MLMs: The ‘inspirational’ social-media scams ruining women’s lives

Make £12,000 a month from your kitchen table – but it might cost you your marriage. And your friendships. Sally Williams investigates MLMs – the ‘inspirational’ social-media scams ruining women’s lives.

‘Earn thousands from home.’ ‘Be your own boss.’ ‘Make money fast.’

A new wave of business opportunities promoted heavily on social media promises to make women – particularly stay-at-home mums – empowered entrepreneurs with an easy income. But what seems like a lucrative side-hustle often turns out to be a devastating recipe for losing money.

‘It’s like she’s been completely brainwashed,’ says Gary of his 34-year-old wife Danielle, who is busy at her day job as a nurse when he speaks to me on the phone. ‘She’s been emotionally distant. And she’s always on her phone or laptop.’

Danielle isn’t having an affair. In October 2018 she signed up to be a ‘consultant’ for health and beauty company Arbonne, with the hope of making some extra money. Arbonne uses direct selling, whereby consultants purchase products that they sell on to friends and acquaintances, earning a cut of the profits. The commission model is similar to the way Avon ladies made money selling beauty products door-to-door in the 1970s, except Arbonne consultants sell through social media – usually Facebook.

But Arbonne is not just a direct sales company, it’s also a multi-level marketing scheme (MLM), which means consultants can earn money by persuading other women to join the company. Once someone signs up, you become their ‘upline’ and take a portion of their earnings. If they sign up people beneath them, you also take a cut of those profits. Your source of income can hypothetically keep expanding. MLMs have many tiers.

Danielle first heard about this ‘amazing business opportunity’ from a friend on Facebook. In the evening, after she puts their three-year-old daughter to bed, she goes online to watch Arbonne training tutorials or motivational talks. Gary, 39 and a project manager, finds the inspirational phrases maddening: ‘If you have the wrong attitude, you will always fail’, ‘Personal effort determines your income’.

MLMs

‘She’s convinced she’s going to be earning £12,000 a month,’ says Gary. But since signing up to Arbonne, Danielle hasn’t made any money at all. In fact, she has lost around £4,000. Consultants are required to buy a start-up package and must regularly sell a certain amount of stock. ‘But there isn’t much demand because the products are so highly priced,’ says Gary. An Arbonne eyeshadow palette retails for £50; a can of hairspray is £24. So Danielle spends around £80 to £100 a month on the products herself, hoping to sell them later.

On top of this, she is encouraged to become a ‘product of the product’ by buying Arbonne wares for her personal use. In terms of recruitment, her target is to contact 20 people a week on Instagram or Facebook. But so far, she has failed to recruit anyone.

‘Last January she opened up a credit card and ordered a thousand pounds worth of trial packages to give to people for free. She arranged a party and no one turned up.’ The gifts are still in a cupboard, all packaged up. ‘If you look around the house, we have Arbonne products everywhere: soap, toothpaste, shower gel, shakes, teas, energy drinks…’

And now Danielle has announced she’s going to Arbonne’s global training conference in Las Vegas in April. It’s a glitzy event where the most successful Arbonne consultants parade in front of a stadium of adoring applause, new product sets are sold for up to £270 and consultants get to sip £15 cocktails. ‘So that’s another couple of grand,’ says Gary.

As a poorly paid nurse, Danielle is seduced, Gary thinks, by the glamour the company is peddling, and as the Arbonne website puts it, ‘The chance to live the life of your dreams by starting your own successful business.’ ‘But it’s not a business,’ says Gary. ‘You’re effectively an unsalaried employee of a multinational corporation and are paying for the privilege.’ Danielle says Gary is ‘holding her back’ from progressing in the company. ‘I’ve had to make up for what she’s spending in order to keep a roof over our heads,’ says Gary. He thinks their six-year marriage will end.

After concerns were raised over its business practices earlier this year, Arbonne issued a statement that their sales plan is ‘not a pyramid scheme; it is a standard, legal sales strategy. Arbonne upholds the highest standards of integrity and we do not condone deceptive, unethical or illegal practices of any kind.’

Over the past five years, MLMs – all of which operate legally – have become increasingly popular in Britain. The Direct Selling Association, the only recognised UK trade body for the sector, estimates that more than 400,000 people in the UK are involved in direct selling. Many companies focus on the beauty and wellness sectors. Younique ‘presenters’ sell make-up. Forever Living trades in aloe vera-based drinks and gels. Herbalife specialises in dietary supplements and protein shakes. Juice Plus reps sell diet drinks. Valentus sells weight-loss coffee.

Social media and smartphones have brought big business into the kitchen and now anyone, anywhere can earn money on the side by being a distributor and building a network. For mums at home with children and women in low-paid jobs, MLMs can feel like lifesavers. Particularly as MLMs, unlike other small businesses, promote aspirational models of womanhood: you, too, can be both a perfect mother and very rich.

‘I thought they were benign at first,’ says Hannah Martin, founder of Talented Ladies Club, an online magazine for working mums which has around 90,000 readers. Hannah even ran positive interviews with MLM reps on her site. But in 2017, after watching Netflix’s Betting on Zero, a documentary exposé of Herbalife, she removed any content promoting MLMs from her site. ‘I realised how the business model works and I was appalled,’ says Hannah.

According to a report by the US Consumer Awareness Institute, on average, less than one per cent of participants make a profit from an MLM scheme (compared to 39 per cent from a conventional small business). MLMs are akin to pyramid schemes: they have little to do with selling products to customers and everything to do with keeping a stream of new recruits – and their money – flowing into the business. Most of these companies make their revenue from newly recruited salespeople purchasing expensive products (with the intent to resell) when they join the scheme. But the majority of individuals struggle to make any sales and end up losing money.

