11 ms·

The MLM Epidemic in 13 Maps

99 points by encorekt 7y ago

elil17 7y ago
This article doesn’t dig into the details, but these companies are really vicious. They aggressively recruit at my college and I’ve seen them to convince students to take what they would have spent on next semesters tuition and use it to buy “inventory” (i.e. more products than they’ll ever be able to resell) instead. These things ruin people’s lives
- encorekt 7y ago
  Absolutely -- it's that promise of financial freedom and products that "basically sell themselves" except you're stuck with the inventory because 10 people are working on the same friends to get them to buy Younique mascara.
  - throwawaysea 7y ago
    Actually, MLMs are required to repurchase unsold inventory: https://www.mlmlaw.com/library/cases/mlm/ftc/amway.htm https://www.mlmlaw.com/library/cases/mlm/ftc/amway.htm
    - RandomBacon 7y ago
      That's a pretty long document. What section? I'd love to be able to tell my friend whose wife still has a bunch of LuLuRo leggings.
      - jandrese 7y ago
        The doc seems specific to Amway. Perhaps this clause: > 72. Amway, the Direct Distributor or the sponsoring distributor will buy back any unused marketable products from a distributor whose inventory is not moving or who wishes to leave the business. (RX 331, p. 17B to 18B; CX 847; CX 1076) The buyback rule has been in existence since Amway started. (CX 1041 J) Amway enforces the buyback rule. (CX 847; Brown, Tr. 501213; Bortnem, Tr. 686, 690; Soukup, Tr. 913) In any case I would not be surprised in the least if your upstream told you to pound sand if you tried to return unsold product, regardless of legal precedent. You have to decide if it is worth your time and money to sue them.
    - Osiris 7y ago
      My wife did Mary Kay and they had a clause regarding buy back: They would pay 90% of what you paid to buy it and you'd be blacklisted - you could never by a MK consultant again. So even if an MLM has that type of program they probably make sure people know it'd be bad for them to exercise it.
      - thaumasiotes 7y ago
        > they probably make sure people know it'd be bad for them to exercise it. The example you cite seems to undermine this claim. If you're doing terribly selling Mary Kay products, you get 90% of your money back and... you can't sell Mary Kay products anymore. Which you couldn't do in the first place; why would you care about being blacklisted?
        nkrisc 7y ago
        If people thought about it that rationally, they wouldn't have gotten involved with MLM schemes in the first place.
    - wp381640 7y ago
      Most have penalties for repurchasing such as restocking and delivery fees that mean they still make good That is before going into the psychological pressure applied to distributors to not "fail" by asking for a restock, and the incentive schemes that mean many distributors continue stocking up on unsold goods to maintain commission and reward levels
- jbob2000 7y ago
  How do you craft a law to make this illegal though? And then how do you enforce the law? How do you bring these companies to justice? A fool and his money are easily parted. If those students didn't blow their tuition on MLM garbage, they'd have blown it on something else. I'm sure there's a kid somewhere who blew his tuition making ridiculous option trades based on something he read on r/wallstreetbets.
  - Matticus_Rex 7y ago
    I don't think that's necessarily true. I know plenty of smart people who just didn't know enough about MLMs and had a bunch of people around them who were doing them, and got sucked in. They're smarter now, but these things are really toxic and cult-like.
  - badrequest 7y ago
    Simple, if you receive income that is a royalty from the sale of products you sold to the person who ultimately sold them, it's taxed at 100%.
    - imadethis 7y ago
      So no more wholesalers? No more commission for sales reps selling through partners?
    - mysterypie 7y ago
      If that were the law, then the MLM's simple workaround would be to pay you a recruiting fee based on the success of the people you recruit. If the people you recruit sell a lot, you get a bigger fee because you did a better job at recruiting. I imagine it'll be tough to craft a law to target MLMs because if it's too broad it'll hit many kinds of legitimate business and if too narrow they'll creatively bypass the rules.
      - learc83 7y ago
        The IRS deals with people trying to exploit loopholes like that all the time. The law isn't a programming language.
- deleted 7y ago
  [deleted]
- dwoozle 7y ago
  Why shouldn’t the principals of a company that willfully harms so many people’s lives receive a criminal punishment on par with what someone who murders a single person gets?
  - brighton36 7y ago
