When I was 18, I found a job opportunity to sell a product that was so lucrative, revolutionary, and profitable… I’d want to invite every friend and family member of mine to get in on the action.

Here’s the story how your friend from high school or church is going broke doing this.

Around age 18, I was on the hunt for my first “big boy” job after spending the past four years working in restaurants and retail stores. It didn’t take long for me to figure out that 2009-era employers wanted applications completed online and not in-person anymore, so I slapped together a resume and uploaded it to various job hunting websites.

If you were not job hunting in the year 2009, have yourself a tall a glass of wine, because we were one year into the Great Recession and job prospects simply didn’t exist. Therefore, when I got a phone call at about 7:00pm one weekday night from a recruiter whom I believe found my resume online, I was excited.

Thanks, Ashley!

A sales company wanted me to come in to interview with them to sell knives, and they sounded eager to hire me.

During our conversation, they told me that my friend “Ashley” told them that I was job hunting, how easy it is to sell their product, how much money their team makes, and even if I didn’t knock it out of the park immediately… I’d be earning $14 an hour in base pay until I did.

For reference, my first job paid me $5.35 an hour, minimum wage had been increased to $7.25 an hour the previous year, and the job I was leaving was paying me $7.75 an hour.

This minimum $14 per hour offer was double what I had ever made up to that point. I was intrigued, but just as quickly as my interest was peaked, I became extremely skeptical.

Why would some company offer me such a generous salary when I had zero experience in sales?

I asked the interviewer what my friend Ashley’s last name was so I could thank her for putting in a good word, and they hesitated before ultimately changing the subject. I don’t remember what their reply was, but it wasn’t a last name. That was odd, considering the only Ashley I was friends with was focused on college and not interested in getting a job yet.

We concluded the call, and I googled their company name.

For every 15-20 webpages I found that said they were a scam or a fraud, I found one that said the following reasons why I should disregard the bad publicity and listen to this site instead. They often said things like this:

Source: YouTube

It sounded too good to be true, and more-so than that, it sounded just plain inconsistent. Do you notice all the contradicting statements?

  • Want to work a lot” vs “Only want to work a little
  • Need money” vs “Don’t care about money

I had just encountered my first Multi Level Marketing company.

I didn’t meet with them. They were my first encounter, not my last, and the most bold towards recruiting me.


Multi-level marketing (MLM), also called pyramid selling, network marketing, direct sales, reverse funnel, and referral marketing, is a marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company’s products/services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system.

For the intent of their article, I will be referring to them as MLM’s.

Every MLM company dictates their own compensation plan, but a common feature that all of them share involve paying their sales-force from only two revenue streams:

  1. Commissions made from product that they sell.
  2. Commissions made from other distributors that they recruited into the MLM, also referred to as one’s “down line distributors“.

If you’ve been on Facebook in the last decade, chances are that you’ve found at least ONE person inviting you to some virtual or physical “party” where you can buy whatever product they’re selling… whether it be adult novelty items, candles, or cookware. Simply put, they’re encouraging you to participate in their MLM by purchasing their products, purchasing into the brand, or both.

According to Wikipedia’s list of Multi Level Marketing companies, organizations such as Advocare, Avon, doTerra, LuLaRoe, Mary Kay, and Young Living (Essential Oils) are MLM’s.

Source: Reddit

MLM’s tend to boast (unsubstantiated) world changing qualities about their company structure or products from miracle weight loss results, detox, medicinal qualities, spiritual enhancement, women empowerment, or financial benefit.

It is my personal observation (backed by dozens of reputable organizations such as Forbes: Mary Kay Preys on Women) that MLM companies prey on a certain clientele of the population to recruit as sales people.

Although nobody is exempt (I am a gay man with zero kids who was targeted) They tend to be women who have recently started a family or dedicate a substantial amount of time towards their kids, and are having issues devoting enough time to enter the workforce.

They lure them in with the idea of working from home, or as r/antimlm on Reddit pokes fun at, being a #bossbabe and working in a self-employed capacity.

As a feminist, I have a fundamental issue with these tactics, but this is a personal finance blog…so here’s my problem with the finance side of things.

