Why pyramid scheme-like MLMs are not a cure for Coronavirus
Over the past couple of weeks, as the world has gone Coronavirus-mad, another ‘virus’ has been seeking out new victims.
Always keen to take advantage of any human tragedy (not even child loss and 9/11 are immune from being exploited by MLMs), MLM reps have been out in force, proclaiming that they have the cure for the Coronavirus impact.
The ‘cure’ is two-fold. Firstly, if their MLM company produces any kind of health product, they’ll push it as a must-buy (and tell you it’s flying off the shelves to create FOMO).
And secondly, they’ll try to convince you that their pyramid-scheme like recruitment and sales model is the perfect solution to the dire financial straits you find yourself in thanks to lockdown.
Here’s why we believe you need to avoid ALL MLMs, now and always.
Don’t be taken in by medically dangerous claims
We’ve seen some brazen health claims in the past few days – including drinking aloe gel (which not only isn’t proven to help prevent or cure viral illnesses, but internal consumption of aloe is actually discouraged by a well-known cancer centre).
So don’t be taken in by “medically dangerous” health claims by MLM reps, like this one:
If you want to boost your immune system, and maintain your personal cleanliness you’ll find cheaper (and sometimes better quality) products online and on the high street.
MLMs are exploiting money worries over Coronavirus
The second, and more alarming, way in which MLM reps are exploiting people’s worry over Coronavirus is financial. Small businesses are already feeling the pinch from Coronavirus, and not every company will survive. The economic impact also has knock-on effects for employees.
So justifiably, many people are worried about money right now. Which, as always, is seen as an opportunity by callous MLM reps to recruit, like this post:
Many reps are boasting about the security of their online business, and offering people places in their team. Some even promise that people can add anything from £400 to £2,000 to their family income with the ‘side hustle’ they offer.
Sadly this is far from the truth. As extensive research published by the Federal Trade Commission (FTC) shows, an average of 99.6% of people who join an MLM will lose money when expenses are taken into account. (The FTC goes as far as labelling some MLMs it has investigated as ‘pyramid schemes’ and ‘scams’.)
Over 80% of MLM reps make NOTHING according to the companies themselves
And our own investigations back this up. Here are some earning statistics published by the companies themselves (click the link to read the full reports):
- 86% of US Herbalife distributors earned NOTHING
- 85% of Nu Skin distributors earned NOTHING
- 88.6% of Forever Living reps earned NOTHING
- 88% of Arbonne consultants earned NOTHING
Even the small percentage of MLM reps who do earn any income at all, on average earn very little:
- Only 6.9% of Herbalife distributors earned more than $183 a month
- Only 7.49% of active Nu Skin reps earn more than $124 a month
- Only 3.62% of Forever Living reps earn more than $105 a month
- Only 1.28% of Arbonne consultants earn more than £167 a month
And remember, this is NOT profit. From this paltry income, which again is only earned by the TOP tiny percentage of people who join these companies, you need to deduct business expenses – including your own purchases (we’ll go into more detail on this later).
How MLM reps lie by making earning money seem easy
To compare the vast difference between the promises MLM reps make and the reality if you join, here’s a post by a Forever Living manager. She claims to be helping a play group leader increase her income by £1,000 a month:
The post makes it seem doable, if not easy, to earn £1,000 a month while working and raising a family. In fact, she claims it’s possible working just one hour a day.
The reality is very different. According to Forever Living themselves, only the top 3.62% of all people who sign up will earn over $105 a month. So the chances of this woman (and anyone else) achieving the promised £1,000? Virtually nil, according to Forever Living.
“People are already earning hundreds and hundreds of pounds”
To prove how blatantly MLM reps are lying right now in a cynical attempt to recruit as many desperate people as possible – people like hairdressers who have lost their income during the lockdown – here’s a quick reminder of what Forever Living say their reps earn.
According for Forever Living’s own figures, of all the people signed up to the company:
- 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.
It’s clear from these numbers that it’s not easy to earn a significant amount of money with Forever Living. In order to earn a liveable salary, you need to be much higher than the top 3.42% of all people signed up.