    Because these fools choose to be parted from their money.
- gexla 7y ago
  Interesting they go the route of selling inventory. It must be required to make the thing legit. From what I could see from one meeting I was tricked into attending (it was supposed to be a BBQ and no mention of any sort of meeting) the real product to sell was the high margin learning materials and seminars. That the effort of course goes into recruiting people to sell this stuff to. The guy who invited me did well to place himself as the "church" and "organizer." The rest were suckers being sold on the "community" component. Do your capitalist prayers and good things will come to you. Have faith!
  - elil17 7y ago
    I’ve absolutely seen that too. Just last week a classmate mentioned that she was going to the Bahamas for the weekend. I asked why and lo-and-behold it’s for a training for her “work.” Undoubtedly this was a huge money maker for someone. I understand the appeal, of course - who doesn’t want to be tricked into believing that taking a weekend in the Caribbean is a good idea financially
- sharemywin 7y ago
  wow. I'm sure I'm going to get downvoted but, you think mlm is bad but the VC model is ok. How many people have spent countless unpaid hours and who knows how much money working on a "start up" VCs: Let's out source the high risk part of finding product/market fit instead of paying for R&D and then come in at the last minute and collect most of the profits.
  - sharemywin 7y ago
    or lets look at social networks, its basically mlm but only the network gets paid.
Scoundreller 7y ago
I found « The Dream » podcast to be pretty good on the topic. https://www.stitcher.com/podcast/stitcher/the-dream https://www.stitcher.com/podcast/stitcher/the-dream
- eli 7y ago
  Agreed. I’m not usually a huge podcast person, but this was a really interesting look at the history through today of MLMs
LanceH 7y ago
I wrote and deleted a long response. The short version is that they can be broken into two groups: 1. Distributors are paying well over wholesale and their margins are much closer to referral fees that really don't support the full retail effort. 2. Distributors are paying closer to wholesale but are buying junk that nobody actually wants. This is more like a ponzi scheme with items that theoretically hold value.
devmunchies 7y ago
I wonder why MLM's are so rampant in the mountain west. I know "mormons" and "sales experience from missionary work" but the analysis can go deeper. From personal, anecdotal experience, a lot of these MLM people I've seen are moms. Could it be that that area is so sales heavy that stay-at-home moms want to run their own thing so they get into MLM on the side?
- Spooky23 7y ago
  Mormons tend run the companies and seed the initial demand. Moms with built in communities are big markets. Wherever you have a big military, police/fire/prison presence you'll see these all over. Also certain church communities, certain freelancer type industries, (yoga contractors, photographers) etc.
  - thephyber 7y ago
    I've noticed that "military, police/fire/prison" families and some church communities like to "support our own" and buy from "locally owned businesses". I think MLMs allow people to buy what they think is a locally owned business that they believe will return dividends to their own community. Sadly the dividends that MLMs return are mostly negative (debt, friction of social bonds, etc).
    - Spooky23 7y ago
      They also have shift work husbands and are more likely to have a female spouse at home when kids are young. Pension systems make it very difficult to get out of the job after a few years. If you go to a police or fire station and ask, easily 30% of the wives are nurses, as it’s a job with super flexible schedules. MLM gets pitched as a way to make some extra dollars.
    - gexla 7y ago
      > I think MLMs allow people to buy what they think is a locally owned business that they believe will return dividends to their own community. This would be the sane selling point for people who aren't susceptible to cult following. I was tricked into going to one of these meetings and at first I thought this is what it was. I was envisioning a sort of Amazon meets Costco scheme where you can get greater discounts with the more bulk that you buy. That's not keeping money in the community, but at least it's saving money in a community buying pool. The first speaker at the meeting even got into a small business presentation which had nothing to do with MLM. I thought he did great. Then came the preacher, and everything fell into place. This is some sort of scam. I would have been fine with the thing if it would have been a group buying thing where you save money AND stuff gets delivered to your door. I never did get far enough to see if there would have been any savings though.