The damage isn’t only financial. Because MLM consultants are financially rewarded for signing up new members, ‘suddenly your friends are a source of income to you,’ says Hannah. Female friendship is exploited and monetised. ‘That is incredibly damaging, not just to the friendship but to the person who has to view her friends in that way.’

A spokesperson from Anti-MLM Coalition, a website that gets around 20,000 views a month since launching in 2017, adds: ‘These schemes are being sold to women not by some stranger but by the nice lady at the baby group who said, “I used to be just like you and I’m so glad I found this opportunity.” even though she probably doesn’t have an income from the scheme, she needs to sell the opportunity on to have any hope of making money. The victim becomes the perpetrator very quickly.’

Campaigners compare MLMs to cults, saying that they target vulnerable individuals: stay-at-home mothers, the unemployed, people who are lonely, the disabled. That person is flooded with flattery and validation, then once they’re enticed they’re encouraged to ignore friends or family who might be critical. ‘You are told by the company and other consultants that any doubters want you to fail,’ Hannah Martin says. MLMs also frame criticism as a symptom of ‘empowerment’. For example, ‘Your husband doesn’t want you to have something for yourself.’ If recruits don’t see financial returns, it’s their own fault. ‘They make you feel like a failure, that you are not trying hard enough,’ says Hannah. ‘People are ashamed.’

Isabella, 35, has two children, aged three and two, with her husband Ian. She was introduced to US-based fitness company Beachbody in 2012, when a friend gave her one of their DVD workouts. ‘I loved it and became a fan,’ she says. Five years later, Beachbody launched in the UK. At that time, Isabella was a stay-at-home mum with both her children under one; her first child was only weeks old when she got pregnant again. ‘I gave birth twice within 12 months,’ she says. ‘I felt isolated.’

Working for Beachbody seemed like an exciting opportunity and she signed up to become a ‘coach’ (distributor), believing she could earn £33,000 a year. She paid £160 for a challenge pack, which included an annual membership to ‘Beachbody on demand’, an online streaming service for workouts, a bag of protein shake, plastic ‘portion control’ containers and a water bottle. She also had to pay a monthly subscription fee of £16.95; plus spend around £100 a month on one of the subscription products, such as protein shakes or bars.

During her six months as a Beachbody coach Isabella spent £1,500 and earned £30. ‘I only sold two ‘challenge packs’. But I put in hours and hours of work. I was ignoring my kids. I was constantly on the phone trying to sign people up. One of the Beachbody leaders told me to start a Facebook page called Mummy Struggles. She said my angle would be my journey as a new mum. She encouraged me to share a lot of videos and photos of myself doing the workouts.

‘I am now deeply mortified. I had just had a baby. I had a big gut, big thighs. I was wearing skimpy shorts and bras, because that’s what they encouraged me to do. Friends started making concerned comments,’ she continues, ‘And I blocked them. I didn’t even tell them why. I completely dropped two of my oldest friends.’ She also had a ‘massive row’ with her younger sister. ‘The second I told her about Beachbody she said it was a pyramid scheme and that she was never going to buy anything from me.’

MLMs

Isabella’s moment of clarity came during one of the weekly calls between the UK reps and the head of their upline: Anna and Dan, a couple in New York. ‘They’d been pressuring us to sell more. They didn’t listen when I said I was on my phone every minute of the day,’ Isabella explains.

‘That day Anna switched her tone. It was very negative. She said, “Dan can’t even come on the call because he is so disappointed in you. You need to make new contacts. Start faking friendships – just ‘like’ their posts on social media every now and again, make a comment occasionally and, believe me, these people will feel that you are genuinely their friend.” And that’s when the penny dropped – because that is what she did to me.’

If Isabella was at the bottom of the pyramid, Lisa Holroyd, 36, was at the top. A former childminder, Lisa lives in Halifax with Jonathan, 36, a demolition worker, and their three children, aged ten to 14. As a top ‘presenter’ for beauty brand Younique she led a team of roughly 3,500 people and made around £60,000 over four years. She puts her success down to getting in early; she was tipped off by a friend and had built up a list of clients before Younique’s official launch in the UK in 2014.

She says Younique gave her confidence, she could fit the work around her children, and the money meant she no longer had to go around the supermarket ‘adding up what was going in my trolley’.

But Lisa decided to quit after going to the Younique conference in Las Vegas in 2018. ‘I don’t know if it was the people I went with, or the conference itself, or the fact that I was away from home for six days.’ either way, something changed. ‘I thought, I can’t believe it’s taken this long to realise that I have been paid off the backs of other people. It made me slightly sick.’

She was shunned by former colleagues and prevented by the original contract she signed with the company from talking about Younique on any of her social platforms for a year. ‘Now I’ve looked at it from the outside, it’s not what was sold to me, and I probably should have thought about it better. I am a bit ashamed of myself.’

‘A lot of MLM reps are trapped,’ says John Evans, who set up the Facebook group MLM Lies exposed in 2015 – it now has 15,500 members – after a friend tried to recruit him. When John questioned the MLM model his friend cut him off. ‘They have invested so much – so much heart and soul and time – but they’re not making any money. And their upline says, “You’ve got to keep going” – no one wants you to quit because it takes money out of their pockets. Some people carry on for years. It takes a toll emotionally. There’s a dark world out there where a lot of people are struggling.’