Hey lovelies! Are you interested in an incredible business opportunit that gives you the abilit to work from home? For decades now, network marketing companies have been dangling the promise of a rocketing income, flexible schedule and THE GREAT aspirational lifestle in front of people desperate for a lucky break. But what happens when the dream of direct sales starts INFLUENCE SCAM to look more like a nightmare? Debika Ray investigates.

“I was in a religious cult in my youth—so I school girl, Mean Girls sort of stuff. There’s a ing Association, which represents the indus- quickly recognized the feeling,” says Charlote lot of adulation of the CEO, the woman who try, in 2017 there were 18.6 million direct-sell- over a confidential internet call from Australia. started the MLM, and that is quite typical be- ing representatives in the US—where most of She does not want to divulge her full name be- cause the founder is seen with almost religious these businesses are based—up from 15 million cause, she says, the subjects of this discussion fervor so there was nothing she could say that in 2007. MLMs account for about $34.9 billion are highly litigious. Charlote is part of the An- was wrong.” in sales. Many now operate in other developed ti-MLM Coalition—a group of activists striving The term “pyramid scheme” is ofen used countries, as well as in countries with growing to educate people about multi-level marketing. to describe these kinds of groups, but MLM consumer markets such as India and Mexico. Also known as network marketing, multi-lev- chains are not technically pyramid schemes. The trouble is, according to research, the prac- el marketing is a business model—popular- For one thing, they are legal in most jurisdic- tice is less about selling products than about ized by the likes of Avon and Tupperware in tions—although many argue that they should roping other people into doing it, too. the middle of the last century—under which at least be beter regulated. For another, most Multi-level marketing has taken on a new a brand’s products are sold through a network involve selling tangible products and services, life in the social media era, with platforms of unsalaried representatives. The representa- rather than investment opportunities. such as Facebook, YouTube and Instagram giv- tives buy discounted stock to resell and are re- Far from ringing alarm bells, for many peo- ing distributors new channels through which munerated through a system of commissions ple the names Avon (which has been operat- to market their stock and win over recruits. on their transactions and those of anyone they ing since 1886) and Tupperware (since 1948) Younique, for example—founded in 2012— enlist as fellow distributors. It’s a business mod- evoke cozy images of groups of women gath- boasts of being “the first direct sales company el that has thrived for decades but one that is ered around the kitchen table sharing conver- to market and sell almost exclusively through laden with insights into the gendered nature sation and advice over tea and cake, making the use of social media,” through its “virtual of consumerism and the power of social media harmless, small-scale purchases from each oth- parties.” “My most successful parties are when to muddy the waters between social and trans- er and sometimes going on to become “Avon the hostess invites between 200 and 300 peo- actional relationships. ladies” or host Tupperware parties themselves. ple,” says one blog by a network marketer, ad- Charlote signed up in 2016 to sell a range of A myriad of other brands, selling everything vising others to post regularly on their own liquid lipsticks afer a friend who was already from sex toys to dog food, earn billions operat- personal page, as well as within groups they doing so pointed out that she would get a dis- ing in a similar way. Big names include Amer- specifically set up for MLM sales. It’s perhaps count on the products if she enrolled as a dis- ican companies Amway (health, beauty and no surprise that social media, much of which is tributor. She lasted about five months before homeware products), Herbalife (dietary sup- built around personal image and branding and withdrawing, put off primarily by the inter- plements), LuLaRoe (clothing) and Mary Kay careful self-presentation, lends itself so well to TEXT: actions she witnessed on the secret Facebook (cosmetics); German firm Vorwerk (household MLM —especially when brands are increasing- groups she was added to by her “upline”—the appliances, kitchen and beauty products) and ly keen to tap into the power of “influencers.” person who recruited her. “It’s hard to put into Hong Kong–based Infinitus (Chinese herbal Many opposed to MLM complain of their DEBIKA RAY words,” Charlote says. “It’s very much like high health products). According to the Direct Sell- feeds being inundated by friends selling essen-

62 63 “It’s perhaps no surprise that social media, much of which is built around personal image and branding and careful self-presentation, lends itself so well to multi-level marketing.”