Spooky23 7y ago
When I worked retail sales in the 90s there was an Amway cult meeting nearby. Every few weeks, they would drop in after a pep-rally type thing and try to waste your time looking at the most expensive thing and talk about their amazing business. Then they'd drop the pitch (at the time it was about their e-commerce business). Once you ran into them, you could spot them. It was a mix of desperate mid-life crisis guys looking for cash, clean-cut naive younger people, and diligent moms starting a business. Really sad.
- steveeq1 7y ago
  > Once you ran into them, you could spot them. It was a mix of desperate mid-life crisis guys looking for cash, clean-cut naive younger people, and diligent moms starting a business. That's really heartbreaking to hear. Usually MLMs sell to types that "really need to make money", when in fact it brings people further away from that. A friend of mine (almost) fell for a cryptocurrency 'class' that "teaches" people about this "exciting new wealth-building opportunity". But it's instead trying to sell shitcoins.
- bilbo0s 7y ago
  >It was a mix of desperate mid-life crisis guys looking for cash, clean-cut naive younger people, and diligent moms starting a business. Something struck me as a bit familiar about those descriptions. And then I remembered, around here, it matches up with the demographics of the gig economy types. Uber, food delivery, etc. Only difference being the gig economy types are drawn more from the poor. I wonder if the desperate who are poor do gig economy jobs, whereas the desperate who are middle or upper middle class, (or those who like to think of themselves as middle class culturally anyway), tend to go for the "start a business" MLM thing?
  - yardie 7y ago
    > the desperate who are middle or upper middle class I find they tend to do both. The poor won't have the capital nor credit to be an Uber driver. The middle class will engage in both. I've had my share of Uber/Lyft drivers also hawking Herbalife.
mortenjorck 7y ago
I'm guessing the 13 companies here are the long tail of MLM compared to Amway and Herbalife, but I’m curious just how big the difference is.
- thephyber 7y ago
  From the wording in the article, I'm guessing this is just using Google Trends data. You can search and compare for yourself: https://trends.google.com/trends/explore?geo=US&q=%2Fm%2F0dgsq8m,%2Fm%2F038f_t https://trends.google.com/trends/explore?geo=US&q=%2Fm%2F0dg...
dmalvarado 7y ago
ASEA also stands for Alaska State Employees Association, which explains dark green Alaska
closetohome 7y ago
I'm a little concerned that at no point in the article does the author use the term "pyramid scheme."
- dorothyat40 7y ago
  Like it's co-opting this soft language that the industry is pushing to distance itself from a pyramid scheme, which is very much is?
- BryanBigs 7y ago
  This is a guess, but a pyramid scheme is illegal, and so calling 'legal' companies by the term might be considered slander. Since some of these companies live to bully through the court system, it's probably a conscious decision to avoid the term. Just a guess though.
StanAngeloff 7y ago
Over the past 15 years, I've had the opportunity to work with more than a dozen MLM companies in the UK. This won't be a popular opinion, however I believe great quality products and a self-regulating industry can create businesses that are far from being a Ponzi scheme but are legitimate companies with ethics, great support and opportunity to earn decent money.
- mprev 7y ago
  What "great products" need to go through MLM? Arguably, it's easier than ever to launch a product direct to buyers. And it's neither easy nor cheap to build a multi-level network of distributors. None of the UK-active MLM schemes I've seen has an ethical reason for using MLM rather than legitimate sales channels. Let's look at some. Cleaning products that are vastly more expensive (in part to fund the MLM commissions) than High Street equivalents. Questionable dietary supplements that rely on woo-woo rather than scientific backing. And of course, electricity, gas, and phone service with the added margin to pay for all those ad-emblazoned Minis and, again, MLM commissions. Maybe it's like communism. People like to say that, on paper, it's a great idea (I disagree but that's not the point). Those same people also say that it has never been implemented properly, and so it's not the fault of the idea that it has always led to national scale human misery. In your view, MLM could lead to ethical companies with great products etc. But the past few decades show that every time it's tried, MLM actually preys on the dreams/needs of the vulnerable, adds huge margins to mostly crap products, and the people who get suckered end up mostly losing money. MLM is a horrible idea that leads to horrible outcomes.
