The Perils Of Multi-Level Marketing Programs

Published October 4, 2017 at 10:00 AM CDT

A Stella & Dot display table at an in-home jewelry selling party. (Kim/Flickr/Creative Commons)

Millions of Americans are getting sucked into multi-level-marketing schemes – selling from home. We ask how that’s going.

They call it social retail. People, often women, selling to each other, neighbors, friends. Avon did it. Amway did it. It was called multi-level marketing. And now, in the social media era, it’s all over. The neighbor next door selling clothes, candles, skin care, supplements. The companies behind it promise big bucks and freedom. Some find those. Many do not. Some end up in trouble. Even friendships can get strained. This hour, On Point: When everybody’s selling from home. — Tom Ashbrook.

Guests

Alden Wicker, freelance journalist covering sustainability and personal finance. ( @AldenWicker)

Bonnie Patten, attorney and executive director of Truth in Advertising, which educates the public about deceptive marketing. She has testified before Congress and assisted the Federal Trade Commission in bringing class action lawsuits against multilevel-marketing companies. ( @bonniepatten)

Christina Hinks, former LuLaRoe distributor. Blogs at MommyGyver. ( @MommyGyver)

From Tom’s Reading List

Quartz: Multilevel-Marketing Companies Like LuLaRoe Are Forcing People Into Debt And Psychological Crisis — “Of these second-wave MLMs masquerading as women’s empowerment, LuLaRoe is queen. More than 80,000 women have paid around $5,000 for several boxes of low-cost clothing and worked as much as 80-hour weeks to outfit hundreds of thousands of suburban women in multicolored polyester. But according to a report that studied the business models of 350 MLMs, published on the Federal Trade Commission’s website, 99% of people who join multilevel-marketing companies lose money. Depending on how you look at it, it’s either a brilliant business model or a predatory practice—or a little bit of both.”

Vox: Why Your Facebook Feed Is Filled With Women Selling Essential Oils And Press-On Nails — “Multilevel marketing (MLM), this model of friends selling to friends on behalf of a company, hadn’t just taken over my networks; it was everywhere. About one in seven US households include someone involved in direct sales, and participation skews female — 92 percent of in-home sales parties are thrown by women, the national association reports.”

MommyGyver: MLM’s: Revamping The Model — “My criticism of MLM begins with the very reason many decide to enroll with them. Often, these companies seduce an individual into joining based on their wants, needs, and deepest desires. In the case of LuLaRoe for example, we see a deep and aggressive push to the millennial stay at home mom and her peers. Why her, you ask? It is my opinion that stay at home mothers struggle at times with the concept of being “just” a stay at home mom.”