In an era characterized by entrepreneurship and self-starting ventures, the allure of Multi-Level Marketing (MLM) companies often proves irresistible to many job seekers. MLMs promise individuals a flexible work schedule, financial independence, and the chance to own their own business – an offer that, on the surface, seems attractive and too good to pass up. But beneath the gleam of these seemingly ideal work conditions lurks a troubling reality.
The Problem with MLMs
MLM companies operate on a questionable and ever-shifting business model with a few red-flag hallmarks;
- The job-seeker is required to make a purchase upfront
- The pay structure is confusing
- The interview feels like a sales pitch
Typically, MLMs will create fake job postings that advertise an opportunity to earn a high-income with no experience required. The job description will be sparse or missing altogether, and the next step in the hiring process will be a “group interview” (sales presentation). The goal of the sales presentation is to convince job-seekers to spend money. This recruitment process forms multiple layers (or levels) within the company’s structure, which gives MLM its name.
During the presentation, the host will advertise the products or services provided and make a philanthropic statement describing the product’s positive impacts in people’s lives. They may also briefly inform the job-seeker that the job opportunity is commission only and requires job-seekers to sell these products and services to people. Often times, the “commission only” part is presented at the end and is framed as an “opportunity to own your own business”.
Who Pays Who?
Consider the following two statements;
- A job-seeker seeks employment and interviews for a sales executive opportunity
- A sales executive sells an employment opportunity and interviews a job-seeker
The true revenue stream for MLMs is derived not from the sale of the actual products but from the fees and purchases made by each new recruit, creating a pyramid-like structure.
This model is fundamentally flawed and often disproportionately benefits those at the top tiers at the expense of those at the lower levels. This translates into the vast majority of individuals in MLMs not only failing to turn a profit, but often ending up with financial losses. According to the Federal Trade Commission, more than 99% of MLM participants lose money.
In addition to fake job ads promising lucrative income and flexible working hours, MLM companies will often employ manipulative marketing tactics that downplay or ignore the financial risk involved. In reality, success in MLM companies often involves deceitfully recruiting more participants rather than selling products. This can result in an endless recruitment cycle, where new recruits must bring in more participants to recover their initial investment, pushing many into an unsustainable financial position.
In addition to the financial danger, MLM companies often foster a harmful culture that lacks diversity, equity, and inclusion. The relentless focus on recruitment and sales can create an environment where participants are encouraged to exploit personal relationships for financial gain. This usually manifests as in-group recruiting, where new participants target family members and people with similar religious beliefs or ethnic backgrounds. Furthermore, the pressure to recruit in MLMs more often falls on entry-level participants who are the most vulnerable and marginalized members of their communities, further deepening socioeconomic disparities.
As an organization committed to promoting diversity, equity, and inclusion, it is important for us to bring awareness to these harmful business models. True job opportunities should offer fair wages, clear role descriptions, and solid opportunities for growth and development. They should contribute to a healthier society, not compound existing inequalities.
Job seekers must exercise due diligence when evaluating employment opportunities. Be wary of “opportunities” that require you to make an upfront investment, focus primarily on recruiting others, or lack a clear description of job responsibilities. A legitimate job will not require you to pay the company, but instead, they should be paying you for your time, skills, and labor.
In conclusion, while MLM companies may present themselves as appealing employment opportunities, it is crucial to look beyond the polished surface. Job seekers deserve genuine employment opportunities that offer not only financial remuneration but also personal growth, security, and a sense of dignity and respect in their work.