The Math Doesn’t make sense

My personal finance rule is “people lie, math doesn’t. If the math makes sense, it’s true”.

Virtually every MLM charges “start up fees” that range from $25 to $500+ to provide you with the initial supply of inventory, marketing material, or whatnot. Some will waive the startup cost by asking you to jump through some other hoop such as making so many sales or recruiting someone else. You’ve got to spend money to make money, amirite?

However, only 1.13% of participants in this particular MLM earned more than $25,000 in the year 2016, before expenses. If 100 people are selling for this company, only 1 person out of 100 earned enough in the entire year to equal out to a $12 an hour job at 40 hours per week.

Trust me, they might not be working 8 hours in a row, but they’re definitely working over 8 hours per day spread across 24 hours…without benefits. The truth is that more than 90% of consultants took home less than $1,000 all year long.

If you worked full time for minimum wage for 30 days, you’d make $1,160. Do you see what I’m getting at?giphy9

Yeah, sure. Some consultants state that they only participate to get discounted product, or that they could “work harder” to sell more product and make more money–because they’ve met people who earn six figures per year, but that doesn’t change things like the Federal Trade Commission (FTC) who levied a $200 million fine against Herbalife in 2016 for misrepresenting how much money sales reps can make selling its healthy lifestyle products.

Leaders say that MLM companies can protect themselves against such allegations by refining their marketing pitch for different audiences…hence that photo I posted up top with so many conflicting pitches.

The more dedicated consultants often flood their social media profiles with photos with seemingly positive testimonials that help bolster the legitimacy of their campaigns. Others tend to guilt or shame their followers into participation.

At the end of the day, it’s all about promoting their small business while joining in on some revolutionary movement, correct?

Not quite.

Let’s critique a few posts, shall we?

Exhibit A.

Source: Reddit

This particular person is boasting about the prepaid card that their MLM commissions are deposited on being able to pay for a pedicure.

Other things that can pay for a pedicure: Cash, coin, checks, debit cards, credit cards…basically direct deposit from every job in the country.

It’s a little peculiar to me when I hear or see someone bragging about all the money they make from their MLM, because it’s never extraordinary things like them buying a $100,000 Lamborghini in cash, but rather them paying things like their $250 car payment. When I was making $5.35 an hour part time in 2006, I could afford the same car payment, too.

I work for money. I exchange that money for goods and services. That’s not brag-worthy, so don’t fall for it.

Exhibit B.

Source: Reddit

Well… let’s just start at the beginning.

  1. 18 years ago she wrote a check that she knew was going to bounce (aka: a worthless check), which is a crime in Tennessee.
  2. Her car had been repossessed, so she borrowed her boyfriend’s car to go to training for a million dollar company that was conveniently located in some girl’s house.
  3. Even though she was 33k in debt, negative $300 in her account, and 3 months behind on her rent… her boss insisted that she go to Dallas to a seminar.
  4. Something something something…two decades later…now she’s successful.

If you overlook the numerous disastrous decisions that would leave her in a financial ruin, the story is almost endearing.

However at no point in this post does she state that she was able to become debt free, or at least catch up on her bills. Maybe I’m a little critical since I operate a website that publicly documented me paying off of $40,000 of debt…but I take pride in that fact and love to encourage others to do the same by leaning back on my own story as proof of concept. I would also never courage anyone to jeopardize their entire financial life for any job, no matter the payoff.

Putting all of your chips on one table is a guaranteed way to eventually go broke, and when you’re betting the roof over your head in the process… that’s not going to be a good time.

But what do I know, I’m just a personal finance educator. Moving on.

Exhibit C.

Source: Reddit

I’m not a dietician. Hell, I’m barely even a cook. However, food/nutrients (good or bad) that don’t get absorbed by the body through your GI tract doesn’t just vanish or dissolve into nothing, they find their way out of your body…very rapidly, almost laxative like.

Use your imagination.

I almost posted something similar to this, but instead of poor diet advice, it was suggesting that their MLM product would cure your depression and suicidal thoughts instantly…but my moral compass kept pointing away. There is a serious issue with consultants giving extremely poor or plain incorrect medical advice in order to make sales that already have resulted in illnesses or death.

