Direct Selling Australia, the national trade association, estimates that between 77 and 95 per cent of consultants working for MLM are women.

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By now, you can probably sense that I’m not the biggest fan of multi-level marketing. That’s not because I don’t like the product categories listed above, don’t support women achieving financial independence, or want to see more women in the workforce. Because I don’t like the story painted by research, data, countless lawsuits and testimonials from people who have left predatory MLMs.

LuLaRoe co-founder Mark Stidham says the model of having women work for non-guaranteed wages is literally the foundation of his riches, or in his words, “If you want to create incredible wealth, identify an underutilized resource. And there’s an underutilized resource of stay-at-home moms.”

According to the documentary, in 2017 LuLaRoe had approximately 80,000 consultants and generated approximately $2 billion in revenue. But the buy-in for consultants was between $5,000 and $10,000 and the average monthly profit was estimated to be only $120.

At the same time, Stidham and his wife (co-founder DeAnne Stidham) were seen flying around the world in private jets and living in multi-million dollar luxury properties.

In Australia, the MLM industry is estimated to have a turnover of $1.4 billion, with approximately 500,000 people working as salespeople or consultants. While not all MLMs are the same and not all use the same tactics, the lack of transparency regarding structures, goals, incentives, and actual compensation is enough to warrant criticism.

According to Queensland University of Technology researcher Associate Professor Deanna Grant-Smith, most people who work for MLMs generally have no experience in sales or the business sector before being recruited.

In a work from 2022 Looking across the industry, Grant-Smith and other researchers found that MLM consultants fall into four groups: confident self-doubters (39 percent), self-aware seekers (27 percent), aspirational devotees (18 percent ). , and the Prudent Appraiser (16 percent).

According to research, the most common group of people who join MLMs – self-doubters – lack confidence in their financial literacy and are unlikely to do research on an MLM before joining.

Maybe that’s why they’re willing to take a job where they literally pay to become an employee and enter an industry where it’s expected that only 1% of consultants make a profit.

Earlier this year, the Rural Freedom Movement, an MLM that sells machines that promise to electrolyze tap water, came under fire after former salespeople went public with their experience.

In addition to selling a $6000 machine that is not supported by peer-reviewed scientific studies, the sellers were also forced to buy their own model. A former agent he told ABC that she was offered a loan to help her afford it, but it came with an interest rate of about 25 percent.

When she began to struggle to make sales, she was encouraged to spend more, this time to access self-promotional “masterclasses” from other distributors within the same company (also known as peers).

Many MLMs also entice customers with flashy bonuses like new cars or trips abroad for top performers, but rarely any transparency about how much those top earners earn or disclosures — say , for example, that the car is on a payment plan. or that the vacation is actually a conference the employee paid to attend.

Call me crazy, but no job should have structures so confusing that employees don’t fully understand how much they’ll earn in base pay.

While losing someone to the cult of an MLM can be the death of your friendship or put a serious strain on your family, any criticism should be saved squarely for those at the top.

These people adamantly encourage others to monetize their personal relationships, all to get rich. Even when the products are good, it’s enough to turn most people off.

Victoria Devine is an award-winning retired financial advisor, best-selling author, and host of the #1 Financial Podcast. 1 from Australia, She is on the money. Victoria is also the founder and co-director of Zella Money.

• The advice provided in this article is general in nature and is not intended to influence readers’ decisions regarding investments or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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