In my files is an unpublished article written about five years ago. I described the surreal experience of constantly encountering or personally overhearing MLM recruiting soliictions, being personally told tragic and dramatic MLM stories by all sorts of people, and observing MLM’s footprint on individuals and communities almost everywhere.
“Wherever I go,” I wrote, “I hear it, like a repetitive, droning, whispering sound. At Starbucks the sound is distracting and intrusive. In grocery stores, customers are chatting in the aisles but not about shopping. It is the ‘sound.’ In the cubicles and break rooms of office buildings, at restaurant tables, in fellowship halls of churches, and always at parties. I often can’t discern sentences, only the telltale terms – exciting, opportunity, invite, dreams, believe, income andunlimited, code words that seem commonplace, but to the confidants are infused with profound, evocative and specialized meaning.”
In bizarre contrast, I also noted that this ubiquitous cultural phenomenon was almost never mentioned in the news media. MLM’s multi-billion-dollar financial impact on millions of individuals year after year was not only unstudied, it was not even acknowledged. The social disruption of family and friends was not reflected in TV drama, movies or music. There was no “Death of a Salesman” story in theater about the pathos of MLM. Though millions were investing billions every year, the MLM industry was invisible in the business news, ignored by the financial planning community and not studied in universities. Even when a major hedge fund expended millions to expose one of the oldest and largest MLMs as an illegal pyramid scheme, the financial press did not see a need to investigate MLM’s realities but frittered away its coverage on personality pieces.
My perceptions of MLM’s intrusive presence are not imaginary. Nearly eighteen million American households quit or get recruited into MLMs every year. These recruits and losers carry MLM’s solicitations and their sad experiences wherever people reside, work, socialize and worship. MLM literally is everywhere. The candidacy of Donald Trump, the most famous of all MLM promoter/endorsers, elevated MLM’s presence above Main Street and Wall Street right into the highest office in the land. Though his deep involvement in MLM was referenced in the press with some implication of scam attached to it, it did not trigger an inquiry into MLM itself.
MLM Shift Follows Fate of Cigarettes
This all seems to be changing now. The reality that for years only a few independent and courageous writers, bloggers, attorneys, whistle blowers and web publishers dared to say and for which they were often sued, ridiculed, or physically threatened is now being said out loud by institutional voices – journalists, culture critics, tv and movie producers and academics.
For decades, toxic cigarettes were deceptively described by the promoters and mindlessly echoed in the media as cool, sexy, and enjoyable. Then, suddenly smoking was revealed and condemned for what it actually is and always was – medically lethal, socially obnoxious, and physically addictive. A similar radical shift in public understanding is beginning for “multi-level marketing.”
For the precise moment that the shift began, I would cite November 7, 2016 when the satirist and comedian, John Oliver, dedicated an entire segment of his HBO show, Last Week Tonight with John Oliver, to speaking the unspeakable truth – that ALL multi-level marketing enterprises are essentially one and the same scam. In just 30 minutes, Oliver debunked the myths of MLM as “direct selling” and “income opportunity.” He presented Nu Skin’s own disclosure showing that 95% of its “distributors” received zero income. He revealed the absurdity of MLM claims to be based on product “sales”, exposed the enormous scale of its layered deceptions, skewered its absurd health promotions and pilloried the outrageous dishonesty of MLM executives. The CEO of Herbalife, Michael Johnson, was hilariously shown jumping around on a stage and literally wrapping himself in a Mexican flag as he unscrupulously promised hope-filled Mexican recruits that he could make them all rich and happy – knowing that more than 99% of all Herbalife recruits lose money, every year. Oliver called Johnson’s predatory antics, “douchebaggery at a double black diamond level.”
John Oliver broke the barrier to say the unspeakable: MLM – meaning any company identified with that model – is synonymous with pyramid scheme. The YouTube of that John Oliver show has been viewed over 17 million times, with a Spanish language version gaining another 2.5 million viewers. Once Oliver broke through to acknowledge what others knew – but would not say – it seems that a gate opened. For years the news media genuflected to MLM “millionaires”, went along with the pretense of “direct selling”, expressed awe at MLM “growth”, and did not fact-check MLM concocted “income statistics.
But suddenly the entire business is being cast as financially entrapping and socially harmful. The MLM model and its claims and tactics are being cited as the calculated cause of consumer losses. Blame-the-victim is shifting to blame-MLM itself. The “winners” are being depicted no longer as “entrepreneurs” but as scam artists. Recruiters are depicted as brainwashed and sometimes dangerous nuisances.
The news narative shift started the very day after the Oliver show. Newsweek magazine wrote, “… the primary way MLM distributors earn money is by recruiting their friends and family to be distributors as well, and then convincing them to recruit their friends and family to do the same. The result is a kind of pyramid …”
Time Magazine wrote, “Oliver believes that these (all MLM) companies’ business models look very similar to pyramid schemes and according to at least one Youngevity saleswoman in a corporate video, it is a “pyramid scheme thing.”
Even the Wall Street Journal, in quoting Oliver, was able to say what its own writers never did on their own or even dared to repeat when I and others explained it to them – that it’s not just that some MLMs are pyramids; it’s the model itself that is a pyramid scheme. “Are multilevel marketing companies actually pyramid schemes? John Oliver believes so,” WSJ reported.
It could be argued that the Netflix documentary, Betting on Zero, was the force that shifted the tide. As the first documentary film in which MLM was featured and examined it clearly played an important role. But focused mostly on just one MLM scam, Herbalife, and the Wall Street war over its stock pricing, the film’s greatest contribution to the shift was to provide dramatic content to support Oliver’s deeper truth-telling. Before Betting on Zero there were the research, advocacy efforts and publicity generated by hedge fund manager William Ackman who lost nearly a billion dollars trying to get the FTC to shut down Herbalife. Much of his research was built upon the earlier class action lawsuits against Herbalife and other MLMs such as Omnitrition and NuSkin brought by attorney Douglas Brooks.