And yet, this is what the Forever Living Manager above has claimed about her recruits:
“I’ve got lots of people who’ve joined me and who are already earning hundreds and hundreds of pounds.”
How can it be possible that “lots of people” in her team are earning “hundreds and hundreds of pounds” when Forever Living’s own figures show this is only possible if you are in the top 3.42%?
We don’t believe it is. Especially as one of this Manager’s top recruits, a women who even gave a training session at Forever Living’s November 2019 Success Day, admitted in February this year that she’d earned just £87 that month (despite working HARD at her business, as you’ll see below) and couldn’t even afford to repair or replace her car.
We believe this is yet another lie told the hope to recruit yet more poor, desperate people into her downline so she can earn money from them.
MLM reps are the REAL customers
As with all businesses, MLM reps need to deduct any business expenses from their income in order to get their real profit. And in an MLM these often expenses usually include your own personal consumption of products.
“Be your own best customer” and “be a product of the product” are popular MLM mantras, giving weight to the belief that MLM reps are the real customers of these businesses.
As well as personal consumption, MLM reps also need to factor in their ‘active’ requirement to join these companies. This is a minimum value of personal sales (or purchases) a month to remain with the business. These are usually anywhere from £99-£199.
From interviewing many MLM reps – including women who climbed up the ranks of these companies – we understand that is this active requirement that leads them into debt.
Indeed, based on our extensive research, and that of other MLM experts, we believe you are more likely to get into debt than you are earning any money by joining an MLM.
MLMs require you to work hard (often for no money)
MLMs aren’t quite the family-friendly business opportunities you can easily slot into ‘pockets of time’ around your other commitments they pretend either. (Such as the ‘hour a day’ promise above.)
Here’s what a former It Works rep told us:
It was normal to be working at 2am. You were expected to be working ALL the time, I was told to message people while waiting for the kettle to boil and even when on the toilet! You couldn’t even have a wee in peace!
And one Forever Living manager regularly boasts about the evening meetings, training and online working groups she holds with her downline. She even organises 6am power hour sessions for them:
Incidentally, the Forever Living rep hosting the power hour above has been in the business over a year, and despite telling her manager “I need to increase my income by £2000 per month, NOW” at the start of January this year, is the rep that said she’d earned just £87 in February.
We don’t know about you, but we don’t want to be working at 6am or after 8pm – particularly if we’ve already put in a day’s work in a job that actually pays us. Especially if it means earning as little as £87 before expenses.
So don’t believe the promises – MLMs are NOT the answer to financial insecurity. And they’re not easy business opportunities that require little time from you. As you can see, they are more likely to leave you exhausted, depressed and in debt.
One MLM rep asked for £5 to pay for 69p NHS ‘self care pack’
Sadly, while many people in communities are pulling together and looking out for people who need help, others are viewing the Coronavirus pandemic as an opportunity to make money from others, and further their own agenda.
The news is full of warnings about a spike in scams right now, and to that list we’d like to include the rash of MLM reps in a hurry to push their products under the guise of ‘charity’.
We’ve explored before how cynical MLM reps use the goodwill of others to line their pockets, help them maintain or gain rank, or simply get their business in front of potential new victims.
And what better opportunity for MLM reps to look good (while benefiting themselves) than a national lockdown in which many people have lost their income and are fearful of the wellbeing of themselves and their loved ones? Or are even putting their own lives at risk for the rest of us?
Don’t believe anyone would be that cold hearted? Recently in a neighbourhood Facebook group set up to help people in Covid-19, a Younique rep asked people to sponsor her ‘self care packs’ for NHS staff. Each pack contains sweet treats, ‘uplifting quote cards’ and Younique samples:
We priced the pack based on Tesco prices, where all the non-Younique products are available. Most are in multipacks, so we calculated their individual prices:
- 1 x hot chocolate sachet – 30p
- 1 x Haribo Starmix pack – 11p
- 1 x Yorkie biscuit – 14p
- 3 x Lotus biscuits – 14p
- Total = 69p
So, aside from the ‘uplifting quote cards’ (one of which looks homemade), and the Younique samples, which are given away free by Younique Presenters to promote their business, each pack costs just 69p.
