How deception in MLMs destroys people – watch our video to see the proof

Business

For almost five years we’ve investigated the MLM industry. Find out how we believe deception in MLMs destroys people in this video.

Two weeks ago I participated in the world’s first global online MLM conference. I gave the final presentation of the two day event, which included expert opinions, experience and research shared by lawyers, industry regulators, economists, journalists, academics, and former MLM participants.

The conference explored the problems with the MLM industry at length, and I felt it was fitting to end the event giving a voice to some of the people who say they have been damaged by their experience with an MLM.

My panel was Product and earning claims and the true numbers, so I started by contrasting some of the marketing messages of two MLM companies with their income disclosure statements. You can watch the video here (read on to discover how both Arbonne and Nu Skin appear to have removed the content I share in the video following the conference):

In the video I contrast marketing and training messages from Arbonne and Nu Skin with their income disclosure statements, that reveal what people are actually earning with them. I chose these two companies because I believe they are typical of what I see in many MLMs, and I already had the data to hand.

I also reveal the financial secrets of some of Forever Living’s top reps. Again, because I already had this information to hand from previous investigations.

If you’d like to read these investigations, you can so here:

How do Arbonne’s marketing claims compare to its income disclosure statements?

In the video I share a screenshot from Arbonne’s website that asks how often you are given the opportunity to make money, make a difference and have fun on your terms. It goes on to say that “So many” Arbonne consultants have transformed their careers, their lives and themselves.

Another recruitment message from Arbonne asks whether you’d like an extra $1,000 a month, seemingly insinuating this is reasonably possible with Arbonne. The sheet goes on to list some example incomes, starting at District Manager with a monthly income of between $250-$1,000. It also mention Arbonne’s Mercedes Benz bonus twice. 

And finally, I share a screenshot from Arbonne’s training materials in which they advise placing a starter order, and spending, “… enough to be uncomfortable so you will have to work to pay yourself back.”

83% of US Arbonne consultants seemingly made nothing in 2018

So what’s the truth? How long WILL it take you to earn back your ‘uncomfortable’ starter order?

When we look at Arbonne’s 2018 income disclosure statement we learn that only 17% earned enough to be ‘active’ on a monthly basis. So of all Arbonne reps in the US in 2018, 83% (144,586 people) apparently made no money.

Here are what their reps earned, based on their income disclosure statement:

  • 144,586 people (83%) earned nothing.
  • 19,866 people (11.4%) earned $70 a month.
  • 7,224 people (4.1%) earned $321 a month.
  • 1,806 people (1%) earned $1,531 a month.
  • 602 people (.34%) earned $5,987 a month.
  • 301 people (.178%) earned $21,711 a month.

And remember, this is not profit. These figures don’t take into account any expenses and personal purchases – including that ‘uncomfortable’ starter order Arbonne recommends.

We believe Arbonne asking whether you’d like an extra $1,000 a month is irresponsible and misleading. Why? Because, according to their income disclosure statement you’d need to be in the top 1.5% of all their US reps to earn over $1,000 a month before expenses. Hardly as realistically achievable as they make out, is it?

Less than 2% of Arbonne reps achieve the Mercedes Benz bonus

And what about the Mercedes Benz bonus they mention twice in one recruitment marketing document? According to Arbonne’s own small print less than 2% of independent consultants achieve this award. 

And by the way, those who do, simply get to lease a white Mercedes in their own name, and receive money from Arbonne towards the lease as long as they keep hitting their targets. 

‘Most’ Arbonne reps apparently work more than 10 hours a week for free

Now we’ve contrasted some of the marketing and training information Arbonne recruits see with the company’s income disclosure statement. let’s find out how much time Arbonne reps are putting into their ‘business’. 

According to a screenshot from a training document we share in the video, “Most people invest about 10-15 hours per week, on average, when they start their business”. But we know from Arbonne’s income disclosure statement that “most people” (83%) earn nothing from their Arbonne business. So that means they work between 10-15 hours a week, or 520-780 hours a year for free!

And in fact, anecdotally, from the people we have interviewed, it seems most MLM recruits spend many more than 10-15 hours a week trying to get the business to work for them. Indeed, according to the UK DSA, 49% of direct sellers work more than 10 hours per week on their business. 

How do Nu Skin’s marketing claims compare to its income disclosure statements?

Moving on from Arbonne, let’s look at some of Nu Skin’s recruitment messages, and compare them with their income disclosure statement. 

In the video we share screenshots from Nu Skin’s website that state that it is possible to treat Nu Skin as a full time career or primary source of income. Their marketing messages also say that you can earn on a daily basis and receive profits and bonuses each week, and that you can build up your business as quickly or slowly as you like and commit to building your dream with Nu Skin. 

They even talk about building blocks equalling 500 points of Sales Volume and suggest aiming for eight of these blocks as a monthly minimum, and say you’ll receive your building blocks bonuses on a weekly basis. And finally they talk about recurring orders, or ADRs. This is an order that is automatically made each month, like a subscription service.

From their website, joining Nu Skin seems quite good. It sounds like it’s possible to earn a full time income, there are plenty of bonuses and profits to earn each week, and they even make it easy for you, by enabling you to set up monthly orders. 