The chain of actions, truth-telling and exposures go far back and include many long-forgotten individuals, just as the research and advocacy against cigarettes did before the public at large realized its horrific harm and how the tobacco industry was profiting from inflicting fatal illness and life-long addiction.
Oliver’s comedy has been followed by a June 12, 2019 devastating 8-minute blast against “MLM” by comedian and political commentator, Samantha Bee. The YouTube of her truth-telling has already been viewed more than 650,000 times.
Comedy aside, ground-breaking research into MLM’s sordid and largely untold history and its dirty record of corrupting government were provided in a remarkable 11-part podcast produced by Dann Gallucci and Jane Marie, called The Dream. Over five million have listened to it.
The recent BBC documentary by Ellie Flynn, called “Secrets of Multi-Level Millionaires” went where even the Oliver show did not, exploring the cult aspect of multi-level marketing, its psychological addiction and the dangerous tools of persuasion that MLMs use to entrap, control and defraud millions of people. The tone of the documentary is ominous, reflecting the dark realities behind MLM’s utopian façade.
More documentaries are now in the works. Books will follow. And in the arts and entertainment world, MLM is finally breaking through as a disruptive and, if not tragic, a farcical force in daily life. The hit comedy series, Schitts’ Creek has a brilliant and revealing episode of MLM as a seductive scam and a calls it out as a pyramid scheme. George Clooney is involved as a producer of a new series on Showtime, entitled, “On Becoming a God in Central Florida” with MLM at the center of the drama. Kirsten Dunst plays a young woman in the 1990s who, “entrenched in a scheme to turn quick investments into life-changing money, she begins to ensnare everyone from her boss to her co-workers to some other ambitious would-be billionaires.”
Jason Alexander, famous as George in the Seinfeldcomedy series will soon be playing what is described as the head of a “weight loss tea pyramid scheme “ in a new satire titled, “Faith Based.”
Some have pointed to the flood of MLM solicitations on social media as the spark that ignited the awakening. The recent “Anti-MLM Coalition” that emerged in the UK is providing a voice for the true experiences and realities of MLM participants – loss, disappointment, betrayal and sometimes ferocious anger.
The inundation of social media might be a contributory factor, but MLM has been known for decades for invading and commercializing private, even sacred, areas of life and for training millions of people to abuse the trust of friends and family. Also, MLM is hardly the only negative force that is ruining social media.
When the findings of science on deadly effects of nicotine and tobacco became more widely known, the tobacco companies joined forces and developed a sophisticated PR campaign, led by the PR firm, Hill and Knowlton. The campaign sought to create doubt about scientific facts, to discredit critics and scholars, suppress news and media inquiries, and to blame the victims for their illnesses. Hill and Knowlton also intensified tobacco lobbying to subvert law enforcement. The campaign was successful, for awhile. Despite growing awareness of the harm of cigarettes, per-capita consumption of cigarettes in the USA rose from 3,344 a year in 1954, when the dis-information campaign was launched, to 4,025 in 1961, the highest ever.
MLM has been running a similar dis-information campaign for at least 25 years, when my book, False Profits, was first published and other whistle-blowers and web-publishers emerged and class action lawsuits began to be filed. During this time, the MLM industry – with some MLM companies turning directly to the tobacco-campaign expertise of Hill and Knowlton – has sought to marginalize consumer watchdogs and critics as “anti-MLM.” It has attacked publications that ran investigative articles. It has abused the court system with SLAPP lawsuits (meritless cases to harass critics and financially ruin them with legal fees.) It has created false distinctions between “MLM” and “pyramid scheme” and published absurd data on “income averages.” Most significantly, it has intensified its “blame the victim” narrative. MLM now claims that the “losers”, despite being offered the “greatest income opportunity in the world”, didn’t even try for the income but only wanted “discounts” on MLM’s products. (No explanation is offered for why most recruits quit buying and abandon the schemes completely within a year or less.) MLM has also massively increased its influence on government, succeeding in getting Amway’s Betsy Devos into the presidential Cabinet.
The cigarette industry’s false propaganda extended its reign of disease and addiction for three more decades, but as the truth spread on Main Street, despite the dis-information, by the 1970s in the USA a sharp decline in smoking began. It accelerated year by year. Today the per-capita consumption is about 1,000, a 75% drop in the USA. To compensate for the loss, the industry launched a campaign to addict and sicken people in other parts of the world and to focus on younger people. China’s average consumption per person is now double that of the USA. About one in every 3 cigarettes smoked in the world is smoked in China.
Following suit, MLM has already shifted to China, which now has greater volume than the USA. The USA, which invented MLM is now just 18% of global revenue. Total revenue claimed by the MLM industry for the USA was lower in 2018 than two years ago. Perhaps one other indicator of what’s coming to MLM are the stock prices for large MLMs. Herbalife’s stock price is down 50% from its high just this year, Usana 53% and NuSkin 52%. Avon tried to maintain true direct selling until the early 2000s but then adopted MLM. Recruiting added revenue briefly, then it fell off a cliff. The company sold off its North American business and recently announced it would be acquired by a Brazilian MLM. Meanwhile, its stock value has dropped over 70% in the last five years.
Amway, the largest and oldest of all MLM and the prototype of everyone of them reports that its global revenue is down 25% over the last five years. Amway’s revenue surged when it entered China, but now it has no new countries to exploit.