MLMs are recruitment-based businesses where participants earn money by recruiting others to join and purchase products. The focus is on building a pyramid of recruits, with money flowing upward to those at the top. Most revenue comes from new recruits buying products, not from actual retail sales to external customers.
MLMs appeal to women by offering the promise of financial independence, flexible work hours, and the ability to work from home. Many MLMs market themselves as opportunities for stay-at-home mothers or women in economically depressed areas to earn extra income, often leveraging societal expectations around caregiving and domestic roles.
Only about 3% of MLM participants make any profit at all, and even among those, the earnings are often minimal. The vast majority lose money due to high upfront costs for starter kits and inventory, combined with the difficulty of selling overpriced products.
The FTC's loss in its case against Amway in the 1970s set a legal precedent that allowed MLMs to continue operating. Amway introduced self-imposed rules, such as requiring 70% of products to be sold to non-participants, but these rules were largely unenforced. This case effectively legitimized the MLM model, despite its exploitative nature.
Many MLMs, such as Amway and Mary Kay, are deeply intertwined with Christian values and the prosperity gospel, which equates material success with divine favor. MLMs often appeal to religious communities by framing their business opportunities as morally aligned and spiritually rewarding, leveraging the cultural and social structures of these groups.
MLMs are marketed as opportunities for financial freedom, flexible work schedules, and the chance to achieve the American dream. The pitch is highly appealing, especially to individuals in economically depressed areas or those with limited job options. The social and community aspects of MLMs, such as parties and team meetings, also make them attractive.
MLMs capitalize on the American belief in meritocracy and individual responsibility, suggesting that success is a result of hard work and personal effort. This narrative aligns with the idea of 'pulling yourself up by your bootstraps,' even though the MLM model is inherently exploitative and rarely leads to financial success for participants.
Some MLMs are shifting away from traditional recruitment-based models and adopting affiliate marketing strategies, where participants earn commissions through online links without the need for recruitment. This trend reflects growing awareness of the predatory nature of MLMs and the declining profitability of the traditional pyramid structure.
Brownie Wise revolutionized direct sales by introducing the Tupperware party model in the 1950s, which combined product demonstrations with social gatherings. While initially a positive innovation for women seeking economic opportunities, her model laid the groundwork for the exploitative recruitment-based MLMs that followed.
While MLMs face increasing scrutiny and declining profitability, they are unlikely to disappear entirely. Instead, they may evolve into new forms, such as affiliate marketing or other online sales models. However, the core issues of exploitation and financial risk for participants are likely to persist.
And welcome to Money Talks, a special extra podcast from Slate Money where we chat with brilliant and interesting people. I'm Emily Peck. I'm a correspondent at Axios and co-host of Slate Money. And I'm here today with Jane Marie. She is a Peabody and Emmy award-winning journalist whose amazing podcast, The Dream, went really deep on money.
maybe the most American of businesses of all time, which is the multi-level marketing industry. Some people might call it
pyramid schemes or direct marketing, companies like Avon, Mary Kay, LuLaRoe, Amway, companies that sell the American dream but typically turn quickly into a nightmare. Jane's book is called Selling the Dream, The Billion Dollar Industry Bankrupting Americans, and in it she goes even deeper on MLMs. Jane, welcome to Money Talks. Thanks for having me. I'm excited to be here. I'm so excited you're here.
After the break, I want to talk about everything. What MLMs actually are, how they came to be. Why aren't they legal? Are you legally required to be interested in MLMs if you come from Michigan? Shaina Roth, our producer, is from Michigan and was, I think, unusually interested in this topic. Fantastic. That's why I bring it up. And I want to talk a little bit about even maybe Donald Trump. That's all coming up on Slate Money Talks.
Thank you.
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Okay, so I feel like I always knew what multi-level marketing was, but not until I really listened to the dream and read your book did I really kind of
think about how mathematically impossible MLMs are. But before we get into the math, can you maybe just explain what exactly makes a business a multi-level marketing company? Well, can I ask you, what did you think they were? I guess I thought they were, I don't know, stuff you sell out of your home, you have parties, and you don't wind up making a
Any money, but I hadn't given hard thought to how the business model is really just recruiting people to buy the products, not really recruiting people to even sell them. That's the game. You just want as many people to buy the products to sell. Exactly. It doesn't matter if they sell them or not. It's just about I buy a box of
of $150 worth of makeup and that job done. And then everyone's taking a cut up and down the line. I can't tell you how long it has taken me to come to that explanation. I've been doing this six or seven years now.
