And Why I’ve Regretted It Ever Since
In the Fall of 2015 I was a new mom of two. I had been a stay at home mom for almost a year and a half and I was the picture perfect MLM candidate.
I was an educated, ambitious, intelligent woman looking to contribute financially to our family as well as find something that was all mine. I wanted to be something besides the sleep deprived, creatively depleted mom of two little kids. I was desperate to find a bit of the person I was pre-parenthood.
But I needed flexibility and a work-from-home opportunity. I needed something that would provide me the framework and let me do the work. And the thing I’ve realized now, I was desperate for something that felt like it was all mine.
What Is An MLM?
MLMs, multi-level marketing, are nothing new. Think Avon, Pampered Chef, Mary Kay, the list goes on and on and on. Also called direct sales, network marketing or referral marketing, it is a sales business based on a hierarchy of sellers hawking the same products for a company.
The selling of the product isn’t what makes the money though. The recruitment of others under you, some call it a ‘downline’, is what the real money maker is and this, inherently, lends to the most common name for MLMs, pyramid schemes.
A pyramid scheme is a business model wherein one person sits atop a “pyramid” of people beneath them and makes money off each as the levels continue to build. It’s illegal in the United States and it looks something like this…
Karen joins a company to sell a product. Karen gets 3 friends to sign up to sell the same product and makes money off of those 3 people. Those 3 people each get 3 more people to sign up to sell the same product and while they perhaps make a small commission off of their individual sales, Karen is up at the top making the most off of them. And so on and so on.
In most companies, this small commission from the sold product is what helps to avoid the very illegal label of pyramid scheme. And while a lot of MLM companies do have compensation plans to avoid being an actual pyramid scheme, the similarities in their tactics, culture and jargon lend themselves to a kind of disconnect from reality that can do very real damage.
The culture of MLMs was one I wasn’t at all familiar with but quickly learned was at the very crux of their appeal. It’s all about “family” and “community” and “building a team”. For women driven MLM companies, they push hard the ideas of being a #bossbabe, #momboss, #hustler and my absolute favorite #entrepreneur.
Let’s be real clear, being an MLM rep is not being an entrepreneur. You are a sales person for a company. You do not call the shots, you do not drive your business in any other direction than the way they tell you.
And Back To The Story…
So it’s early 2016 and I’m a bit of a vulnerable mess looking for something, anything to be just for me. I became obsessed with the idea of being an Independent Consultant for a new-ish MLM called LuLaroe. Known for it’s “butter soft” leggings, casual styles and colorful prints, LLR was beginning it’s dizzying climb to absolute mania. I knew a woman who also sold it, she appeared to be doing so well! She was making so much money! She was doing it all!
The initial investment to “being your journey” and set up shop was a little over $6,500.
Read that again: $6,500.
And I won’t actually own anything but a large inventory of clothes that I am now charged with selling. No stake in the company, no licensing or branding.
After lengthy talks with my wonderful husband and the opening of a 0% interest credit card (which was a suggestion by the company if you didn’t have the liquid cash for your initial investment) I signed on and received over 600 pieces of clothing.
I also invested close to another $2000 on various supplies that I was told were “essential” to running a successful business.
I admit now that I was truly caught up in the hype. LuLaRoe was promising pie-in-the-sky results and I was ready to get to work. Sure I had spent A LOT of money, but they told me I was going to triple that in no time.
And I believed them.
Somethings not right…
All told I was sitting at close to $10,000 invested in this business and all too quickly did I realize that it was far from sustainable. The market became heavily over saturated within months of my launch. I started to get a bit nervous that I wouldn’t make the sort of money I had been assured I would and I reached out to the only resource I had, my upline.
I was told by them, and the company via weekly Facebook live broadcasts and emails, to just keep investing. Keep buying product to keep my inventory “fresh”, even if my sales were next to nothing. Stay positive! See the challenges as opportunities! This business is yours, make it what you want it to be! Many times I was told it was my own fault that my business wasn’t becoming what it could be, it was all on me.
But here’s the major thing, besides these exclamatory statements, I was never given any real business advice or any practical strategies for forecasting my business, managing my inventory, balancing my life and my business. I was simply told to “Sell! Sell! Sell!”.
