Multilevel Marketing Companies Are Cashing In on the Crisis

As a teenager, Amelia was desperately looking for a part-time job, handing CVs out in cafés and bars with no luck. One day, she picked up a leaflet about an “exciting business opportunity” to become an Avon representative. Everybody knew somebody who was selling for Avon — an auntie or a neighbor. Pity-bought lipsticks rattled around the bottom of handbags, and catalogues littered kitchen tables. The ubiquity of Avon created a sense of security; this “exciting business opportunity” could be a legitimate quick moneymaker. The next thing she knew, a manicured Avon representative was at the dining room table, providing tips on how to sell products and recruit a “team.” The catalogues were swiftly thrown away and forgotten, with never even a nail polish sold.

Avon, and companies like it, have tempted millions of people, and even more have watched as people we know become part of these selling communities. Avon is one of the most common and well-known multilevel marketing (MLM) companies in Britain, but over the last decade, the sector has exploded, with social media providing a perfect foil to sell products — and ourselves. Watching friends and acquaintances mixing up juice-based meals and popping fruit-powder pills, filming their skin care routines, or modeling their new leggings has become commonplace. While we might roll our eyes and scroll past, the “girlboss” business model is sucking in people in the thousands and has only grown in the face of economic crisis.

At the height of the coronavirus lockdown, multilevel marketing companies were rebranding as “social selling” and exploding across social media. Representatives for Younique, FM World, and Arbonne were hosting “social media raffles” that offered the chance of winning big for a small entry fee. Social selling rose 32 percent during the first quarter of 2021 as people were recruited to make their work-from-home businesses a reality, with society and our working lives transformed by the COVID pandemic.

According to culture writer Kaitlyn Tiffany, these companies are a “form of direct selling in which income comes not from the sales they make themselves but from the sales made by people they recruit.” Their structure mirrors that of pyramid schemes, but because there is a product that representatives sell, rather than solely focusing on recruitment, they are technically legitimate businesses. Despite this, in the United States, the Federal Trade Commission “estimates that only 1% of MLM members walk away without making a loss.” The real money lies in the difficult business of “building a team,” but for most people, our networks are not endless, and neither is the patience (or pockets) of our friends and family.

MLMs have a long history of recruiting and exploiting women. The Direct Selling Association (the trading body for UK MLMs like Avon and Amway) states that 96 percent of its 631,000 direct sellers are women. In the 1950s, companies like Tupperware took a “party” approach, wherein housewives would host friends and family to showcase the products and recruit, with the emphasis being on women’s ability to independently earn money while socializing.

This gendered trend has continued to define MLMs. In the documentary series LulaRich, family and uniqueness are the vision of American clothing company LulaRoe, which wants to “empower” women through its business. The documentary shows that the leggings empire founders, DeAnne and Mark Stidham, were preying on educated, middle-class, stay-at-home mothers who were “unfulfilled” in their lives. In 2019, a group of LulaRoe’s sellers lodged a lawsuit against the company, arguing that it is an illegal pyramid scheme and has “cult-like” behavior at the very top.

Today, brands like Herbalife, Juice Plus, and Nu Skin are enjoying immense success in the UK, encouraging women to sign up and achieve the perfect body, face, hair, and life through their “exclusive” products. But beneath the shiny hair and “perfect” bodies, what MLMs are really selling women is the dream of autonomy and financial freedom, and the opportunity to be part of a seemingly thriving community of women at a time when many of us are feeling lonelier than ever before.

Over the past few years, social media feeds have morphed from photos of kids and pets into endless posts by friends peddling everything under the sun: makeup, skin care, candles, essential oils, hormone gel patches, leggings, tote bags, juice powders, nontoxic cleaning products, whitening toothpaste, vitamins, nail decals, nutritional shakes and gardening towers. (Washington Post, 2019)

In 2020, mass job losses and an uptick in time spent on social media provided the perfect storm for MLMs to increase their recruitment, focusing on people anxious about their financial situation or eager to make some extra cash. During COVID, the MLM sector was “booming,” with companies like Avon boasting a 53 percent increase in sales representative sign-ups in the first eight months of 2020. But this recruitment drive wasn’t a natural occurrence: it was a direct order from the highest ranks to use the crisis to their advantage. Sellers have described being pressured by their “uplines” (the person who recruited a distributor into the company and their recruiter, and so on) to go live daily on social media to promote the MLM lifestyle. Lockdowns were presented as the perfect opportunity to seek out “financial freedom” and transform lives.

Amid fear, confusion, and crisis, MLM representatives were working hard to capitalize on the pandemic and tout their promising and successful lifestyles. This wasn’t just about the products, but also about the lifestyle they promise: an accessible #Girlboss world where you could be working at home and raking in money, all while holding the family together. You, too, could be a #Momtrepreneur. These tactics enticed women through a “cult of positivity” that easily adapted lockdown orders to the companies’ benefit.

Today, the cost of living has spiraled out of control, and disaster is on the horizon for more people than ever before. With energy prices jumping and the hikes in rent hot on the heels of a decade of austerity, there is no safety net for millions across the country. These conditions are amplifying the kinds of vulnerability on which MLMs prey: financial precarity coupled with social isolation. With this crisis being the “worst in a generation,” the poorest in society are going to be the worst affected, but middle-income families, too, are set to be up to £4,600 worse off over the next year as prices soar.

This is the perfect opportunity for MLMs to break new ground. The promise of financial freedom has been particularly appealing to women balancing economic and domestic labor, with carefully curated Instagram posts promoting the ideal lifestyle seeming to offer a solution out of both poverty and isolation — leaving out the fact that trouble is undoubtedly to be found down the line. As the cost-of-living crisis leaves many people poorer, get-rich-quick schemes are there to offer a “helping hand.” Precarity and uncertainty provide the perfect conditions for MLMs to thrive and even to be suggested as reputable sources of work.

It isn’t just that MLMs are offering financial security: they are cultivating a sense of community and purpose. These companies entice sellers with conferences that could be confused for pop concerts, competitions to winfreeluxury goods, specific language that creates an insider/outsider dynamic, and a constant stream of communication from other sellers via instant messaging group chats. Poverty is lonely, and MLMs know it. They use FOMO (fear of missing out) as a recruitment tactic and offer an escape fantasy from the intense isolation that people at the sharp end of capitalism experience.

With so many chewed up and spat out by these MLMs, it’s not surprising that there is a growing backlash, with one former seller calling their business “a fucking cult.” Anti-MLM content is thriving, creating a counter-community of its own. On YouTube, TikTok, and Instagram, creators have built platforms dedicated to analyzing the tactics and impact of MLMs and trying to warn off potential victims. The backlash has been swift and harsh, with subscribers contributing “MLM horror stories” to be debunked, undercover reports from recruitment calls, and deep dives into specific companies. But can this anti-MLM content really protect us, or is it reproducing some of the same toxic dynamics?

Anti-MLM content regularly attracts viewers in the hundreds of thousands. Creators are active on TikTok, Instagram, and YouTube, creating a “diffuse and disorganized” community, but one that might “pose an existential threat” to social selling. While some of these creators are former MLM sellers, others…

Read More: Multilevel Marketing Companies Are Cashing In on the Crisis

2022-09-22 10:11:38

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