How Multi-level Marketing Became America’s ‘Unseen Propaganda Factory’
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From KQED in San Francisco, this is Forum. I'm Mina Kim. Sign-ups to sell products for companies like Amway, Herbalife, or Mary Kay surged during the pandemic. Multi-level marketers, or MLMs, promise flexible hours, income, and the ability to be your own boss with the backing of a recognized brand. But according to Bridget Reid, the success rates for people working in multi-level marketing are, quote, closer to those of gamblers in a casino.

Reid joins us to talk about the rise of the MLM model, the people it exploits, and why it's got powerful political backers. Forum is next. Welcome to Forum. I'm Mina Kim.

For decades, multi-level marketing or MLM companies like Amway and Mary Kay have made the promise that people could become their own bosses, earn extra income, and work flexible hours under the umbrella of a globally recognized brand. And some 17 million Americans have gotten involved at some point in their lives. But according to the Federal Trade Commission, 99% of people who join MLMs don't make any money.

New York Magazine features writer Bridget Reid looked into the allure of the MLM model and its impact in her new book, Little Bosses Everywhere, How the Pyramid Scheme Shaped America. Have you or someone you know been involved in multi-level marketing? Bridget Reid, welcome to Forum. Hi, thanks for having me. Glad to have you. So as you noted, MLM has been around for some 80 years. So what made you look into it now?

You know, multi-level marketing historically over that time has enjoyed a little boom every time the economy dips. And so during the pandemic in 2020, that phenomenon occurred just like it has in the past. And many millions of people sort of streamed into MLM and the industry grew. And, you know, that was...

covered in the news and I looked into it for a story about how women were predominantly joining because more women left work during the pandemic. So when I was writing that article, there were so many strange

contradictions and sort of bizarre idiosyncrasies of this industry. And I'd reported on, you know, I've reported on different industries and other types of businesses, and this one just stuck with me. And so I soon learned that I really needed to

write a whole book if I wanted to figure out what was going on here. What was going on? I assume many of our listeners will recognize some of these brands, Mary Kay, Amway, Herbalife, Cutco, doTERRA, they span the globe. So what is the MLM model? How does it work?

This is a complicated question. In theory, a multi-level marketing company is sort of step one is similar to a wholesale business where distributors are buying products at a discount and selling them.

at a profit, ostensibly. But what makes MLM different from just a regular door-to-door selling business, and that's how they were once constructed in the earlier part of the 20th century, like you might have heard of Fuller Brush or Avon. These are sort of Americana door-to-door salesmen companies, and they were just strictly that business model.

What MLM did when it was invented in the 40s is allow distributors to recruit people under them in what's called a downline and make money off of what those people are buying and on and on, in theory all the way down sort of ad infinitum. And some companies have slightly different structures. But the problem is that in multi-level marketing, supposedly,

all those people buying products are sustained by then selling those products, right? So you are buying a bunch of whatever your supplements or health shakes or whatever they are, and you're making money by selling them. And then you're making money by other bringing other people in and getting commissions from the company. But that second part, whether people are really selling the products, that's what has dogged the industry from the very beginning, whether that's actually occurring, because if it's not occurring, what's

What's really happening is just an endless chain of people investing in a scheme, and that's a Ponzi. So what tends to be their pitch to recruit people?

You know, it's changed over time, but what's always remained the same is the idea that this is a low-cost, flexible, and accessible type of small business where anybody, whether you have education, whether you have disposable income to invest, can join for a small, low cost, maybe $199, $200, maybe even $100 for a starter kit.

And then with your own moxie, your own persistence, your own resilience, build a business as big as you want.

with the only object in your way being yourself. So it's this ultimate American dream entrepreneurial pitch, and it really appeals to people who might have otherwise had difficulty building an income, rising up a career ladder, changing their class status in the sort of traditional ways through attaining

higher levels of education or maybe starting a business after having gone up the career ladder. And so that's why it's always appealed, I think, to people who are looking to sort of fast track or they're looking to supplement what they're already doing. Maybe they're working in a store or a restaurant and it's not enough. They have bigger dreams. They want to buy a home. They have children and they want to save for their education and they need to add to it.

