A young woman sits centre screen in a well-lit attic bedroom. She looks like she is in her late teens, with long hair, a trendy hoodie and manicured nails. She has a message to deliver as she uncomfortably shifts and glances left of centre, perhaps glancing at notes.
At the end of the five-minute Instagram video titled Life of a Young Entrepreneur [Heart emoji], the woman tells her followers: "All it takes is one simple yes to change your life forever." The golden opportunity she is promoting is to become a salesperson for a multilevel marketing company (MLM).
One Irish woman, Karina O'Dowd, was looking for an opportunity to work from home while dealing with a health condition in 2017. This was before the pandemic shifted the way we work, and her options were limited. O'Dowd, then 23, was sick of being on social welfare and wanted to make her own money. After countless unsuccessful searches on job sites, she happened upon an advertisement on a buy-and-sell Facebook page. The infomercial-style post read: "Would you like a second income? Would you like to work from home and choose your own hours?"
O’Dowd had doubts about the possibly too-good-to-be-true opportunity, but she was in a vulnerable place: “I was so desperate for a job at the time that I thought I’d give it a go.”
O’Dowd replied to the post and received a message from a woman in the UK asking if she would be interested in becoming a salesperson for an MLM cosmetics brand. She was told she would need to buy a “starter kit” for €138 that she could use to advertise with and sell. The kit would contain €300 worth of products.
Once O'Dowd agreed, she was introduced to her "team", which consisted of five other women tasked with being the first sellers for the brand in Ireland. "I remember thinking it was going to be really hard to launch and advertise because no one had ever heard of it – and it was."
Influencers?
O’Dowd describes an average day selling for an MLM as similar to that of an influencer. A lot of time is spent “creating content” – writing posts, uploading photos and videos – and posting it on social media to attract customers.
In fact, as anti-MLM activist Nicole Ziege explains on her Instagram page @antimlmnicole, being a seller for an MLM is very different to being a social media influencer.
Terms MLMs use for their business model – including network selling, social selling, direct selling – involve becoming a contracted salesperson who can make money from commissions on the products they sell, and by recruiting new people to join their “downline”. You can usually earn commissions from what your downline sells, and recruitment is incentivised by offering you the opportunity to reach higher levels within the MLM structure.
Influencers – people who monetise their large social media followings – usually engage in “affiliate marketing”, in which companies pay them to promote a brand and often give them a discount code that they can pass on to their followers to generate sales, from which the influencer can then earn commissions. MLM salespeople do not get paid for promotion.
As Hannah Martin, a former psychotherapist and founder of the Talented Ladies Club, told Multilevel Marketing: The Consumer Protection Challenge virtual conference hosted by the College of New Jersey business school in 2020: "Most people [selling for an MLM] invest about 10-15 hours per week on average [into marketing], but we know that most people don't make a profit, meaning these people are working for free. These numbers can be as high as 780 hours a year for free."
Young mums are often targeted, as well as those with health conditions who are unable to work outside the home
According to an article for The Conversation written by Dr Máire O'Sullivan, a lecturer in marketing at Munster Technological University, critics say that MLMs' emphasis on recruiting downline sellers makes them similar in structure to illegal pyramid schemes.
According to the Competition and Consumer Protection Commission, pyramid schemes are "marketing and investment frauds" in which people are offered an opportunity to market a particular product. However, profit is gained not by selling the product, but by recruiting others into the scheme. Under section 65 of the Consumer Protection Act, 2007, it is illegal in Ireland to establish, operate, promote or knowingly take part in a pyramid scheme.
O'Sullivan cites research by Jon M Taylor, founder of the Consumer Awareness Institute in Utah, which found that at least 99 per cent of MLM participants lose money. "I've seen [the maths] and it makes sense to me," says O'Sullivan."I've certainly never seen any MLM company present any evidence that his stats aren't true."
With that damning assertion, MLM recruitment becomes a “feminist issue”, says O’Sullivan: the European Direct Selling Association Seldia found that 87 per cent of MLM recruits in Ireland in 2020 were women, based on the companies in its network. (It also found that sales in Ireland were up 23.3 per cent from 2019.)
