June 15, 2024

Tricia Oak

Business & Finance Excellency

The women quitting multi-level marketing schemes

“It felt so taboo and so secret, like if anyone found out we were having this conversation all hell would break loose.”

Nicola reclined on a lounger, feeling the warm sun soak into her skin. It was September 2020 and the now 27-year-old was on holiday in Rhodes with a group of her colleagues. As Nicola sunbathed next to her friend Tash, they discussed their jobs and the company they both worked for. “I don’t think I can do this for the rest of my life,” Tash, now 24, confessed quietly. Relief flooded through Nicola. She’d been thinking exactly the same thing. This wasn’t how it was supposed to feel.

The women’s roles as “independent travel agents” had been sold to them as dream jobs

The women’s roles as “independent travel agents” had been sold to them as dream jobs, promising them the opportunity to run their own businesses, work from anywhere and travel the world. In reality, things hadn’t panned out that way and they were both ready to quit. The thought of actually doing so, however, was daunting. Some jobs are harder to leave than others.

What even is an MLM?

Nicola and Tash were part of a multi-level marketing company, commonly referred to as MLMs. MLMs are often associated with pyramid schemes, but – unlike pyramid schemes – MLMs are legal as their business model involves selling a product. MLMs enlist recruits, who aren’t paid a salary but instead earn commission on their sales. MLMs incentivise members to enrol other people into the business by offering them a cut of their recruit’s commission, too. This route tends to be more lucrative than actual sales.

MLMs incentivise members to enrol other people into the business

MLMs, also known as “direct selling” or “network marketing” companies, have a reputation for peddling lunchboxes and make-up, but the sector is evolving rapidly. Over recent years, organisations have popped up that dabble in everything from booking holidays and selling broadband to exchanging foreign currency.

Nicola was unhappy in her job at a call centre when she was recruited into an MLM in 2019. She was 25 at the time and had noticed a new Instagram follower commenting on her photos. Soon, the stranger slid into her DMs, telling Nicola all about what she did for a living.

“The way she sold it was incredible,” Nicola says. “You can travel, earn money and break free from the mundane 9-5, something I was desperately craving at the time. I was the perfect candidate for this scam act.”

“She had to sign up for a monthly direct debit of £46 to keep her account active”

Nicola decided to join, seeing this as an opportunity for a new side hustle. She paid an initial fee of £142, which the company told her covered insurance and credentials, including the travel exams she’d have to take. She then had to sign up for a monthly direct debit of £46 to keep her account active.

This is a common route into MLMs. According to the Direct Selling Association (DSA), there are 631,000 direct sellers in the UK, 96% of whom are women. During the pandemic, membership has surged as people have grappled with job insecurity. Companies surveyed by the DSA reported a 32% average increase in turnover in the first quarter of 2021.

the women quitting mlms

Ilka & FranzGetty Images

What happens when you actually join an MLM?

Unfortunately, people rarely make a living from these unsustainable schemes. Not only do members only earn anything if they successfully sell products or sign up new recruits, they normally have to pay to join in the first place. Initial fees can range wildly, with some companies offering welcome kits for as little as £10, while others – like the one Nicola joined – charge triple figures.

Jen, 39, joined a cosmetics and skincare MLM in January 2020, when she was seven months pregnant. She paid £49 for a “starter kit” of products to sell, which included some of the company’s most popular items like lipstick, face masks and hand cream. Between giving birth, caring for her newborn and the beginning of a global pandemic, Jen dedicated little time to selling products.

In April, Jen was warned that her account would be deactivated if she failed to put any orders through. She scraped together £150 of sales by roping in her friends and family. A few months later, Jen was promoted to the position of Area Manager. Although this wasn’t a salaried role, she’d earn additional commission from the sales of the seven team members she managed, equalling around £200 extra per month. She found out after accepting the promotion, however, that she would only receive this money if she personally sold £600 worth of products every month.

“After 15 months, Jen calculated that she had actually lost £1,500”

Struggling to meet this target, Jen started buying more and more items for herself, spending up to £300 a month. After 15 months, Jen calculated that she’d actually lost £1,500, despite the extra income from her team. She looked at the beauty products piling up around her house, realising where that money had gone.

A 2011 study concluded that 99% of MLM members lose money. Later research into USA-based MLM participants found that 74% failed to make any profit. But losing money isn’t always enough to convince people to leave.