tial oils or dietary supplements, as well as pho- if there’s a market for whatever you’re sell- ing so might damage your relationships. presenting an opportunity to people who are their sacrifices and talk about the virtues of tinued to be propagated by self-help books such tos depicting the glamorous lifestyle that sup- ing?” MLM businesses refute these claims. One But the pressure to succeed and the incentive having a rough time or don’t have enough motherhood—it’s quite predatory and almost as the phenomenally popular Te Secret (2006). posedly comes with climbing the ladder within blog—believed by many to be from an affiliate not to quit, Charlote says, is reinforced by the money—young moms at home, people with like grooming in that way.” The contention is that we have a vast amount one of these organizations—photos of designer of the Direct Selling Association—asks why “92 way distributors present themselves on social disabilities or chronic illness, retirees, immi- There are financial reasons for the focus on of untapped potential within us and unlocking items, sports cars and luxury holidays are sig- million people around the world” would con- media. “Distributors are encouraged to ‘fake it grants who haven’t been able to work because women, too: for example, while women tend it relies largely on changing the way we think nifiers of their success. Partly because of this, tinue to take part in a business if losses are al- ’til you make it,’” she says. “There’s a culture of of visas, military wives, freelancers, students.” not to be the primary breadwinners, they do and behave: Positive thinking, confidence and the practice of MLM has atracted vociferous most guaranteed. And it’s certainly not the case overstating your earnings and you’re encour- Martin adds that, in her experience, reps are ofen control the household finances, which good behavior can lead to personal happiness opposition—the “antiMLM” group on Reddit that people have universally bad experiences. aged to sell a lifestyle, which most of them are encouraged to pounce on people if they catch means losses are less likely to be noticed. On and prosperity, as well as to the success of so- has over 470,000 members, while Te Dream One woman who has been selling Younique not actually living.” The intention is to inspire sight of vulnerability—for example, if they lost her podcast, Marie was told about a sort-of joke ciety at large. Speaking on the podcast, Pyra- podcast recently caused a stir with its investiga- products for almost four years tells me that newer entrants to stick with it, with promis- their job or need a new car. “They are encour- in some circles called the “husband unaware mid Scheme Alert’s Robert FitzPatrick points tion into the world of MLM—including its im- MLM is atractive because it’s cheap to start es of rewards—fancy cars and vacations—if aged to find people’s weak points,” she says, plan.” “A lot of these companies actually talked out that this is a foundational concept in the pact on women. The objections go beyond mere up and, if the product is good, your only lim- you rise up the ranks to the likes of “black” showing me an advisory document for recruit- about that prety openly—like, ‘Don’t tell your United States. “Thinking correctly in America annoyance—many point to the financial and it is yourself. “The people who don’t like them or “platinum” status. The Talented Ladies Club ers that says that, when speaking to potential re- husband how much money you’re puting into is supposed to lead to prosperity,” he says, de- psychological damage these schemes can do. are usually those who thought they would be has pulled together examples of distributors cruits, you should “Focus on their WHY.” It goes it. As long as he doesn’t know how much mon- scribing a vision in which “there’s enough for Their strongest argument comes from in- millionaires overnight and who just didn’t do saying things online like, “Make your Facebook on to explain that you should “Spend plenty of ey you’re spending on it, it’s fine.’” everyone; scarcity is an illusion.” dependent researcher Jon M. Taylor’s 2011 re- the work that was necessary.” think your business is booming—even if you’ve time on this. Try to get them to connect—If you If these networks are such a bad bet that it’s These utopian ideas tug at both our sense port for the Federal Trade Commission, the US But Robert Fitzpatrick, president of con- only had one order.” can make them cry, you have found their WHY!” an open joke that participants should disguise of greed and ambition and our need to believe consumer protection agency: Taylor conclud- sumer campaign Pyramid Scheme Alert, says So if MLM can be so damaging, why does The gendered nature of MLM also pro- their expenditures, why do people remain in that things can get beter for all of us. MLM ed that 99% of MLM promoters take a loss af- the very foundation is false: “The ‘opportuni- it continue to atract people? That’s difficult vides some clues to its logic: the Direct Sell- them? Martin’s theory is that it’s similar to an makes sense at a time when political certain- ter expenses. This is partly because distributors ty’ is not ‘unlimited,’” he writes in one paper. to answer because of the lack of academic re- ing Association put the proportion of female abusive relationship that encourages secrecy ties are melting away and inequality is skyrock- ofen buy up their own stock to meet the tar- “It is finite and diminishing. The thousands search into MLMs and transparency by the salespeople at 73.5% in 2017, and a glance at and isolation, while promising something bet- eting. While financial worries are rife for the gets needed to qualify for commissions. “Ofen at the botom of the pyramid cannot possibly companies around their practices. But it’s also the brands reveals that the