Mary-Kay? Lularoe? Monat and Arbönne? These are the names of some popular “network marketing” opportunities you’ll be approached by through your social media DMs. So, is that girl you vaguely knew in high school reaching out because she really thinks that you’d be best for this “incredible business opportunity”? Or is there a self-serving intention behind recruiting you to be another “girl boss” on her team?
Pyramid schemes are silent scams that hide in plain sight of the average aspiring entrepreneur, draining the bank accounts of thousands on the promise of “making your own hours” and “working from home.” While flaunting its glamorous exterior to motivate unsuspecting victims into joining, this unsustainable structure is nothing more than your average scam.
To avoid potential new recruits from detecting the unstable business they’re reeling you into, these pyramid schemes have recently begun labeling themselves with synonymous terms, such as “Multi-Level-Marketing” or “Network Marketing.” Regardless of titles, the deceptive, ineffective structure remains the same.
Consultants of these companies primarily focus on recruiting new sellers, earning a portion of the profits of every sale by a person they’ve recruited to their “downline.” This fosters success for those at the very top, (see the pyramid?) but leaves the average bottom tier seller with little to no income. This may seem like a good idea on paper until you consider that the world population is finite. Upon expansion of the company, new sellers will inevitably run out of people to recruit or to sell their products to. This leaves them stuck with an overload of products they’ve already purchased but are unable to sell.
These schemes have robbed optimistic, aspiring entrepreneurs out of millions of dollars collectively. In fact, the loss rate for multi-level-marketing businesses is at least 99%. This means approximately 1% of “girl bosses” have earned an actual profit.
A few key indicators that you’re dealing with a pyramid scheme include:
- Your income relies more on recruiting other sellers than selling products to consumers.
- The company requires you to make an initial investment in buying their products to sell.
- Utilization of social media to contact you, making it appear as if this is a “special opportunity for YOU” when in reality, the recruitment of their downline earns THEM more monetary success.
- Consultants are trained to have an active and lavish social media presence, reflecting the façade of success (often buying followers to do so). The goal is to inspire the following thought process: “If this business has made them this successful, maybe I can find success in it too!”
- Often offer enticing rewards when hitting certain sale and recruitment milestones (trips, cruises, cars, etc.) which are almost always accompanied by some kind of catch.
Monat and Mary-Kay are both known for “giving” their consultants Cadillacs after achieving a specific number of recruitments and sales. However, if you should fail to meet their quota after being awarded the prize car, the company no longer funds payment of the vehicle that is now registered under your name. You do. Now you’re financially responsible for a car too expensive for you to handle. This is a part of why so many people have found themselves in debt at the hands of these companies.
As pyramid scheme popularity skyrockets on social media, people are beginning to educate themselves on the topic. If you’re interested in getting involved with a particular organization and are questioning the validity of a company, this website makes it as simple as typing in its name.
An opportunity to use social media to build your own business and develop a network with fellow entrepreneurs sounds like an absolute fantasy. But after close consideration and research, you’ll find that’s exactly what it is: a fantasy.
Although it’s easy to get absorbed by the excitement of a potentially life-changing opportunity, it’s important to conduct extensive research before investing your time, energy and money. And remember, if an offer sounds too good to be true, it probably is.