Every time I open up any of my social media apps, especially Instagram and Facebook, I get hit with the posts and DMs about joining a “supportive group of girls” who “can make an easy income from just their phones.” When looking through my previous DMs on Instagram, about half of them are from random girls asking completely random questions and wanting me to try their products out. Even some of my old high school friends joined in on these business ventures. What are they? Why do people like them so much? More importantly, why are they actually a scam?
These types of business stem from multi-level marketing tactics and are usually referred to as pyramid schemes. Some of these companies include Monat, ItWorks!, Lularoe and many others. The companies who follow this ploy tend to make a person-to-person selling model: they recruit your typical “boss babe” to sell to their family and friends, and sometimes, to people they don’t even know. Due to the high price that comes with being a part of this business, sellers tend to travel through the depths of social media to find anyone who is desperate or gullible enough to join their program. They tend to target those who are either too young to understand or impoverished enough to feed into the false hope.
From personal experience with dealing with these sellers, the initial product pack can get very pricey. For example, one representative from Monat tried selling me a starter kit for $199. As a college student, that amount of money can pay for most of my textbooks. Why would I want to spend that much money on something that I have no knowledge about? The purpose of these starter kits is to kickstart your “stay-at-home, phone-based” career, where you’ll never have to worry about debt again. Do these potential profits actually pay off your personal debts?
The easy answer is no. The explanation is also rather simple. As stated by the Federal Trade Commission, the promoters may try to recruit you with pitches about what you’ll earn. They may say you can change your life—quit your job and even get rich—by selling the company’s products. That’s a lie. Your income would be based mostly on how many people you recruit, not how much product you sell. So, to put it simply, your income isn’t based on your “starter kit,” it all comes down to how many innocent people you can manipulate into joining your business venture. Also, there are numerous statistics online that further show that multi-level marketing businesses, specifically ones you see on Instagram and Facebook, are not profitable. According to a survey made by the AARP Foundation, among the more than 20 million Americans who participate or have participated in multi-level marketing organizations, 90 percent say they got involved to make money. However, nearly half (47%) lose money and a quarter (27%) make no money. In total, this makes up 74% of those who participate in these organizations making less than, or even none of, what they desired.
We also can’t forget about the scandals that certain multi-level businesses have been a part of. There have been numerous lawsuits that Monat, the vegan haircare and skincare brand, have been hit with. As stated by Healthline, class-action lawsuits against Monat began to appear in 2015. Each lawsuit dealt with the issue of consumers dealing with one thing while using Monat’s hair care: hair fallout. This type of fallout wasn’t normal, either; whole chunks of hair were falling off of consumer’s heads. Clearly, this isn’t normal for any hair care brand.
Some multi-level marketing companies offer up “free cars” to those who make enough money. As stated by Arbonne, they give “free” Mercedes to the top 2% of sellers. Not only is that an unrealistic expectation, but they also make the car not-so-free. Not only do you have to keep your rank in the top 2%, but Arbonne also leases or buys the car in their name. So, some of your profits go straight into funding your free car which means it’s not really free at that point, is it?
The moral of the story is if your old high school friend asks you to join a company that will change your life through the wonderful use of your phone (and over $199), tell them that the manipulation and consistent lying isn’t worth trying to make a few dollars off of actual or potential friendships. If they try to feed you the lie of “but I make so much money,” show them the statistics. Let them know that it’s okay if they expected so much more from these companies, and are being fed false hope. If they are one of the few who actually makes money or gets a shiny, new car (or something along these lines), then that is awesome for them! They’re one of the very few who got to that point, and they probably had to ruin a lot of great friendships to get there (or they had to annoy and manipulate hundreds of strangers). If federal administrations such as the Federal Trade Commission are saying that it’s probably not a good idea, then there is definitely a valid reason why it is not a good idea.