Some Win, Others Lose: Multilevel Marketing Has a Checkered History with the Military

Multi-level marketing companies, or MLMs, promise a path to wealth, but some of those who get involved with them find the promise illusory, if not fraudulent. Others make a lot of money making friends. (Arek Socha / Pixabay)

The idea of ​​running your own home business might sound appealing, especially if your home changes locations around the world every few years.

Multi-level marketing companies, or MLMs, are becoming increasingly popular in military communities because of their “become your own boss,” said Scott Johnson, a Navy veteran who hosts a podcast aimed at educate military and veterans about career opportunities and identify scams. .

MLMs promise a path to wealth, but some who get involved with them find the promise illusory, even fraudulent. Others make a lot of money making friends. Knowing what to look for and keeping a life balance are two factors in managing membership in an MLM.

Multi-level marketing companies create income by using non-salaried members to sell goods or services directly to consumers. The products range from clothing to jewelry to beauty items, but the principle is the same. Participants must pay a recruiting fee, and they must also pay for the inventory they will sell.

“Eventually you go bankrupt, or you can’t continue selling to your same group of friends,” Johnson, who worked for Amway for a decade after it went into service, told Stars and Stripes by phone on the 12th. may. Amway, founded in 1959, is an MLM that sells health, beauty and home care products.

The past year has proved particularly difficult for those looking for work during the coronavirus pandemic. The unemployment rate for military spouses was higher than that of the general population at 24%, according to a 2020 Department of Defense report to Congress.

And, according to the Labor Department, 6.5% of ex-combatants were unemployed in 2020. This was a significant jump from 3.1% the year before, reflecting the severity of the pandemic, a indicated the agency.

Friends in the company

Johnson said he understands the appeal of MLMs, especially for people who seek a social circle when their spouse is deployed or who are about to leave the military without a career plan.

He said he got involved with Amway in 1993 because he didn’t have a plan and a trusted friend, a former flight surgeon, was in the business.

Johnson said he spent thousands of dollars on meetings, membership fees and inventory.

“To offset the cost of staying at Amway, I always had to sell, and the sales I made became more about not disrupting the relationship. They were sympathy sales, ”he said.

“But it’s more than money. It’s just dollars. There is also time. I can get the money back, but not my time or these friendships.

In 2010, Johnson was part of a class action lawsuit against Amway subsidiary Quixtar which alleged unfair and illegal business practices that misled distributors about earning potential and costs of participation.

Amway settled $ 56 million out of court and Johnson said he got 5% of what he spent for his involvement in the business. He said he was just happy that it was behind him and that he is now focusing on educating others.

The settlement did not include Amway’s admission of guilt.

“The lawsuit contains strong and obnoxious allegations and language that we categorically reject,” said a 2010 letter from company president Steve Van Andel and then president Doug DeVos. “Nonetheless, the company and its leaders (independent contractors) take responsibility for all past problems, and we take responsibility for solving them.”

‘Boss girls’

MLM companies offer a range of goods and services, but the business model of recruiting more people to help sell a product remains the same.

The idea of ​​becoming a “boss babe,” a term used in MLM social media circles, as well as products are the bait, Johnson said. Many MLM companies are marketed to women because of the products they sell or on waves of trends, such as weight loss and “wellness”.

Brooke Langston, a wife of a Yokosuka Naval Base serviceman, said she joined Thrive by Le-Vel, a brand of dietary supplements and weight loss products, last year to make money. during the pandemic.

She was given a strict script to follow for her social media posts, as well as instructions for sending messages to friends or family who she knew might have body image insecurities, said Langston to Stars and Stripes via Facebook Messenger on May 5.

She said she regretted spending the $ 1,000 it cost to sign with the company.

“I only earned $ 20 in my few months with the company, which I haven’t seen a dime of yet due to their payment portal not releasing funds until you earn $ 25” , Langston said. “Looking back, I’m extremely embarrassed that I allowed myself to fall victim to the predatory MLM business model, and even more embarrassed that I tried to exploit people for my small gain.”

Truthinadvertising.org, a non-profit organization that reviews product claims, said in March that Thrive uses unsubstantiated health claims and disease treatment to sell its products.

Representatives for Le-Vel, which has an A + rating from the Better Business Bureau, did not respond to email questions from Stars and Stripes on Friday.

Run away from the ‘hun’

According to the Federal Trade Commission, an MLM should be avoided if it makes promises that sound too good to be true, focuses heavily on salespeople recruiting other salespeople for the business, uses high pressure sales tactics, or whether its distributors are required to purchase more inventory than they can reasonably sell in order to remain active in the business.

But not everyone has a bad experience with MLMs. Ashley Watkins, a Navy wife at Naval Station Great Lakes, Ill., Said she joined Pure Romance, an MLM selling sex toys and other adult products, after losing her job civil.

Watkins said she deliberately plans days when she doesn’t engage in selling Pure Romance to maintain a balance in her personal life to avoid pushing her friends away or being labeled as a “hun,” Internet slang for someone who relentlessly sends messages to people to sell products.

“I think it’s a way to meet people based on where you’re posted,” Watkins said via Facebook Messenger on May 5. “Plus, you can work from your phone any time of the day.”

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About William G.

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