It sounds like the industry also likes to tout that it generates billions of dollars in sales, I think $40 billion in 2022. But why should we be wary of that number? Well, because of the way the business is structured that I described when you asked me your first question, this sales number, what we mean by retail sales, that's a really big question mark for

When in another retail sales business, any consumer business you want to think of, whether it's like soda pop or chips or cannabis or anything, how much you're actually moving, right? What consumers are buying, the demand, that should be sort of the center of any kind of market, right? What do people want and what are they buying? And in multi-level marketing, because what's primarily tracked by these companies is what

The purchase is by their distributors, not that second part that we talked about, the purchase to the consumer. What amounts to retail sales and multiple marketing is actually just an estimate. They take the amount that their wholesalers are buying at a discount and they just estimate if all of those buyers were successful and sold them to their friends and family or people they meet online or on the street.

if they really sold those products in the way they're supposed to work, that's the number that they report their sales. And so the whole industry does it that way. It really is a hypothetical number. And that's what we rely on to kind of legitimize this as a retail-based business. So ostensibly, these are people selling products. But in reality, the market is a big guess. So it takes the amount of money that...

its own sellers are using to buy their products and then doubles it to determine how much

They're generating in terms of sales. We're talking about how multi-level marketing works with Bridget Reid. And I want to invite you, our listeners, to join the conversation. What questions do you have about MLMs and how they work? Have you or someone you know worked for MLMs like Mary Kay or Amway or Herbalife? How did it go? Have you had success or a positive experience with multi-level marketing? Has someone in your life tried to recruit you to participate?

You can join the conversation by emailing forum at kqed.org, finding us on our social channels, Blue Sky Facebook, Instagram, or threads at KQED Forum. And you can call us at 866-733-6786, 866-733-6786.

What was so striking from your book, Bridget, was that even as a lot of people started to realize the reality didn't really match the sales pitch that they were getting, they stayed in it. Can you tell us about Monique, who was drawn into the world of Mary Kay Cosmetics, one of the oldest and most well-known MLMs?

Yeah, and I'll use Monique just to put a finer point on your last question. The amount that a company might use to estimate their retail sales is based on the discount they give to their distributors. And the discount changes depending on how much you're buying. So the more products you buy, the higher the discount you will likely get.

So, for example, in Mary Kay, the company that Monique joined, they typically give the wholesale consultants about a 50% discount. So when Monique joined Mary Kay, it was with a small starter fee. I believe it was $199. But very quickly, first of all, in all multiple marketing companies, you do have to spend a minimum amount on products every month.

And so for her, it was around $150. But she was encouraged very quickly by her upline, which is her sponsor, the person that brought her into the business to buy more because you are then availing yourself to this higher amount of commissions that you might get.

back from the company. And so she was right away spending around $1,800 on just a wholesale order of Mary Kay products. And this is when she's just in the business, right? So she doesn't even really have practice going around and selling makeup. She doesn't even really know how to put on makeup. She was a veteran who was in the military for many years and just it wasn't part of her lifestyle. And so she really didn't even know much about these products anyway. But

That $1,800 she spent in Mary Kay, that's actually reported as production. That's the euphemism they use in Mary Kay to estimate those retail sales. And so right away, that becomes $3,600.

in sales, recorded to Monique and of course then attributed also to her upline who also is making money off of how much she's buying, right? So that's the purchase becomes sales right away even though not a single customer has come to her door and you know, put on the makeup, right? She hasn't actually sold a single item

But what she's buying, the company allows or encourages to be reported as sales. And so at the end of her journey, or not even at the end, right, but at certain points in her journey, she'll be celebrated for, you know, $10,000 in, quote, sales or $20,000 in, quote, sales. And all that's really been recorded by the company is $10,000 worth.

purchased by her with her own money. Listener Wendy writes, the shortest way to lose friends is to be a multi-level marketing marketer. They invite you to mysterious events and then try to get you in their cult and you feel used.