- detaro 7y ago
  Examples of such companies?
- noxToken 7y ago
  At the core of it, MLM is a legitimate business strategy to get a relatively unknown product distributed through a network effect. I create a meal replacement smoothie. Some friends want to try it, so I hook them up. Then friends-of-friends ask about this smoothie that isn't available, so I let them sell the product to other people in exchange for a cut. I quickly realize that I don't have the capital for to materials. Product is moving too fast, so I ask them to pay up front for some of the materials. The problem is that this benign relationship that helps both of us can be easily made predatory.
cityzen 7y ago
There is a great podcast called The Dream about MLMs. I feel sorry for anyone that gets wrapped up in these things.
dwoozle 7y ago
This is my favorite article on MLMs, how they basically consume and destroy female friendships for a quick buck. https://www.washingtonpost.com/outlook/2019/01/21/how-mlms-are-hurting-female-friendships/ https://www.washingtonpost.com/outlook/2019/01/21/how-mlms-a...
rhizome 7y ago
Read the classics, too! http://www.vandruff.com/mlm.html http://www.vandruff.com/mlm.html
qwerty456127 7y ago
What if all the businesses were MLM? What if MLM schemes were also designed to re-distribute rewards so all the wealth wouldn't concentrate in the the top members' pockets?
- tlb 7y ago
  And if my grandma had wheels, she'd be a bicycle. Actually, a Co-op seems like the answer to your second question. Profits are shared among members in proportion to their activity.
- kjs3 7y ago
  They wouldn't be MLMs in any recognizable sense?
  - qwerty456127 7y ago
    I mean what if there were no centralized retailers, everybody would be encouraged to re-sell, everybody would be rewarded for distributing to other active re-sellers, people receiving abnormally high passive income from their networks because of their high position in the distribution hierarchy would be taxed to reward active minors. At the same time businesses producing goods (rather than distributing tem) and services (incl. storage, logistics and quality control) would remain the classic way, MLM is just about the sales. Just imagine buying all your groceries and gadgets from neighbors and friends rather than from Walmart/etc. Wouldn't that be nice?
    - kjs3 7y ago
      Oh, I see what you mean. Then my answer (not facetious) would be "because that would suck". I don't want to be a micro-distributor, I don't know a lot of people outside of sale that would think that's awesome, and if there's anything MLM has proven is that buying exclusively from your friends/acquaintances/neighbors is a good way to ruin relationships. Sure...there's a more equitable scheme to equalize distribution of wealth, but please don't let this be it.
TexasBuckeye 7y ago
These MLM "companies" are a scourge on many desperate and under-educated people. They prey on the desperate and it's unbelievably unfortunate that it's still actually legal.
randogogogo 7y ago
I'm always amazed by how well MLMs inoculate their sellers to criticism. Questioning the merits of the product or the distribution system usually results in conflict. A lot of people selling these things think they've discovered something special and that they're clever to have picked it up and run with it. Once they're at that point there is no stopping ego.
alpineidyll3 7y ago
They left out graduate education ;P
droithomme 7y ago
I'm not sure what the purpose of the article is. It mentions a bunch of companies I've never heard of and has maps apparently of which states people search for their company name on Google, each year from 2008 to 2018. I suppose they are showing growth of interest in each company name. But there's not much commentary in the article. Just maps and a paragraph description of what the company is selling and a brief history. The first on the list claims is an oil and gas company popular in Texas that somehow sells oil and gas using a multi-level marketing scheme?!? Whaaaat? The article doesn't even explain how that works or what they are really selling. Do random independent distributors buy gas tanker trucks and make deliveries to farm houses then try to recruit the farmer to sell to his neighbors? They could have tried to explain what this company is about. But instead it's just these maps and cryptic descriptions. Another one says a MLM company sold leggings that became popular, then lowered in quality, which resulted in lawsuits. But no mention of lawsuits about what. Not sure the article is useful or the title "epidemic" is justified. There probably is a MLM epidemic, but the article doesn't really support that. Just lists some random companies with spartan facts and some maps derived from Google search data.

