“[A] form of direct selling in which a major chunk of a person’s income comes not from the sales they make themselves but from the sales made by people they recruit into the company . . . .” Kaitlyn Tiffany, How the Pandemic Stoked a Backlash to Multilevel Marketing, The Atlantic, Jan. 21, 2021.
Jon M. Taylor, MLM’s Abysmal Numbers, ftc.com:
Our studies, along with those done by other independent analysts (not connected to the MLM industry), clearly prove that MLM as a business model – with its endless chain of recruitment of participants as primary customers – is flawed, unfair, and deceptive. Worldwide feedback suggests it is also extremely viral, predatory and harmful to many participants. This conclusion does not apply just to a specific MLM company, but to the entire MLM industry. It is a systemic problem.
Of the 350 MLMs I have analyzed for which a complete compensation plan was available, 100% of them are recruitment- driven and top-weighted. In other words, the vast majority of commissions paid by MLM companies go to a tiny percentage of TOPPs (top-of-the-pyramid promoters) at the expense of a revolving door of recruits, 99% of whom lose money. This is after subtracting purchases they must make to qualify for commissions and advancement in the scheme, to say nothing of minimal operating expenses for conducting an aggressive recruitment campaign – which (based on the compensation plans) is essential to get into the profit column.
Alden Wicker, Multilevel-marketing companies like LuLaRoe are forcing people into debt and psychological crisis, Quartz, Aug. 6, 2017:
Joining a MLM is appealing to women who find hope in their promises of a better life: freedom, economic independence, and an endless supply of cheery trinkets. Despite professing quick-income prospects though, it’s difficult for MLM consultants to earn more than pocket change. When glitzy recruitment videos yield to the reality of suburban cul-de-sacs, people selling for MLMs can be plunged into debt and psychological crisis.
See Direct Selling in the United States: 2019 Industry Overview, Direct Selling Association.
See Multi-Level Marketing Category, truthinadvertising.org.