And yet this Younique Presenter is asking people to sponsor each pack for £5 – a profit of £4.31 (less the cost of the envelope).
So, not only does this Presenter use this an opportunity to get samples for her business in the hands of (often) cash-strapped NHS staff, but she’s apparently making a VERY healthy profit too.
And yet she’s presenting this as a charity effort, and wanting credit and praise for it. And when this post was questioned and removed (rightly) from the Facebook community page, she was enraged (demonstrating something that looked very much like narcissistic rage).
We don’t know about you, but this doesn’t appear very charitable or generous on the part of the Younique Presenter. She’s seemingly making a healthy profit from each pack, while promoting her business by sending out business samples.
And she’s not the only one. There have been several press reports asking people not to fall for similar scams. It has even promoted MLM reps, like this Arbonne consultant to ask their team to lay low, and take their donation requests offline:
As we have previously covered, these ‘charity’ requests are designed to benefit the MLM rep and put money in the pockets of their company. If you genuinely want to help hard working healthcare workers, there are plenty of better ways.
The FTC warns 10 MLMs about income and health claims in Covid-19
We’re not the only ones who are disgusted by the opportunistic health and income claims MLM reps are making during Coronavirus.
Here are some of the posts the FTC describes as “unlawful” and “deceptive”:
We’ve seen numerous posts by MLM reps in the UK – particularly from Forever Living (whose reps have a long history of lies and deception) claiming that their products boost immunity, and making earrings claims (as you can read above).
So please note that these claims are NOT acceptable. They are NOT accurate (as we know, on average 99.6% of participants in MLMs will lose money after expenses are deducted). And they are not even legal, it appears.
How CAN you protect your career and finances from Coronavirus?
So if MLMs are not the cure for the financial impact of Coronavirus, what is?
If you’re lucky, your job will be safe and your company will allow you to work from home if required or needed. If you don’t have that security, there are a number of things you can do to protect your finances. For a start, MLMs aren’t the only home-based business you can start.
You can use your skills to go freelance and work for clients from home. here are some tips that can help:
- Your 10 first steps to a successful freelance career
- Think you can’t afford to go freelance? Six money tips that will help
- Checklist for going freelance
- 47 ideas to help you find freelance clients
You can also retrain, and acquire new skills you can use to work from home.
If you considering starting a business from home, you’ll find some helpful tips in these articles:
- 16 signs you’re ready to start a business
- How to start a business when you have no money
- Six business ideas for mums
- How to start a business – your first 10 steps
Or you can find ways to take your existing career or business online – or change the way you offer it to get around the impact or Coronavirus.
With some creative thinking you can even come up with new business ideas. For example, a friend owns a popular local hotel and restaurant that’s been hit hard by Coronavirus.
So they’ve come up with two ingenious ideas to try to make the best out of a bad situation. They’ve ordered bespoke, branded takeaway containers and are planning to offer ‘dine in’ packages in which they’ll deliver their three course meals direct to people’s homes.
And they’re considering offer luxury isolation packages in which they’ll offer full, round the clock room service and other services to people who wish to self-isolate or recover in their bedrooms.
It’s not ideal, and the thoughts are in the early stages of working though and testing viability, but it’s an example of the inventive ways in which businesses can try to adapt as best they can to avoid losing all income streams during this difficult time.
Freelancers, employees and business owners can also make use of the many tech solutions that enable people to run their businesses from home. These include conferencing software that enables you to hold video meetings.
Personally we love Zoom, and use it daily to run our own online business. You can sign up for a free trial here if you don’t already have it. (This isn’t an affiliate link – we just love Zoom!)
There’s a wealth of other technology and software that we use to run our business easily from our home or office, and connect and work with people all over the world. So whatever need you have, or problem you have to overcome, do some quick online research to see what solutions are available.
You might be surprised at how much you can do to earn money from home without getting sucked into a MLM.
Photo by Sharon McCutcheon