Business

How MLMs are hurting friendships

Less than one percent of multilevel marketers will profit: FTC

Herbalife Ltd. Plaza in Torrance, California, U.S., on May 1, 2016. Herbalife has agreed to pay $200 million to settle U.S. claims that the nutrition company deceived consumers with get-rich-quick promises, as the U.S. government forced sweeping changes to the company’s business but stopped short of hedge fund manager Bill Ackman’s call to shut it down. MUST CREDIT: Bloomberg photo by Patrick T. Fallon.
Herbalife Ltd. Plaza in Torrance, California, U.S., on May 1, 2016. Herbalife has agreed to pay $200 million to settle U.S. claims that the nutrition company deceived consumers with get-rich-quick promises, as the U.S. government forced sweeping changes to the company’s business but stopped short of hedge fund manager Bill Ackman’s call to shut it down. MUST CREDIT: Bloomberg photo by Patrick T. Fallon.

Jamie Birdwell-Branson had just moved to a new town, when an old high school friend reached out on Facebook and asked to meet for breakfast so they could catch up.

“She was so interested in meeting up that she agreed to meet up halfway between our two cities - which was about an hour’s drive for each of us,” Birdwell-Branson said.

“I was so eager for friendship that I immediately agreed, even though I hadn’t seen her in years.”

Halfway through brunch, the other woman revealed that she was less focused on friendship and more focused on recruiting Birdwell-Branson to sell skin-care products.

“It was nothing but a marketing ploy for Arbonne,” she said. “She had zero interest in what was going on in my life and had no intention of forming or reconnecting a friendship.

“Needless to say, we haven’t talked since.”

Over the past few years, many of us have witnessed social media feeds morph from child and pet photos 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.

Women and multilevel marketing, or MLM, companies have gone together since Tupperware and Mary Kay were introduced in the middle of the 20th century as a way for housewives to make money from home and get products to women in rural areas.

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While some women find success in these endeavors, they are the exceptions. According to a Federal Trade Commission report, less than one percent of MLM participants will profit, a far worse rate than for “legitimate small businesses,” of which 39 percent are profitable over the lifetime of the business.

“MLM makes even gambling look like a safe bet in comparison,” the report states.

The FTC closely monitors MLM companies and cautions that the compensation structure, which incentivizes participants to recruit additional participants, “poses particular risks of injury.”

While the financial risks of getting involved with an MLM are well-documented, the personal ones are harder to quantify but are just as real. Namely: You could end up alienating every Facebook friend you ever had.

The pressure to sell and recruit has led to underhanded tactics that strain, fracture and sometimes end friendships and family relationships. Is dinner with an old college roommate just about getting caught up on the past decade or is something else afoot?

Increasingly, it’s the latter, and it leaves women on the receiving end feeling duped, angry and not sure how to respond.

The structure of MLMs is to blame for many of those “Let’s catch up!” Facebook messages piling up in inboxes. The more recruits or team members your friend pulls in, the more money she makes.

It’s what the MLM industry calls “building a downline,” which is lingo for bringing in another recruit as part of your team who sells under you, while you act as their “upline” and take a cut of their sales.

The less pretty term for this is a pyramid scheme. It’s also a pretty good way to infuriate your social network.

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Back in our moms’ era, attendees knew from the outset what they were in for when invited to a Tupperware party. Today, some are upfront about their MLM involvement, but not always.

That coffee with a friend or girl’s night is — surprise! — not about catching up but about making a sale or recruitment to an MLM.

“I thought I had made a genuine connection with a mom I met online in a mom group,” said Erin Heger of Kansas.

After Heger declined this mom’s offer to become a Beachbody coach, the woman stopped talking to her.

“It really hurt,” Heger said. “I even invited her and her kiddo to my son’s first birthday party. I felt like an idiot for thinking we were actually friends.”

Many unsuspecting women have relayed being pursued for get-togethers by MLM friends to the point of feeling stalked.

MLMs can be so pervasive and tactics so aggressive, they’ve inspired a closed Facebook group, “Sounds like MLM but OK,” where its 80,000+ members have a safe place to vent about MLMs and “their poor business structure, obnoxious marketing practices, and all-around awful nature,” according to the group’s public description.

It adds, “This is also a place to vent about your #bossbabe ‘friends’ you haven’t talked to since 5th grade but have a wonderful opportunity for you!”

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Some of those tactics include using email lists that are normally off limits for solicitations to send invitation blasts to parties, in hopes of making a sale or gaining a recruit under the guise of a get-together.