99 points by encorekt 7y ago

This article doesn’t dig into the details, but these companies are really vicious. They aggressively recruit at my college and I’ve seen them to convince students to take what they would have spent on next semesters tuition and use it to buy “inventory” (i.e. more products than they’ll ever be able to resell) instead. These things ruin people’s lives

encorekt 7y ago
Absolutely -- it's that promise of financial freedom and products that "basically sell themselves" except you're stuck with the inventory because 10 people are working on the same friends to get them to buy Younique mascara.
- throwawaysea 7y ago
  Actually, MLMs are required to repurchase unsold inventory: https://www.mlmlaw.com/library/cases/mlm/ftc/amway.htm https://www.mlmlaw.com/library/cases/mlm/ftc/amway.htm
  - RandomBacon 7y ago
    That's a pretty long document. What section? I'd love to be able to tell my friend whose wife still has a bunch of LuLuRo leggings.
    - jandrese 7y ago
      The doc seems specific to Amway. Perhaps this clause: > 72. Amway, the Direct Distributor or the sponsoring distributor will buy back any unused marketable products from a distributor whose inventory is not moving or who wishes to leave the business. (RX 331, p. 17B to 18B; CX 847; CX 1076) The buyback rule has been in existence since Amway started. (CX 1041 J) Amway enforces the buyback rule. (CX 847; Brown, Tr. 501213; Bortnem, Tr. 686, 690; Soukup, Tr. 913) In any case I would not be surprised in the least if your upstream told you to pound sand if you tried to return unsold product, regardless of legal precedent. You have to decide if it is worth your time and money to sue them.
  - Osiris 7y ago
    My wife did Mary Kay and they had a clause regarding buy back: They would pay 90% of what you paid to buy it and you'd be blacklisted - you could never by a MK consultant again. So even if an MLM has that type of program they probably make sure people know it'd be bad for them to exercise it.
    - thaumasiotes 7y ago
      > they probably make sure people know it'd be bad for them to exercise it. The example you cite seems to undermine this claim. If you're doing terribly selling Mary Kay products, you get 90% of your money back and... you can't sell Mary Kay products anymore. Which you couldn't do in the first place; why would you care about being blacklisted?
      - nkrisc 7y ago
        If people thought about it that rationally, they wouldn't have gotten involved with MLM schemes in the first place.
  - wp381640 7y ago
    Most have penalties for repurchasing such as restocking and delivery fees that mean they still make good That is before going into the psychological pressure applied to distributors to not "fail" by asking for a restock, and the incentive schemes that mean many distributors continue stocking up on unsold goods to maintain commission and reward levels
jbob2000 7y ago
How do you craft a law to make this illegal though? And then how do you enforce the law? How do you bring these companies to justice? A fool and his money are easily parted. If those students didn't blow their tuition on MLM garbage, they'd have blown it on something else. I'm sure there's a kid somewhere who blew his tuition making ridiculous option trades based on something he read on r/wallstreetbets.
- Matticus_Rex 7y ago
  I don't think that's necessarily true. I know plenty of smart people who just didn't know enough about MLMs and had a bunch of people around them who were doing them, and got sucked in. They're smarter now, but these things are really toxic and cult-like.
- badrequest 7y ago
  Simple, if you receive income that is a royalty from the sale of products you sold to the person who ultimately sold them, it's taxed at 100%.
  - imadethis 7y ago
    So no more wholesalers? No more commission for sales reps selling through partners?
  - mysterypie 7y ago
    If that were the law, then the MLM's simple workaround would be to pay you a recruiting fee based on the success of the people you recruit. If the people you recruit sell a lot, you get a bigger fee because you did a better job at recruiting. I imagine it'll be tough to craft a law to target MLMs because if it's too broad it'll hit many kinds of legitimate business and if too narrow they'll creatively bypass the rules.
    - learc83 7y ago
      The IRS deals with people trying to exploit loopholes like that all the time. The law isn't a programming language.
deleted 7y ago
[deleted]
dwoozle 7y ago
Why shouldn’t the principals of a company that willfully harms so many people’s lives receive a criminal punishment on par with what someone who murders a single person gets?
- brighton36 7y ago
  Because these fools choose to be parted from their money.
gexla 7y ago
Interesting they go the route of selling inventory. It must be required to make the thing legit. From what I could see from one meeting I was tricked into attending (it was supposed to be a BBQ and no mention of any sort of meeting) the real product to sell was the high margin learning materials and seminars. That the effort of course goes into recruiting people to sell this stuff to. The guy who invited me did well to place himself as the "church" and "organizer." The rest were suckers being sold on the "community" component. Do your capitalist prayers and good things will come to you. Have faith!
- elil17 7y ago
  I’ve absolutely seen that too. Just last week a classmate mentioned that she was going to the Bahamas for the weekend. I asked why and lo-and-behold it’s for a training for her “work.” Undoubtedly this was a huge money maker for someone. I understand the appeal, of course - who doesn’t want to be tricked into believing that taking a weekend in the Caribbean is a good idea financially
sharemywin 7y ago
wow. I'm sure I'm going to get downvoted but, you think mlm is bad but the VC model is ok. How many people have spent countless unpaid hours and who knows how much money working on a "start up" VCs: Let's out source the high risk part of finding product/market fit instead of paying for R&D and then come in at the last minute and collect most of the profits.
- sharemywin 7y ago
  or lets look at social networks, its basically mlm but only the network gets paid.

