How multi-level marketing has taken over your Instagram feed
Maybe you recall your mother and her friends having Mary Kay or Avon parties in the living room, as they tested out cosmetics and placed orders for the products they liked. Or a Tupperware party where they fawned over the latest container to keep food fresh. These companies use multi-level marketing (MLM), a strategy where the company’s products aren’t available in stores and are instead sold through a non-salaried workforce of distributors who sell directly to the consumer. Distributors can then recruit lower-level consultants underneath them and take a cut of their profits.
With the rise of social media, multi-level marketing companies have gone digital. Instagram DMs have become a breeding ground for messages trying to sell shampoo from Monat, Shakeology meal replacement drinks, leggings from LuLaRoe and protein powders from Herbalife. The messages invite you to join them on a “journey to financial success,” and masquerade as self-empowerment. They boost being an entrepreneur and having flexibility with your schedule as selling points.
To get involved, distributors sign up and pay the buy-in fee to receive a startup kit, which can come at a hefty cost. The distributor will typically begin posting on social media about their involvement with the MLM company to urge their friends and family to try out the products, with the goal of recruiting members to work underneath them.
The companies promise huge incomes from working with them. Top sellers are rewarded with cars, vacations and cash bonuses. However, the only way distributors can make any real income is by signing up people underneath them and taking a cut of their commission. This has caused many MLM companies to be accused of being pyramid schemes, which work by recruiting members at different levels and promising profit for enrolling other members into the scheme, according to Investopedia.
Few people will find themselves successful within an MLM company. Dr. Jon M. Taylor has conducted research about MLM companies for his book, “The Case (For And) Against Multi-Level Marketing.” According to Taylor, within the first year of operation, a minimum of 50 percent of representatives drop out and by five years, a minimum of 90 percent of representatives will have left the company. Overall, 99 percent of people who join will lose money, according to the Federal Trade Commission.
One well-known MLM company is Herbalife Nutrition Ltd. which manufactures and distributes weight loss and nutritional products with over 500,000 distributors. The company has been accused of misrepresenting its sales practices and reached a settlement with the FTC in 2016, where they were ordered to restructure their company.
Herbalife and several other MLM brands sell health products that have no real scientific backing. Arbonne is an MLM company that sells nutrition products along with beauty, skincare and body products. They market their products as “natural” and use words like “green,” “pure” and “clean” in their advertising. According to nutritionist Meghan Telpner, who did extensive research on Arbonne’s ingredients, their products include ingredients like cyclopentasiloxane, which is considered toxic and harmful, and polymethyl mathacrylate, an acrylic polymer commonly known as “plastic.”
In one message from an Arbonne salesperson named Adrienne to Ithaca College student Morgan Kornfeind, Adrienne claimed that being in college is the perfect time to get involved with the company. She said, “I have many friends who have started their businesses at exactly where you’re at. As a result, many of them have graduated from college debt-free and driving a free Mercedes from Arbonne!”
A typical Arbonne distributor in Canada earned between $30 and $250 in 2017, far from the large incomes and free cars many of the company’s sale reps like to advertise. Of the approximately 250,000 consultants Arbonne employs, only 12 percent make any income at all. In other words, very few college-aged students are going to graduate debt-free and drive a free Mercedes from being an Arbonne salesperson.
Part of the 12 percent is Peyton Mott, a 21-year-old Executive Regional Vice President. In a testimonial video posted to Youtube, Mott shares that she utilized social media to recruit consultants.
“So many people on my team are because of Instagram,” Mott said. “We’ve connected because I had a hashtag and they found my hashtag and they saw my pictures and they messaged me like ‘what is this?’ Because of social media and because of technology, we can build global businesses.”
According to Mott, she began selling Arbonne when she lived in a college dorm and invited girls over for Arbonne shakes to share her story with them. Mott ends her testimonial video with a bold claim. “There’s no reason that you can’t do it. If a 19-year-old in a college dorm room can build a massive Arbonne business, so can you.”
These schemes prey on vulnerable people who hear about the unattainable stories of success from the few employees at the top and want that success for themselves. The people at the top are able to grow rich when the company first starts but as the company becomes more established, sales become tougher. According to a Quartz article written by Alden Wicker, MLM companies disproportionately flourish in rural and suburban areas where there are higher levels of income inequality.
“This is the story of rural and suburban disenfranchisement and the MLMs that offer desperate American women a chance at clawing their way out,” Wicked said. “They’ve become part of the fabric of suburban America, as cherished and inevitable as barbecues and the county fair.”
Rae Harris is a senior journalism major that doesn’t want to buy your shampoo, trust us. You can reach them at [email protected].