We were left to find our own way while making very little profit and watching those sitting at the very top of our uplines become wealthier and wealthier, at some points receiving bonus checks of up to $50,000 a month. With every penny of that being made off of the inventory we ordered from the company, NOT what we were selling. THIS, my friends, is a pyramid scheme. *This structure has since changed after multiple lawsuits*
No wonder the only real advice we got was to keep ordering.
It was about 6 weeks into my “career” as an Independent Consultant that the first of many major issues arose. Demand was high and the company was pumping out inventory at a breakneck speed. Quality control seemingly went out the window and consultants were receiving and then selling leggings that came out of the packaging with holes, shredded upon initial wearing, and arrived from the warehouses damp and smelling horribly of mold.
Customers were angry, wanting refunds for the defective items (we were instructed to exchange the item, we could not process returns) and once again the only guidance I received was to STAY POSITIVE! and order more inventory to replace the defective stuff.
Mind you, refunds to us for the damaged inventory took weeks, months and in some cases, never.
Again, over the course of the year that I “worked this business” I was not given ANY sound business advice. I was never told the real reason the leggings were shredding to pieces upon initial wearing or why some ordered items were no where to be found and my money for those items wasn’t coming back to me.
All I was ever told was to STAY POSITIVE! BUY MORE INVENTORY!
BUILD YOUR TEAM!!!
That was the constant one: Build your team.
Even as the company was seemingly falling to pieces around us, as we were struggling to make sales and pay off our initial investment, as we were asking questions and getting no answers, all we kept hearing was “Build Your Team!”
Bring more people into this? Really?!
And that’s when I got out.
The MLM Aftermath
I consider myself a lucky one. I saw very early on that this company wasn’t selling clothes, it was selling meaningless platitudes, empty promises and lies.
They were selling lies.
They were preying upon people in vulnerable positions; those who had been laid off and couldn’t find employment, those who were truly looking to make decent money quickly, those, like me, who wanted something to call their own and be proud of.
This is where the culture of MLMs does its damage. The constant barrage of one sided, specifically curated and ineffective messages that do nothing but drive their own agenda while simultaneously asking you to put aside your own.
At LuLaRoe is was expected that you portray on social media a life that’s happening BECAUSE of your business, even if it’s the furthest thing from the truth. It was demanded that you ignore the glaring bad and only focus on whatever good you can find.
LuLaRoe wanted you to lie.
It took more than 2 years and too many sacrifices to pay off my MLM debt after I turned my back on it all. My disappointment and anger at the company quickly turned to disappointment and anger at myself.
How could I have done this to my family? How could I have been so gullible and stupid?
The guilt was tremendous. The shame of knowing I had willingly done this and left my family in a far worse financial state than when I had started sent me into a deep depression.
I carried that shame and guilt for months and then I had a conversation with a friend of mine and she had brought up a podcast she listened to that investigated MLM culture and she urged me to listen. What I have learned in the years since has helped me work through my own guilt and shame and drove my desire to expose these companies for what they really are.
And here’s what I learned…
I began to do research on my own and found many resources that took a critical look at these businesses. I found resources that investigated and pulled apart compensation plans, looked at how products were sold to the retailer and then how those retailers sold to their customer. I learned more about the recruitment techniques and culture of these companies.
And the bottom line?
MLMs are not a way to become independently wealthy, in fact less than 1% of those in an MLM business model make a profit. But more so, the predatory and misleading nature of the business, its recruitment tactics and its culture can be just as mentally destructive as it is financial. These businesses promise the world, deliver nothing and usually leave so much damage in its wake.
I’m years beyond this business and I still regret every day that I ever got involved. However, if my story keeps one person from throwing their time, talent and money into a “business” that will bring them nothing, then it wasn’t a totally wasted experience.
For more information on MLMs listen to The Dream, Sounds Like MLM But Ok or read a report on MLMs from the Federal Trade Commission.
*Originally posted in November 2019*
Update September 2021:
I’ve had such an amazing response to this article, thank you to those who have read, shared and reached out!
This past spring I had the pleasure of joining the anti-MLM advocate herself, Roberta Blevins, on her podcast Life After MLM. Roberta is also an ex-LuLaRoe consultant and we had an awesome conversation about our experiences .
Check out our 2 part LuLaRoe chat – click the links below!