products are large- ter. “You’re told things like that your husband, majority, there’s a small minority swimming you need to sell a minimum amount—for ex- enroll as many recruits as those few at the top at least partly because of who such businesses ly female-oriented. Traditionally, women have friends and family won’t understand and that in wealth—a minority that has no incentive to ample, £500 worth of products,” says Hannah already have.” Taylor echoes this: “MLM as a target (or rather, who their independent rep- different types of social networks than men, if your circle isn’t supportive, you should get a encourage others to seek equality at their ex- Martin, who runs the Talented Ladies Club, a business model is the epitome of an ‘unfair or resentatives target, because instructions rare- ones that lend themselves to this domestic, new one. Simultaneously you’re love-bombed pense. Everywhere, hoaxes that play on our in- British website and service which helps new deceptive acts or practice.’ MLM makes even ly seem to be linked to the companies them- conversational, intimate way of selling. “Any- by your network, who are described as your ‘sis- security and loss of control are thriving. mothers back into work, and has been inves- gambling look like a safe bet in comparison.” selves). Marie is cautious about atributing one worth recruitment will see joining you in ters’ and ‘family.’” It’s perhaps not a coincidence that MLM has tigating MLMs for the past few years. “If you And the impact is not just financial, says it to a personality type, but she says she no- this business as a relationship,” says one rep on Then there are the psychological traps that infiltrated the highest levels of society. Between don’t meet that target, you become ‘inactive’ Charlote. Geting involved can be psychologi- ticed that responses during her research for Te Dream. As well as cashing in on this social keep us all chained to bad decisions. “Some 2009 and 2011 Donald Trump himself en- and have to buy a starter kit—the initial mini- cally and socially damaging, ofen affecting per- Te Dream tended to fall into two camps. “Peo- capital, MLM businesses recognize that wom- people avoid thinking about their losses and dorsed a multi-level marketing company called mum investment in stock—again.” sonal relationships. “The typical patern seems ple were either immediately suspicious or en are more likely to be comfortable leting a will continue participating in behavior that The Trump Network, which sold vitamins and Taylor points out that the business model to be one partner in a couple joins an MLM, they were fully on board. Those who are inter- female salesperson into their home. contributes to even more loss, out of denial health products, and his education secretary is largely insular and dependent on purchas- gets very involved and heavily invested, devel- ested truly believe that they will be that one In return, for many women with small chil- and refusal to go through the pain of saying, ‘I Betsy DeVos’ father-in-law is the co-founder of es by distributors themselves, rather than by ops new social circles, their personality chang- percent who succeed.” More specifically, she dren, the prospect of working from home and screwed up,’” Marie says. And the sunk cost fal- Amway, which had sales of $8.8 billion in 2018. people outside the line of business—essentially es and they spend increasing amounts on MLM says, reps strive to recruit people in particular seting your own hours is an atractive way to lacy also comes into play. “When you’ve invest- From the kitchen table to the highest levels of shifing money from newer entrants to a few at products and training, dropping ‘non-support- life circumstances. “They look in communi- balance work and domestic responsibilities. ed so much money in something, you might as government, we live in an age of false promis- the top. This means that distributors are heav- ive’ friends and family and increasing conflict ties where they feel they’ll have a good chance “They market very heavily to highly religious well continue—if you quit now, you’re definite- es. And, as with nationalistic promises to re- ily incentivized and trained to recruit, which when the other partner has concerns. We’ve of converting believers with the promises of communities and places where escape is not ly out the $3,000 but if you keep going there’s a store pride and control, statistics, evidence and chimes with the findings of Jane Marie, host also heard of university students abandon- wealth and freedom,” she says. “It’s definite- an option—for example, to military spouses chance you will make $3,001.” expertise seem powerless to cut through the of Te Dream podcast. “The product you’re sell- ing their studies to work in MLMs full time.” ly marketed to people who have few other op- and those who live on military bases,” Marie In the first episode of Te Dream, Jane Marie kind of simple, emotional and inspiring mes- ing doesn’t really mater,” she says. “The goal It’s easy to see why it would be a nuisance to tions for work and for making a living, and for says, pointing out that many of these compa- traces the ideology behind MLM and pyramid sage that MLMs present: that you are the mas- of all these companies is to find siting ducks have your friends unexpectedly treat you like whom their lives are already prety restricted.” nies proudly brand and market themselves as schemes back to the human potential move- ter of your own destiny and that we can dream who will say, ‘Yes, sign me up,’ then who cares a customer or potential recruit, and why do- Charlote has a similar assessment: “They are Christian businesses. “They praise women for ment of the 1960s—a philosophy that has con- of beter times. Aren’t we all looking for that?

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