Scoundreller 7y ago

I found « The Dream » podcast to be pretty good on the topic. https://www.stitcher.com/podcast/stitcher/the-dream https://www.stitcher.com/podcast/stitcher/the-dream

eli 7y ago
Agreed. I’m not usually a huge podcast person, but this was a really interesting look at the history through today of MLMs

LanceH 7y ago

I wrote and deleted a long response. The short version is that they can be broken into two groups: 1. Distributors are paying well over wholesale and their margins are much closer to referral fees that really don't support the full retail effort. 2. Distributors are paying closer to wholesale but are buying junk that nobody actually wants. This is more like a ponzi scheme with items that theoretically hold value.

devmunchies 7y ago

I wonder why MLM's are so rampant in the mountain west. I know "mormons" and "sales experience from missionary work" but the analysis can go deeper. From personal, anecdotal experience, a lot of these MLM people I've seen are moms. Could it be that that area is so sales heavy that stay-at-home moms want to run their own thing so they get into MLM on the side?

Spooky23 7y ago
Mormons tend run the companies and seed the initial demand. Moms with built in communities are big markets. Wherever you have a big military, police/fire/prison presence you'll see these all over. Also certain church communities, certain freelancer type industries, (yoga contractors, photographers) etc.
- thephyber 7y ago
  I've noticed that "military, police/fire/prison" families and some church communities like to "support our own" and buy from "locally owned businesses". I think MLMs allow people to buy what they think is a locally owned business that they believe will return dividends to their own community. Sadly the dividends that MLMs return are mostly negative (debt, friction of social bonds, etc).
  - Spooky23 7y ago
    They also have shift work husbands and are more likely to have a female spouse at home when kids are young. Pension systems make it very difficult to get out of the job after a few years. If you go to a police or fire station and ask, easily 30% of the wives are nurses, as it’s a job with super flexible schedules. MLM gets pitched as a way to make some extra dollars.
  - gexla 7y ago
    > I think MLMs allow people to buy what they think is a locally owned business that they believe will return dividends to their own community. This would be the sane selling point for people who aren't susceptible to cult following. I was tricked into going to one of these meetings and at first I thought this is what it was. I was envisioning a sort of Amazon meets Costco scheme where you can get greater discounts with the more bulk that you buy. That's not keeping money in the community, but at least it's saving money in a community buying pool. The first speaker at the meeting even got into a small business presentation which had nothing to do with MLM. I thought he did great. Then came the preacher, and everything fell into place. This is some sort of scam. I would have been fine with the thing if it would have been a group buying thing where you save money AND stuff gets delivered to your door. I never did get far enough to see if there would have been any savings though.