As they sat on their sunbeds, Tash and Nicola felt guilty for even discussing the prospect. They looked around at the colleagues they had come on holiday with, feeling ashamed of disappointing these people who had become their friends. They thought of the teams of almost 80 people they had recruited between them to earn extra money. Could they abandon the same women they had persuaded to join?

Shamed for wanting to leave

MLM members are often made to feel ashamed of thinking about leaving. “I felt I was letting people down, which was a horrible feeling,” Tash says. “These companies are really hard to leave as they rely on a huge amount of people to be in them in order for there to be a profit [for the company]. You will often hear things like: the only way you fail in network marketing is if you leave.”

“It’s very hard for people in MLMs to find anyone to talk to about wanting to leave”

Jess, 28, is an anti-MLM campaigner and host of the podcast HUNcovered. She says Tash and Nicola’s experience is common. “It’s hard for people in MLMs to find anyone to talk to about wanting to leave, because [members] can be obsessive about surrounding themselves with positive people. In their minds, the positive people are in the MLM.”

Jess became an anti-MLM campaigner after her own troubling experience. When she joined a skincare business, she was immediately added to a WhatsApp group with other members. Jess was explicitly told not to say anything negative about the company or its products. “There’s nowhere you can go to raise any concerns,” she says.

Leaving can mean risking both new and old friendships

Most MLMs connect their members in the same way, adding them to WhatsApp and Facebook groups, and encouraging them to attend weekly, or even daily, calls. Like Tash and Nicola, some become close friends. And leaving can mean risking both new and old friendships. Jen recruited one of her close friends into the company she worked for. Although they’d known each other for over 20 years, when Jen quit, her friend turned against her, unhappy that Jen had left. They haven’t spoken since.

Members can also become reliant on new friendships, as being part of an MLM can isolate them from their real friends and family. Although Jess knew the company she was joining was an MLM, she was unaware of the sector’s reputation and saw this as an opportunity to be her own boss. Her partner, however, was sceptical and warned her not to join. When Jess voiced these concerns, the woman who recruited her called him unsupportive and said he wanted her to fail. “They plant that seed in your head,” Jess says. She believes that the company was deliberately turning her against anyone who expressed doubt about what she was getting into.

the women quitting mlms

Florence OgramGetty Images

As awareness of the problematic nature of MLMs grows, Jess warns that companies are devising new tactics to disguise their business models, like inventing new names for it. “Influencer marketing” is one that has recently emerged. Tash was never told the company she was part of was an MLM and she believes this is because of the “negative connotations” attached to the label.

A key red flag is earning more through recruiting others than selling products

A key red flag, Jess warns, is earning more through recruiting others than selling products. Often the recruiting side of the business is kept quiet until new members have actually joined, at which point they are told that it is how they can make “the real money”. To avoid signing up to an MLM in the first place, Jess advises caution when it comes to unsolicited messages on social media, particularly if they include invasive questions about your income.

When Nicola and Tash returned from Rhodes, they finally worked up the courage to tell their mentors (senior members of the company) that they were leaving. Both their mentors tried to persuade them to stay. Tash recounts one of the messages she received that said: “I’m surprised you are willing to walk away and turn your back so easily.”

Despite this, the women emailed the organisation’s head offices to end their memberships, cancelled their direct debits and removed themselves from the various WhatsApp groups. “When I left I felt incredible, like a huge weight was lifted off my shoulders,” Nicola says.

“If your gut is telling you that you should leave, please listen to it,” Tash empathises.

“Just leave,” agrees Nicola. “Do not approach your mentor or tell anyone in your team that you are going to leave because they’ll persuade you to stay and will make it harder for you. Reach out to your family or friends so they can help you.” Tash suggests formally cancelling your membership and payments before telling your team that you have left.

Tash says that most of the friends she made at the company have now blocked her on social media. “It was a huge shock, but I fear when you are so consumed by the business, as I was, you can’t handle when others say something negative. I’ll always be here if they have a change of heart.”

“I was brainwashed so to be able to think clearly again is priceless”

Earlier this year, Tash and Nicola returned to Rhodes and spent the summer there. As they sunbathed on the island again, they reflected on how much their lives had changed since the last time they were there. The women are now teaching English online, a job that provided the steady income and the freedom to travel that they’d been searching for.

“I was brainwashed so to be able to think clearly again is priceless,” says Tash. “Honestly I’ve never felt so free since I left, which is ironic as all I wanted from the business was freedom.”