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It’s Not Personal, Karen. I just HATE Multi-Level Marketing (MLM’s)

This post may contain affiliate links. Click here to read my full disclosure.

Multi-level marketing, network marketing, direct sales companies, MLM…no matter what these companies call themselves, they’re all the same thing…a big, fat pyramid scheme. 

But not all multi-level marketing companies are bad, right?

You might be thinking, “Melissa, what right do you have to badmouth an industry that has been around for generations? 

It’s not personal, Karen.  I just hate multi-level marketing as a business, and maybe you’ll understand after you’ve read my story.

 

Network Marketing History

 

Network marketing has been around for over 50 years, dating back to a vitamin company called Nutralite in 1934. At least, this is the earliest documented MLM company.

In 1943, the company introduced the first pyramid marketing compensation plan which we know today as a pyramid scheme. 

But before I explain more about how network marketers make money, I want to share a bit about my very first experience with this business model.

In the early 1980s, the economy was tanking fast and hard. Unemployment topped 10%, layoffs were expected in nearly every industry, and literally everyone was Living on a Prayer

 

Multi-Level Marketing to the Rescue (But Not Really)

 

Many turned to network marketing company Amway, short for “American Way” for relief from hardship. Ronald Reagan (The Most American President EVER) was President, and Amway was offering a way to help families through the economic downturn. 

So my Mom started selling Amway and Tupperware and anything else she could get her hands on to help pay the bills so we didn’t have to use the gas stove burners for heat in the winter.

 

What is Network Marketing?

 

The definition of network marketing is a marketing strategy in which sales representatives of a company earn money recruiting new distributors and earn commissions on their own sales and on the sales made by their team: Use your personal relationships to be successful in network marketing.

Plain and simple, network marketing is large companies recruiting new distributors to become ambassadors (ie bug the crap out of family and friends) and sell their products as well as using them to recruit more salespeople to do the same. 

This is where the term “pyramid scheme” comes from. While some people are able to have multi-level marketing MLM success, 99% of participants lose money on the business.

 

Federal Trade Commission’s Regulation of Multi-Level Marketing MLM Companies

 

The Federal Trade Commission, or FTC, is responsible for regulating network marketing companies to protect consumers from deceptive business practices.

According to the FTC

An MLM compensation structure that incentivizes participants to buy product, and to recruit additional participants to buy product, to advance in the marketing program rather than in response to consumer demand in the marketplace, poses particular risks of injury. Where such an unlawful compensation structure exists, a participant is unlikely to be able to earn money or recover his or her costs through selling product to the public. In such circumstances, participants will often attempt to recruit new participants who will buy product, and pressure existing recruits to buy product, with little concern for consumer demand. Where an MLM has a compensation structure in which participants’ purchases are driven by the aspiration to earn compensation based on other participants’ purchases rather than demand by ultimate users, a substantial percentage of participants will lose money.

H.R. 3409, aptly named the “Anti-Pyramid Promotional Scheme Act of 2017” is controversial in that it gives protection to pyramid schemes by redefining the term “pyramid scheme” in a way that allows almost any pyramid scheme to escape the definition.

According to Federal Trade Commissioner Todd Sweeney, passing the bill would “fundamentally damage the ability of the Federal Trade Commission to protect consumers from pyramid schemes” and “entirely stop the FTC from shutting down these kinds of scams.”

H.R. 3409 was vetoed on 12/31/2018. I think it’s important that the Federal Trade Commission establish boundaries and protect the innocent from multi-level marketing MLM schemes.

 

MLM Scheme Illustrated

 

MLM Scheme How it Works
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The majority of people who get involved in a multi-level marketing plan end up losing money and showing no profit at all. 

 

My Team Beachbody MLM Story

 

I first joined Team Beachbody in 2014 after moving out of state with my husband and three kids. We were new to Illinois, and I had no friends and felt very isolated.

I reached out to my then-sister-in-law for information about Chalene Johnson’s TurboFire workout. It was listed for sale on Craigslist locally, and I didn’t want to buy into a multi-level marketing scheme. I was guarded and careful.

About 2 hours later, I was paying for a Beachbody challenge pack with a credit card and signing up to be a “discount coach”. 

I quickly moved up the ranks to Diamond coach status, sharing multiple selfies and silly videos of me working out in my living room. I pushed the company’s money-maker Shakeology on everyone I knew. And I truly believed I was making a difference. 

Then I attended the Team Beachbody Coach Summit in Nashville, Tennessee. This was the moment that I realized that Team Beachbody is a joke

The first night at Summit, hundreds of coaches poured into Bridgestone Arena to witness top coach Melanie Mitro recognized for being the #1 coach in the company. 

What we witnessed that night will forever haunt me. Carl Daikler, CEO and founder of Beachbody, had created a skit that was based on the fact that Melanie is a “hot mess” to prove that anyone can be a top coach…even if she’s a hot mess.

There were dancers who carried laundry baskets and threw clothing into the air. Melanie’s own kids were involved, and they actually had her youngest son say on a pre-recorded video that his Mom was a hot mess. 

I cringed at this disgusting display of what was supposed to be an award ceremony. I finished out the week but soon after I returned home, I walked away from the company.

