Multi-level marketing schemes frequently aim their strategies at women, leveraging social dynamics. Have you received a message on social media that reads something like this? "HEY GIRL, I HAVEN'T SEEN YOU IN A WHILE, YOU LOOK INCREDIBLE. WANT TO UP YOUR GAME FOR YOUR NEXT EVENT? GET MY MASCARA AND RECEIVE A FREE GIFT. BUT HURRY, OFFER ENDS AT MIDNIGHT!" These messages are all too common.
While it's tempting to dismiss them, a significant number of women across the U.S. find themselves involved in multi-level marketing, or MLMs.
Surprisingly, many women are engaged with MLMs selling everything from essential oils and weight loss products to the allure of romance. Alarmingly, 99.7% of individuals who join MLMs either earn nothing or incur losses, often left with unsold inventory that doesn't help recoup their investments.
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According to Jane Marie, who authored "Selling the Dream: The Billion Dollar Industry Bankrupting Americans", MLMs resemble pyramid schemes where top recruiters continue to thrive while those at the base struggle. "They make money by charging entry fees, sometimes offering a small product in return. It's those at the bottom who face the most challenges, cycling in and out quickly, but the demand for replacements ensures the money keeps flowing up," she explains.
Statistics from the DSA indicate that 75% of MLMs primarily target women, with many offering products traditionally associated with female consumers. This trend can be traced back to the 1940s when door-to-door sales of items like Tupperware and Avon cosmetics became popular.
Jane Marie highlights that societal norms made women more approachable for in-home sales, and their expansive social circles facilitated recruitment. This historical context has perpetuated the focus on selling beauty products, jewelry, and health shakes through MLMs, especially in communities where women's economic mobility is restricted.
For further insights on the tactics used by MLMs to attract women, signs to recognize if you're being approached by an MLM, and steps to take if you've already experienced financial loss, tune in to the podcast. In our latest mailbag segment, a listener queries about finding the best low-cost brokerage account, and we analyze the feasibility of becoming a millionaire by retirement. We also cover news including Donald Trump's new stock and recent changes in swipe fees on major credit cards.