Spooky23 7y ago

When I worked retail sales in the 90s there was an Amway cult meeting nearby. Every few weeks, they would drop in after a pep-rally type thing and try to waste your time looking at the most expensive thing and talk about their amazing business. Then they'd drop the pitch (at the time it was about their e-commerce business). Once you ran into them, you could spot them. It was a mix of desperate mid-life crisis guys looking for cash, clean-cut naive younger people, and diligent moms starting a business. Really sad.

steveeq1 7y ago
> Once you ran into them, you could spot them. It was a mix of desperate mid-life crisis guys looking for cash, clean-cut naive younger people, and diligent moms starting a business. That's really heartbreaking to hear. Usually MLMs sell to types that "really need to make money", when in fact it brings people further away from that. A friend of mine (almost) fell for a cryptocurrency 'class' that "teaches" people about this "exciting new wealth-building opportunity". But it's instead trying to sell shitcoins.
bilbo0s 7y ago
>It was a mix of desperate mid-life crisis guys looking for cash, clean-cut naive younger people, and diligent moms starting a business. Something struck me as a bit familiar about those descriptions. And then I remembered, around here, it matches up with the demographics of the gig economy types. Uber, food delivery, etc. Only difference being the gig economy types are drawn more from the poor. I wonder if the desperate who are poor do gig economy jobs, whereas the desperate who are middle or upper middle class, (or those who like to think of themselves as middle class culturally anyway), tend to go for the "start a business" MLM thing?
- yardie 7y ago
  > the desperate who are middle or upper middle class I find they tend to do both. The poor won't have the capital nor credit to be an Uber driver. The middle class will engage in both. I've had my share of Uber/Lyft drivers also hawking Herbalife.

mortenjorck 7y ago

I'm guessing the 13 companies here are the long tail of MLM compared to Amway and Herbalife, but I’m curious just how big the difference is.

thephyber 7y ago
From the wording in the article, I'm guessing this is just using Google Trends data. You can search and compare for yourself: https://trends.google.com/trends/explore?geo=US&q=%2Fm%2F0dgsq8m,%2Fm%2F038f_t https://trends.google.com/trends/explore?geo=US&q=%2Fm%2F0dg...

dmalvarado 7y ago

ASEA also stands for Alaska State Employees Association, which explains dark green Alaska

closetohome 7y ago

I'm a little concerned that at no point in the article does the author use the term "pyramid scheme."

dorothyat40 7y ago
Like it's co-opting this soft language that the industry is pushing to distance itself from a pyramid scheme, which is very much is?
BryanBigs 7y ago
This is a guess, but a pyramid scheme is illegal, and so calling 'legal' companies by the term might be considered slander. Since some of these companies live to bully through the court system, it's probably a conscious decision to avoid the term. Just a guess though.

StanAngeloff 7y ago

Over the past 15 years, I've had the opportunity to work with more than a dozen MLM companies in the UK. This won't be a popular opinion, however I believe great quality products and a self-regulating industry can create businesses that are far from being a Ponzi scheme but are legitimate companies with ethics, great support and opportunity to earn decent money.

mprev 7y ago
What "great products" need to go through MLM? Arguably, it's easier than ever to launch a product direct to buyers. And it's neither easy nor cheap to build a multi-level network of distributors. None of the UK-active MLM schemes I've seen has an ethical reason for using MLM rather than legitimate sales channels. Let's look at some. Cleaning products that are vastly more expensive (in part to fund the MLM commissions) than High Street equivalents. Questionable dietary supplements that rely on woo-woo rather than scientific backing. And of course, electricity, gas, and phone service with the added margin to pay for all those ad-emblazoned Minis and, again, MLM commissions. Maybe it's like communism. People like to say that, on paper, it's a great idea (I disagree but that's not the point). Those same people also say that it has never been implemented properly, and so it's not the fault of the idea that it has always led to national scale human misery. In your view, MLM could lead to ethical companies with great products etc. But the past few decades show that every time it's tried, MLM actually preys on the dreams/needs of the vulnerable, adds huge margins to mostly crap products, and the people who get suckered end up mostly losing money. MLM is a horrible idea that leads to horrible outcomes.
detaro 7y ago
Examples of such companies?
noxToken 7y ago
At the core of it, MLM is a legitimate business strategy to get a relatively unknown product distributed through a network effect. I create a meal replacement smoothie. Some friends want to try it, so I hook them up. Then friends-of-friends ask about this smoothie that isn't available, so I let them sell the product to other people in exchange for a cut. I quickly realize that I don't have the capital for to materials. Product is moving too fast, so I ask them to pay up front for some of the materials. The problem is that this benign relationship that helps both of us can be easily made predatory.

