal in most first-world countries, such as the US and Australia. Although Multi-Level Marketing businesses deny the correlation between the two, a vast majority of MLM businesses in the past have been uncovered, and subsequently charged, as pyramid schemes; leaving hundreds of ‘independent consultants’ without income, and with a surplus of product. The income disclosure statements of many MLM businesses are technically readily available online, which show a vast majority of consultants actually lose money each period, rather than make any sort of income; a baseline idea of an average MLM income spread is that 80% of the company makes 0% income1. Although the numbers are available, many MLMs use shady tactics to skew the statements, and make the truth almost impossible to uncover by the average person, such as excluding those who lose money each period, and concealing how much product is actually sold, and what the cost price of said product is in relation to the sales price. 

MLMs may advertise their work environment as unquestionably empowering for women, boasting ‘sisterhoods’ where females are seen building each other’s businesses, and supporting their ‘side-hustle’. This feminist narrative is a huge selling point for those who are wanting to be more conscious of their impact in modern waves of everyday feminism. The lack of female presence in the business sphere is a prevalent issue that has been slowly improving over the last few decades, and MLM schemes use this issue to push their own image of becoming a ‘boss babe’s2.

Despite this airbrushed image of a supportive ‘girl-gang’ to help new members build their own income flow, MLM practices are fundamentally anti-feminist. Multi-Level Marketing businesses are known to prey on women who are experiencing hardship, or who lack strong social ties to female friendships. Distributors promise these women an entire catalogue of ‘sisters’ to call on for anything, business-related or not. Commonly targeted demographics include new mothers, undocumented immigrants, and those from lower-income communities, who may be struggling with financial difficulties due to natural disasters, or loss of employment. 

There are numerous accounts of newer consultants being strongly encouraged by their ‘upline’ to work themselves into debt, being told that ‘you have to spend money to make money”. The toxicity found in MLM downlines is a widely documented environment shared by those who have managed to leave the MLM, and use their experiences to dissuade possible employees3.

Subsequently, MLMs tend to employ the use of goals that distributors should work towards, in order to receive rewards, either in the form of a raise, or physical goods, like a car, or a luxury holiday. The basis of reaching these goals lies in the number of products sold each period, as well as people recruited to the consultant’s ‘downline’. If a consultant does not reach the goal, there could be repercussions, most notably a social stigma of failure felt from their ‘support system’ of ‘Boss Babes’. To avoid this stigma, women are encouraged to buy their own product to reach the baseline requirements for each period; many consultants are told that, in their initial few months of starting the business, it’s completely normal to do so, and that they will sell the product eventually. Furthermore those with financial difficulties are told to open credit cards specifically for ordering and purchasing more products, eventually landing them in massive amounts of debt that many are never able to pay off until they leave the business. 

This predatory behaviour is disguised behind flashy concerts and kitschy rewards touted on social media by the minimal few who are able to make a livable wage through MLM practices. These people are often already affluent or famous before they join the business, with social influencers and B-List celebrities using their fame to pressure their following into purchasing products, or joining their downline4. It’s interesting to note that most of the people who claim to earn an extravagant wage through any MLM business usually have a second job. 

Additionally, members of the MLM community are encouraged to constantly bully their friends and family into supporting their ‘business venture’. Consultants are taught to use manipulative tactics, such as gaslighting and abusing familial relationships, to sell products and recruit more members into the business. Many ex-MLM members have recounted the loss of friends and family support due to the constant barrage of self-advertisement, as well as the borrowing of money to continue sustaining their business. 

Why it’s more important than ever to stay aware of shady practices

MLM businesses are using the current COVID crisis to encourage those affected, or those who are fearful of the unstable circumstances, to join Multi-Level Marketing schemes. Distributors are advising possible members to utilise stimulus cheques to ‘invest’ in an MLM, and earn the money back within a few weeks. Common tropes used to embellish these business practices include the idea of working from home, choosing your own hours, and, most importantly, job stability. These promises are short-lived, and are fundamentally untrue. The unstable economy will undoubtedly affect MLM businesses, as it has affected numerous other firms this year - the results may just be more delayed due to the way income is received in Multi-Level Marketing schemes. 

Furthermore, the stimulus cheques introduced by multiple government authorities worldwide are a safety measure used to minimise the economic impact made by COVID-19’s at-home safety measures - using the money to join an MLM, or to purchase products from one, is essentially giving the money to massive-scale businesses, who are likely to be the least affected by the current economic condition; a vast majority of the money made through product sales in MLM schemes is received by the top of the pyramid, not consultant you purchased from.

In essence, the case made by MLM businesses is weak and a thinly-veiled image of social acceptance. They encourage superficial business relationships, and ruin real-life friendships, as well as land their employees in massive amounts of debt, of which some are unable to recover from until many years later. 

Therefore, it is morally and ethically wrong to knowingly support these practices, and their predatory agendas. 

Further Reading:

[1] Although most of the information is pertinent to the US economic climate, Nasdaq’s article on MLM income practices exposes these shady practices wonderfully.

[2] The phrase ‘boss babe’ is a common term used by distributors in MLM businesses to entice women who want more control of their work environment. In addition to Boss Babe, consultants may use other female-oriented terms like ‘Hun’ and ‘Girly’.

[3] Websites and Message boards (such as reddit) have been entirely dedicated to anti-MLM businesses, and are easily accessible sources of information by those who have lived through the MLM-experience.
[4] Some notable members of MLM communities include Alex Vega from Spykids (and her Husband Carlos from Big Time Rush), and Jenna Boyd from ‘The Sisterhood of the Travelling Pants’ and Netflix’s ‘Atypical’ - Sorry to ruin your childhood.