Multilevel Marketing and The Loss of The American Dream
“Hey, girly! I have a great opportunity for you...”
If you’re a woman between the ages of 18 and 40, you might have received a message that starts like that. Even if you haven’t received that exact greeting, you’ve likely received the message that follows: a paragraph detailing the success you could have if you sign up to sell some product like makeup, essential oils, or fat-burning wraps. The sender could be a complete stranger but is often a friend (or bully) from high school. Either way, it’s someone who wants you to buy something or sign up to sell it. Annoying, right? It’s not as simple as that.
It’s not just a product they’re trying to sell you. They’re selling the American Dream. These companies are selling the idea that if you work hard enough, you can achieve anything. Barriers be damned. Anything is possible if you just believe and do exactly what they say. On the flip side, they’re selling the notion that if you don’t succeed in their business model, you simply didn’t work hard enough and it’s all your fault.
The person contacting you is a distributor for a multilevel marketing company, also known as an MLM. The people within this model call it direct sales, implying that they have a more direct connection with the customer. And they do, in a way. Distributors buy products wholesale from the company and then sell them for a higher retail price within their own network of customers. So instead of buying from a store, customers buy from someone they know supporting their friends and families instead of a big-name company. Again, it’s not that simple.
Companies that follow the MLM model, like Young Living, Mary Kay, and (perhaps most notoriously) LuLaRoe, have faced widespread accusations that they are pyramid schemes, an illegal business model in which members make money by enrolling others without actually providing a product or service. These companies offer incentives and bonuses to their distributors when they recruit new salespeople, and, in a lot of cases, that’s how distributors make the big money. But it’s never directly FOR recruiting. It’s AFTER recruiting. Distributors are usually paid a percentage of the sales when their recruits buy inventory. So it’s totally legal.
Of course, when the real money comes from recruiting, not everyone can be successful. According to a 2018 study by AARP, 74% of MLM participants surveyed reported that they made no money or that they lost money. Just the idea of getting caught up with one of these organizations seems risky. So why do one in thirteen Americans over the age of 18 report that they’ve participated in at least one MLM? What are these companies offering to make people disregard the data?
I asked my immediate network, and it turns out I know a lot of former and current distributors. People in my own family have participated in such schemes. My mother was fairly deep into Mary Kay for a period of time, and we always thought it was great fun. She would get a new shipment of makeup in, and all the girls in the family would sit around the dining room table trying on samples of the new colors. We didn’t know what the company was really up to.
Getting recruited is probably the easiest part of being in an MLM. It can start with that “hey boss babe” style message on social media. “I got this random text from this lady...asking if I wanted to make some cash for the summer,” said Winston Gammon, my stepbrother. He agreed to go to a seminar about selling Cutco knives. “But I got there and it was, like, a lot of pressure to sign this employee contract.” He was told success stories of eighteen-year-olds making $10,000 per month and fed an “if they can do it, so can you” line of reasoning.
But it can be more subtle than that. Sometimes it’s the product that does the recruiting. AARP reports that 43% of survey respondents who had participated in an MLM said that they joined for discounts on products. So did Lacey Cromer, my aunt and former It Works distributor.
“My friend sent me home with some samples of the hair supplement and the vitamin drinks, and I tried them and instantly fell in love with the idea of them,” she said. The idea of them. She went on to admit she didn’t have much practical knowledge on reading nutrition labels despite having the theoretical knowledge as a certified nursing assistant.
Art by Kate Saxton
“Unfortunately, me being the broke college student I was, I didn’t have the money to pay $35 for vitamins, so I got reeled into the whole ‘sellers get them cheaper’ idea.” That cheaper wholesale price” isn’t listed anywhere on their website, but the price of the basic starter kit (the Business Builder Kit + Triple Threat Add-On Pack) comes out to $158.58 after taxes and shipping. For that you get five digital product sample mailer credits (I assume these are credits to receive samples), a personalized It Works website, 30 single-serve Skinny Brew packets, a bottle of 60 Slimming Gummies, and a bottle of 60 ThermoFight X caplets. So, a website from a template and some samples. Obviously, it would cost more than that to get your business off the ground.
Some people take out loans to fund their startup costs. Wanda Taff, a Mary Kay team leader and former Independent Sales Director from my hometown, is one of these people. “I went to the bank, actually, and took out a loan...so I could come in with full inventory,” she said. “Actually, I paid the loan off... It was either four or six months.” Wanda worked very hard to pay her loan off, and eventually became a team leader for as many as 30 consultants at a time which led her to qualify for the Career Car Program (the program that offers consultants the opportunity to use the classic pink Cadillac or other vehicle). But often, such success is not the case.
Some MLMs encourage new recruits to take out loans or put initial inventory purchases on credit cards. So says Suzannah, a former Mary Kay consultant interviewed by Vox. “I’m glad that when I signed up, I had money saved away that I used. Not that I’m happy about having $1000 worth of makeup sitting in my house that I can’t seem to get rid of…” Suzannah put about $3000 into her business and came out with nothing.
So in a business model that convinces recruits that it’s impossible not to succeed yet sets them up for failure, what causes people to get off the ride? According to that AARP survey, of the people who said they were no longer working for an MLM, 36% said they didn’t make as much money as they expected to and 29% said it took up too much of their time.
“What I did not have were the selling skills,” said Kristi Gammon, my mother and part-time Mary Kay consultant. “I was pegged as someone who might know somebody. Joke’s on them,” she continued. “I don’t know anybody.” I actually didn’t realize my mother still sold Mary Kay until this interview (“It’s not ‘do you sell Mary Kay?’” she said. “It’s ‘are you with Mary Kay?’”). It was a more prominent focus in her life at one point, but the MLM never consumed her the way it had others.
I don’t remember it being the primary source of income at any point, but I remember her going to meetings and doing makeup parties. She put effort into those things and didn’t see an adequate return on investment. So she stopped doing all the extra stuff and now she only sells to a few customers. She doesn’t do it for the money. She just does it because she likes it.
Often when people leave an MLM, they face scrutiny. From people within the organization who want them to stay in. From people on the outside who think they shouldn’t have gotten mixed up in it to begin with. From themselves because at some point, you start doubting your own judgment. In the anti-MLM community (yes, that’s a thing), this is known as “hun-shaming,” referring to a term used by current MLMers as in “Hey, hun. When are you placing your next order?” “Huns” who leave their MLM are often excommunicated from their MLM circle despite having formed connections one might consider friendships. If the MLM has taken over their life, leaving can feel incredibly isolating.
The people who run these companies sell the idea of the American dream, the idea that anyone can achieve success if they work hard enough. They sell their regimen for achieving that success: sell a product and recruit others to join. And finally, they sell the idea that if you fail at this regimen, it’s your fault. It’s so easy, how could you not succeed?
I don’t want this article to come across as me bashing the people who work for MLMs. As anit-MLM podcaster Roberta Blevins says, there’s been too much “hun-shaming.” I know too many good people who have found their ways in and out of these organizations, some of whom have found success, others who have not.
Instead, I would like to use these people’s experiences to examine how these companies are structured. The people at the top of the pyramid make their money by recruiting new members and encouraging them to recruit as well while the people at the bottom lose. Unfortunately, this structure works for the people who created it, leading MLMs to be woven into the fabric of the United States economy. MLMs may never go away, but by understanding how they operate, we can save ourselves and others from losing their American dream.