You can read about all of the reasons I quit Beachbody coaching, and since sharing my story, hundreds of women have shared their multi-level marketing MLM horror stories as well. 

 

MLM Companies

 

  • Beachbody 
  • Mary Kay
  • Young Living Oils
  • Doterra Essential Oils
  • Lularoe
  • Rodan + Fields
  • Advocare
  • Younique
  • Pampered Chef
  • Isagenix
  • Nerium
  • Herbalife
  • Scentsy
  • Even CBD Oil Companies are getting in on it….

These are just a few of the MLM companies that exist today. Many will say that not all MLM’s are the same. Some companies argue that their company isn’t like other MLM’s. 

 

Mission Statements of Multi-Level Marketing Companies

 

Younique’s Mission Statement is to uplift, empower, validate, and ultimately build self-esteem in women around the world through high-quality products that encourage both inner and outer beauty and spiritual enlightenment while also providing opportunities for personal growth and financial reward.

Team Beachbody’s Mission Statement: It’s our mission to help you become the person you want to be. Our comprehensive approach combines fitness, nutrition, and support—a proven formula that has helped thousands of people completely transform their lives. People just like you. 

LuLaRoe Mission Statement: Where through fashion we create freedom, serve others and strengthen families. A place where lives are being blessed and dreams achieved through love, purpose, confidence, trust and growth. —Neither one of those is an actual, complete sentence, by the way.

There’s a whole lot of inspirational puff speak in all of these. I’m all for encouraging women to love themselves, love their bodies, live their best lives, etc. 

It’s easy as a distributor or coach to look to your MLM as a false idol. These companies create a cult-like family, but once you decide to leave the company, they shun you. 

Once you become ostracized from your MLM “family”, everything you thought you were doing to build your self-esteem comes crashing down. You feel very alone and sad. 

 

How MLM’s Make Money

 

Network marketing companies offer products for sale. These products typically speak to a pain point such as weight loss, anxiety, beauty, confidence, etc. They market to fix insecurities or problems.

Instead of placing their products in department stores and paying for advertising, they hire guinea pigs (I mean independent contractors) to become marketers and sell the products to everyone they know.

So Beachbody, for instance, is creating an army of coaches to sell their product and recruit new distributors to sell their product and recruit new distributors to sell their product.

 

The Hierarchy of a Multi-Level Marketing Company

 

A multi-level marketing plan is set up like a pyramid. We’ve already established that. The company at the top creates products to sell and offers to change your life when you become a distributor or coach. 

When you sign up, they are selling you on the idea of being a business owner, an entrepreneur, in charge of your schedule. The ultimate goal is to climb the ranks until you’re at the top, with the company. 

But everyone starts at the bottom and has an upline.

MLM Upline

The MLM upline refers to the person who recruited you into the direct sales company and the person who recruited them, etc.

Your upline is largely responsible for your success. You see, in multi-level marketing programs, your success doesn’t come from selling products directly. It comes from recruiting new distributors and training the right people to recruit and train more salespeople. 

Sure, selling is part of it, and that’s where the company makes its money. I’ll explain that later, but the compound effect is powerful, and MLM’s know this. That’s why they’ve become rich duping people into joining their “opportunity”.

MLM Downline

The MLM downline is, you guessed it, everyone you’ve recruited and those they have recruited as well. Basically, it’s anyone who signed up after you through your network.

It’s your job, as their upline coach or distributor, to make sure they have all of the training and resources needed to succeed.

“But wait…I thought I was signing up to save some money or gain self-confidence, maybe lose a few pounds.”

Congratulations! You have just become part of an intricate network set up to benefit the company and your upline. 

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Network Marketing Success Stories

 

For every 100 people involved in an MLM scheme, there is a single success story. I know of three people who have had incredible success with the multi-level marketing plan. 

One is a Presidential Diamond Doterra rep. Presidential Diamonds earn on average over 1 million dollars per year. No doubt about it, she’s incredibly successful. 

Another is a Scentsy director who has earned all sorts of cruises and trips and makes good money selling Scentsy.

The other was involved with Lularoe, and that trainwreck of a company has gone downhill fast. She recently jumped ship and started her own clothing boutique after realizing that the company was sending her repeats of the exact same clothes she had been selling for months. There were no new prints or inventory, so her sales were plummeting.

The one thing that all of these ladies have in common is that they’re very influential. Their story sells the products, and they speak about the emotional benefits of the company as it has changed their lives. But it’s important to realize that 99% of network marketers lose money.

 

MLM Destroys Families and Ruins Friendships

 

This is a bold statement, I’m aware. But I can say from experience that when you’re drinking the kool-aid of the multi-level marketing programs, you become obsessed in an unhealthy way. 

If you aren’t careful, you idolize a company instead of spending time praying and meditating.

Every action in your daily life makes you question, “How can I spin this into a post on social media to get more people to ask questions about what I’m doing?” 

When I was engulfed in Beachbody, it consumed me. And that’s exactly what MLM companies want. They want you to eat, sleep, and breathe the business. 