Because as you were describing, Bridget, the more Monique bought, the more her sponsor made, the commission went to her upline. And so then she's incentivized as well to recruit more people so that she can also earn commissions as well, hence Wendy's comment. Again, let me remind listeners, we're talking about multilevel marketing and how millions of Americans have gotten involved in MLM. Even though, according to the Federal Trade Commission,

99% of people don't make any money from it. But it has an enduring popularity, and Bridget Reid is helping us understand why. She's a features writer for New York Magazine and author of Little Bosses Everywhere, How the Pyramid Scheme Shaped America. We'll have more with her and with you after the break. Stay with us, listeners. I'm Mina Kim.

Support for Forum comes from the University of San Francisco School of Management. Celebrating 100 years of partnership with the Bay Area business community, the USF School of Management connects students to the city's vibrant culture, hands-on internships, and a wealth of career opportunities.

where AI and sustainability are integrated into every facet of business education, and where students bring innovation, ethics, and entrepreneurial leadership to a planet in need.

The University of San Francisco School of Management. Change the world from here. Support for KQED podcasts comes from Earthjustice. As a national legal nonprofit, Earthjustice has more than 200 full-time lawyers who fight for a healthy environment. They wield the power of the law to protect people's health, preserve magnificent places and wildlife, and advance clean energy to combat climate change. Earthjustice fights in court because the Earth needs a good lawyer.

Learn more about how you can get involved and become a supporter at earthjustice.org.

Welcome back to Forum. I'm Mina Kim. We're talking this hour with Bridget Reid about her deep dive into multi-level marketing businesses like Amway, Mary Kay, Herbalife, and so on. And listeners, share your experiences with multi-level marketing. Have you or someone you know worked in MLM or been in multi-level marketing? Has someone tried to recruit you to participate? Have you had a successful or a positive experience with MLM or not so much?

You can email forum at kqed.org, find us on Blue Sky, Facebook, Instagram, or Threads at KQED Forum, or call us at 866-733-6786. Let me go to Ellick in San Francisco. Hi, Ellick, you're on.

Hello. Yeah, thanks for having me and really interesting conversation. I'm from Utah where it's like MLM Disneyland. There's a million MLMs and everybody knows like tons of people that are in them. And like I have this aunt, for example, that was really into one of the essential oil companies and like very strong smells. But I've noticed like in MLMs people are

when they like people that are selling it oftentimes are really into the product, like almost at like a culty level. And I'm just wondering if there have been any studies or research on if people more at the bottom, like do they tend to spend so much on the products that that essentially cuts into their profits and they don't make any money? Alec, thanks. You raise a lot of interesting things there. Bridgette?

Absolutely. That's certainly what's going on. And I'll say not even just the people at the bottom are spending money on the products. It might, you know, sort of on balance impact them more if they're towards the bottom and they don't already have other income to offset. Like maybe they don't have a big downline.

So they're not making other income from the company. But even the people at the top of a multi-level marketing downline are required to buy products every month. So everyone really is buying. And of course, this truly is why people in these companies are so loyal to the products.

In many companies, what's called personal use is encouraged. So when an upline makes a new recruit, they will encourage them to purge their home of whatever other company's products might be there. So if it's essential oils, obviously it's a little more narrow. But in Amway, for example, which sells all manner of household products from toothpaste to household cleaner to makeup,

you will be encouraged by your upline to rid your house of all of these other items and to just fill your house with Amway products. There's even a subscription service called Ditto in Amway where you sign up and I've spoke to at least a handful of people who were encouraged to put hundreds of dollars on their Ditto subscription service every month. So if you're spending hundreds of dollars

you know, on these products, you're definitely going to be loyal to them, right? And this is a phenomenon that has long occurred in multi-level marketing. You know, in the 1970s, when Amway was being sued by the FTC for being a chain selling operation, which is another way of saying pyramid scheme,

