A Psychotherapist talks about MLMs - part 3

Modern Incarnations and What To Do About It

In this article, I continue my exploration of MLMs following on from part 1 and part 2.

Have MLMs changed the way they operate to stay relevant today?

Over their many decades of operating MLMs have always been quick to embrace new forms of communication technology - email, websites, social media, Zoom, etc. to ensure they are part of modern conversations and can benefit from any efficiencies.

So in our internet age, rather than just targeted in-person recruiting, it might take the form of shotgun-style spamming of all their Facebook or Instagram contacts, sliding into your DMs with messages dense with emojis and breathless excitement regarding a new opportunity that is transforming their lives and how they’d like to share the joy with you, ‘dear friend’.

But the real core of how they work is unchanged since it exploits our evolved human emotional wiring and psychology. So they make very sure they ‘don’t fix what isn’t broke’ from their point of view.

How can you tell if someone is in an MLM? Is someone selling me Tupperware part of a cult since that seems kind of fine?

Yes, Tupperware is an MLM corporation so they are part of the problem. Sure, the products are actually decent quality although rather expensive for what they are. This is true of most MLM products and it’s not an accident. If you can’t easily make money selling the product due to the high price, you’re more incentivised to recruit. It’s not the products, it’s the structure that is the problem.

So please buy your plasticware through normal retail channels. You’ll both save money and you won’t be enabling an MLM corporation.

Devil's advocate time: Some people seem to do really well out of these. So maybe it works for some?

Well, firstly, part of MLM culture is pretending you’re wealthier than you really are on social media. That said, if you are one of the lucky few to get in early and recruit a big downline, you can make lots of money in an MLM.

There are also only so many profitable spots up near the top so competition is fierce and often involves pushing any rivals out. This is why so many MLMs are started by people from high up in other MLMs who realise that the best way to get the big money is to start your own one.

But you can’t stay in denial about the fact that all those people below you are being deceived and exploited and that leads to a confrontation with shame. Many women who rise up and make money in MLMs often quit and stay quiet due to the incredible guilt they feel for having harmed so many fellow women.

Speaking as a psychotherapist, to stay in and climb the ranks, certain less palatable psychological traits are an advantage. Ideally, you need to be able to exude charm, flaunt luxury brands, lie with impunity, and knowingly prey on the vulnerable with little or no remorse. A certain psychological shamelessness. I’m not saying you have to be literally psychopathic to ascend in MLM hierarchies, but it probably helps.

Are there any examples of MLMs that I think are particularly compelling or interesting?

I personally find MLMs compelling and interesting in the same way that watching a snake devour a hapless rodent is ‘interesting’ - it's awful and grotesque yet I can’t bear to look away. A lot of people think that MLMs are maybe ‘not great’ but it seems many don’t realise just how bad they really are:

I think MLMs are often amoral predatory corporations that farm the vulnerable, squeezing and sucking money out of them into their ravenous stomach from behind a glitzy camouflage of carefully crafted and deceptive marketing.

Sure, the ones that are so predatory that they overstretch their political protection and attract government action are compelling to watch but largely because you get to glimpse the raw sickness behind their benign facade.

So there is the 2021 Amazon documentary series called LulaRich which explores the clothing MLM LulaRoe that was indicted as an illegal pyramid scheme by the Washington state Attorney General. Before that was the 2016 documentary ‘Betting on Zero’ which covered the multi-year battle between supplement MLM Herbalife and hedge-fund manager Bill Ackman which resulted in them ultimately being investigated by the FTC. The documentary clearly stung Herbalife so they have their own website where they smear the documentary makers.

What I find particularly shocking is that Lularoe and Herbalife are still operating today. MLMs just treat any government attention as a cost of doing business. They will just pay the fines, settle any lawsuits or class actions for a pittance, make some superficial changes and keep on doing exactly what they’ve always done - farming the vulnerable.

More recently, in April 2020, the FTC sent warning letters to 10 MLM companies telling them and their representatives to stop making unsupported claims that their products could treat or prevent COVID related illness as well as expressing concerned about similarly unsupported claims about the earnings people could make by joining these MLMs after having lost jobs or income due to the pandemic. Before that, some were targeting people with cancer.

What this all highlights is how staggeringly profitable the MLM corporations themselves are. In 2019, their collective profits were US$39 billion. Wall Street and even Warren Buffet love them which Bill Ackman discovered to his horror and at great expense. While MLMs claim to epitomise the American Dream, they are a uniquely American Nightmare which is unfortunately being exported all around the world. You don’t have to take my word for how bad they are either. The Dream podcast series tells it like it is.

Speaking as a psychotherapist, what is my advice for someone that has a friend or family member in an MLM?

How do you try to communicate that they're probably about to lose all their money? There is probably pressure you feel to actually help by buying some of it - because you can see how desperate they are!

I’ll keep it simple and give you a pair of dos and a pair of don’ts.

• Don’t buy from them, even out of pity. I know this is tough. Any money you pay them will just flow back to the MLM and ‘feed the beast’. It may also give them false hope and keep them in longer. And the longer they stay in, the more money they will lose. MLMs know that pity purchasing works and they are psychologically manipulating you as much as their MLM member victim.

• Don’t criticise them or the opportunity. They’ll just filter you out. MLM members are pre-emptively coached to expect ‘haters’ and to disconnect from them. This only serves the MLM by isolating them more and increasing the shame. So keep that connection and be calmly curious. If you’re lucky, your friend or family member will be in the half who quit in the first year. It’s those who angrily withdraw from others that end up staying in and double-down, ‘garaging’ and borrowing to ward off that shame that they have no-one else left to process it with.

• Do encourage them to track their money. And I mean all of it - income and expenses, even if it’s just in a simple spreadsheet. The conferences, training resources and workshops, petrol, self-purchases. That net profit redefinition that MLMs all use ignores personal expenses. It’s that simple. When you factor in all the expenses in money, time, and energy - the numbers will tell the story.

• Do support them when they leave. They have some grieving to do. Make sure they know that it wasn’t them. And that it wasn’t the product either. Ideally, the numbers should have shown them that the whole MLM structure is deceptive, corrupt and ‘farms the vulnerable’. They were someone with good intentions and modest expectations who got exploited by a predatory master manipulator. It can and does happen to many of us. Empathy, compassion, and connection are the true antidote to shame. Kia kaha!