I’ve seen incorrect information about depression, dieting, diabetes, and even statements saying that they will be disregarding the advice of their medical professional with almost a decade of medicinal education and years of practice because they read “an article” written by somebody who’s financial interest is in selling said product that illustrated all the benefits of some non-FDA tested supplement they’re peddling.

That’s plain vile and dangerous.

The Self employment illusion.

Self-employment is the state of working for oneself rather than an employer.

When you are self employed, you typically get a business license and often form a legal entity (sole proprietorship, partnership, limited liability company, etc) to claim business income with and file taxes through, at minimum.

You’re the boss, and the company. No matter how well or poor your business performs, you answer to yourself.

Although many MLM consultants attempt to say that they are their own boss, or are business owners, having quotas set by anyone other than yourself or not having to file business income would clearly negate that. Even though they are “self employed” and a “business owner”, somehow somebody above them can administer things such as target sales goals, promotions, giveaways, or even a free car for outstanding sales.

However, the car isn’t free.

Once a consultant ‘wins’ their car, they DO NOT own it, nor do they get to keep it unless they and their team maintain a specified level of production for every month that follows. Mary Kay actually calls the arrangement a ‘Co-op Lease’. Depending on the net production of your team, you will either owe the full lease payment, a portion of it, or nothing. The lease agreement lasts for 24 months. If you fail to meet minimum production requirements for several months, you will lose the car.” –Pink Lighthouse

My home office (where I do my mortgage lending work and operate this website from) is located over my garage. I bought my Honda in 2014 and the company who was paying my salary at the time didn’t repossess it when my employment ended with them in 2016…because the car belongs to me. Whether I decided to buy it, or lease it, it belongs to me and is/was never dependent on how much I could sell with any particular company. My Honda will always be right beneath me, in my garage.

I could be wrong, but it’s a little difficult to be a “business owner” when your boss sets your objectives.

Pyramid schemes.

A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products or services. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.

According to the U.S. Federal Trade Commission, legitimate MLM, unlike pyramid schemes “have a real product to sell.” “Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s probably not. It could be a pyramid scheme.”

In the beginning of my post, I mentioned that MLM’s are paying their sales-force from only two revenue streams:

  1. Commissions made from product that they sell.
  2. Commissions made from other distributors that they recruited into the MLM, also referred to as one’s “down line distributors“.

Over the years, companies that operate in a pyramid scheme complex have added products to sell so their company could remain legal, even if selling products takes a back seat to recruiting new consultants.

The Federal Trade Commission warns, “It’s best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products.”

I will not use this post as a place to voice my criticisms with general business structure and wage inequality, but some MLM’s and their consultants will point to other well known or common companies and say “they also work for a pyramid company“.

One of the stark differences is that my 9-5 job is being a mortgage loan officer, but I don’t have to buy the mortgage loans that I’m selling in order to keep my job.


This photo explains why MLM’s exist.

If you’re the founder or work immediately under the founder, you typically make buckets of money since there’s thousands of people under you who’s commissions you’re getting a portion of. The closer to the bottom you fall, the likelihood of earning a living drops substantially.

There’s no real chance of moving up the chain, because most MLM companies have 100,000+ consultants.

Educate others.

We all know somebody who associates with a multi-level marketing company.

They aren’t unintelligent people, but rather respectable members of society who are simply looking for a big break or a chance to reach their goals at any cost. Even though I strongly disagree with their participation in MLM’s, and the math is on my side, I do admire and commend their eagerness and commitment towards at least the concept of reaching their goals. Ambition is a great trait to have.

It’s impossible to reach your financial goals if you are losing money every year to your job, and time is a precious item that we all get so little of.

I encourage anyone participating to use their ambition towards goals that they actually have a mathematical chance of succeeding at. There are so many industries and trades that are starving for ambitious workers, and a great federal resource to utilize if you want to learn what education, pay, and work is like in any field is the Bureau of Labor Statistics: Occupational Outlook Handbook.

Learn something new, and teach what you learned to someone else.

Good luck!