Why pyramid schemes 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 they produce 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).
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.
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, she 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.
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. These include courses like Tech Pixies’ Social Media Magic Course – which recently won the Digital Women Digital Course of the Year award.
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