I’ve had a number of dealings with multi level marketing in the past (actually when I mean ‘dealings’ I mean just friends approaching me to sell their wares). Gone are the days of Avon and Tupperware parties, now multi level marketing is so entrenched with so many different companies that it’s hard to keep track and hence you become unsure if you are dealing with an MLM sales pitch in the first place.
To be honest, I’m a little AntiMLM. I’m not to the point that I would post on the Reddit antimlm form or anything like that, but when I am approached to buy something from an MLM-selling friend, I tend to bit a little off put by it and don’t usually buy what they are selling. My multi level marketing tolerance factor has decreased over the years, proportionate to my ability to say no more easily as I get older.
What is Multi Level Marketing
Multi level marketing is big business, in the US and in Canada. Even John Oliver did a show about it on his talk show as mentioned in this great article by Vice on how to get a friend out of an MLM.
According to Investopedia, multi level marketing is a strategy where product distributors are asked to recruit new distributers and are paid a percentage of their recruits sales. MLM is not illegal but many MLMs end up looking more like a pyramid scheme (which are illegal). In pyramid schemes, people at the bottom don’t earn much money, and most of the money goes to those at the top. MLMs are known NOT to be profitable for the distributor (e.g. your friend selling their MLM wares). Relatively few distributors earn meaningful incomes from their efforts.
Here are some encounters I have had with friends and acquaintances and their attempt at marketing to me.
Silpada Party
One of my first encounters with multi level marketing was at a Silpada party. If you haven’t heard of Silpada, Silpada sells sterling silver jewelry at expensive fancy-ish prices, for example, their hammered hoop earrings are $39, not too bad I guess, most are under $100. The friend was my colleague, she is really lovely and she invited me and a few other coworkers over to her house with a disclosure that there would be some jewelry on display.
I went because I wanted to connect with my coworkers and I also wanted to see what her home looked like, haha (I’m nosy like that). I actually ended up buying a few pairs of earrings as Christmas gifts to my friends, back when my friends and I were doing physical non-minimalist gifts. I think the reason why it “worked” and I went to the multi level marketing party, was because my coworker is genuine and isn’t the sales-y type of person. She also wore a lot of the Silpada jewelry herself and it looked nice.
Silpada ended up being acquired by Richline Group in 2016, which coincidentally is owned by Berkshire Hathaway, so now Warren Buffett owns Silpada and I’m a shareholder too! I’ve come full circle I guess, to supporting myself, lol!
Lyoness
The next encounter with multi level marketing was less favourable and has a less positive memory for me. I had not heard from a colleague for years. She had moved away and started a family. I get a random text from her asking how I am doing and wondering if we could chat and catch up. I thought this was very nice of her to reach out. We start chatting and she updates me on how her life is going and I update her a bit on how my life was going. Then she slips it in, the segue into her sales pitch.
She talked about how she wanted to be her own boss, earn passive income, work from home, and for herself, and claim work from home expenses and she found a way to do that. She said I could too if I was interested and it only required about 30 minutes of my time and she wanted to show me a video. I thought hey, why not I’ll have a peek, if anything it would make a good topic for a blog post.
Her passive income scheme was through Lyoness, and she has been making and saving money. Lyoness is a multi level marketing company originating from Austria, you earn cash back from shopping at their retail partners. The majority of this company’s income though, comes form the multi level marketing aspect, where marketers who are wanting to have their own business, pay membership to Lyoness to try and recruit more Lyoness memberships and earn money this way.
After I watched the sales-pitchy video, I told her that this sounded like an MLM company and that I wasn’t interested and find investing for dividends is a better way to earn passive income. I felt a bit betrayed that she contacted me out of the blue not to see how I was doing, but actually just to try and do a sales pitch. I had an email a few weeks later from her asking if I was interested in joining. I said I wasn’t. I haven’t heard from her since.
DoTERRA Dark Side
Finally, I have a friend who periodically sends out messages to a group chat that I am in, asking if we were interested in putting an order for more DoTERRA essential oils. She says they are great and it has helped her sleep and insomnia, and that the essential oils are great for purifying the air, or preventing colds etc. etc. I can’t remember the ‘benefits’ of the DoTERRA essential oils that my friend touts, I usually tune those text messages out. A few of my friends already bought some DoTERRA oils but I haven’t because I am not convinced that super expensive essential oils are a panacea for life’s ailments…and because I am somewhat antimlm.
DoTERRA is an essential oil company founded in 2008 and according to Wikipedia, in 2015, generated more than $1 BILLION in annual sales.
Wow. That’s a lot of money.
Lazy Man and Money has a detailed post on whether DoTERRA essential oils are a scam. Many DoTERRA supporters (and marketers I suppose) are in disagreement with him. Personally, I have tried smelling DoTERRA oils at a local convention, and the essential oil I tried did actually smell really nice, but it wasn’t life changing, unfortunately for the sales lady at the booth.
Should Friends Sell To You?
Although the idea and premise behind multi level marketing is nice- ideas such as financial independence, working at home, and flexible hours, and female ’empowerment’ (83% of MLM direct sellers are women, in Canada) according to an article from Flare magazine, titled Multi Level Marketing: Empowering or Exploitive?
Even more interesting, Flare states that a lot of MLM direct sellers become direct sellers when they enter motherhood, the social outlet, and ability to contribute to their household finances doesn’t feel like a burden at all and the side income supplements their regular day job income. Working full time and having kids is definitely hard to manage.
