Comment Editor Alice Macfarlane warns us of the disguised dangers of multi-level marketing
Those of you reading this article that are over the age of twenty, might remember the days when Instagram was merely a platform to over-edit painfully low quality photos of your friends, your dog, or what you had for dinner that evening. The Instagram that we use now is certainly a far cry from the lo-fi filtered platform that we once knew and loved. In recent years, the term ‘influencer’ has become prominent in our vocabulary, and whether you love or loathe the word, it cannot be denied that it has become one of the most important features of the increasingly corporate world of social media. Influencer status is lusted after by the average Instagram user, and this growing social trend certainly hasn’t gone unnoticed by businesses.
Even the most reserved Instagram users are probably no stranger to the direct messages from ‘entrepreneurs’ using buzzwords like ‘boss babe’ and ‘side hustle’, explaining how you can earn thousands of pounds on top of your regular income, without even needing to leave your home. Sound too good to be true? That’s because it is.
Multi-Level Marketing Schemes, also known as MLMs, have swept the social media sphere at an unprecedented speed. Gone are the days when online selling schemes were simply your auntie flogging a few skincare products on Facebook. MLMs are now tapping into a younger, more relatable audience, promising potential for huge bonuses, paid holidays and even company cars if you make it to the top. So how do you get there?
Often confused with illegal pyramid schemes, MLMs do not rely solely on recruitment for profit, with employees buying and selling stock directly to earn commission on their sales. The fact that the company also relies on revenue accrued from product sales is what makes MLMs acceptable, unlike their not-so-distant cousin the pyramid scheme. Realistically however, although legitimate in the eyes of the law, the reality is it is nearly impossible to earn any money through sales alone. In order to grow, you need to recruit others to create a ‘downline’ of employees, allowing you to earn commission on their sales, the sales of those below them, and so on and so forth. This means that, after futile attempts to sell overpriced products, desperate employees begin trying to recruit friends and family to join the scheme.
Companies insist on each employee purchasing ‘starter packs’ that are usually costly, with beauty and wellbeing giant NU Skin’s cheapest introductory product package costing an eye-watering £377.52. The promise is one of high input, high reward, but the reality is distinctly lacking in the latter. So, with an empty purse, no product sales, and no family or friends left to recruit, employees are forced to turn to strangers for business, often targeting vulnerable groups such as young mums and the unemployed. The shocking reality of the earning potential from schemes like these is revealed in data collected from 2017, showing that 89.2% of workers didn’t earn any money from commission at all, a figure which has actually been estimated as closer to 99% after expenses. As for the top earners, the ones with the flashy cars who convince you that you can be like them if you just ‘allow success into your life’, they make up a miniscule 0.04% of the entire company – that’s about 36 people.
Despite the near impossibility of earning any money and the crippling personal expenditure, employees are pressured, through training sessions and conferences, to maintain a ‘no negativity’ attitude. Worse still, they are encouraged to cut out those who show any negativity towards their work, resulting in MLM schemes becoming scarily cultish, and leaving many employees alienated from family and friends.
With these statistics in mind, it is questionable as to why MLMs are still legally allowed to operate, and why people continue to sign up to them. But the attraction lies in their rhetoric. The opportunity to earn big money, reap rewards and live the influencer lifestyle is often all-but impossible to resist. But next time you receive a message offering you a seemingly no-strings-attached ‘business opportunity’, think twice and read between the lines, because nobody wants to end up at the bottom of this pyramid.