Pyramid schemes are illegal in the United States, but I promise you we are exposed to them all the time. Only now, we call it "multi-level marketing" - and it's a total scam.
What's the difference? It's all in the technicalities, my friends. See, what makes pyramid schemes illegal is that you're paying participants to recruit other participants. MLM's claim that they're different because they're not paying you to recruit other people, they're paying you based on how much product those recruits buy and sell.
You're not getting paid for the recruits, technically. It's just that you can't really get paid without them.
It reminds me of the story of my local bikini hot dog lady (listen, I've lead a weird life in a weird town.)
She used to sell hot dogs from a cart at the side of the road wearing nothing but a string bikini and some sky-high heels. There would almost always be a line of cars waiting to buy from her. It became an issue with traffic flow so police stepped in and shut her down. She didn't have a food license and it was illegal to sell food without one.
She opened back up a little while later selling "plates, cups and napkins" - but giving away "free hot dogs" with those purchases. She wasn't technically selling food. She just to happened to be giving it away with all these plates ...
If a pyramid scheme is selling hot dogs, an MLM is selling plates and giving away a free hot dog with purchase. Same same, but different.
So MLMs aren't technically breaking the law because there's a product involved in the recruitment...
GiphyI don't know where bikini hot dog lady is now, but I hope she is recognized for her genius. So now that we understand what makes an MLM different from a pyramid scheme (see also: nothing but technicalities) we can more easily talk about how badly they suck, how predatory they are - most importantly - how people are getting out!
Reddit user pastel-vibes-forever asked:
Things got ... enlightening, to say the least.
Making Friends
My mother did Amway years ago. She told me she quit when she realized she approached every new acquaintance with an aim to make a sale instead of making a friend.
This is what got me out of selling Insurance. It wasn't a pyramid scheme, just a bad commission job. My coworker and I were at a bar just chilling after a sh!t day, started talking to this guy, and without either of us realizing it we had launched right into the pitch.
Debt
My recruiter told me she made $400 at the party I was at. I later learned she made 25% of that.
I was told if I could get 2 people under me, I would make $400-$500 per month.
Then I was told I needed 4 people instead of 2.
Then I was $2,000 in debt with nothing to show for it.
Deleted them all and changed my phone number.
I am an owner of 2 businesses, so I thought adding a small side hustle would be an easy transition, but it turned out that as a legitimate business owner, I couldn't bring myself to use the toxic business practices that were expected of me (cold messaging, hounding people for orders, constantly reminding people about deals, etc.).
When I left, I helped the two girls who were under me get out as well, and apologized for roping them into something I thought was a good deal.
Unfortunately one lived 4 states away, and the other didn't have qualifications necessary for my fields so I couldn't give them jobs at my other businesses. I did, however, take on the debt that they had gone into to get them in the clear.
- Trawhe
Tupperware
GiphyI've been wanting to tell this story for ages, and never got round to it.
When my husband died (abusive prick so don't feel bad for me) he left me with a tonne of debt (ok you can feel bad for me now lol). Not long after he died I had gone to a Tupperware party for a friend, and made some positive comment about one of the products, and that put me on the presenter's radar. This presenter happened to be one of those top tier ladies that ignored their family to make it big. She was/is the regional person. Whatever the title is.
I was BROKE. Paying off so much stuff while waiting for the life insurance to come through, you'd be surprised at the amount of companies that don't give a sh!t that you've lost a spouse, they just want their money. So Tupperware was spun as a way to earn extra money. She even gave me the starter kit without having to pay up front.
Problem was, I worked full time, and it was near impossible to book parties. I did my first presentation at my house and booked no parties. I reached out to all my friends and family and booked no parties.
The pressure from this woman was IMMENSE. She'd call me while I was at my day job. She try to convince me to quit my day job to focus on Tupperware. She knew I was broke, but she was adamant that if I quit my job I'd make it big, and before I know it I'd have a Tupperware car just like her.
She never listened to me. Even when I said to her "How do you expect me to pay my bills if I quit my job and start up Tupperware?" She had a response for everything. Nothing was based in logic and every time she called me, which was weekly, I was filled with dread.
I started to ghost her. It took months for me to work up the courage to tell her I didn't want to do it anymore. It took weeks for her to accept me "don't want to do it anymore". She dragged it on, and on, and on. Finally she sent me a curt "Leave your kit at the front door" message which I did.
She tried a couple of years down the track to recruit me again. I ignored her calls.
All I wanted to extra income to help me. I also wanted to add to my friend group. All I got was stress, anxiety, and frustration.
Business Partners
Joined a jewelry-based MLM thinking it would be cute to sell jewelry as a side hustle in July after I relocated across the country. I got roped in to the "be your own boss" and "make money while you sleep" mentality, and for a while, it boosted my confidence because I truly thought I was doing a great job running my own business. On paper, I brought in good money (about $100 per live show, which was one hour a week), but I had to ship out the jewelry to them, which ate about 20% of the profit, then the money earned went back into ordering more jewelry.
By September, once the glitz and excitement of it all wore off and I realized nothing was coming back to me, my boyfriend told me the only way to earn money in the business was to add new "business partners." I told him I wasn't interested in doing that, but that was part of the scheme. I was so hurt by the people who had roped me in to the business. So I quit that same day. Luckily, I made it out with only like $30 lost, but I still have a ton of jewelry and packing materials taking up space in my house.
Do Not Contact
I joined Primerica, I didn't see any red flags at first but small ones started popping up.
Like my team leader telling me to basically live outside my means to make people think I was doing really good and then they'd join and then I'd do really good.
Or finding out all the contests ran around recruitment and not sales numbers.
I left as soon as I realized, even put my name and number on the do not contact list.
Blew a lot of money trying to make that work only to realize I wasn't going to make any money without screwing my friends.
Been there, tried that. Term life insurance and financial advising. The biggest red flag for me after joining was that everything was focused around recruiting and building a team rather than building a book of business and developing the knowledge necessary to actually help your clients. I "noped" out of there pretty quick and without any issue. I am still friends with he guy who recruited me. He does very well, but admittedly inherited his dad's book of business who started with Primerica back in the 80's and never had to build his own client base.
Didn't Even Realize
I had just started college right out of high school. Was going to an art school (i know, bad idea) and was looking for a job to do between classes. Classmate of mine mentioned CutCo, so I naively went in for an interview.
Few points to know. I had no previous job experience at all, the "office" was in the next town over, and I didn't have a driver's license at the time, let alone a car. My freaking Mom drove me to the interview. Got the job anyway.
So I get the CutCo bag of stuff to show off and was sent on my way to harass my relatives. I thought that I was only doing example shows to them, practicing for the real deal. My Dad and StepMom even bought some knives (no idea what happened to them though, last I saw they used a different set). Once I run out to people to bother, i start running into problems.
Problem 1 was i didnt sell anything other than that one set. Problem 2 was i hadn't gotten any other people to talk to. The "pyramid" part of my pyramid scheme wasnt working real well. Problem 3 was the straw that broke the camel's back apparently. I couldn't get to the weekly meetings because my mom refused to drive me across town every week (she had a long commute).
In the end I got a call from my "manager" telling me he was basically letting me go and I needed to turn in my swag bag. I told him I couldn't get to him so he had to come to me. Later that day he rolled up, o gave him the bag and that was it. Dont think I ever got my cut from the knives I did sell either.
The real kicker was that I didn't even realize it was a MLM until almost a decade later, browsing this very sub.
Heavy Boxes
GiphyOur office had an Avon lady that would take our orders on a bi-weekly basis. She was the sweetest person, not pushy at all. Unfortunately she passed due to an illness and we did not know anyone else who sold Avon.
I got the bright idea of signing up as I read on their website that many people would join up solely for the discount. It sounded easy as I was planning on only taking orders for the office. Paid my $25 online and waited for the brochure to come in.
Our apartment was always the last stop for the UPS guy. He stopped by one evening near 8pm hauling a heavy box with AVON all over. He gave me this look of utter hatred. I felt so bad when he asked me if I had signed up to sell. That should've been a red flag.
Every time you placed an order you had to buy the catalogs which were heavy and a nuisance since I only needed two at the most for the office. Whatever small credit I gained ended up reinvested on having to buy the catalogs.
Not too long after I signed up the calls started. I began receiving calls from various people during work hours to attend meetings, to meet the regional so and so, to place orders, how to boost my sales. It became so frustrating at the time as my father became ill and had to be hospitalized so I kept having to answer every call in case it was hospice nurses or other medical staff. One woman kept calling and calling so I snapped one day. Told that I didn't plan on attending any meetings and that if she didn't understand that the first few times I told her, then she was a moron.
With everything else going on, I would forget to place the orders and I finally told the gals I would no longer sell as I had no time for it. They understood and we lost our Avon fix. It was not worth the hassle and we should have just found someone to take our orders.
On the bright side, our UPS guy was happy he no longer had to make his routine deliveries of heavy boxes that would end up chucked in the dumpster.
"Financial Hardship"
I was a call agent for Tahitian noni for the USA and Germany (now called Morinda). It was horrible fielding calls near when people's $120 monthly auto payment was due for 4 one liter bottles of juice. I couldn't cancel their subscription on late notice without a fax with their signature at least a week in advance, unless they claimed "financial hardship."
Eventually I learned that I would just need to feed them what to say and then gladly cancel for them on the phone. Total scam. Only people who made money were the early people to sign up and the founders, who are multi millionaires.
- Chasicle
Boss Babe
I know a girl who got sucked into Arbonne. She constantly makes videos on FB and instagram acting like she has this perfect life and last I heard, her boyfriend (that she claims in her husband on social media) had to call her from a gas station to see if they had any cash in the house because both their credit cards were declined and he needed gas to go to a friend's birthday party. Needless to say, he didn't go. It literally says "boss babe" on her Instagram.
It All Felt Criminal
I worked at the head office of a large MLM, and one of the OG's. Mary Kay.
You have to live, breathe, and sh!t pink. Honestly, I once got sent home from the office because I had made a cardinal mistake... I had worn a pantsuit to the office. As a woman, we were expected to wear a skirt or dress daily. I was new and didn't really think they'd get upset over a pantsuit, all things considered. I was wrong.
I know this is a different perspective, but hear me out. I didn't really know what Mary Kay was initially, all I remember is seeing the old school pink eye shadow cubes in my mom's makeup drawer. I started to discover that things were all a bit strange and ... predatory. We would run campaigns inside of universities and colleges because the older generations all "knew" what was up. The company was marketing toward these younger girls specifically because they didn't know the shtick, and hinging on the fact that we would somehow be able to convince them of making easy money. I heard a lot of horror stories the longer I worked there. Specifically from people who were angrily demanding answers from directors at the annual "Seminar" held in Toronto for Canadian Mary Kay consultants. People losing thousands of dollars. It all felt so criminal to have been a part of.
The Product Works
My ex boss brain washed me into Hempworx. I was very skeptical about cbd working for anxiety. I had tried everything and nothing had worked before. CBD actually worked, surprisingly. This was before the big hemp boom so CBD wasn't available everywhere like it is now.
So my dumb self paid the 20 bucks - luckily that's all. I thought it was rather weird that my manager kept pushing me. Talking about "Running your own business." My mom had her own business before she died. I knew it wasn't "my business" - but the CBD worked.
After trying other CBD products and getting better deals, I basically saw they were exploiting people and charging way too much for their product. I was very back and forth on whether or not to sell to people most the time. The company was terrible, but the product helped me and it did work.
In the end I paid 20 bucks and never sold anything.
Shake Shops
GiphyLong story short, my ex and I were going through the process of making funeral arrangements for our stillborn son. The cremation cost was about $2,500 give or take. The job I had at the time wasn't paying very much and do to her mental state I opted to pick up a little extra work on the side at my friends Shake Shop.
Before I know it, I'm being roped into that good ol Herbalife bullshit. Of course, I didn't know much about them at the time I thought they were legitimate. At first, I'm there just helping wash dishes and make shakes. The next thing I know, I'm helping to recruit people and using the product myself.
I eventually left ( within a three-month window of time) when I began to notice all the red flags and they just kept piling up. You aren't allowed to have the Herbalife logo anywhere, you weren't allowed to say you were an Herbalife shop, had to explicitly used the term Shake Shop, the distributor had to pay me under the table and wasn't allowed to mention the fact that she'd been doing it. Things like that.
I was about a week in when the funeral home knocked the whole cremation down to $800 and put me on a monthly payment plan. So in truth, after a week I no longer needed to be there. But it was nice having the extra $300 a month.
But after that time spent there, my inability to ignore all the red flags, and the fact that I was peeing neon green from using the product myself, I just thanked The Shake Shop owner and left one day.
For about 14 days after leaving I had Representatives from the company calling me to ask when I was going to start up my own branch. - without getting into a lot of detail, I told them to lose my phone number.
By now, I was actually taking steps to heal and I was in no position to get into something convoluted and dishonest as Herbalife. I did research on the company and what the product actually does to your body. Armed with of the new knowledge I honestly felt guilty. To simplify it, whenever you drink an Herbalife shake, tea, and any of the sawdust they call supplements, you are killing your kidneys.
There's something to be said when a Monster energy drink is healthier than an Herbalife shake. And yet, we still have 5 "Shake shops" in an 18 mile radius from where I live.
Big Yikes
I was a "coach" for an online fitness MLM. While I do still enjoy the company as a consumer, being a coach was terrible. I joined it in a financially weak position and in a lonely time too, so I was desperate for a community. In the end, it only made my debt worse because the expectation was that you would subscribe to all the shakes and supplements and you HAD to get the newest program as soon as possible, even though it'd be part of your regular subscription months later.
Biggest red flag was uplines giving unrealistic goals with deadlines, and employing the idea of "if you aren't succeeding you aren't working hard enough, because anyone can do this" and promoting burnout by encouraging you to use all your free time towards your "side hustle". Big one: "If you have time to scroll on your phone, you have time to send invites!" like....never ever relax, work 24/7?
So basically I was super burnt out and depressed because I had a demanding full time job and was expected to treat this MLM like another full time job on top of it. Got so bad that family reached out because my "uplifting" posts were so thinly veiled that they could see how depressed I was.
Big yikes, haven't been able to do one of their programs since.
- Jfiliko
Gastric Bypass
A former coworker of mine struggled to lose weight. She was also ALL UP in Arbonne. She also had a minor physical disability, which she blamed for her inability to lose weight. She was only maybe 20lbs over weight. Well, she gained 50lbs in order to be approved for gastric bypass, after which she lost the weight...and then proceeded to say Arbonne was the cause for her weight loss.
- c8080
Look At Their Shoes
The IT guy at my old company roped me into going to a "presentation" at a fancy hotel in town on how I could "make money at home in my own time" — Naturally, being the naive person I am, I accepted. He told me to "bring a friend" if I could, which should have been the first red flag. So I roped in another friend saying there would be free food and off we went.
We get to this really fancy hotel and people are dressed in suits (I was under-dressed) and my IT guy finds us and introduces me to his "up line guy" and it was our IT Manager!! (Second red flag)
Anyways, IT guy introduces some other dude, me, and my friend (whom he had not met before and didn't bother introducing himself to) to the IT Manager by saying "These are my three guys". This was Red Flag #3.
So my friend is getting super weirded out by everyone and decides to leave. I confront him and was about to give him a guilt trip for bailing on me when he looks at me and just says, "Look at their shoes."
So I start looking around at all these people in business suits and lo and behold they are all wearing the worst shoes — some of them were even in sneakers. That's when I realized these were just people trying to put out the appearance of success where there was in fact none. I bailed with my buddy and never looked back.
Possible Side Effects
I left about five months after I joined. I started to see through dõTERRAs lovely guise at a team meeting where "cut people off" was a big theme. One of them had cut me off already when I told her I hadn't the financial income to buy 100PV to make commissions and that other oils are better quality for cheaper.
But, their usage guidelines have led to a horrible thyroid episode fueled by oils that stimulate the immune system. As my thyroid condition is autoimmune based, it was inevitable. I didn't know that the oils had an immune system effects. I suffered with a thyroid wrecking itself for months because I had no idea what the oils were doing.
Lack of warnings about potential side effects was something I should have paid attention to.
Harassing People All Day
So I got into Scentsy originally because I really liked the product. After a few months, my cousin wanted to join under me. She and I promoted and I was enjoying the extra money every month, but usually it all went right back into Scentsy.
Once I had my baby and decided to stay home, I realized I wasn't really doing as well for myself as I thought. The people who were ordering regularly from me stopped ordering and my husband and I were starting to use our extra finances to keep up with the quarterly quotas.
About three months ago, I decided enough was enough and have let my membership lapse. I still order from my cousin when I want a new wax melt. I really do enjoy the products, but unless you're harassing people all day every day, you just don't get sales.