And it took me a long time to make it that succinct, but you're exactly right. MLMs are recruitment-based. You find 10 people and they find 10 people and they find 10 people and suddenly you have this giant pyramid and all the money is flowing up to you. But that money, it doesn't really matter where it comes from. It could come from people actually buying and using the products.
But typically, it comes from new recruits, which there is an endless supply of. One of our subjects on the podcast said, we're a bathtub with the drain open. In terms of their recruitment strategy, they understand that there is a line miles long of people wanting to achieve this aspect of the American dream, financial freedom and time freedom. And you can set your own schedule and spend time with your children. But
But really what they do is rope you in with a sign-up fee, which is usually between $99 and $499 because over $500, I believe, it becomes –
a franchise and then you have to follow franchise law, which there's rules around. So let's keep it lower than that so we don't have to follow any laws or rules. And then you're encouraged when you sign up also to kind of bulk up on the product or the service that you're selling in order to experience it, in order to have it in your home, to show to your friends.
and to host these parties. And that can cost, I mean, people can spend thousands. You could spend 200, but then of course you're not really giving it your all, right? So you want a really good starter kit and you want to spend as much money as possible. And if you in three months realize,
No one wants these scented candle thingies. There's one that is scented. It's like Glade Plugins, which Glade Plugins are cheap and available at the grocery store if that's your thing. There is no reason to buy them through a pyramid scheme. But this one company would tell you, stock up on all of our holiday scents. You have to have cinnamon, apple cider, esophagus.
And also the winter solstice one and whatever. And they'll have a whole selection of things that you should bulk up on. You do that, then you realize nobody but you wants them. I don't know if you even wanted them. I don't want them. But there is no market. Right. There's no market for these things. And you quit the company. But to the company's books, they're making bank. They're selling overpriced products to you, the seller, right?
And now you have a garage full of Glade plug-in knockoff. And they're off to the bank. You had this wonderful part of the first season of The Dream. I think it's one of your producers. You decide, like, she's going to be the guinea pig. She is going to sign up for a makeup MLM. And she does. And I was really struck by, she shells out for the starter kit. But then her upline changes.
and we need to explain upline and downline. The person above her in the pyramid calls her to check in and basically convinces her to buy way more products and makes it sound like you're going to have this party. You're not selling snacks and drinks to the people. You're selling this makeup. And if you buy it, I mean, that's just like, that's only going to help you. And your producer is like swept away by the sales and only later realizes, oh,
Like I'm the end consumer. I'm the customer. Whoopsie days. We spent like $1,500 in total doing that. Just on things that would be required of any seller or any distributor that signs up, right? So she signed up. Typically your upline is someone you know who recruits you into their team and then teaches you how to do the same thing. So it's kind of an infinite web thing.
Although in 13 levels, you surpass the population of the Earth. Right? That was the math that was just like, oh, oh no. This isn't going to work.
How are we going to fix that? But yeah, we found a product that we thought would maybe be okay because it had an okay pedigree. And then we didn't know anyone who sold this product. So she just went on their website and was assigned an upline. So she joined someone's team randomly. I think this woman was in Arizona. And after we got the starter pack, which I will say contained...
hardly anything. Like, it had order forms. It had a few, it's a makeup company. It had a few tools, like a brush cleaner, some makeup brushes. The most impressive thing that was in there was, okay, it's like a little stand made out of cardboard, and then it has a
LCD screen like that's the size of a three by five card. Okay. In the middle of it and you press play and it just plays distributor testimonials on loop. How is that important to selling makeup? I don't know and I was like if we have a party are we supposed to display this little cardboard video iPad? And so they send you that sort of thing and you have that question. You go I don't know how I'm supposed to sell makeup by putting this in a room with all my friends and
And then your upline says, well, you can't. So you must buy the $900 pack of makeup to show your friends what our makeup is. So we do that.
Then we couldn't get anyone to like join. And we were next encouraged to attend a conference in San Francisco that was at a hotel. We paid all the expenses. Flight, hotel. Talk about the conference. Yes. The desperation. Destination Amazing, I think you mean. Destination Amazing. That was the name of it.