The company actually got a Harvard Business School professor to sort of wax rhetorically about how he'd never seen a group, a company with participants who were so loyal to a brand of liquid cleaner, which of course is ironic that he didn't sort of draw the connection that well in another company selling liquid cleaner, the people that work for it.

aren't being paid based on how much liquid cleaner they're buying, you know? So yes, this is certainly a phenomenon and a concept in MLM that is tricky, right? Like why

How can you draw the line where what you're buying is actually because you like it and want it and want to use it when you're also making money based on how much you're buying and how much your downline is buying? Yeah, I was struck by Alex's description of how Utah is like Disneyland and also how passionate people are. The other thing, too, is it reminded me of just the sophisticated process that's involved now that can be so very persuasive to get people involved.

excited and passionate about participating like podcasts and books and brochures that really get to it. I was also struck by the degree to which if people are feeling like there's a lot of pressure that they're flagging in their sales, that they'll also put out a lot of money for coaching and training. Oh, yeah, there's basically a second cottage industry program

which now is very online but honestly has also been a long been a part of multi-level marketing. It was once called the tools, that's sort of the parlance. Now, self-help, entrepreneurial skills, this sort of girl boss side hustle culture is pervasive and so it's not necessarily notable to us. But in the 80s and 90s,

very successful multiple marketing uplines started their own self-help businesses, putting out tapes and books so much so that it was an internal conflict in both Amway and Herbalife.

whether these uplines making their own companies essentially and profits off of selling that motivational material, whether that could threaten the companies legally because maybe that's a pyramid scheme or just that maybe those businesses are now competing with the product business. And so that phenomenon has now spilled over where multi-level marketing, uplines will send their recruits

They have their own books and tapes and podcasts now, but they could also just go to someone like Tony Robbins. They can go sort of regular sales speak and entrepreneurial sort of encouragement, coaching, training. It's so diffused now that there really is this second industry where people can sell that. And of course,

people who leave Multi-level Marketing often start a coaching business, which happens in the course of the book. And you'll see that play out too, which again,

That sort of begs the question, if you're so successful selling your product and in this marketing company, why are you now starting a coaching business? You're right. You can sort of see where I'm going with that. Yeah. But the bottom line, of course, is that the people on the bottom end of spending money in so many different ways around all of this to support their ability to do this. The other thing I was struck by was Alex saying his aunt. And I saw a stat that the industry is 75% women. Why does it tend to appeal to women?

MLM has been primarily comprised of women participants since the 60s. And part of that is because multi-level marketing since its inception has been part of this, you know, these are independent contractors, not full-time wage laborers, right? And so always, like I was saying in the beginning of this conversation, MLM appeals to those sort of outside the traditional labor market.

whether they're immigrants trying to get a footing or whether they are women who are doing childcare or who are in the sectors of the economy and the labor market that are already insecure and require "flexibility." So I'm thinking of, you know, the retail sector, service, restaurant work. Already women tend to work in these fields, and in part that's because they're also still taking care of their kids.

And so the need among women is higher for this flexible, quote, "income." And whether it really generates income is, of course, the big question. But women are always more susceptible to that pitch, I think, than men. Though, you know, as inequality in this country gets worse, but in these sort of a little more nuanced and hidden ways, right, where someone might have a lot of student debt

they might be driving Uber or working in Amazon. So a person might actually have a job, they might even be working full time, but they are still not meeting the cost of living. They're still behind on their rent. And so that I think is actually now becoming more gender neutral. And many, many types of Americans are at risk for this type of pitch. And so the dominance of women, I think, is very true still. But also, I think the industry

relies on it using women, honestly, as a cover. You know, the Direct Selling Association, which is the lobbying group that represents MLM's interest on Capitol Hill, they're constantly touting the ways that the industry, quote, helps women. And small business owners are women and their moms and single mothers and all kinds of things. And I actually think that

Because the industry is so, that 75% number is from the industry itself. So I actually think we really don't know the true demographics of MLM anymore. Let me go to caller Karen in Menlo Park. Hi, Karen, you're on.