Related: 6 Musings of an Overwhelmed Working Mom
I’ve had a few experiences with multi level marketing and being an Antimlm type friend. My experiences range from being supportive and purchasing the goods they were pitching, to not being supportive and not really wanting to talk to that acquaintance again.
Have you had friends or acquaintances approach you to sell their MLM goods?
Where do you stand on the pro MLM or antiMLM spectrum?
How do you manage their requests?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.
Many years ago, I had a colleague try to recruit me into a MLM scheme which I will not name here. His approach was kind of weird and secretive. To be nice, I showed some interest until I found out what it was. And by that time, he had turned me over to a big-time recruiter higher up the chain and it was all just so obnoxious. I had to be pretty rude to get them to leave me alone. Other than that, I have not had any other experiences. Tom
@Tom- Thanks for sharing your experience, Tom. I guess that’s how it all starts, when we try to be nice! 🙂
I was invited to a business opening night to a friend’s place so I wanted to support him only to find out it was a MLM scheme when they started the marketing video. My then-boyfriend and I were not “wow’ed” but we were scared for those other people there who seemed enthralled in it. I lost all respect for him and flat out refuse any sales pitch from him. His business venture only lasted a few years when he had epiphany that he was in an MLM.
Now, I have this co-worker who’s selling this Money and trying to show pictures about improvement in hair style and I keep pointing out that different lighting will make it different. Show pictures of hair in same lighting but it never works out the same. She also brags about how fast her hair grows. She claimed her hair grew 7 inches in a year. I said, hair grows an average of 6 inches a year anyway, what’s next? To be fair, I did try the hair product free sample. Yeah, that was a big mistake. My scalp was so itchy for a week straight after one use to the point I had open sores and it was because of all the “chemicals being pulled out from my old shampoo” they say. I said, I use natural shampoo so that argument doesn’t fly. She offered me another sample that’s good for sensitive scalp. I flat out refused. Also, if I wanted the sample, I would have to enter into a 2-year contract where I would get deliveries every 3 months (it takes me 4 months minimum to use up my bottle of shampoo) and have a PAD debit of $50 every 3 months (no way!). I told her that if the product works great for you, fine but I’m not giving permission to a company to take money out of my bank account. Oh, and if I cancel after 2 years, it would cost me $250. hehe, nope! I’m an antiMLM 99% of the time. There are useful products out that, I’ll say that much and don’t mind buying the odd ones. I just don’t like the conditions or MLM that comes with it! Sorry for the rant! lol
@KQ- Wow, I had no idea they have MLM for hair style and hair growth AND I had not heard of PAD debits– what a money maker because a lot of people would be too lazy or wouldn’t know how to stop that PAD. Thanks for sharing 🙂
When I was a member of a gym close by the university I went to, there was one of the trainers that approached me and asked how my workout was and all stuff related to that. Then he asked me about if I had money in the stock market which I didn’t at that time. And so he was telling about meetings he went to at someone’s house on the weekends where they would advise you on where you should put your money in the stock market. He kept on saying how great of returns he’s been getting and I should join as well. He told me that you have to put in about $5K a month to be invited to these weekly meetings and guaranteed that you will get a great return on your portfolio. I turned it down saying that I didn’t have money at that time(which I really didn’t) and never saw him in the gym again.
I’m guessing that he only worked at the gym to recruit members into the pyramid scheme. But yeah, that was my only experience to get persuaded into a pyramid scheme.
@Kris- $5K a month to invest- that must have been a really swanky gym!
I had an old classmate do the same thing! After not being in touch for quite a few years, she sent me a text asking how I was doing, talking about our careers etc. Then, out of the blue, she starts telling me about this product she is selling and how I should join in on the MLM scheme. No thank you! I politely declined but the encounter still rubs me the wrong way to this day. I’m not keen on the ‘bait and switch’ approach of these schemes – feels disingenuous for sure!
@Cassie- That is the perfect word- disingenuous! I feel kind of sad she didn’t want to chat with me to REALLY see how I was doing, and I’m sure you feel the same.
It’s up to the public to determine whether an MLM is an illegal pyramid scheme because federal regulators allow the MLM industry to “self-regulate” except in extreme cases, MLMs are not required to submit fully audited numbers, or any numbers, to legal authorities unless under investigation. Regulators merely issue the caveat to research any offers before joining, and also the warning that schemes exist in the MLM industry.
@Bill- Thanks for sharing, I didn’t know that.
I had a couple of friends selling Pampered Chef when they were on maternity leave or their kids were very young. I hosted 2 parties, a few years apart. Overall it was a good experience. I bought a lot of kitchen stuff at a discount, which was good for me because I like cooking. Some I still use every day. My guests didn’t buy that much, but I think they had a good time. And I got to show off my new (at that time) kitchen reno!
I agree with your assessment that the big money is in recruiting others to sell under your umbrella, and thankfully my friends weren’t into that part of the MLM business.
@Kari- Good point about the social aspect, that’s one positive aspect (and the discount!). I didn’t know Pampered Chef is an MLM but I have heard of it.
Being a lady boss is great, but NOT if it s multi-level marketing. MLM s are basically pyramid schemes, and it s time to get the word out. Some humorous quotes and art help to ease the blow.