And it was like just this gaslighting shame ceremony. There were no business tips. It was supposed to be come here and learn how to like explode your makeup business. And instead, Mackenzie, our reporter, got there and was in this room full of women who were, for the most part, desperately needing side hustle money and were basically told, you
You aren't working hard enough. You don't have your vision board done correctly. You haven't made enough lists of who to recruit. You are being uncreative. Nothing about our products suck. And they do because it burned my skin. Nothing about our products suck. Nothing about they're too expensive for what they are. Nothing about they also come in cardboard packaging, which is fine if you're Benefit, but not if you're this company. And
She left that place with all these stories about like women who were there to pay for their father's headstone, which he had been without, you know, 10 years, to help their husband who was unemployed. People who really were trying to work this as a job and what they got was vision boarding and positive mental attitude and just wanted it off. But like nothing material. There were no
profit and loss sheets they were meant to fill out. It was just, I think one of the assignments was, tell us how much money you would want to make next year. And then you would write down $10,000 and then they would say, and how are you going to get there? Yeah.
It's really, like I was saying in the beginning, the most quintessential of American business models because the notion of individual responsibility and economic problems are your problems is so very American. We're encouraged at all levels to think of poverty or any kind of economic problem as a personal failing. And this industry just completely capitalizes on that to the point where you're going to
ostensibly to get help with your business and strategize about your business. And you're just being told, just do better. It's your fault that you're not selling. Even though it's not a business that anyone... What's the success rate, Jane? It's like 3%. 3% that make any money at all, like a dollar. A couple of years ago, Rodan and Fields, which has recently abandoned the MLM model. But a few years ago, in order to maybe save their reputation, they started this trend of publicly...
releasing their income disclosure statement. All of the companies that do this, it's a one pager that previously they had only showed to recruits. They didn't publish them online, but Rodan and Fields was like, we're going to put ours out in the public and you can see what's going on here. So then all these other companies followed suit. And if you imagine one sheet of paper, it has a paragraph at the top that pitches the company to you and how much you're going to enjoy this and how much time, money, freedom, all that stuff you can get.
Then it has a little chart that shows you the different ranks in the company, like as you recruit more and more people, how much money you can make. And it shows you the percentages. So someone makes a million dollars, right? It's 0.01% of the company makes that. And then you kind of go down to maybe $100,000 and it's like two, whatever. And then you go down and it kind of stops. It doesn't tell you who lost money. It doesn't tell you who quit, right?
And so the FTC, I think it was February of 2023, the FTC set out to do kind of a deep dive study on 70 MLMs and their income disclosure statements and found to accompany outright fraud, lies, and deception in every single one of them because they do not get to
the failure rates. They don't get to people who've lost money. So when they're saying, oh, 99% of people made $100 in that income disclosure statement, that's 99% of 3%. So they're saying there was lying and fraud in these one-pager statements or in their disclosures about... In the one-pagers. I see. Yeah, because they only included...
again, the people who make money, which is only like 3% of people. So they're talking about when you... I have to show it to you. I have to send it to you, but it's crazy. It's like, it looks like 99% of people make $100 a year or whatever. I see. This tier makes $100 a year, but they're not including...
all the people who lose money or drop out, which is the majority. Right. So of the people who make money, a few make... A little bit of money. Even of the people who make money, it's not very much. Yeah. And then they completely ignore all of the people who quit. So, okay. Why are you so obsessed with this industry? What got you into it? Does it have to do with Michigan or...
Explain. Well, what got me into it was a program director at Stitcher called my production company and was like, we want to make a show about MLMs. Would you want to produce it? And then I was like, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah. Like, I know everything about this. Why? Why did you know everything about it? Because my whole family does this. Interesting.
Oh, my God. At Thanksgiving this year, my uncle, who's a little different, he left the Thanksgiving table and got on the computer at my dad's house and was researching in front of me. And he knows about my reporting. In front of me, he was like looking up some requirements for his new quote unquote job. Yeah.
With Kangen water? Kangen water? Mm-hmm. It's an MLM that sells thousands of dollars of equipment that goes under your sink to make hydrogenated water. I see. Which...