We calculate that 82% of US Nu Skin reps made nothing in 2019

So, how much can you REALLY earn?

According to Nu Skin’s 2019 US income disclosure statement, if you want to earn over $1,000 a month before expenses you need to be in the top 1.19% of all active reps. But if only the top 1.19% of all active reps earn over $1,000 a month before expenses, it doesn’t look very possible for most people to treat Nu Skin as a ‘full time career’ or ‘primary source of income’, does it?

As with Arbonne, Nu Skin only includes Active Brand Affiliates who made any money in their table. And only 17.85% of all Brand Affiliates are Active. But what does ‘Active Brand Affiliates’ mean?

An Active Brand Affiliate or Distributor is apparently someone who has placed an order within the past three months. They need to obtain 100 PDV – the points system they use to calculate order values – and make five retail sales a month. 

So, from what we can tell, that means that 82.15% of Nu Skin reps who were actively working the business made NO MONEY. We also know from taking to MLM reps in many companies that the automatic monthly subscriptions (like Nu Skin’s ADR) contribute towards the debt they build up.

Over 80% of people trying to make MLMs work often make no money

As you can see, from both Arbonne and Nu Skin’s income disclosure statements it appears that over 80% of people who are actively trying to make the business work make no money. And of those who do make any money, less than 2% in both companies made more than $1,000 a month before expenses. 

And every MLM income disclosure statement we have investigated so far has show the same patterns. 

For us this it confirms Dr Jon Taylor’s research, published by the FTC, showing that, on average, 99.6% of MLM participants will lose money once business expenses are deducted. 

It also, for us, dangerously contradicts the recruitment messages shared by companies and their own reps. Messages like this one, shared by a two Forever Living rep (who, despite claiming to be ‘debt free’ is hiding a £205,000 directors loan from the women she recruits):

If it was that easy to make money with MLMs, don’t you think more than 2% of people in MLMs would earn more than $1,000 a month? Let alone £50,000 a year?

To contrast this Facebook post, here’s what people signed up to Forever Living are REALLY earning, according to figures published by the company in 2018:

  • 88.6% earned nothing.
  • 7.86% earned an average of $105 a month.
  • 3.42% earned an average of $1,493 a month.
  • 0.2% earned an average of $28,512 a month.

And please note, like most MLMs, it is highly likely Forever Living are using a mean average to calculate these already abysmal numbers (in our opinion), rather than median average. You can find out why this is important here.

Most people who join an MLM are likely to lose money

Time and time again, income figures published by MLMs show that most people who join lose money. And we believe that the MLM companies and their top reps, the 0.4% who do make money, know that the opportunity will fail for most people. But they NEED those people to join and remain with the MLM for as long as possible for the companies and the top reps to earn. 

So they perpetuate the myth that MLMs are a great way to achieve financial freedom, and make money working from home. And that deception, in our opinion, leads to devastating financial, social and emotional consequences for many people. People who buy into the dream they are sold, only to find it doesn’t exist. 

People who are told that quitting is failure. That looking critically at the opportunity is having a negative mindset. And that those who can’t make it work are losers. 

All ex-MLM reps I have interviewed are psychologically damaged in some way

in the past five years I have interviewed many former MLM reps. Without exception they all lost money, including one woman who was considered successful. And all told me they were psychologically damaged in some way. 

From shame at seeing Facebook memories, or admitting they’d missed their children’s birthday lunches for team meetings, to embarrassment at how they’d treated friends or guilt over the distance they’d created with family, and the debt they were hiding from their partners. 

Most had product they’d personally purchased still sitting in garages and spare rooms and all regretted getting involved with the MLM. In the majority of cases, it was less like an interview and more like therapy, and most insisted on anonymity – scared of the repercussions from their former MLM team. 

THIS is what MLM can do to people, and why so many people campaign for this industry to be properly regulated – or closed down completely.

Have Arbonne taken down their recruitment pages?

Interestingly, while writing this article I attempted to link to the Arbonne page I screenshot in my presentation in March 2021. But I couldn’t find it! It looks like Arbonne has removed it since the MLM conference. Here’s a screen capture from Wayback Machine from their US site in February 2021 showing the URL and content:

But when you try to visit the same URL today, you just see a 404 error page:

The recruitment messages I shared in my presentation from Arbonne appear to have been removed in the past two weeks. A coincidence? Or is the company aware of the chasm between their marketing claims and the lived reality of the vast majority of the people who join their business?

And while the Nu Skin pages I screenshot are still online if you look for them directly, they no longer appear to be easily found when visiting the ‘opportunity’ page on Nu Skin’s website, as they were three weeks ago when I was researching my presentation. Mysteriously, all their recruitment pages seem to have been edited since the MLM conference.

Interestingly, one video that appears on the original Nu Skin recruitment pages, but which I can no longer find when navigating from their home page, contains this messaging. Again, remember that Nu Skin’s income disclosure statement reveals that 82% of their reps earned no money in 2019, and that only 1.19% earned more than $1,000 a month before expenses:

Surely if there was nothing wrong with the recruitment messages I highlighted in my video presentation, they’d still be using them? Why remove or edit them if they are honest and accurate?

I’ll let you make up your mind about that.

Photo by Jessica F