It's not Personal, Karen. I just HATE MLM's!
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What’s worse than losing money in a pyramid scheme?

 

Losing your entrepreneurial spirit to go into business for yourself! I wonder how many former network marketers feel shameful or embarrassed about bombarding friends and family about their MLM company?

How many of you have hesitated to start a blog or consulting business or get your real estate license because you’re afraid of what people might think? 

It’s time to let that go, y’all. Believe it or not, Beachbody wasn’t my first attempt at making MLM work. When I was about 20 years old, I went to a facial party hosted by a friend. 

We were given free facials and were shown personal care products that would fix acne issues and make our faces glow. 

Not long after, I was taking out an unsecured loan at 18% interest to buy my Mary Kay inventory. I was convinced I was going to make a difference in women’s lives and I was going to make enough money to quit my job and stay at home. 

Of course, this was a pipe dream, and I ended up selling my inventory back to the company for a loss of 50% and had to pay off the remainder of the loan in payments. 

Even though I lost a lot of money in Mary Kay and I made $0 profit as a Beachbody coach, I realized that I do have something to offer to the world. 

My purpose was to help other women who want to stop the struggle, go all-in on something that they can be proud of, and provide for their families, all while maintaining a healthy work/life balance.

But I’ll admit when I first started this blog I was frightened. Leaning into my faith and my calling helped me gain the confidence to chase my dreams. 

 

MLM Horror Stories

 

I’ve shared comments from 17 Beachbody coaches on why they quit coaching, but I want to share some more comments I’ve received on my YouTube channel and blog. 

An old friend reached out to me to “catch up” when I just happened to be going through a devastating time in my life. I thought she was trying to be there as a friend, but after a couple of minutes, she dropped BB on me. I was so hurt. When I told her that this was a terrible time for me to even think about it, she dropped me. She never cared. This is such an unethical practice. ~ Jeannie

I never made a dime but I spent hundreds. Shakeo is expensive, had a few expired bags because I just couldn’t down the stuff. I felt like a failure. ~Mel D.

Thanks for your honesty! There is a movement with anti MLM companies. A great podcast is Sounds like an MLM but.. I’ve lost friends to an MLM. When I refused to join I was cut off. It’s cult like. These people only associate with other people in the MLM. ~Diana

Thanks for your honesty! There is a movement with anti MLM companies. A great podcast is Sounds like an MLM but.. I’ve lost friends to an MLM. When I refused to join I was cut off. It’s cult like. These people only associate with other people in the MLM. ~Amber

I love how you said they are brilliant because they truly are. They found a way to get “authentic” user-generated content for FREE!! They literally don’t need sales people because they have free ones by the thousands. ~B Miller

So, the other day, a friend of mine got in touch with me to let me know she had seen some Beachbody coach using my before and after pics on her site. See I lost 110lbs. Did it all on my own. This woman, she came across me on social media, stalked my profile, found my pics, kept them, and used them to claim I had lost 110lbs on Beachbody and using the shakes. ~Greatest Ever

Thank you for this. I’ve been talking with a wellness coach on Instagram about her wellness community, and she asked me randomly if I was interested in coaching. Her group is very spiritual, so I’m very drawn to it, but then she mentioned Beachbody. 160 bucks to start up and get this kit, etc etc. Shakeology is a part of it too. My bf said it sounds like an illegal pyramid scheme so I looked on YouTube and found this video of yours lol now I’m thinking that it is a scheme that wouldnt really benefit me the way this person made it seem. So now I’m sad. ~Monica

Of all the comments I received on my blog and YouTube channel, none compare to the woman who shared with me that she had recently given birth to a stillborn child and was approached by a person in her grieving mothers’ Facebook group. 
 
The woman befriended her and then after a few messages, hit her up with the “opportunity” to get her life back. I could not believe what I was hearing. 
 

Why I’m AntiMLM

 

I think it’s obvious from this article that I am antiMLM. I have no desire to be affiliated with a pyramid scheme ever again. 

Instagram is full of deceptive network marketers who hide their intentions. You can spot an MLM “hun” by her hashtags and if she’s really vague about what she does. If her profile says she’s a motivational speaker, entrepreneur, mompreneur, or fitness coach but there’s no mention of the actual company, she’s probably involved with an MLM. 

For example, remember when I shared about top Team Beachbody coach, Melanie Mitro? Her Instagram profile lists her job title as “Business Mentor”. You have to dive deep into a network marketer’s profile and even then, they don’t disclose the name of the company.

In business, we call this shady AF aka deceptive business practices.

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Call to Action

 

If this is you – If you’re frightened because you’ve tried the MLM business model and failed, don’t give up on yourself. Trust that you were created for a reason (even if you don’t know what that is just yet). 

I wasted 10 years of my life in fear of starting my online business because I:

  • had no clue how to get started
  • didn’t have a lot of money to invest
  • was afraid of what others would say or think
  • was terrified of letting myself or my family down

If this is you – Book a one-on-one discovery call. I can help you brainstorm and come up with a strategy for achieving your goals. 

Please don’t waste another minute agonizing over the details. Multi-level marketing may have left a bad taste in your mouth, but don’t let it scar you for life. Book a call now!

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