In my understanding, there's already hydrogen there, right? H2O. Yeah. Right? But yeah, he was looking at it on the computer in front of everybody at Thanksgiving like, this is my new gig. And showing it to me and stuff. And I was like, what is happening? But that's not abnormal in my family. My great-grandma was an Avon lady. I grew up going to these parties. And they were fun parties, like Tupperware parties, Avon parties, whatever.
jewelry parties. It's a really popular pastime, I would say. Sometimes a real job, but mostly pastime where I came from. But no one made money. It was just a reason to hang out without the kids. I keep asking about Michigan because it's the home of probably the biggest or the longest lasting MLM, which is Amway. They're from Grand Rapids, yeah. We should probably take a break and we come back
I want to talk a little bit about the history, not just Amway, but I want to talk about Brownie Wise and Tupperware a little bit. My spirit animal, Brownie Wise. ♪
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So let's talk about Brownie Wise, because when I was reading about her in your book, I was like, hey, actually, this was a good thing, especially for women. And I want to talk about that in another context, too, because these scams so often, it's women that are swept up in these MLMs. But back in the beginning with Brownie Wise, who was selling Tupperware and had these fleets of
housewives doing it, I feel like this was kind of a great thing for women back then, no? Yes, it was. It was very fun in the beginning. This was very early on in the history of how these companies came to be. So there were only a few true MLMs before Brownie Wise joined Tupperware. But I'll tell you the quick story of how she did.
She had a door-to-door salesman come to her house, which was not an MLM. It was just like a knock on your door, whatever thing. And this was early 20th century when door-to-door salesmen were everywhere. It was very normal. Yes, yes. So it was like the 40s, I think, when she first encountered this. She was in Detroit and someone knocked on her door and tried to sell her some cleaning products. And she called the company that that person worked for and said, this person was terrible. Yeah.
I love this.
Everything about her. And she looked gorgeous. Like, she looked like a Barbie doll. I love her so much. So she said, I can do this better than that guy. And then blah, blah, blah. So then Tupperware was selling their plastic bowls, which plastics were brand new around this time. Like, people didn't understand what plastics could do and everything.
how they could store food better than glass or metal. And it was like kind of a new thing. And Earl Tupper, who started Tupperware, was trying to sell them in department stores, sell these bowls. But they had to be demonstrated because people didn't understand like how to seal. You know how it's like impossible to get the lid on your coffee cup? When you go to a cafe and they give you the lid, it's like... Yes, you have to really...
It's a skill. It's a skill. Well, this was brand new back then, this pliable material that you had to seal around the edges and figure out if it was actually sealed. And they had that whole burp it thing back in the olden days where if it burps, it's sealed. So you would put the top on the bowl and then you'd push in the middle of the top and it would go. Yeah.
Charming. And then, yeah. And then you knew it was like vacuum sealed, right? You could throw it across the room and it wouldn't leak. And it was like a huge innovation. Like you say in your book, you couldn't really store leftovers or bring stuff to your friend's house or steal Tupperware. I mean, there was nothing to steal yet, I guess. Nothing to steal. This was like a really big deal, but no one understood it. And Earl Tupper was like a drag, basically. No one wanted to listen to him drone on and on. Oh my gosh. He was so boring and...
He was like the worst version of Dan Aykroyd. Like if Dan Aykroyd wasn't funny, it's him. That's what he looked like and what he kind of spoke like. So he was doing poorly and Brownie did the kind of same thing that she did with the housekeeping products and said, I got an idea for you. I can do this better. So they hired her and she built a team and she started selling through this team that was similar to the door-to-door salesman team that
But then she invented the party and everything changed at Tupperware where suddenly the
The recruitment stuff came in, the uplines, downlines, all that stuff, because everyone came to these parties where she would give away her own wardrobe, jewelry. There were like great raffles going on, lots of wine flowing, bowls being thrown all over the place full of jello and not leaking. And they were a blast. And if you look up online, you can see photos of them. They were really fun. And of course, everyone there is like, wait a minute, this is a job I can have? And so then that structure was established.
was introduced to Tupperware. Not nefarious, just really like coming from a place of amazing new thing and we want to sell it. It was organic. It sounds so fun. Wonderful. Yeah. Yeah. And all these women were like stuck at home, you know, didn't have cars, couldn't get around easily. Oh, for sure. Even,
to this day, MLMs are a great excuse to leave your husband and children at home for a lot of communities. I mean, my friends in my hometown spend all day Saturday away from their kids. Like, what? I want that. No.
