The Deviousness of MLM Companies

MLM companies tell big lies to prop up their business model. They exploit their participants, and they prey on vulnerable people.

If all you’ve ever heard is their sales pitch, you may be surprised at these claims. But I’m going to show you just what I mean!

But first, if you missed part one All MLM Companies Suck – Even Yours, click back and read it first so you can learn:

  • What is an MLM?
  • What do MLMs promise you?
  • How are each of those promises actually lies?

Then come on back here and keep reading!

The BIG LIE: Who Is The Customer?

Why do MLMs lie so much? They lie about your costs, they lie about your income, they lie about the hours of work involved, they lie about the quality of their products. Why? What’s going on?

There’s one big lie that underscores everything else about an MLM company.

They are lying about who their customer is.

If you sign up as a participant with an MLM, you believe that you are a business owner who is recruiting customers. But the truth is that you ARE the customer.

All the messaging you will receive as a participant in the MLM is designed to get YOU to spend money.

  • You buy inventory to show at events and to stock booths.
  • You buy inventory to keep up with quotas or remain at a higher commission level.
  • You buy inventory for yourself because you “love the products so much”.
  • You buy business supplies like catalogs, brochures, and marketing materials.
  • You buy branded products like promotional goods, sample products, and gift items.
  • You buy access to a company web page, back end reporting and processing programs, and other undisclosed membership requirements.

If you are able to hook a few customers underneath you, so much the better for your doomed bottom line. But the company is hoping that you turn those people into additional customers for them – people who will buy into the dream and the big lie and will pour their money higher up the company pyramid.

When you understand that YOU'RE the customer, it's obvious why you're not making any money.  ::facepalm::

What Do I Mean By Exploitation?

I consistently use the word “exploit” when I talk about MLMs. They are exploiting their participants. How so?

I am the customer of a lot of businesses. When I go to a store, I give them money, they give me things, and I’m not being exploited. If a member of an MLM is a customer, then how are they being exploited?

The big one is all the free labor the company steals from its members. Remember, you are PAYING to participate in the MLM. They are not paying you.

However, they expect you to:

  • Recruit additional participants
  • Train new participants
  • Advertise the company brand
  • Advertise specific products and promotions
  • Design advertising and promotional materials
  • Use your own car and body as walking advertisements
  • Provide testing and feedback about the products
  • Provide customer service to address inventory, shipping, and quality issues

I first noticed this when I was a member of Usborne Books. A lot of the work is done online, and almost every online post includes an image. We were given a branding guide on how to make brand-compliant images and given access to file folders full of images to choose from. All of those images were made by unpaid workers.

Marketing design is it’s own specific job field, but none of these Usborne workers are being paid for this work. Instead, remember, they are PAYING to be part of this club and are doing this work for free.

Most of the contact a participant has with the company is through their “upline” – recruits higher in the pyramid. Unless your upline is one of the 1% who are making a decent income, all the work they do to recruit you, train you, and encourage you is unpaid labor.

They are being exploited, they are passing that exploitation on to you, and anyone you recruit will also be exploited.

Who Is Targeted By MLMs

As I’m sure you can imagine, it’s harder to exploit someone who has a great income, a strong sense of self-worth, and a world of great opportunities.

That’s why MLMs target vulnerable populations.

The vulnerable target group that I’m a member of is stay-at-home moms (SAHMs)

  • SAHMs have low confidence about things like earning power, productivity, and contribution to family success.
  • We value being able to earn money while also caring for kids.
  • We have strong local networks of other vulnerable SAHMs.

“You can make a lot of money from home,” is a sales pitch perfectly tuned for someone who wants to care for their kids but is also anxious about their financial contribution to the family.

Our vast social networks of other vulnerable women is the other target on our backs. When a company pressures you to sell to your friends and family, they are asking you to trade on the goodwill and social obligations you have built up in your relationships.

I can tell you that I have purchased MLM products from friends out of guilt, social pressure, and obligation. Some people have probably bought from me for the same reasons.

Other groups that are common targets of MLMs include:

  • Religious groups (strong social ties and high sense of social obligation)
  • Military spouses (emotionally isolated women with revolving social groups)
  • Immigrant populations (strong social ties and susceptible to economic mobility messaging)
  • Young people (eager to start making money, less knowledgeable about business practices)

Stay Tuned For Part Three

There’s one more post in this series. Click through to MLM Companies Think You’re Dumb to learn:

  • How MLMs think you’re dumb about money.
  • How they specifically target women for exploitation.
  • What you can do now that you understand these companies.

In the meantime, let’s continue the conversation. Have you been tricked or misled by an MLM? Drop me a comment and let’s talk about it!

There are so many MLM companies to choose from - but it turns out that they ALL suck!