Hi. So my experience with Amway occurred a few decades ago, and I was not told that I was being invited to an Amway party. I was a hardworking professional electrical engineer trying to get ahead in my own field and tired and lonely. And I was surprised that a friend of mine invited me to an Amway party, and it was a pretty hard sell.

And I was, you know, it was terrible because I ended up, I ended the friendship because I had been, I felt like I was just not treated honestly. And it was not a good experience. And I wonder if other people have had this experience. Thank you so much.

Well, Karen, thanks for sharing your experience. Listener Mark writes,

Does your book address some of the new twists that marketers use to update their, quote, con for folks who have already heard about MLM? What's so interesting about Mark's question is also that it's been updated from so many terms. MLM was sort of the new one from, like, pyramid scheme, right? Well, first of all, just to step back for a second, your book really is an indictment of multilevel marketing. Right.

You know, how is it different? And at the same time, your subtitle is How the Pyramid Scheme Shaped America. So a lot of people draw distinctions between MLM and pyramid schemes. But how are they? Are they different? Right. Well, and that is the million dollar question. And, um,

you know, it really is a difference. The question is whether there's a difference here or whether it's a distinction without a difference, right? And so just like you correctly said, the only reason we even have the term "multi-level marketing" is because in the '70s, by the time this industry, this plan, as it was called, it was invented as "the plan," which sounds sort of ominous,

once it had been around for, you know, over 20 years.

the US government, state governments really started to understand how these companies operated and they really were no functionally different from a pyramid scheme. And they cracked down on some of the early companies which have names like Holiday Magic, Nutrilite, Nutribio, Costco, and you know, if you were around in the 70s, they might ring a bell, but they've really been lost to history and in part that's because

some of the other companies like primarily Amway, though they had actually come from the same set of companies by those same inventors who invented the plan, and this is what my book documents, they were successfully able to kind of argue that, "Oh no, those are bad apples. We're the good apples." And so Mary Kay, Amway,

Shackley, some other companies that were around for a very long time, out of which Herbalife grew out of some of those companies. So many of the modern companies, though they come from the same place, they were successfully allowed to continue their business model. And that kind of came to a head in 1979 when the FTC did decide to let Amway's business model continue.

companies followed the quote Amway rules. So Amway argued that it had rules in place regarding product sales for its distributors that kept it from being a pyramid scheme. Those rules were really never actually tested by the FTC. The agency didn't crack Amway's books and they weren't able to really document, well, how much are people selling versus how much are they

buying products and keeping them around and making money off of recruiting, which is how we legally define a pyramid scheme. And so they really just took Amway's word for it. And those are the only rules that we really have that regulate MLM. And so

That, you know, is it legal or not? Well, it's been allowed. You know, we've never had a pyramid scheme piece of legislation. We've never had a Supreme Court case. A jury never weighed in, right? The FTC only made a decision. And since then, that's really the whole industry, the way it works now flows down from that. So my book really argues that it's never been tested whether, quote, multilevel marketing

is truly different from a pyramid scheme. And instead, we actually have decades and decades of evidence that it's not. And the lawsuits from these companies, if you even read one, I mean, they've sounded the same since the 80s, the 90s, the 2000s, up until the 2016 case against Herbalife that the FTC filed under the Obama administration. So it's almost like that adage, if

If someone shows you who they are, believe them. It's almost like multiple marketing is constantly showing us what it is. And yet we sort of allow it to be called something else. Yeah. And as you say, not regulated.

Despite the fact that there were some heartbreaking stories in your book about a young Texas mom struggling to feed her kids and a waitress scraping by in Brooklyn that are just spending thousands of dollars on products and training and getting so much pressure to sell. And that under Amway, one of the largest MLMs, 99% of people failed to reach any level of achievement within the company and business.

There was a young mother who estimated that she lost $120,000 trying to build a business. You also write that MLMs are treated with a bit of a shrug. You write, there is a common nebulous understanding about Americans that MLM is odd and exploitative, but a shrug goes along with it too, as one does with Scientology or other factions of this country's colorful fringe. It's one of our many sideshows, falling somewhere between a cult to crime and a joke. Why do you think we treat it that way?

One problem really is that they have been around so long and that that one federal decision really did open the door for many such companies using the plan to flourish.

and legitimize. And, you know, the Amway founders, J. Van Andel and Richard DeVos, they amassed incredible political influence and power over the last few decades, you know, starting in the 60s and through now, you know, Betsy DeVos, Donald Trump's education secretary, is Richard DeVos's daughter-in-law. And

And so there's both tremendous political pressure to normalize these businesses and allow them to continue. And then, you know, that legal kind of question mark, I think,

when a person is trying to figure out whether they should join these businesses and they're looking on the Federal Trade Commission website and even that website says, "Well, they're legal, but we don't recommend them." You know, I think that's really hard to figure out, you know, what do I do here? And so this kind of gray area has just

really allowed for a big kind of gap in how we treat these types of crimes and financial frauds versus others. And then, of course, the fact that

there are a lot of women involved and the women who are involved are maybe housewives, you know, in a way someone might use that term pejoratively. They're not necessarily the most politically... They don't necessarily have politicians looking out for their interests.

And so that's another part of why, you know, it's like there is that shrug where somebody might say, well, they did it to themselves. And that, you know, self-blame is very much encouraged in MLM. If you didn't make it, you are to blame. And so even the survivors, many of them don't talk about it because it's so shameful. Yeah.

Well, you mentioned the founder of Amway, Richard DeVos, father-in-law of Betsy DeVos. And after the break, I want to get into the direct connections between multi-level marketing and the right...

In the meantime, listeners, you are weighing in with your experiences around multilevel marketing. And this listener writes, during the pandemic, a person I knew in high school reached out to me to recruit me for an MLM to invest in Alibaba during the pandemic. First, they hooked me in because I thought they genuinely wanted to catch up, but they quickly went into a sales pitch. I straight up said, no, I'm not interested in your pyramid scheme. They said it's not a pyramid scheme as they proceeded in drawing an actual pyramid scheme.

We're talking with Bridget Reid. Her new book is Little Bosses Everywhere, How the Pyramid Scheme Shaped America. She's a features writer for New York Magazine, and she investigated the enduring allure and popularity of multi-level marketing. And also, it's very broad reach, which we'll dig into more after the break. Stay with us, listeners. This is Forum. I'm Mina Kim.

Support for Forum comes from the University of San Francisco School of Management. Celebrating 100 years of partnership with the Bay Area business community, the USF School of Management connects students to the city's vibrant culture, hands-on internships, and a wealth of career opportunities. Where AI and sustainability are integrated into every facet of business education.

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Welcome back to Forum. I'm Mina Kim. Millions of Americans have gotten involved in multilevel marketing at some point in their lives, but according to the Federal Trade Commission, 99% of people who join MLMs don't make any money. Bridget Reid is features writer for New York Magazine and has written about this in her new book, Little Bosses Everywhere, How the Pyramid Scheme Shaped America. And listeners, what questions do you have about how MLMs work and how they can be used in the future?

Have you or someone you know gotten involved with MLMs? Has someone in your life tried to recruit you? Maybe you've had a positive experience with multilevel marketing you want to share. You can email forum at kqed.org. Find us on our social channels at KQED Forum or call us at 866-733-6786. 866-733-6786. So Bridget, just before the break, we were talking about the people who started Amway Richard DeVos' father-in-law, Betsy DeVos, who became the Secretary of Education during the

Trump's, the Trump's first presidency. And then it was also started by a man named Jay Van Andel. Can you talk a little bit about the really how intertwined MLM key players like this are with the Trump presidency?