But I guess since those times, it's really morphed into something more explicitly scammy, it's fair to say. Well, Amway, I talk about this in the book, Amway began their business without a product. There was no product. They knew they wanted the MLM model. And they don't do the party model, but they do like the very standard pyramid-shaped recruitment thing. They did not have anything to sell.
They built the business and then were like, what do we want to sell? There was a soap company near them that was going out of business and they bought it. I think it was called Frisk and they bought it and they
rebranded it as Amway. And that was the product that they kind of pretended that the business was built around. But they had already had the idea for the business structure, which relies on recruiting. And it was, they did great at that. And then all these other companies were like, well, we'll do that. I'll sell garbage. Yeah.
Vitamins was big, right? Yeah, vitamins was big. A lot of beauty stuff. Nowadays, it's like diet shakes, diet things, still beauty stuff, wellness products. Yeah, vitamins and supplements. And now telecom. The bros are into telecom MOMs. What does that mean? I don't know. Oh. Like, I mean, it doesn't matter what it means, right? It's just internet service.
that you sell in a pyramid selling structure. Amway is so important too because
This was on your podcast. I was sort of shocked slash not shocked to realize there was these Federal Trade Commission cases back in the, I guess, the 1960s where the FTC, which is supposed to protect consumers, was like, oh, there are these MLMs, they're scams, they're taking advantage of people. And then the FTC started going after various MLMs fairly successfully until they ran into Amway. And could you tell the listeners who founded Amway? And we'll see if they recognize these names.
Richard DeVos and Jay Van Andel are co-founders. They grew up together in Grand Rapids, Michigan. And you might know the name DeVos because Jay Van Andel's son married Betsy DeVos, who became the head of our education department under Trump. But they've had a long history of connection with politicians. Right.
It's been hard to track their original connection with Gerald Ford, who's also from that area, from Michigan. But they definitely had a close relationship with him and the Republican Party. Jay ran the Republican National Committee. They had really close ties to and ran the Chamber of Commerce, which is a—
lobbying organization. I thought it was part of the government, but it's a lobbying organization. Yeah. Big business lobby. Huge. And then, you know, Betsy gets appointed to education secretary and they're really plugged in. So, but this happened in the late 60s and 70s that they knew each other.
And the FTC had gone after Holiday Magic and Costco and a few other companies and shut them down very successfully and then approached this case against Amway the same as they had all the other ones that easily got closed. And, you know, they'd won pretty swiftly. And this one, they lost. And it set a precedent for all MLMs from like 1972 forward that it was okay because they
In their defense, Amway said, we don't participate in a scam. And that's because we have something called the Amway rules, which appeared out of thin air. They made up the rules. They made them up on the spot in court or during the trial. So the rules were, you have to sell 70% of your product outside of the organization. You have to have real customers and these sorts of things.
None of it was enforced. There was no enforcement agency. No one at Amway was making sure that that was the case. So people were still buying in and buying a bunch of products. And they were also one of those companies that encourages you to replace every product in your house with Amway products. So you have to buy a lot in the beginning to make sure that your dish detergent and your laundry soap and your shampoo and conditioner and now makeup and etc. is Amway. Right.
That's a big investment to go into it kind of wholeheartedly. And then they also sold a bunch of motivational cassette tapes and pamphlets and things. If your business wasn't going perfectly, you could buy into this program where you would get sent. It was kind of like a Columbia House record. I don't know if kids know what that is anymore, but you'd automatically get sent a tape to like boost your motivation and make you a better salesperson.
So that's how their money came to be. But there wasn't someone in their company checking, like, I wonder how much of this soap is being used outside that seller's house. I wonder how many of these tapes, how much they're spending versus how much they're selling of our product. No one was analyzing that. But they told the government, hey, we're going to self-regulate and or we have been, which was not true.
But we'll self-regulate. We'll make sure that these products get into the hands of retail customers who don't have any interest in being part of the scheme. The problem with that is if you join the scheme, you get a discount. So who wouldn't want it? It's kind of like when you're at the checkout nowadays and they're like, do you want to join our loyalty program? Right.
But it would be like at the checkout, do you want to join our loyalty program? And we're going to give you this little scanner and you can go around your neighborhood and sign people up for the loyalty program.
