Jill Dremer He claims to have cracked the code to gain financial freedom.The year was his 2015 and the location was Upstate New York At the grocery store, a 36-year-old mother of two discovered that federal subsidies didn’t cover her kids’ favorite cereal. Revelation followed. Something.As fate would have it, Drehmer found something. LuLaRoea multi-level marketing company that is riddled with controversy today.
of CaliforniaBased in, the brand sells women’s clothing to a devoted fan base. Its pies de resistance are buttery soft leggings covered in quirky prints (everything from butterflies to monster trucks). In theory, this all sounds painfully harmless, right? After all, we’re talking about the pants you bought from someone’s aunt. FacebookRumors have swirled that LuLaRoe has a shady side, but it’s only recently that that seam has been played out very publicly.
last year, amazon prime video announced Lularicha must-see documentary series that exposes the company’s deceptive marketing tactics and illegal activities. pyramid scheme Practice (oops!). Months before the show’s release, LuLaRoe settled a lawsuit with the state of Washington for her $4.75 million. why? It was out front as an MLM, but blatantly violated of the Federal Trade Commission consumer protection guidelines and Anti-Pyramid Promotion Scheme LawThe brand was touted as a get-rich-quick tale, but in reality, the overwhelming majority of its “independent fashion retailers” made little or no money.
For the record, LuLaRoe isn’t the only one battling notoriety and lawsuits. Quite the opposite. The list of controversial MLMs is very long, Amway, herbalife, Primerica more. Unfortunately, people still want to jump on the bandwagon. Mr. Drehmer is one of about 7.3 million Americans who want to taste his dream. direct sales association data.
So what’s the appeal? Why do so many people continue to join MLMs in the face of such massive backlash?
For those unfamiliar, MLMs use a direct selling business model that relies heavily on word of mouth (or, in today’s day and age, Social media). Unpaid distributors sell products and services to friends, family and strangers while also recruiting people to work for them. They then receive a portion of the recruit’s income, directing more and more cash to the top of the food chain.
The legal line between MLMs and pyramid schemes is dangerously blurred, if not completely blurred. Although the FTC is tasked with investigating potentially illegal MLMs, these organizations are largely unregulated unless there is a viable reason to investigate (for example, a large number of formal complaints).
“The government cannot and does not investigate every company that exists,” he said. Hamline College Economist and MLM Expert Stacey BosleyIn other words, “You shouldn’t assume that all MLM companies are legal, because that probably isn’t true.” Are there any red flags that MLM could be an illegal pyramid scheme? The company prioritizes adoption over actual sales, requires upfront investment, and does not buy back unsold inventory.
Autonomy is a big challenge for MLMs, especially since this business model is woven into the fabric of our culture. After all, household names continue to reign in homes across America. Avon When Mary Kay Our makeup bags still have a stronghold, tupperware A staple in our kitchen.
Only famous brands. Thousands of companies have sprung up since his MLM model was established in the late 1800s. and they straddle All categories including beauty, wellness, financial services, home appliances and even electricity. And they bring in big bucks too: a record $42.7 billion in 2021, according to the Direct Selling Association.
Cue Drehmer and her new reality. A loyal LuLaRoe retailer since 2016, she said her company changed her life. Now free of her debts, she has reached the peak of financial freedom. She, for example, bought a new house, complete with an in-ground pool, a separate bedroom for the boys, and a fully stocked boutique that operates like a storefront business. Sounds a lot like the American Dream, doesn’t it?
Unfortunately, Drehmer is one of the few companies to achieve such success. A staggering 99% of independent distributors suffer losses, according to FTC research. Still, that awful statistic doesn’t seem to scare people, saying, “Not everyone who comes into contact with these schemes sees themselves in that 99% of the time.” Jane Marieco-sponsored dreams A podcast that explored MLM as part of its popular first season.
but why? “We want information that confirms our existing beliefs,” asserts Bosley. In this case, that 1% of him shows that he might actually succeed, even if the objective data suggests otherwise. We stick to the idea of being the exception rather than the rule, with the hopes of avid gamblers.
The economic impact of MLMs is spectacular. But just as compelling is the appeal of a tight-knit community. Add in wine nights, star-studded conventions and “free” cruises and you have a very sweet-sounding social life.
take from Jessica HicksonFormer Top Rank Rep for Health and Wellness Companies I can do it“When you walk in, you feel like you want to be surrounded by only those people because love, encouragement, and people lift you up,” she explains. Although it is a thing, there is a possibility of salary.)
