American dream or nightmare: The risks of the MLM experience

You hear the familiar ding of Messenger. You look down and smile with surprise to see the name of someone from high school on your screen. Though you are slightly confused because you have not spoken in 20 years, why not reconnect now? The conversation starts off pleasantly enough with the typical “how are yous” and “what have you been up tos”. And then it starts. 

The pitch. 

“You know you look great, but if you want to get back into the shape you were in in high school, I can help you get there.” You roll your eyes, close Messenger, and take stock of what you have done in your life that has kept you away from having to send messages like that.

This is the classic intro to a Multi-Level Marketing (MLM) pitch. If you are not familiar with the term, you are probably familiar with some of their companies: Tupperware, Mary Kay, Avon, Beachbody, and the infamous LuLaRoe are just a few. 

MLMs are a business structure where an individual seller earns commissions both from direct sales and from the sales of their recruits and their recruits, and so on — hence the multiple levels. MLM sellers often contact you to sell their products or services through social media, but true success relies on bringing in more recruits as part of their downline. And that is also often done through social media to lure in friends and acquaintances or through hosting a product party for friends. 

A common thread in all MLMs — no matter the company — is that the sellers are women 74% of the time. This is not a coincidence. Women have been the target of MLMs going back to the very beginning. Some brands have sought out housewives in rural communities to sell to other women that the company otherwise would not have been able to reach. These companies used the isolation of these rural women, and the friendships they had with one another, to make a profit. 

Creating products that appeal to women is also by design so they can attract women as sellers in the first place. Having the chance to receive endless discounts on products they (and their friends) actually want to use is often the hook that brings in many sellers.

Targeting women who need the money 

According to business.com these practices are still very much at work today: Isolated women such as stay-at-home moms, military wives, and immigrants are often the primary target of MLMs. Now, these companies use language about achieving the American dream by becoming your own boss, having unlimited earning potential, and creating friendships as a way of recruiting women into joining. 

Maggie Curtis*, who has worked for a few MLMs, says she initially got involved because of the camaraderie. “I had a traumatic experience in college where a whole group of people I thought I could rely on turned their backs on me. Having the sisterhood of the whole upline and team things offered was enticing. Like a balm on a wound.”

Once a woman is signed on as a seller, the company shares tactics to help her sell and get others to join her team. Some of these include encouraging friends to host a party or demo for the product or posting their own use and enjoyment of the products on social media. But the sales approach can become more aggressive — and can go so far as telling women to exploit hardships like needing money for fertility treatments or needing to support a family member who has cancer. 

Erica Mercer*, a seller for a popular diet and exercise MLM, says she had been asked to use sales tactics that she wasn’t comfortable with. “There have been times when I felt pressured by other coaches to build my business in ways that I am extremely uncomfortable about. However, I always feel I am helping the most people when I remember how I felt at my healthiest. I am honest with myself, my team, and my customers about what’s working or not working. Running sneak peaks at coaching or sending ‘hey girl hey’ texts made me feel like a sleaze the two times I did it.”

The hard truth is that many women won’t make money from becoming MLM sellers. In fact, HuffPost says that 73% of sellers don’t make money or end up losing it in the long run because they have to purchase products to sell upfront — whether they are able to sell them or not. On top of that, many of the discounts and prizes sellers receive for getting involved (a big draw for many who sign up) are considered taxable income which means more out-of-pocket expenses if sellers have little or no profit. Yet, according to LinkedIn, women wanting to help to financially uplift other women is a reason for them to work with MLMs and promote involvement amongst their friends.

Sometimes the risk is worth the reward

Jennifer Farlane* who works for the same MLM as Erica Mercer had such a successful financial experience that her husband was able to quit his second job. She has since joined a second MLM selling house cleaning products and is finding the same financial luck there. The financial freedom she has achieved by being able to pay off debt and credit cards has made the experience worthwhile for her. Farlane also works a full time job on top of working with two MLM companies. Their flexible structure allows her to handle all three by setting her own hours and working mainly from her phone.

The reasons women have for getting involved with an MLM vary. All of the sellers I spoke with joined their companies because they genuinely believe in the products and wanted to share their positive experiences with others. 

Even with so many risks, many women still decide to get involved in MLMs — including women who haven't had good experiences with them in the past. Curtis worked for a year and a half for a major MLM makeup and skincare company before leaving after she realized being a direct sales guru was not for her. 

Now, she has recently signed up to sell for a kitchenware company. She says the difference is that she knows all of the risks she is facing this time, and that she isn’t concerned about making any kind of a profit. Instead, she just wants the discounts she will receive on her purchases.

Knowing what you are getting into seems to be the most important factor for anyone that is considering joining a MLM as a seller. Curtis cautions anyone looking to get involved to “know yourself. Know what you want to do and what you are able to do. Some people can really make money doing MLMs, but more often than not, it isn’t profitable at all unless you can work the sales.” 

Mercer agrees and warns “it has a place for everyone, but if you want to be elite, you have to work extremely hard and be willing to sacrifice more than 45 minutes a day to the business.” And Farlane sums it all up by saying, “Don’t be a skeptic. Whatever your reason for being involved, don’t be afraid to work the hustle, and put in the time to get what you want and need. Educate yourself and don’t automatically have the mindset that MLMs are awful.”

MLMs can come with a risk. It’s extremely important to do your research on any company you are looking to work for, including their selling structure and practices, before you get involved. Remember that an educated woman is the true boss babe.

*Not her real name.