Elline Lipkin from California said that her child’s school class list was used to dupe parents into an MLM-focused party, something other parents who might have professional services to offer do not do.

“A parent at my child’s school spams the whole class list to invite everyone over for themed get-togethers,” Lipkin said.

“I innocently went to the first one and walked in just as another rep was winding up her pitch and felt trapped for over an hour as she told us how pure, wonderful, well-priced, etc. this product was. I let other parents know (subsequently) that these weren’t social gatherings (as some thought, too), but I’m resentful of the duplicity.”

For many women, that duplicity is unforgivable. Grace Alexander of Georgia had a colleague reach out to her because she knew Alexander was a chef, a diabetic and had a background helping design meal plans for diabetic residents at an assisted living center.

This colleague asked Alexander for help creating a diet for herself to help her blood sugars stay level and asked if keto diets were any good. The conversation soon took a turn.

“Of course, then she sent me this scammy keto shake hard-sell MLM message, and I was so disgusted,” Alexander said. “I unfollowed her on social media and stopped responding to her ‘waves’ and DMs.

“I felt completely disrespected and insulted by her pretending to want my educated opinion on something I am quasi-expert in. Discovering it was all a front to sell me some ridiculous get-skinny-fast product was just the last straw for me.”

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MLM tactics can break family relationships, too. Jen Johnson said that her sister started selling MLM products, something that their mom initially supported but stopped buying when the sister claimed the product would cure their mom’s cancer.

Her sister ended up not speaking to her mother during her final year of life. Johnson blames both the MLM for its tactics and her sister for being heartless enough to follow them.

“Also, while my mom was in hospice, my sister attempted one final sale by having her MLM friend try to sell to my mom,” she said. “I have no respect for them.”

Why would any woman engage in such tactics? According to the Direct Selling Association, the national trade organization for companies that market products and services directly to consumers through an independent sales force, 18.6 million Americans are involved in direct sales, and a staggering 74 percent are women.

These women are not setting out to annoy their friends. Many women want and need flexible work options because of family or other responsibilities, but it’s challenging to find a standard job that fits within school hours or a specific set schedule, especially if you’ve been out of the workforce a few years to care for a child or relative.

MLMs can exploit so many of the fault lines around women and the economy — women remain underpaid in the workplace and undervalued as stay-at-home mothers.

MLMs sometimes promise instant entrepreneurship success, camaraderie with other women in a “team” environment, and a career identity, trappings that standard jobs typically require years to build and develop.

The lure of an MLM increases further when you’re also promised to make loads of money working from home in your pajamas while drinking wine and being your own “boss babe” as your friends post pictures doing just that.

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Once in an MLM, it’s challenging to quit, as Leslie Loges from Virginia, an ex-MLMer, attested.

“In an attempt to leave a job where I was burning out, I joined an MLM for the first time and was quite naive about them,” she said. “My upline said step one was to have a party to try to recruit more consultants, and I was tasked with getting four people to attend.

“My invitation to my friends was super generic and made it seem like they’d get to try products, but I didn’t even have samples for them to try yet.”

Loges was under pressure from her upline and desperate to get people to RSVP. Two friends ended up coming.

“My upline facilitated and led the whole thing, but I was the one who had chosen to be vaguely deceptive on the invitation,” Loges said.

“In reality, I was deeply embarrassed to tell them I was just trying to get them to sign up with me. My friends were confused and annoyed, my upline was pretty displeased, and the whole thing was a bit of a disaster.”

Loges said she’s lucky that the experience didn’t end those friendships, but she never brought up the MLM to those friends again.

“That was in 2013, and I still feel shame from the experience,” she said. “I cut the upline out of my life this past August when she repeatedly asked me to host a party even after I said no.

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“I blocked her from contacting me — on social, email and phone. She texted me from someone else’s phone a couple weeks ago. I blocked that number, too.”

Deb Seher from Massachusetts is also an ex-MLMer who put in $900 to start selling Isagenix, an MLM company that sells dietary and skin-care products, but never made a penny.

“I was told to get everyone I knew on the regimen. The sell was that it would change people’s health. There was a push that it would cure autism and Down syndrome,” she said.

“It was the fix for people’s financial struggles. Sell at church and PTO meetings. Have tasting parties.” Seher was uncomfortable spewing medical information she knew to be untrue.

“They prey on women that have full plates. Women that need to earn a living while caring for a family. Women should use the money they invest in an MLM to further their education or market a skill set. Once I did that, I finally started making money. I’m embarrassed that I fell for it,” Seher said.

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