The 'Get Rich Quick' MLM Schemes Targeting Gen Z During Lockdown

Young people out of work from COVID-19 are falling victim to controversial multi-level marketing schemes.
October 7, 2020, 8:15am
Gen Z Are Scammed By New Pyramid Schemes and MLMs.
Illustration by Marta Parszeniew.

Charlotte Dickerson sits down in front of the camera with a cup of tea, and begins to tell the story of how she lost £800 in four months by becoming a girlboss. Her first YouTube video – featuring a thumbnail of her looking confused with the caption “I was scammed” - explains how she fell deep into multi-level marketing, before realising she was losing huge sums of money.

“The whole experience has changed my life,” says Charlotte, 23, who signed up to one of these schemes in 2018. Since leaving the MLM beauty company Arbonne, she has begun using her channel to debunk the kind of “get-rich-quick on your own terms” lifestyle that she says has proliferated during lockdown. “It’s the perfect time for it to thrive, because people are feeling vulnerable.”

Multi-level marketing schemes, or MLMs, are businesses that rely on the recruitment of others to make a profit for those higher up the chain. Their initial boom was in the 1940s, when vitamin companies such as Nutralite in the US began incentivising selling via “distribution teams”. This allowed employees to earn commission by hiring sellers to work below them, and taking a cut of their profits.

Their popularity increased steadily until the early 2000s, and then it exploded, with the internet allowing companies (often with vague corporate names such as Amway, Forever Living or Oriflame) to reach a much larger audience. Their controversial structure means they’ve been compared to illegal pyramid schemes but sellers are keen to stress the small differences that make these legitimate and legal. They sell a product, such as cosmetics or diet supplements, where pyramid schemes often don’t, and representatives make money directly from their sales.

The “hi hun, I’ve got an amazing business opportunity for you” message you’ve probably got from someone from your primary school? That’s normally how recruitment begins. It ends with you having to buy an expensive “starter kit” or products to sell on to family and friends via social media. Suddenly, you’ve a back room full of alkaline water filters, “business opportunity carrier bags” or fake Gentleman’s Pride aloe vera aftershave. Schemes such as US-based Arbonne, which Dickerson was a part of, also promote diet plans, with sellers often feeling pressured to take part themselves in order to convince others to “invest in the lifestyle”.

However, these products are largely irrelevant to the business model itself – the money is in the “downline” structure, which means earning commission for each person recruited into your team.

Information about those at the top of MLMs is hard to find, but the owner of FM World, a popular cosmetics scheme, also moonlights as a successful art collector. Artur Trawinski established FM World in Poland in 2004, which claims to be one of the largest MLMs in the world. His association with the company goes unmentioned, however, in the promotion for the European ArtEast Foundation, an organisation that aims to “bring the public closer to a different perspective on art from across Eastern Europe”. In 2018, he was named as one of Apollo magazine’s “40 under 40” art collectors.

A huge part of the appeal seems to be the community. Dickerson initially trusted her MLM scheme for this reason – she had just moved to London to start college, when she noticed a message from a family friend. Her Instagram was a glossy, perfect grid of poolside pics and pastel-pink slogans.

“I was lonely and I felt really vulnerable,” she says candidly. “Someone I knew was reaching out, with an incredible lifestyle, saying I could have it all too. There was no obvious reason not to. There are so many people feeling like this at the moment, and MLMs are monopolising on it.”

Forty-five percent of UK workers under 25 have been furloughed since the start of the pandemic, with an estimated one million under-25s facing unemployment this year. The idea of running a profitable business during a global crisis is, understandably, incredibly appealing.

Sade Taiwo, who runs the financial education site The Penny Pal, says she doesn’t blame people for finding the schemes attractive. “They present themselves as a quick way to make money and that is what people need right now.”

However, according to The Penny Pal, only a staggering 1 percent of those in MLM schemes make a profit. High enrolment costs, and the need to buy products before selling them, means people are often left with large amounts of un-shiftable stock.

Taiwo says she believes there should be greater education about the risks involved, but isn’t sure who this would fall to. “The schemes themselves certainly aren’t going to tell the truth. So who should it be up to? Schools Parents? Banks?”

Though Charlotte Dickerson only started her YouTube channel “to show people that she’d changed”, she’s now a leading voice in the “anti-MLM” movement. “I didn’t want to be known as the girl in the pyramid scheme. The videos were a way to tell my friends and family all at once.

“A lot of people I know who have left the scheme feel the same sense of guilt – we bombarded everyone with messages, and there’s no way you can tell an acquaintance that you’re no longer selling without it being weird. The majority don’t talk, because they’re embarrassed.”

Those who do talk, however, are creating “anti-MLM” content en masse. A popular post in the Reddit group r/antiMLM shows the outgoings of a seller stretching down an Excel sheet and adding up to thousands more than the profit column. YouTubers display screenshots of the MLM “huns” who claim their essential oils work “better than hand sanitiser” at killing viruses. One post even asked for volunteers with coronavirus to consume silver supplements, citing it as a potential cure.

Even for some of those who previously left the schemes, the current health crisis has made them re-evaluate their financial choices. Dickerson says she’s seen a lot of people trying MLMs for a second time as a result of being furloughed or losing their job, convinced that it was their own fault for not making a profit the first time.

Tiffany Ferguson, a California-based YouTuber who focuses on internet culture, has seen something similar. “Initially, a lot of them were devastated that they couldn’t go to their business conventions because of lockdown.’’ (In non-pandemic times, various MLMs run meetings for their sellers, often promising business secrets “unavailable anywhere else”). Ferguson saw that morph into a new confidence about their business plans, with the pandemic affirming that working from home in a MLM scheme was a wise decision.

Ferguson thinks it’s important to be critical of the anti-MLM groups, as well as the seller communities they aim to combat. “The important thing to remember is that people who join MLMs aren’t stupid.” she says. “Some of the people on these forums think they are, and that becomes a bit toxic.”

The important thing to remember is: always undertake proper research about any financial investment. Sade Taiwo advises that anyone considering a scheme should scrutinise every claim made, and search for people’s experiences with the company online before committing any money. She suggests if you or someone you know is already part of a scheme, set a definite deadline to assess the progress made – and don’t be afraid to cut your losses.

Ferguson, however, is reluctant to offer advice for people considering MLMs. “It’s not up to people with regular paycheques to criticise anyone’s financial decisions.” However, she adds with a laugh: “Times are crazy and tough, but some things are too good to be true.”

@sdickinson8