And then they'll get a card, and then they get a scanner too, and then they keep doing that. Right. And the point I wanted to raise is just that there was this moment, it seemed like, in the 1970s where the FTC was poised to just get rid of MLMs altogether. Yeah. But the political leverage that these two men had was so strong that...
Essentially, and you report this in the podcast that the FTC, which is the board is political appointees, they came up with a reason to not put MLMs out of business. And now we still have them today.
There's also a revolving door between MLM legal teams and the FTC. Oh, no. Yeah. There's a lot of people that go in one and come out the other and go in the other and come out one. You know, you can work at the FTC and then you're Amway's lawyer. Oh, my God. Yeah.
Because you know exactly how it works inside the FTC. So Jane, I feel like you hear about people losing money all the time and you're like, well, that would never be me. But I mean, so many millions of people do this. Why do people keep doing this to themselves? Because it sounds great. The pitch is amazing. I mean, if I were to say to you, Emily, I have
I have this awesome opportunity for you. Yeah? You can make as much money or as little money as you want, okay? Okay. And you do not have to work a nine to five. You can work on your schedule. Oh. And our products are the best in their class. And the reason they're the best is because we don't want to sell in a normal retail environment because people don't understand how important these products are. You kind of have to show them and teach them and educate them.
So that's part of the job. But once you do, once you explain to someone that this diet shake is the best ever and you show them the statistics that we made up, if you explain to them that the supplement that's $90 a month is great, and especially if you show them this opportunity, if you explain to them that they can do the same thing that you're about to do, it's easy peasy. You're like time, money, freedom. You have freedom now.
You don't have to work so hard and you can achieve the American dream. Doesn't that sound rad? Like I would do it. Yeah. No, it sounds good. And I mean, a lot of people, you point this out, I think you speak to one woman, high school friend of yours who's out in Michigan in some remote area that's not really doing well economically. There's just not a lot of options to make money any other way that isn't
kind of terrible. When I was there reporting with her name's Danielle and she sold for a company called 31 Bags. It was like bags, like trunk organizers and things like that and purses. I was there visiting her and I went to the local church where she holds her team meetings and recruitment sessions and
And I went to one on a Saturday, and it was super fun. And I was like, oh, if I lived here, I would totally come hang out here. Yeah. I mean, it does sound fun. Yeah, it was all these ladies, and we're playing games and chit-chatting and having coffee and stuff. Yeah, there isn't a lot to do around there. To make money. It is fun. Yeah, there isn't a lot to make money because there isn't money around.
It's a very economically depressed area outside of Flint, Michigan. But also, if you're growing up in this kind of rural, mostly conservative area, and most of my friends, including Danielle, had children in their teens, early 20s, you know, they were very young parents. The women get kind of tied down with the child rearing and keeping house. I mean, I think if there were more economic opportunities there for them to go on and get jobs, they would, but there aren't. So
You take care of the home. And then you get itchy and you want to do something else. And this is kind of the perfect opportunity to have a little bit of time away from those duties that also might be imposed on you by your church or your family that you're supposed to be a stay-at-home mom. Well, you can stay at home and sell bags.
And also, isn't part of what's going on, speaking of wifely duty, a lot of these MLMs are sort of infused with sort of like a Christian vibe? Not sort of. Completely. Completely. Yeah. Explain about that. I will. So the biggest ones are Amway and Mary Kay that are very blatant about their connections with Jesus and the prosperity gospel, which says there is no way to tell if you're going to heaven. However...
If the Lord has blessed you, you'll see it in your material surroundings. It's the kind of church that Donald Trump went to. Right. Norman Vincent Peale. Why would you be blessed if God didn't favor you?
So there's that. 31 Bags, for example, is named 31 Bags after Proverbs 31, which is all about women being very, very hard workers and also submissive and beholden to their husbands. There's a lot of Christianity. Also, the Mormon community is heavily involved, not only because most MLMs are based in Utah because of their lax pyramid scheme laws, but
But also because these are people who have grown up understanding proselytizing and missionary work, knocking door to door, networking, getting people to come into your fold. That's really just a part of the mentality. And so it's an easy transition to say, well, why don't you do instead of with Jesus, do it with soap?
