Sep 12, 2019

It may look attractive, but beware the toll of 'MLM' on friendships

Rachel Liddell was a new mum when she was roped into selling products from Younique, a US-based cosmetics company.
Catherine Bouris
Sydney Morning Herald
September 4, 2019

Rachel Liddell was a new mum when she was roped into selling products from Younique, a US-based cosmetics company, via a local "buy swap sell" Facebook group in her small New South Wales town.

“I am very into makeup and didn't actually want to sell at all: I just wanted the kit because it seemed like a good deal," she says. "The lady I signed up under pushed me into doing live videos and selling because [she said] ‘I wouldn't have to go back to work’.”

Molly Murray signed up at one of the parties.

“I got recruited as a consultant without the lady actually telling me that I was signing up as a consultant," she says. "She added the business builder kits to my order form after I had signed it.”

Now, Ms Liddell and Ms Murray have come away with little to show for their employment except a desire to ensure other women aren’t put in a similar position.

Multi-level marketing (MLM) is a method of selling a product through a network of distributors, who receive financial incentives for recruiting others. It is common for someone to make as much money from recruiting people just as from selling the actual product. Examples of companies that use this business model include Arbonne, Avon, LuLaRoe, Nutrimetics, and Mary Kay.

Dr Máire O Sullivan, a lecturer in advertising and marketing with a focus on gendered consumption at Edge Hill University, has previously referred to MLMs as “legal pyramid schemes”.

“I think that the structure itself is flawed and as soon as recruiting becomes the focus, you are entering pyramid scheme territory," she says, adding that she believes the only way to properly regulate them is to prohibit the incentive to recruit.

Many women pay to sign up just to receive the product discounts offered to distributors, or to get the enticing start-up kit that contains everything a person needs to advertise the products to others. Unfortunately, it often isn’t as easy as buying one kit and getting out with your dignity intact.

Multi-level marketing companies encourage pushy sales tactics, and to play up specific angles – the work from home angle, the being your own boss angle, the financial independence angle – to convince their friends, family members, and random Facebook acquaintances to sign up.

A number of these companies have found success by using pseudo-feminist language that frames their company as one seeking to empower women, rather than just make money. In turn, these women can end up in near financial ruin, with significantly fewer friends than when they started.

The nature of MLMs – which emphasise the independent nature of the business, “being your own boss”, and the flexible hours – make them enticing for new mums looking for ways to make money around the odd and often solitary hours they inevitably keep, like Ms Liddell.

“She was extremely pushy, rang me almost everyday and constantly messaged me about what I should do. It got pretty bad, although I had some success with it, I managed to climb statuses, I was pushed to recruit from day one. It left a horrible taste in my mouth when I recruited.”

“The MLM distributor will be asked to merge their social and economic lives and to see every interaction as a possible opportunity to recruit or sell," says Stacie Bosley, associate professor of economics at Hamline University in Minnesota.

"Individuals seem to react differently to this element, and it may play out differently based on one's culture and social norms. Even if one is comfortable recruiting and selling to friends, family and acquaintances and those individuals are comfortable being asked – and many are not – there can be social and psychological issues when reality sets in and few, if any, make money in the venture. There can be guilt, resentment, and embarrassment, especially if distributors are trained to overstate the likelihood of earning money, misleading others as they have been misled.”

A number of these companies have found success by using pseudo-feminist language that frames their company as one seeking to empower women.

Most of these companies frame themselves as more than just a company looking to make money. Younique describes itself on its recruitment page as a sisterhood with a mission to uplift and empower women around the world. Who wouldn’t support a mission like that?

As it turns out, quite a few people wouldn’t. The anti-MLM subreddit has over half a million subscribers, and there are countless Facebook groups where former recruits and those who just can’t stand the tactics used come together to criticise, vent about, and lampoon the MLMers in their lives. There are also several blogs created by those who’ve escaped an MLM and want to warn others.

Dozens of people have filed lawsuits against LuLaRoe, a US-based MLM that sells leggings, and other former sellers are facing bankruptcy. Meanwhile, on LuLaRoe’s website, the company describes its story as “a story of a struggling mother who has and continues to inspire thousands while following her dreams” who launched the company “with a vision to help others succeed”.

In the end, Ms Liddell recruited seven friends, some of whom have distanced themselves now she has left the MLM life behind. Other friends fell out of touch as a result of her persistent cold messages encouraging them to join her downline.

Others are essentially scammed, like Ms Murray was: charged for product she didn't know she had ordered.

“As I didn’t realise I’d been signed up as a consultant until the product turned up on my doorstep, I didn’t cancel my credit card straight away and I ended up having about $5000 charged to my card. During that time she placed three more orders which I couldn’t return, despite the company’s 45-day return policy.”

Since the company had a signed order form, her credit card company didn’t reverse the charge.

“Now I cross out any remaining lines on any order form and take pictures of the original form so it can’t be disputed.”

No comments: