Young people are fighting back against a business model with a 1 percent success rate: ‘Too good to be true’

·12 min read

A seven-second video with no dialogue somehow says it all — the scream wafting across a college dorm room is unmistakably anguished. 

“My roommate just found out that the pyramid scheme she got involved in is illegal,” TikTok user @ciarathetennisgir wrote in the post. It’s since been viewed nearly 3 million times. 

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According to the Federal Trade Commission, pyramid schemes are “scams” that generate money based on the people recruited, not how much of a product is sold. They can “look remarkably like legitimately multi-level marketing business opportunities” — especially to a naive young college student. 

Since pyramid schemes are illegal, companies obviously do not market themselves as such. They often start as multi-level marketing companies, or MLMs, which sell products or services through person-to-person sales, but also put a great deal of emphasis on new member recruitment. 

Some MLMs are legitimate businesses, but they still have a questionable success rate that would make anyone suspicious. Research from the FTC estimates that only 1 percent of MLM members walk away without losing money. 

MLM employees often sell wellness items, like shampoo, makeup, diet programs, essential oils, skincare and books, but the rewards of the “MLM lifestyle” are often the most enticing product. This puts emphasis on recruiting new members to said way-of-life, and pushes MLMs right to the border of pyramid scheme territory.

As those MLM lifestyle-flaunting posts become increasingly popular among a new demographic of younger recruits, they’re becoming harder to avoid on social media — but also easier to spot. 

Now, other young people are trying to keep their peers away from potential pyramid schemes by identifying what’s appealing about MLMs and debunking potential manipulation techniques that could turn a direct-sales business into an illegal pyramid scheme.

MLMs are showing increased attention to one demographic — college kids

MLMs have targeted bored, stay-at-home moms hoping to bring in a little extra cash without the hassle of a full-time job since the 1900s, when Tupperware parties and Avon ladies were all-the-rage. They are now targeting college students, just like the one in the above viral TikTok.

Bonnie Patten, the executive director of Truth in Advertising, told POPSUGAR in 2019 that 75 percent of those who work for MLMs are women, and moms make up a large part of that percentage. According to InsideHook, the uncertainty of the pandemic and a depressed job market have made students and other young people “easy targets” for MLMs.

MLMs are now reaching a wider audience, and grabbing hold of younger, social-media-savvy women. Often approached by hometown “girlbosses” with a sweet job description involving little oversight and maximum impact, young women don’t always have an outright reason to say no.

Chelsea Suarez, a content creator who sheds light on the unethical business practices and manipulation tactics sometimes used by MLMs, told In The Know why so many of these companies recruit members of Gen Z.

She said they often have flexible schedules, fear getting swept up into the 9-to-5 lifestyles of their parents, are in need of money and in search of stability as they try to figure out what on earth they want to do with their lives.

“A lot of these kids don’t know anything, and they’re very naive when it comes to these manipulation tactics, these lies,” she explained. “They’ve just been so brainwashed that they think that they are living the dream.”

Social media has helped glamorize MLMs

If you’ve ever checked social media during your break at work to see that your peers are at the beach tanning, purportedly “working from WiFi” and enjoying a “free” Cadillac they got from selling shampoo, you may understand how many MLMs effectively recruit young people. 

“Flexing,” or showing off your accomplishments or possessions on social media, is not a new concept. With MLMs, you’re not just selling a product — you’re selling a lifestyle.

“It’s easy to fake a lifestyle on social media … to manipulate people, to lie to people, even if you don’t realize you’re doing it,” Suarez explained. 

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Recruitment, or getting other people on board to sell products underneath you, is a crucial part of MLMs and pyramid schemes. Social media is the best way to reach the widest audience with your revolutionary, glamorous lifestyle in which your job is just texting your friends poolside, it seems.

In fact, misleading posts about MLMs became so pervasive on TikTok that the app banned them from its platform entirely in December 2020, categorizing them under the “Frauds and Scams” section of its community guidelines. The platform’s choice likely came because of its generally young user base compared to other sites, as well as past struggles with scams promoted via its famously “accurate” algorithm.

Suarez said other social media sites, like Facebook and Instagram, should follow suit and block MLM content — but find a more effective way to do so. 

“Because of social media, there’s been such a huge resurgence of MLMs. And it’s just crazy,” she said, adding that TikTok relies on community policing of its posts, which isn’t always effective in itself. She estimated that only 1% of the MLM posts she reports get taken down.

Media Matters for America, a nonprofit that studies misinformation, found in May 2021 that posts and accounts promoting companies like Herbalife, Avon, and Plexus were still thriving on the app. 

“Despite guidelines to prevent predatory schemes from advertising on the platform, content promoting MLM companies is not being restricted by TikTok,” the report stated. “TikTok must begin aggressively enforcing its own community guidelines against MLMs or remain complicit in financially and physically harming its own users.”

In some posts, such as this TikTok shared by @justice_chimel, MLM products are not overtly advertised or tagged, but the product is still visibly on display. In this case, commenters noticed the subtlety and pointed it out immediately.

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Because of the new anti-MLM policy on TikTok, the way recruiters reach out to people is becoming more sinister and is spreading to other apps. 

“They would be more vague, and not say anything about the MLM at all. Not show the products, not do anything like that,” Suarez said, adding that most would advertise a glamorous lifestyle, then encourage people to go DM them on Instagram. “Then they’re just all over the place again and back to their normal tomfoolery.”

MLMs advertise a unique job experience that offers a solution to the drag of the typical workplace

One step ahead of achieving a glamorous life of luxury, vehicles and all-expense-paid vacations is the dream of having a job that isn’t as restrictive as your typical 9-to-5. 

The idea of “being your own boss” or a “CEO of your own company” is repeated time and time again, but in reality, MLM employees are self-directed salespeople who work for the company whose products they sell. 

“They want the freedom … the title, the lifestyle, the fake life, without actually having to actually do the work to get there,” Suarez said. But that’s not even what they get. 

The job may sound simple enough — make people desire your lifestyle so you can sell the products you use and get them to work with you — but it’s much more than that. Each employee is a salesperson, a recruiter, a shipping manager, a marketer, a social media manager, a customer service representative, and so on. You may be able to work from your phone instead of an office, but you’re always logged in.

“They work all the time. They say ‘I can work anywhere’ … that means you work everywhere,” she explained. “You work every second of the day, or else you won’t have the money. You can’t stop.”

Suarez said that at the start of most multi-level marketing jobs, the person who recruited the new hire, also known as the “upline,” asks the employee what their motivation, or their “why,” is. It may be to replace a full-time job, to make money for a car payment, to save up for nicer clothes, to support your future children, and so on. The idea is that your “why” will empower you to work hard through difficult times. 

She said it isn’t empowering at all, though. It’s a trick.

“It’s all just manipulation to try to keep you in, so that they can make money, because that’s their motivation,” she explained, adding that these companies don’t want to help you become a “boss babe,” as many claim. Ultimately, they just want to make money.

Increased targeting of highly motivated, young social media users has given rise to the anti-MLM movement

Suarez, who has a background in both sales and psychology, sees herself as uniquely poised to help debunk manipulation tactics MLMs use to recruit and retain people. She, and so many other creators like her, are members of the anti-MLM movement.

The anti-MLM movement is massive and grows every day. At time of writing, there’s a massive glossary of dozens of YouTubers who are a part of it. The anti-MLM tag on TikTok has more than 77.5 million views attached to it. Reddit’s r/antiMLM community has more than 708,000 members. 

Alongside Suarez, tons of other personalities who are passionate about debunking MLM claims have risen across platforms. Heather Rainbow has made many a viral anti-MLM video on TikTok. YouTuber Isabella Lanter shares tips based on her background in marketing and influencer content creation. One anti-MLMer, Jessica Hickson, spent five years in an MLM and is now sharing what she learned on her TikTok page. 

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An exceedingly common genre among anti-MLM creators is the MLM horror story. Those tales of misfortune range from cringe-worthy pitches that bystanders received from recruiters to unexpected scenarios within the companies. 

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Suarez said there are two reasons why horror stories appeal to people so much. First, it gives people a voice, and makes people who have had awkward or painful encounters with MLMs feel less alone. 

Second, she said, “It’s fun to watch people … just be idiots.”

On her channel, Suarez likes to show “ridiculous” clips of MLM pitches, poke fun at them, then systematically debunk them. 

“I’m going to roast you. You’re manipulating people, even if you don’t know it,” she said. “I think debunking it and meeting with facts are important as well.”

She also said that “pulling back the curtain” on MLM recruitment tactics is “really fascinating” to people.

Anti-MLM creators help people avoid and get out of potential pyramid schemes

Another crucial genre of anti-MLM post sees creators debunking the so-called perks of MLMs. Suarez has herself called car dealerships, researched reward programs and calculated out-of-pocket expenses for trips to make sure people don’t go all-in for a company to get perks that aren’t actually accessible to more than 0.22 percent of the company on average.

“It’s all a lie, basically. It’s a scam,” she said in regards to MLM rewards that appear “too good to be true.”

The FTC has shared a number of warning signs that MLMs could become pyramid schemes, including these “extravagant promises” about earning potential, “playing on your emotions” and “emphasizing recruiting new distributors,” as previously discussed. 

Suarez shared a number of in-the-weeds red flags from MLM recruiters that only someone who obsessively covers MLMs would know.

“If they don’t say the name of the company right away or if they’re not automatically forthcoming,” she said, waving a literal red flag via Zoom call.

She noted that some may deny being in “sales” and describe themselves as “influencers” instead. Sometimes recruiters will say they “partnered with” a company instead of saying they work for one, as well.

Other red flags include “promising a dream,” saying you make your own hours and having a “professional” reach out to you to do the same thing you do. 

If you’re already involved with an MLM or a potential scheme or know someone who is, Suarez emphasized that it’s not as easy to get out as you’d think.

“Call the customer service number … tell them you want a refund right now … you feel misled. That’s the answer, there’s no discussion about it,” she said. “Don’t talk to your upline. They’re going to say whatever they can to get you to stay, because that affects their money.”

Learning someone’s motive for recruiting you to an MLM is ultimately the most important thing you have to keep in mind when you or someone you care about is considering one.

“It’s not because they want the best for you. It’s because they want money. And that’s it,” Suarez said.

As a prominent YouTuber whose platform involves poking fun at a large subculture, she has faced a lot of criticism for her perceived “mean girl” behavior.

“People will come at … creators like me and say, ‘you’re just jealous … you hate women,’ and it’s like, what are you talking about? I’m literally saving [women], just based on what people have told me,” she said. “I have a little tally — I’ve helped over 5,000 women.”

“Sorry I’m not tiptoeing around, being super nice to people who are scamming people,” she said in a video addressing hateful comments she had gotten in the past.

Suarez offered sweeping advice to anyone who might be considering involvement with an MLM.

“I don’t want to be like, ‘hey, don’t be dumb,’ because you can’t blame the victim, right? But also, just think. Just think about it for more than five seconds,” she said. “Always look deeper, always do your research, and just try to educate yourself. And that’s it.”

No matter what age you are or what motivates you to do what you do, do your research before getting involved with a company, lest you become the anguished scream in the background of a viral TikTok. 

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if you enjoyed this story, read more about how Gen Z is poking fun at the “Millennial girlboss” aesthetic.

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