cityzen 7y ago

There is a great podcast called The Dream about MLMs. I feel sorry for anyone that gets wrapped up in these things.

dwoozle 7y ago

This is my favorite article on MLMs, how they basically consume and destroy female friendships for a quick buck. https://www.washingtonpost.com/outlook/2019/01/21/how-mlms-are-hurting-female-friendships/ https://www.washingtonpost.com/outlook/2019/01/21/how-mlms-a...

rhizome 7y ago

Read the classics, too! http://www.vandruff.com/mlm.html http://www.vandruff.com/mlm.html

qwerty456127 7y ago

What if all the businesses were MLM? What if MLM schemes were also designed to re-distribute rewards so all the wealth wouldn't concentrate in the the top members' pockets?

tlb 7y ago
And if my grandma had wheels, she'd be a bicycle. Actually, a Co-op seems like the answer to your second question. Profits are shared among members in proportion to their activity.
kjs3 7y ago
They wouldn't be MLMs in any recognizable sense?
- qwerty456127 7y ago
  I mean what if there were no centralized retailers, everybody would be encouraged to re-sell, everybody would be rewarded for distributing to other active re-sellers, people receiving abnormally high passive income from their networks because of their high position in the distribution hierarchy would be taxed to reward active minors. At the same time businesses producing goods (rather than distributing tem) and services (incl. storage, logistics and quality control) would remain the classic way, MLM is just about the sales. Just imagine buying all your groceries and gadgets from neighbors and friends rather than from Walmart/etc. Wouldn't that be nice?
  - kjs3 7y ago
    Oh, I see what you mean. Then my answer (not facetious) would be "because that would suck". I don't want to be a micro-distributor, I don't know a lot of people outside of sale that would think that's awesome, and if there's anything MLM has proven is that buying exclusively from your friends/acquaintances/neighbors is a good way to ruin relationships. Sure...there's a more equitable scheme to equalize distribution of wealth, but please don't let this be it.

TexasBuckeye 7y ago

These MLM "companies" are a scourge on many desperate and under-educated people. They prey on the desperate and it's unbelievably unfortunate that it's still actually legal.

randogogogo 7y ago

I'm always amazed by how well MLMs inoculate their sellers to criticism. Questioning the merits of the product or the distribution system usually results in conflict. A lot of people selling these things think they've discovered something special and that they're clever to have picked it up and run with it. Once they're at that point there is no stopping ego.

alpineidyll3 7y ago

They left out graduate education ;P

droithomme 7y ago

I'm not sure what the purpose of the article is. It mentions a bunch of companies I've never heard of and has maps apparently of which states people search for their company name on Google, each year from 2008 to 2018. I suppose they are showing growth of interest in each company name. But there's not much commentary in the article. Just maps and a paragraph description of what the company is selling and a brief history. The first on the list claims is an oil and gas company popular in Texas that somehow sells oil and gas using a multi-level marketing scheme?!? Whaaaat? The article doesn't even explain how that works or what they are really selling. Do random independent distributors buy gas tanker trucks and make deliveries to farm houses then try to recruit the farmer to sell to his neighbors? They could have tried to explain what this company is about. But instead it's just these maps and cryptic descriptions. Another one says a MLM company sold leggings that became popular, then lowered in quality, which resulted in lawsuits. But no mention of lawsuits about what. Not sure the article is useful or the title "epidemic" is justified. There probably is a MLM epidemic, but the article doesn't really support that. Just lists some random companies with spartan facts and some maps derived from Google search data.