Multi-Level Marketing Schemes Are The Friendship Ruiner You Didn’t See Coming

"Use this time to do the personal development you’ve always wanted to do." These are the words not of my therapist but of my childhood friend, who is on Facebook Live from her bathroom in Ibiza, explaining why we should "think positively" to get through the pandemic. On the surface it makes sense – a negative attitude isn't much help in any scenario – but staying on the stream a couple of minutes longer reveals her true intent. "I’m not saying if you’ve got a business, it’s not going to be horrendously stressful..." she begins, and I sigh. She’s trying to covertly recruit viewers into her multi-level marketing scheme, which sells everything from liquid fat burners to weight loss coffee and skincare products, using the language of self-care and self-sufficient girlboss culture. We don’t talk anymore. 

What is a multi-level marketing scheme, you might ask? A company setup which has boomed in recent years, a multi-level marketing scheme – or MLM – is structured so that once someone signs up under you, you become their 'upline', taking a percentage of their earnings. Although it's a topic of much dispute, many consider MLMs to be pyramid schemes, where the business model convinces members to enlist as many newcomers as possible, the only difference being that in an MLM they’re also selling products. The more products you sell, the more commission you make, but the further 'downline' you are, the more people that commission is shared among. The more people you recruit, the more commission comes back to you. MLMs sell clothes and toys, protein powders, essential oils, weight loss supplements and beauty products but, according to a 2018 poll, most participants aren't even close to making the minimum wage.

It’s easy to see the lure of these sorts of organisations. MLMs dangle flexibility and the opportunity to earn money while working from home. They also promise community. For the stay-home mums, military wives, recent graduates and the disabled, an offer to join may sound too good to be true. 

In the 2016 documentary Betting On Zero, director Ted Braun sets out to investigate whether global dietary supplement/smoothie MLM Herbalife is a pyramid scheme. On the surface, the highly-priced nutritional supplement company, which boasted 5.4 million members working across 94 countries, seemed like a great company to become a part of but in 2016 it was forced to restructure and pay $200 million to its members as part of a settlement. It was a business model that forced members to build a downline and purchase products before they were even eligible for income – essentially, members made a loss before they even started. According to the US Federal Trade Commission, the average distributor was earning less than $5 (USD) a month.

With representatives for the same company competing in the same areas and even the same friend groups, market saturation can occur pretty quickly and the effect this can have on friendships and relationships can be astronomical.

Valerie Lysakowski met B on a social work program at graduate school. "We were good friends, [we] got the kids together a lot, I was there for her during her divorce," she tells me. After B gave birth to her second child and struggled to find a job, she joined an MLM to sell nutritional plans from home. Valerie, who struggles with an eating disorder – which B was aware of from prior intimate discussions – was appalled when B tried to recruit her. "When she first asked me to join her downline I said no, that it could be triggering for my eating disorder. She apologised but admitted that she had considered that before asking. She even tried relating to me by sharing some video from her upline who had also suffered from eating issues. She really, really tried to use my history to her benefit."

B kept contacting Valerie and although Valerie knew what her friend was doing was wrong, she didn’t want to cause upset. "I knew in my heart I should say something, but why? It could cost me a friend, even if she wasn't a great one."

After realising that Valerie wasn’t going to cave, B began targeting her friends and family at social events, adding every woman she met at Valerie's son’s birthday party on Facebook. She even reached out to Valerie’s mother and husband. "It strained the relationships with friends the most. Family is family. But friends kept getting messages from her and it made me look like I didn't keep good company. And as the mutual friend, I should have said something. I wish I had."

When it became clear that Valerie’s friendship wouldn’t benefit her financially, B cut her off. "I'd try to get together and she would blow me off. Her life was 100% about her MLM and therefore, so were her relationships."

Nutritionist Josie Naikoi also lost a friendship to an MLM. Three months after quitting as her upline, her best friend of eight years brutally ended the relationship via a long text which claimed she had "tried to ignore [her] negativity, but I just can’t do it anymore." That was three years ago; Josie ended up quitting the company too in 2019. She now looks back at herself during that time with amazement. "I would've never seen this playing out how it did," Josie admits. “Multi-level marketing changes people, destroys relationships and can even wreck lives when people get in too deep." Josie has since posted a video explaining her experience with MLMs.

London Business School’s assistant professor of organisation behaviour, Dr Raina Brands tells R29 that MLMs are hugely problematic. "I think they are at best, dishonest, and at worst totally immoral and should be illegal." She continues: "The companies know that the only people that make money from MLMs are the company's superiors." The members are playing the role of both 'seller' and 'consumer' and despite the two being at odds with each other, members are encouraged to push away doubts. "There aren’t really any other jobs or employers that have to use these tactics, which speaks volumes."

Hearing a friend in an MLM claim "you're not supporting me" is common, and it's an ideology that's pushed by the companies themselves, Brands explains. "[It's] this idea that if people want to support you, then they’ll pay for this product that they probably don’t want anyway, and I can think of no other circumstance in a friendship where we will create that conditionality." Spending $30 on a pair of leggings may seem like a nominal sum for supporting a friend but the more members of a friendship group who get involved in the MLM, the more 'supporting' one will have to do. MLMs are attractive to women from lower socioeconomic backgrounds, and it's easy to see how they can cause financial tension among friends. "If you don’t have many opportunities," says Dr Brands, "when someone comes along and says 'I can make you rich and you’ve got everything you need to succeed' then, of course, that looks very attractive."

Dr Brands notes that the recruitment aspect of MLMs goes against the very nature of friendship. "One rule of friendships is 'when you need me I’ll be there for you' and when you’re kind of pulling on that lever in a way that feels quite icky, you’re using that norm to bring people in and people feel pressured to buy something off you, it is this overstepping of boundaries where tension builds. You are literally pricing the friendship," she says.

So what should you do if you have a friend who's involved in MLMs? Dr Brands says it's important to remember that they are probably mentally tied to their journey. Recovering their initial investment is a huge incentive to keep going. "One way to help people to overcome that bias is to ask them to write down very concretely, 'what if it all goes wrong? How much more will you have lost?' The problem is, your brain is forecasting success. So you need to be counterfactual to talk to your brain."

"You need to make it psychologically safe for people to fail, messages like ‘nobody is going to think worse of you if you pull out now’ and ‘people don’t mind you taking a chance but you don’t have anything to prove’ because I think a lot of it is the feeling of needing to save face, and a lot of that is internal actually. You convince yourself this is your path to economic freedom and success, and the MLMs try to make you feel like a failure if you don’t get there because that’s how they keep you coming back, buying more product and trying harder, so you need to help people unpack that idea that they’re not a failure because nobody wins, nobody succeeds in these endeavours."