Even better, MLM proclaims it’s an escape from the 9-to-5 grind and an opportunity to accumulate wealth on a part-time schedule. We’ve all seen pitches: Be your own boss! Set your own schedule! Work from anywhere! Its charm is attractive and effective.
It doesn’t matter what product they sell because it’s so influential, he says. Amanda Montellthe author of Cult: The Language of Fanaticism“They’re pitching this community, this promise,” she explains.
That is why so many MLM sellers are housewives, college students, etc. “We’re talking about women who want to feel empowered and like they’re interacting with other adults while contributing to the family budget.” It feels even more fraudulent, even cultish, because it makes bigger-than-life, transcendental promises about what to give its recruits.”
the term “brainwashing” It may seem extreme, but it is quite true. “It’s very confusing to see people you love in MLM because sometimes they act normal and sometimes they act like strangers,” he said. Dr. Steve HassanJapan’s leading cult Expert. What many people don’t realize is that this behavior is highly psychological.
“Brainwashing is better understood as a dissociative disorder,” he says. “That is, you have an identity disorder in which you have a group identity to your own identity. The group is programmed to suppress your own conscience, your own critical thinking, your own interests and values. and create a pseudo-identity in the image of the group’s leader.
The anti-MLM movement is gaining momentum online, with thousands of people on Facebook tick tock, reddit and other platforms that seek to dismantle the business model, or at least condemn its existence. Hickson is one of them.her favorite goal Youtube The channel is to “save all current #BossBabes from heartbreak, betrayal and suspicion.”
“The trend for MLMs touting themselves as a method of empowering women is steadily increasing,” explains Marie. “What they are really peddling is self-esteem and personal achievement. They have to pay for lala sessions, conferences, motivational seminars and increasingly parrot it back on social media. You have to spend a lot of time, in a lot of the training materials I’ve seen, these companies encourage you to spend as much time posting about your #GirlBoss goals as they do about their actual product. doing.”
At the heart of the movement is an undying dedication to exposing the exploits of financial and emotional pyramid schemes. To some, his model for this business may sound downright utopian, but these brands have strategically “weaponized the language”, meaning they’re telling people exactly what they want to hear. Mr. Montell said, And they adapt to the zeitgeist. “of COVID MLM has started using more New Age mystical language to talk about holistic beauty and harmony with God,” she adds.
That goes for recruiting strategies as well.former Arbonne The official, who requested anonymity, resigned during the pandemic. Her reasoning? “They started using the pandemic to bring in new people,” she notes. “They’re like, ‘People are losing their jobs. They need this.’ The idea that the profit would be greater was hidden.
Especially in this age of ultimate scammers, it’s easy to dismiss MLM as a cut-and-dry deception (see below). Anna Delby, Elizabeth Holmes, Adam Newman). But it’s not that simple. Money aside, supporters also celebrate a sense of community and individual freedom.
took Timothy Brown, aka “The Avon Man”, joined at age 15 and never left. “My father was an Avon representative, so that sparked my interest,” says the optometrist by day and direct sales by night. “I asked his father to sell it to me so I could buy a car and earn money to pay for the insurance.” I represent “I feel like my dad is alive and still sells through me.”
Or are you in your 20s? Valerin Tavares, whose husband joined Avon to escape his daily work. He got the idea from his parents, who have been in charge for 25 years. After welcoming her first child, she also quit her job to become his business partner to spend more time with her family. The couple bought a house and first family car “on Avon’s salary alone,” but she’s more passionate about what it did for their relationship.
What Tavares describes is, by definition, the American dream. That’s what everyone in MLM ultimately wants. Whether or not it secures a fashionable pink is its own version of success. Mary Kay Cadillac Or you can afford your child’s favorite cereal. What is the risk of failure? For many, they are willing to gamble with their lives. After all, the greater the risk, the greater the reward, right?
Of course, objectively, the chances of getting rich are not in our favor. “Whether we seek spiritual enlightenment, TikTok fame, or success as an Amway seller, we have this spirit of exceptionalism in our country,” concludes Montell. “We think, ‘I know it won’t happen to most people, but I’m sure it will happen to me.'”
Read this article published in the magazine.