It makes sense to me, but good, clean fun. But the reason there's a lot of Christianity, like the overall overarching macro reason is because our ethos as a country is about somehow merit and virtue equality.
equating to success and wealth, which is all baloney. That's not how anything's ever worked. I have a theory also about bootstrapping, like doing it yourself and becoming a successful self-made person. It's just like a racist result of emancipation in the late 1800s, where it was a mechanism by which white people and people in power were
could once again like revert blame for their lack of success and say it's nothing to do with society it's nothing systemic it's not us it's that you need to learn how to make it on your own like we did which they didn't but you know if you want to have a fair shake in this country you're gonna have to do what we supposedly did which is start from scratch and
And prove your worth here. And we're still kind of living in that like meritocracy mindset, even though we understand that that's not what's happening. Well, the term bootstrap was, I believe, satire because you can't literally pull yourself up by your bootstraps. You would just fall over. Yeah, but then it became like a positive descriptor of someone who was industrious.
There was this article that Shana, Shana Roth, our producer from Michigan, where you're from as well, flagged me back in June, arguing that TikTok shops now might be killing the MLM. TikTok shops where people can sell stuff and, you know, get a percentage. Affiliate links where you can write about products and get a percentage.
Do you think all this stuff is going to replace MLMs? I think affiliate links, which are basically MLMs without the recruiting part, is door-to-door sales online.
In a lot of companies that have turned away from the MLM model this past year, in 2024, a lot of companies dropped the MLM model, including Rodan and Fields. And I think they are replacing with affiliate links, like put this link in and you can get a little discount. That's it. You don't have to work for me. You don't have to be on my team. I do think that that's where the trend is heading as people progress.
become more aware of the predatory nature of MLMs. It's also killing a lot of the MLMs. It's actually showing us that these businesses weren't built on product sales.
But their profits are way down. Right. Yeah. I would think just doing an affiliate link isn't as profitable as convincing someone to buy a bunch of your stuff to sell it. Yeah. Right. It might be profitable for the seller, for the person on the bottom, but for the company, it's not making nearly as much as convincing people coming in at the bottom to spend $1,000, right? You're doing piecemeal $10, $20 at a time.
Actually, Danielle, my friend who worked at 31 Bags, they just closed recently. They shut down in this wave of closures and closures.
restructuring. And I texted her like, I heard that 31 bags got shut down. I hope you're okay. Because she's worked there for years and years and built up her downline. And even though the most she ever made in a year was $45,000 without taking out expenses, that was her gross. I was still concerned, you know, this is her life and the thing that she's very proud of. And she's already joined another MLM.
So MLMs aren't going away, are they? Probably not. If they do, they'll become something else or the people who run them
who I've come to understand are like not the best people. They'll figure out some other scam. But yeah, I don't think they're going anywhere. We already talked a little bit about regulation and why it's so hard for the government to shut these scammy companies down. But is there any hope or do you have any sense that there's anything coming in the future that would tighten up regulations around MLMs?
Or now that the Trump administration is coming in? I doubt it, actually. I think that the work that the FTC has done in the past few years around, like, education, essentially, looking at the income disclosure statements, just letting people know that these are scammy. They sent out a bunch of warning letters during COVID-19, mostly to MLMs saying you can't sell products that say they will cure COVID and that your recruitment protocol is against the law, those sort of things. They sent a lot of warning letters. They didn't do any...
big lawsuits or anything. No one got huge charges as far as I know. I'd have to look back at that actually, what cases they have active. But the FTC's purview is enormous. They do all fraud in the United States and there's way more fraud to be addressed. I think they will have a harder time bringing
suits against these companies once Trump is in office because he is very friendly to MLMs because he's a con artist. He really likes this sort of business. He's a person who's like, if you don't want to be a billionaire, you're stupid. And here's a way to be a billionaire, you ding dong. And why don't you want to do it? If there's suckers enough to sign up for my... He used to shill this...
landline video phone in like the aughts when we already had handheld video phones and also Skype already existed. Like it was already in existence in a different form, but he somehow got roped into making commercials for this video phone. And I don't think he has the scruples or the interest in making sure that anyone is taken care of other than himself money-wise.
Jane, thank you so much for coming on. My pleasure. And that's our show for this week. Thanks to Jessamyn Mollie and Shaina Roth for producing. Ben Richman is Senior Editor of Podcast Operations. Alicia Montgomery is Vice President of Audio for Slate. And I'll be back in your feed on Saturday along with Felix and Elizabeth for a regular episode of Slate Money. Until then, thanks for listening.
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