I am generally a nice person. But when a friend from high school who I literally haven’t spoken to in 15 years messages me to ask me how I’m doing – and then immediately starts trying to sell me some diet supplements, protein shakes, wrinkle cream, or “like BUTTAH” leggings, it takes every ounce of restraint not to curse her out on the spot and hit the “unfriend” button like my life depends on it.
It’s not just how disingenuous these messages are, though. Or the fact that trying to sell me a diet supplement or exercise program implies that I am in need of “fixing” (OMFG, stop).
Nope. The thing that pisses me off about MLM companies (which is what the majority of these “long lost friends” of mine work for) is just how much of a complete and utter scam they are.
The majority of MLM (multi-level marketing) sellers are women, and most are at-home parents trying to make an extra buck. I totally get that, because trying to balance working and taking care of kids is a total mind fuck. We all need to do what we can to survive, especially because childcare is so damn expensive, and just paying your rent or mortgage these days is a crap shoot.
But the problem with MLM schemes is that they are just that – schemes, scams, shell-over-your-life-savings-and-get-nothing-in-return shams.
For those of you not in the know, the way these companies work is that they require you to put up a lot of money upfront just to get into the company and acquire your merch.
Then you have to work your tail off to make a sale (hence those annoying AF messages that almost all of us get from people we haven’t heard from in a lifetime). Even if you do make a sale, you generally don’t get to keep all your earnings.
Besides shelling your money over to the tax man (self-employment taxes will kill you, but no one ever tells you that), you are often expected to attend conferences (more money shelled out) and pay for your own marketing expenses, shipping expenses, and other business fees. Oh, and don’t forget about all those “hidden fees” that some MLM companies throw in for good measure.
I always suspected that the reason MLM peddlers were desperately messaging me was because their businesses were not going quite as well as planned. Well, it turns out that I was probably right on the money (or, ummm, lack of money?).
MagnifyMoney.com, a financial advisory and consumer product review site, surveyed 1,049 MLM participants about their experiences. All the participants had been involved with at least one MLM company over the past five years. The respondents shared their earnings, hours worked, and general experiences.
Let me tell you. What they revealed is downright awful – and, sadly, will not surprise you one bit.
The majority of responders say that they make what amounts to about 70 cents per hour – and that is before business expenses are deducted. Holy freaking shit.
70. CENTS. PER. HOUR.
Less than half of the responders made $500 total in the past five years. On average, they worked about 14 months out of the past five years, working about 33 hours a month, and earning $18.88 per month, or 67 cents per hours. WHAT THE ACTUAL FUCK.
“Our conclusions show that most participants could earn significantly more money in exchange for a lot less time and money invested if they were employed in a minimum wage job,” writes Brittney Laryea, a MagnifyMoney writer.
Understatement of the year. I made more money babysitting when I was 12 years old. Sigh.
But perhaps what’s even more concerning is the fact that, according to the survey, 22% of MLM participants lie to their friends and family about how much they’ve earned – probably in an effort to make more sales and win over recruits (you earn commission for every person you get to join the company, hence the “multi-level”/pyramid scheme aspect of the companies).
That number was even higher among people who had to borrow money in order to cover their business expenses. 35.2% of participants who borrowed money from friends and family admitted to lying about their earnings, according to the survey.
Which leads us to the next bombshell, and this is one actually breaks my heart. A striking number of MLM participants go into debt to start their businesses. And very few recover.
According to the survey, 1 in 3 MLM participants admitted to using their credit card to finance their business, and 1 in 10 said they had to take out a personal loan to do so. 15.4% said they still haven’t finished paying off their debt. And 63% of the people who have not paid off their debt report earning less than $500 from their MLM business (well, duh).
Want more? A total of one fifth of participants said they’d borrowed money from friends and family to finance their business. About a third of them say they lost friends over the tension that ensued, and about 40% said that the tension had led to fights between themselves and their close friends and family.
JFC, could this be any more depressing?
Listen, I know that some of you might say that the MLM company you joined is completely and totally different. I mean, just look at you with your sports car and lavish vacation to Bermuda.
In all honestly, I’m not going to believe you. Or I’m going to tell you to give it a few months before the whole thing goes to shit and you owe the company $5000 and your left foot.
The fact is that the vast majority of MLM companies prey on the vulnerabilities of women and moms just like you and me who are desperately looking to make a few extra bucks. The good news is that there actually are some decent ways to earn money at home around your busy schedule (check out this list here).
The bottom line? MLM companies are something we all need to stay the hell away from … unless, of course, you want to piss off your friends, make pennies on the hour, go into debt, or file for bankruptcy.