Inside The Cult-Like World Of “Legal” Pyramid Schemes

Nikki, 35, first heard about the MLM make-up scheme Younique in 2013. The wife of her husband’s friend messaged her out of the blue on Facebook with “an exciting opportunity to join an amazing company and make money from home”. At the time, Nikki was living in a housing commission property as a full-time carer to her husband, who’d suffered a spinal injury at work, and she couldn’t a afford the $129 sign-up fee. The wife of her husband’s friend paid it and said all she had to do was sell make-up on Facebook from home.

“I was really naive. We were struggling financially, barely making it week to week, and I thought I was going to have a ‘high-end business’,” she says. But what was meant to be her golden ticket out of nancial stress became a living nightmare. “It was horrible,” says Nikki, who estimates she spent more than $8000 on Younique products, earning “next to nothing” back.

Today, MLM schemes are booming. From old-school staples such as Tupperware, Herbalife and Mary Kay cosmetics to new kids on the block – Younique, Arbonne, Isagenix, doTERRA and Scentsy – all employ a similar business strategy where revenue is generated from both product sales and recruitment of new distributors. They all primarily target women, luring them with similar promises. “You can earn five figures a month, working from home, with no experience,” is the start of the standard script for an MLM scheme. Getting an opportunity to join a kick-ass sisterhood of boss babes is also a regular feature. Women make up 75 per cent of direct sellers in Australia, and MLMs frame themselves as empowering women (Younique calls itself “a sisterhood with a mission to uplift and empower women around the world”).

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While these strategies are as old as the Avon lady army that ruled Australia’s suburbs in the 1960s, what is new is that the push to sell has moved online, meaning more and more women are exposed to the hard-sell tactics promising success in bucketloads – success that rarely materialises. In fact, research by Dr Jon M Taylor at the Consumer Awareness Institute in the US revealed a staggering statistic: that 99 per cent of all MLM distributors lose money.

Dr Máire O Sullivan, a lecturer in advertising and marketing at Edge Hill University in the UK, has also conducted research into MLM’s advertising tactics on social media and is damning of their practices. “Vulnerable people are being targeted by the allure of making easy money, fitting work around their own schedule, and entering a supportive community,” O Sullivan says. “But some of these companies have an alarmingly cult-like mentality, they practise ‘love bombing’, and encourage you to cut o anyone who isn’t supportive of the MLM or has concerns about the business model. That is alarming and abusive behaviour.” Not surprisingly, an anti-MLM movement is gaining momentum across the globe, with some protesters calling for change in legislation to protect the vulnerable.


For vocal critics, it’s the recruitment of new members by MLM distributors that raises the most concern. If you are a Younique “presenter”, Arbonne “independent consultant” or doTERRA “wellness advocate”, you can earn money from recruiting new members. When someone signs up under you, you then become an “upline” and take a portion of their earnings. If they sign up people beneath them, you also get a cut of their pro ts. The more people you sign up, and the more people they sign up, the more commissions you make – so the people at the very top pocket money from the many at the bottom. When you map it out on paper, the shape that forms resembles a pyramid, though use the phrase “pyramid scheme” at your peril: an online attack from fanatical distributors may follow. In Australia, MLM businesses are legal as long as most of the scheme’s money comes from selling a product instead of recruiting new people, otherwise they fall under illegal pyramid selling schemes.

Whatever you call it, MLM is big business. Research from 2017 estimates 117 million people around the world were involved in direct selling, with retail sales of $276 billion. Data from The Industry Association for Direct Selling in Australia suggests 576,000 independent salespeople operate here, achieving $1.38 billion in sales annually from wellness products (24 per cent of the industry), cosmetics Dand personal care (25 per cent) and household goods (10 per cent).

Despite receiving no formal training, Nikki enjoyed some initial success as a Younique presenter, and quickly climbed to third-tier status after signing up 20 distributors. They were all strangers. She was told to add 30 different people on Facebook a day: the instruction was to go through the Facebook friends of her family members and add people she didn’t know. Nikki was advised to randomly join Facebook groups to contact their members, to message people in Canada and Italy where Younique also operated. She was also told to cold call people and host online “parties” with her friends, hassling them to buy products and sign up as a distributor. “I found it really intrusive and felt uncomfortable doing it, which is probably why I didn’t get very far with it,” says Nikki, who was pressured by her upline to recruit more people.

“I hated the forcefulness of it all.” Unable and unwilling to recruit more distributors, the harassment began. When Nikki told her upline that she wanted to leave, she was repeatedly told “you have to spend money to make money”. One top-tier distributor in Australia then called Nikki directly and said it was her fault she wasn’t making money because she wasn’t working hard enough. But Dr O Sullivan refutes this claim. “I do not believe that is true for everyone who fails to make money,” she says. “Studies show that most of the pro t in these businesses comes from recruiting. If you are unwilling or unable to recruit, then you are unlikely to make signi cant pro t. Eventually, the market becomes saturated, and someone in the lowest levels won’t be able to make money.”

Nikki’s experience is not a one-off. Jaime, 40, was lonely and sick of sitting at home on her own every weekend while her partner worked interstate, when she was invited to an essential oils party on a Saturday night in January 2018. At the time, she jumped at the chance. Now, she wishes she’d stayed on the couch watching Net ix. “The woman who hosted the doTERRA party told me she gets her essential oils for free because she earns so much.

She alluded to the fact that she travels overseas for business and told me how much healthier her lifestyle is now,” explains Jaime, who works in the public hospital sector. “I got sucked in.”

