Sometimes, if it sounds too good to be true, it probably is. It happens all too often when someone approaches you with a message or proposition to get you to sell or buy something from them.
The summer before I started university, a friend texted me out of the blue, explaining that she had this wonderful sales opportunity for me to earn some extra cash right before school started. I asked her if this was a scam, and she said no and emphasized that it was just a way for her to earn scholarships and a free trip to the Bahamas. Sounds suspicious, right? Well, I ignored my intuition, did the interview and got the job immediately after. I completed the first day of training, which was unpaid, and was hounded by my superiors to call or message my family members and friends to inform them of my new position. During these phone calls, I was instructed to mention how important it was for them to take part in and purchase the product–which was knives–specifically from me. Immediately after this, I realized it was indeed a pyramid scheme, specifically a multi-level marketing (MLM) scheme.
Pyramid schemes are a fraudulent way of making money by recruiting investors who, in turn, recruit more investors. It is called a pyramid because the number of investors increases at each level. The initial upline, consisting of a small group of people at the top, relies on having a large downline group of investors to support said individuals at higher levels. The upline is entirely dependent on their downline to make a profit, and in many cases, these up-line members are the only ones who make an income, while the other investors walk away empty-handed. With little to no regard for how much money and time these down-line investors have put into their projects.
MLM, also known as network marketing, is a form of direct selling in which a member’s primary income comes not from their own sales but from the sales made by the people they recruit into the company. These companies present themselves as legitimate business opportunities, but they are pyramid schemes that do not guarantee a stable income for those working for them. Not surprisingly, MLM companies deny the claim that they are pyramid schemes, as most MLMs do offer a product for sale, whereas pyramid schemes are primarily focused on recruiting however, the Federal Trade Commission (FTC) analyzed 350 of the top MLMs and estimated that only 1% of members walk away without suffering a considerable loss.
Many individuals, primarily women with children or struggling teenagers and young adults, join these companies to sell products such as shampoo or weight loss supplements, reinforcing the idea of entrepreneurship and the ability to create a flexible schedule that fits their needs. Distributors prey on the vulnerable, making false claims and failing to guarantee income. These companies and their recruiters manipulate individuals who perceive this as an easy way to make money while becoming their own “business owner,” when in reality, it is anything but.
The shampoo MLM company Monat lost over 44,000 Market Partners or recruiters at the beginning of 2022, with this number increasing throughout the past two years.
The decline was not due to recruiters realizing the company’s questionable practices. Instead, they discovered other MLMs with better opportunities. The market became oversaturated, leading to a lack of consumers to sell to as more people began to recognize their predatory tactics. Many companies simply rebranded and continued to profit off of others’ suffering.
So, next time you receive a direct message or cold call about an “amazing opportunity to sell essential oils,” remember that if it sounds too good to be true, it probably is. Your time is valuable, and no one should scam you out of your hard-earned wages.
