Pyramid Scheme
pyr·a·mid scheme noun
-
a form of investment (illegal in the US and elsewhere) in which each paying participant recruits two further participants, with returns being given to early participants using money contributed by later ones.
We’ve all heard the term, seen the memes and much else. If you’re in college, it is more than likely you’ve also encountered multiple pyramid schemes or multi-level marketing organizations. From LuLaRoe to Pure Romance to Herbalife and so much more, there are numerous reasons why these organizations are dangerous and create a false sense of security.
Multi-Level Marketing groups, much like pyramid schemes, are set up that distributors purchase a starter kit from the chosen company. From there, these people, more often women, are asked to sell the products and recruit more distributors underneath them. The more people you recruit and have to join your team, the more money that you will make (or that’s what these companies want you to believe)
They Are Harmful to Women
From the inception of MLMs, they have always been focused on women. Many of these companies pride themselves on the ‘work from home’ ideology. Not only is it attractive for those that are stay-at-home-moms, but many of the companies also come with hosting ‘parties’ and give them a reason to leave the house. When it comes to recruitment, many women also rope in those that are in a similar situation to their own. It plays on the mentality that if she can do it, so can I.
According to the Direct Selling Association, 75% of people in a pyramid scheme are women. Along with this, comes the false sense of relationships and love. Many of us have been subject to an over-cheery ‘I miss you, how are you!’ message from someone that we haven’t heard from in years. Checking in is awesome, but messaging me to check-in and then attempting to sell me something is not. This is how it works, more often than not, unfortunately. Many women, like stated in this article, are subject to cold messaging. Which is an attempt to message someone, oftentimes friends-of-friends, and first mention a post of theirs or how pretty they are (as an attempt to come off as friendly) and then tell them they have a product that they would just LOVE. However, in addition to cold messaging, we are now seeing an overkill of Instagram and Facebook posts and stories. Which in both cases are turn-offs from trying such products.
Many women are then asked to put anywhere from $100 to $700 down for a ‘starter kit’. In what world is it okay to pay that amount of money just to purchase products and then work to make that back.
Most Products are Misleading
More than 1 in 4 Americans relate MLMs to a relationship failing. Why is that? You might ask. Here’s one example of a reason why.
Many of these products are incredibly misleading.
I’ve read countless stories of someone involved in an MLM believing their products are a cure-all and miles better than what a doctor may be prescribing. In some cases, yes! alternatives for medicines and therapies work wonders. However, your ‘life-changing’ shakes and/or essential oils are not going to cure anything. In one story written by Cashay, a woman’s mother had been diagnosed with cancer, a cousin stepped in and showed her Isagenix shakes and told her that it would make it all better. “My cousin’s post made her feel like she had brought cancer down on herself,” the daughter said, “as if she wasn’t healthy enough.”
From Herbalife being linked to liver issues to Young Living being slammed with a letter from the FDA requiring it to remove claims of disease prevention and treatment (many still promote that their oils do such things, even calling for ingestion), please do deeper research and notice how some of these products are dangerous.
Debt, Debt and More Debt
MLMs are notorious for giving income disclosures claiming that you can make tens of thousands of dollars a year. Is that true? In some cases, yes, very few can make a decent living wage off of them. For many, however, they’re losing more than they put into the company.
In a recent study put out, it was shown that 73% of people either don’t make money or lose money. These numbers, however, are possibly as high as 99% as only 1% of people within an MLM actually profit from the business. According to this survey by Magnify Money, most distributors make 70 cents an hour, before deducting expenses.
The same study made another startling discovery:
The average net income (after subtracting expenses) for the 200 top Amway distributors in Wisconsin was approximately minus $900.
They claim that they are a long-term investment, that they show their true profit after a while but how long can one person go one before they realize how much money they’re losing? Many men and women that join lose more in the span of time that they are in and often never make enough back to pay off what they owe.
For many, the idea of an MLM, or Pyramid Scheme, seems perfect. Never having to leave the house for an office job, being able to sell products they love and so much more. The reality, however, is that these are inherently harmful to all that participate. Truth is, they’ll harm you more than they’ll help. Think wisely before investing in such a job.
For more resources, visit the following sites:
The Dream Podcast on iTunes/Stitcher
Betting on Zero, a documentary that can be found on Netflix