My sponsor and up line kept telling me to do events and follow up. Get the information and follow up. I sent mailers every month to every person who purchased. I sent texts and emails. I would check in about non-Scentsy things just to keep the relationship there.
Ultimately, I stopped because it just wasn't worth the extra stress. I have since stepped out and started my own craft business- something I've wanted to do for a long time. I'm taking classes and getting certified to have a compliant product with US guidelines and I'm going to school for a business degree. There's no sales pressure or quotas to meet. I have fun and best of all, my husband doesn't complain about how I'm wasting money anymore. Lol
Forced To Leave Campus
So when I was in college in the early 2000s, this one guy I knew (who we'll call Ryan) got taken in by a MLM of some kind. I can't remember the name sadly, but he bought in big time. I'm talking missing classes we had to travel to conferences on his own dime, missing work and eventually quits, the whole deal. Ryan recruited a decent number of people he knew to do it although I'm still not sure how. I got the pitch from him at one point and it wasn't all that persuasive.
So this goes on for about a month and then every student in the entire student body gets an email blast from the campus chancellor/president. It explicitly warns students about MLMs, how to spot them, and warns that anyone recruiting for them would be asked to leave the premises.
Those of us not involved in the MLM have a good laugh at the fact that this guy's efforts apparently got to the top of the campus leadership. A few more weeks go by and we realize none of us have seen Ryan in a while. Turns out, he dropped out of school.
We were never sure if it was to do the MLM full time (which seemed to be where it was heading), if he ran out of money at some point and couldn't attend, or something else. From what I could tell years later, Ryan ended up re-enrolling and did graduate, but about four years after everyone else did.
Fight Club
GiphyThis was back in the late 80s, which just goes to show you how old the whole MLM scam is.
I lived in a small town, worked with a really lovely guy who one day mentioned he was part of this amazing new business, would I be interested in hearing him out, etc etc. I knew nothing about ''pyramid'' schemes, as they were called back then, but knew of Amway as they were a mail-order catalogue you would see in people's houses from time to time. I agreed to listen to his pitch, met him after work and he ran through the whole thing. He was going to be making millions within a couple of years, and so was I if I signed up with him.
Total sucker that I was, desperate to find some kind of life and success that could get me out of my town, I signed up. My girlfriend at the time was totally skeptical about it, she kept saying to me that I was not going to make any kind of money at all selling household cleaning products and the like to people who would have to wait weeks for them to arrive. People want that shit now, they'll buy it at their local store when they need it. You get this filter on though, you just filter out any negativity, you think you're on some genius thing.
Then I realized that, sort of like Fight Club, there were members everywhere. This whole Amway pyramid thing had gone viral through our town, every second person that I approached had already been signed up by someone else. All the others that I approached were completely not interested, and not shy of telling me what they thought of the stupidity that was spreading through town. It was this weird vibe, you had half the town - including me - running around thinking they were smarter than everybody else and had discovered a goldmine. Thankfully, it didn't take me long to realize that we were all just selling shit to each other, and bothering heaps of other people with our ''pitches'' to get people to sign up and do the legwork for us. I was running around like an idiot getting the odd sale, and all in my spare time.
The wind truly went out of my sails after a few weeks, but I was now having to fend off the Spanish Inquisition from my work colleague as to why I hadn't signed up any new recruits or sold any more dishwashing liquid. I cracked it with him one day and told him that I was no longer interested and just wanted to get on with my job and my life. Then the truly weird stuff started, and again it was kind of like Fight Club.
Every person that I encountered that was a recruit, my name was mud to them suddenly, and I was getting the cold shoulder and in some cases outright harassment as I tried to do my job and live my life. I had a security guard strip my truck down when I was leaving an industrial site that I had just made some deliveries to. Delivered to this place for years, all through the same security checkpoint and guard. He was checking for ''stolen goods'', while chastising me the whole time about abandoning ''his business''. Some friends stopped inviting me on social outings, it was total whacko weirdo cult stuff.
Eventually, this weird-assed cloud that had descended on our town just kind of lifted - I think people just realized that it was all bullshit. The dude at work, he had refused to speak to me for months, started being his normal self again. I couldn't resist one day and asked him how his business was going. Of course it had all turned sour for him, he realized that he was investing a lot of effort into something that only made him a small amount of money, so he himself had quit the whole thing. He was a bit shamefaced about it, as he should have been.
My girlfriend? Oh, how she laughed...