Multilevel marketing is getting yet another makeover in the US. The better-dressed sisters of pyramid schemes, multilevel marketing companies, or MLMs, have come under fire in recent years in a series of lawsuits, podcasts, documentaries, and investigative reports.
TikTok banned MLMs from its platform in December 2020. In February this year, the clothing MLM LuLaRoe agreed to pay $4.75 million to settle a consumer protection case brought in Washington State. Communities dedicated to criticizing MLMs have flourished on Reddit, Facebook, and other social media platforms.
MLMs, or “network sellers”, don’t work like traditional retailers, which simply exchange goods for money. MLMs work with an unpaid labour force (“independent consultants”) who typically buy products from the MLM and sell them on to people in their network.
The real money comes from recruiting other sellers – if you’re selling for an MLM, you may get a bonus for each new seller you recruit, and then you also get a cut of their sales. That’s why MLMs are likened to pyramid schemes: in order to keep the money coming in, they need to recruit an ever-expanding pool of people on the bottom whose profits filter up to the top. (The technical difference between MLMs and pyramid schemes is that pyramid schemes deal in money and do not sell products; MLMs do sell tangible goods, even if most of the money is to be made in recruiting others to the scheme.)
It’s a profoundly exploitative model. But it’s one that has thrived in the United States, largely in conservative and religious communities, thanks to women.
Many of the most popular MLMs sell female-focused products, from leggings to cosmetics. Many of them have also leaned into the #girlboss language of faux feminism, promising women that they can “have it all”: a well-paying job and plenty of time at home with their kids.
These companies are particularly pernicious because they target stay-at-home mothers in communities where staying home is the norm for women, or at least the desired family setup. These women may also harbour professional ambitions, may want to bring in some income to their families, and may want the real independence that a job brings. MLMs claim to offer just that – and they package these often-false promises in the language of “empowerment” (but not too much).
Instead of paying a fair and transparent wage and offering workers necessary protections, MLMs sell women a false promise of “independence” and “flexibility” – you can have your side business and it won’t interfere with your duties as a wife and mother. It allows an exploitative work model to dovetail with old sexist expectations for a woman’s role in the family and in her community.
And it encourages women to pull their own friends, family members, and neighbours into the scheme, simultaneously exploiting the close ties that many women are skilled at building, and weakening them – a lot of people don’t appreciate being recruited into companies that feel like scams.
The past few years have seen damning exposés of several of the most prominent MLMs, perhaps most spectacularly in the case of LuLaRoe. An Amazon documentary released in September detailed the exploitative business model employed by LuLaRoe (disclosure: I appeared in that documentary), featuring troubling stories of LuLaRoe “network sellers” initially earning big bucks only to see the product decline in quality, their areas become saturated with sellers unable to sell anything, and the company badly mismanaged.
Now, a lot of women have gotten out of the MLM game.
But that doesn’t mean the model is over. A new generation of Gen Z sellers is being recruited; in fact, some are leading the charge, replacing “have it all” pop-feminist branding with vague gestures to wellness, financial freedom, and the work-from anywhere dream.
And credulous media outlets continue to publish glowing profiles of MLM founders and advertise products without fully disclosing (or perhaps even understanding) just how exploitative their business models are.
All it takes, it seems, is the right branding: the “clean beauty” company Beautycounter, for example, has gotten prime and fawning placement everywhere from the New York Times to Elle to Refinery29. Yes, the packaging is pretty. But most of the “consultants” who sell it make virtually nothing.
At this point, the damning information about MLMs is out there if the public wants it, but people understandably trust the word of their friends and neighbours over websites and podcasts.
It’s time for politicians to take on the problem. While pyramid schemes are technically illegal in the United States, MLMs are vastly under-regulated. Meanwhile, wealthy owners are pushing for expansion abroad and campaigning for the loosening of regulations inside and outside of the US. They have the resources and the incentives. It’s the public that needs protection.