The red flags started to appear when Jaime’s upline started pressuring her to recruit. Jaime was spending $500 a month on essential oils for 11 months (leaving her “broke” at times, and adding up to “thousands and thousands” of dollars), but it wasn’t until she had an adverse reaction to an oil blend that she called it quits. “I tried a new blend and it made me feel dizzy, nauseated and clammy. It frightened me, but when I contacted doTERRA, they just told me to send the product back,” recalls Jaime, voicing her concerns about untrained consultants selling potentially harmful products.

When approached for comment, a doTERRA spokesperson said, “Starting a business is a significant decision and for those who make that choice, doTERRA provides a great deal of information, resources and support, including access to a large community of wellness advocates.” Jaime kept her doTERRA account a secret from her partner and still hasn’t told him how much she spent on it. “Looking back now, it was a waste of time and money, getting involved in a community that sells a fake lifestyle. I was conned,” she says.

If Jaime was at the bottom of the pyramid, crouching on her hands and knees supporting the weight of those above, Jessie Reimers is at the top, admiring the view. The mum of two started as a doTERRA wellness advocate selling essential oils in 2014 at age 23 when she was living in south-east Queensland, surviving on Centrelink bene ts, having just been diagnosed with autism and experiencing chronic anxiety as well as panic attacks. Fast forward ve years, Jessie is a Presidential Diamond Leader, with 48,000 team members, making $90,000 a month and seven figures a year. She lives in a beachfront house in the affluent Gold Coast suburb of Palm Beach with her two boys, has just bought a two-bedroom, ocean-facing investment property in the same suburb and paid cash for an o -road caravan, in which she plans to travel around Australia within the next year. Yesterday she didn’t feel like working, so she drove to Byron Bay with a friend and spent the day at the beach whale watching. As one of the top doTERRA leaders in the country, she’s been on incentive trips to the Caribbean, Lake Como in Italy and on safari in Kenya. Jessie credits her success to believing in herself. “I’ve continued to show up and build con dence in myself,” she says. “When I started, I didn’t want to piss around; I wanted to work hard and create a foundation of residual income and a real life of freedom.”

Living in a beachside mansion, working 10 hours a week and earning $2250 for each of them sounds appealing. And all you have to do is believe in yourself? But Jessie is in the one per cent of people who make money from MLM businesses. What sets her apart from the other 99 per cent of people who lose money? “I’ve worked my arse o to get where I am,” she says. “[The people who don’t make money] don’t treat it like a serious business. There’s always people in life who don’t get where they want to, because their effort does not match their expectations.”

When Jessie says doTERRA isn’t a pyramid scheme “because pyramid schemes are illegal”, she speaks with conviction, but her words feel like they’ve been copied and pasted from a well-rehearsed script. She is unfazed when people criticise her business: “I don’t give a shit. I’m not crying into my money. I’m too busy living my best life wFhile they’re working in a job they hate, making a tenth of what I make.” or the 99 per cent of people who lose money on these schemes, the anti-MLM revolution can’t come soon enough. In the US, dozens of people have led lawsuits against leggings MLM LuLaRoe, as former sellers face bankruptcy. In October, the US Federal Trade Commission ruled that a Texas-based nutritional supplement MLM, AdvoCare, was an illegal pyramid scheme and ordered it to pay an AU $217 million settlement, saying AdvoCare promised its distributors “a life-changing nancial solution that would allow any ordinary person to earn unlimited income, attain nancial freedom and quit their regular job”. Instead, the majority of members either made nothing or lost money. Former distributors who’ve seen the light are now finding solidarity online, once their hunting ground. The anti-MLM subreddit has half a million subscribers, and there are thousands of Facebook groups dedicated to venting about their dodgy practices and taking the piss out of so-called “hun bots”.

Amy, who’s in her late 40s, became a part of The Anti-MLM Coalition after a negative experience with SeneGence. She spent $11,000 on products in five months in 2017, before cutting ties with the “cult”. “I was involved in a religious cult in my youth and SeneGence started to feel very cult-like to me,” she says. “It was the same brainwashing, systems of control and influence.”

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Now, Amy is one of the main members of The Anti-MLM Coalition, which has more than 6000 followers on Facebook and offers support for those personally affected by MLMs, and also lobbies for legislative change.

Amy says they get regular messages from distressed loved ones who have lost their daughter/wife/friend to an MLM, looking for resources and advice. “Our main goal is education. We want to encourage people to look for the red flags and be skeptical,” she says. If it looks likes a cult, sounds like a cult and feels like a cult, it’s probably a cult.

O Sullivan’s advice to women charmed by the promise of extra money and empowerment is to use critical thinking. “Nobody would say no to extra money, but be very careful if someone can’t provide hard numbers, a business plan or, in some cases, won’t tell you the name of the company,” she says. “Remember, 99 per cent of people in these businesses lose money.”

Back in rural Victoria, Nikki says she’s done. “Oh God, no!” is her response when asked if she’ll ever sign up for another MLM scheme. All of the women marie claire spoke to (except Jessie) shared the same dire warning to women thinking about signing up to an MLM scheme: “Don’t do it. Run away.”

If Nikki sees one of her friends hinting at joining an MLM, she jumps on them. “Please don’t put yourself or your family through that,” she pleads, finally closing the door to her rumpus room full of boxes, and on the hardest chapter of her life.

marie claire contacted all of the MLM companies mentioned in this story for comment, and only doTERRA responded.

Photography by Ilka & Franz. 

This story originally appeared in the January issue of marie claire.

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