MLMs have “plausible deniability” when it comes to targeting women, explains O’Sullivan, as the practice can technically be described as salespeople targeting specific recruits, and not the company. In her research O’Sullivan has also found a number of examples that show women’s vulnerabilities are often exploited as a means of recruiting them.
These examples vary from the banal to the extreme – from generic cold-call messages offering a great opportunity to body-shaming tactics to promote engaging with weight-loss products. In a particularly shocking example O’Sullivan found, a nail varnish company advertised a “pregnancy and infant loss awareness collection” to women who had suffered miscarriages. In addition, young mums are often targeted, as well as those with health conditions who are unable to work outside the home, such as O’Dowd.
Still, 22-two-year-old Charlotte (not her real name) from Dublin saw selling for an MLM as an opportunity to gain social media followers and advance her acting career. “Even outside of the money there was exposure . . . because the company [was] already big,” she says. “As I would post, they would repost.”
Making money
O’Dowd says that while she sold some products, she didn’t make a profit over the year she was involved: “By the end of it I’d say I lost money rather than made it.” The idea is to “reinvest” whatever small profit you make in order to reach higher levels in the company, she says. As part of her work, she set up a separate Facebook page that attracted lots of members and engagement but did not convert to sales.
“I understand why they didn’t buy [the products], because they were way too overpriced,” she says. “I was advertising them thinking, how can I sell mascara for €26? It was a good mascara, but I just didn’t think it was worth that.”
Sarah (not her real name), from Kildare, says that by the time she reinvested in more products to sell, she hadn't made a profit either. But the 27-year-old believes if she had worked harder and committed more time and effort to selling, she would have done. She points to other women on Instagram who are "so successful" and post about being "rewarded" with trips abroad, bonuses or company titles for reaching a certain level in the company.
One salesperson omitted to blank out a cheque in a montage she shared on Instagram – the weekly income amount totalled €20.32
April (not her real name), aged 24 and from Dublin, came to a similar conclusion when she didn’t make a profit after two months selling for an MLM haircare brand: “Maybe if I stayed for longer, I would have made more . . . Maybe if I was passionate [about it].”
Martin, in her conference presentation, said that in the previous four years she had interviewed many former MLM reps and “without exception” they had all lost money, including one woman who was considered to be “successful”.
“They all told me they were psychologically damaged in some way,” she said. “From shame at missing their children’s birthdays for team meetings, to embarrassment over how they treated friends, or guilt over the distance they created with family and debt they were hiding from their partners.”
MLMs often promote the idea of getting in on the ground floor of the company to be successful. As O’Sullivan explains, if you were to open a franchise for McDonald’s, its success would not depend on when you opened it. In addition, there’s an issue of oversaturation that arises from people recruiting friends, family and acquaintances in the same locality. If there were a McDonald’s 10 minutes down the road and another one 10 minutes away from you in the opposite direction, it wouldn’t be a good idea to open one in the middle of them, she says.
Once people buy into the opportunity sold by MLMs, they are often made to feel like quitting would be a failure and that their “negative mindset” is holding them back. This is underlined by in-your-face positive language deployed by MLMs. For example, the most expensive product pack for one company is called the “Overachiever Package”.
April says the company she worked with ran “gratitude Zooms” and mental-health-focused calls, which, she says, helped her adopt a can-do attitude. The concept of “fake it till you make it” is at play when sellers deemed to be “successful” post photos of their weekly cheques with the amount of money blanked out.
One such salesperson omitted to blank out a cheque in a montage she shared on Instagram – the weekly income amount totalled €20.32.
O’Sullivan urges anyone working for an MLM to keep a profit-and-loss record detailing how much they are spending on products and how much time they are devoting to marketing. “If you’re making money, and the money is coming from recruiting [and] not from sales, then you are just taking other people’s money through the filter of the company,” she says.
After a year without making a profit and learning more about the structure of the company, O’Dowd decided to stop selling for the MLM. “[I realised] it’s not helping me financially . . . and I didn’t like the ethics of it.”
