Multi-Level Marketing Has a Problem: YouTubers Keep Talking About it

Multi-level marketing companies (MLMs) hoping to attract young recruits have a problem — former coaches are taking to YouTube to explain why they quit.

MLMs promote the idea that you can make a real income while working flexible hours, mostly from home — Avon and Mary Kay are some of the most well-known examples — but former MLM representatives are posting videos that paint a very different picture.

In a video entitled “Why I Quit Limelife/ Limelight by Alcone…and Why MLMs are the Worst,” young stay-at-home mom Savannah Whitaker (who goes by Savannah Marie on YouTube) explains that: “When I joined LimeLight, there wasn’t a video for me to watch…It was just a bunch of people talking the company up.” Whitaker’s video details how hard it was to sell to her circle of friends, as most MLMs encourage, and how her sales pitches became such a nuisance that even her closest friends unfollowed her.

MLMs rely on turning customers into salespeople, whose sales then count toward their recruiter’s income. This creates what a 2011 FTC report called an “endless chain” that is “flawed, unfair, and deceptive.”

MLMs require that you buy inventory to get started, and the pressure for sellers to maintain their inventory guarantees income for their recruiter, and their recruiter’s recruiter, in a business model that looks awfully… triangular. (It’s important to note that these businesses aren’t necessarily pyramid schemes, which are illegal.)

Most importantly, the FTC reported that 99% of people who join MLMs lose money. When you see posts about new cars and tropical vacations by fabulously wealthy MLM members, know that MLMs rely on a tiny number of top-tier earners to create the illusion that their level of success is a distinct possibility for new recruits….[Read More]