Van Andel and DeVos were high school best friends in Grand Rapids, Michigan. And they joined the very first multi-level marketing company started by those inventors of the plan. It was called Neutralite and they sold supplements. And these two were so successful in building their organization that they simply started their own, which

which has constantly happens in multiple marketing because once you build up a big downline, even though if you're at the top, you're still spending a lot and buying a lot from the actual company making the products. And so often big successful recruiters will start their own multiple marketing company, which is exactly what DeVos and Van Andel did in the late 50s. They started American Way, which became Amway.

And so they're one of the oldest around and already by the early 70s, that period I referred to before when the authorities were really starting to crack down on MLM. They already had a very key ally in the White House who was Gerald Ford, who was of course their hometown congressman from Grand Rapids and who they called Jerry. They were really close with him. He was a supporter of Amway. He appeared at Amway events.

Jay Van Andel, who's maybe less known than the DeVos's, but he was very key in the U.S. Chamber of Commerce in building that organization as an activist organization, you know, a grassroots mobilization effort.

effort, which in the '70s really contributed to what we might now call the New Right, this coalition that came together eventually to support Ronald Reagan running for president that was a kind of combination of free market purists and evangelical Christians, right-wing economists who were pushing what we call supply-side economics, then called Reaganomics,

Van Andel and DeVos became very key members of this coalition. They themselves were quite devout and outspoken Calvinist Christians, which is a type of Christian reformed sect. And so they, through the 70s, really built that political power. And much of

that effort was actually focused against the FTC and against the regulatory agencies that were cracking down on or attempting to crack down on big business during the stagflation era of the 70s. So anyway, that was all happening before the FTC made its Amway decision, right? So once the FTC has allowed Amway's business model to continue and Ronald Reagan, their ally, is in the White House,

They just continued to build their power over the 80s and 90s. The DeVos family and the Van Andel families, they became huge mega donors to the Republican Party. You know, among the Mercers, the Kochs, any of those sort of dark money funder names that have now become quite familiar, they should be there raising millions and millions of dollars for the RNC, you know, buying new facilities for the Republican National Committee.

giving in huge amounts to politicians all around the country and of course to various Republican candidates for president. And they also gave and have funded institutions like the Heritage Foundation, which is the primary recipient of, I think, their most sort of potent political influence.

And right now, Barb Van Andel Gabby, she's Jay Van Andel's daughter. She is, I believe, the head of the board at the Heritage Foundation. So that's just Amway. And other companies also have been politically active. In Utah, like that caller mentioned,

Many MLMs that are maybe less well-known nationally, but they give a ton of money to all kinds of politicians, including Mitt Romney, who's very friendly with MLM. Kyrsten Sinema has received MLM money. It goes on and on. So they're incredibly politically powerful.

And Betsy DeVos being nominated and confirmed as education secretary really was, I think, the culmination of seeing multi-level marketing's political agenda really become clear in the White House. Is there any kind of equivalent on the left with regard to someone who's involved in MLM who's a huge donor on the left?

There isn't, they do definitely trend towards Republicans, but the Direct Selling Association, the lobbying group, has actually been quite a bipartisan lobbying group. So they really do what a good lobbying organization does, which is lobby any administration, right? So just like oil and gas, just like the tech industry, right, any industry that wants to encourage

profits on Capitol Hill is going to give to both sides. So while Republican politicians tend to be friendlier to MLM, you know, Bill Clinton, for example, received money from the DSA and in 1996 actually recorded a video for the Direct Selling Association to send to its distributors and participants.

And so that's Amway, Mary Kay, Herbalife. Those are all the member organizations funding that group. So, you know, it has been a bipartisan effort. Madeleine Albright was a paid Herbalife spokesperson for many years. And the FTC's decision to fine Herbalife in 2016, which was a historic fine, it was $200 million, but...

They let the business model continue. That was during the Obama administration and during Obama's FTC. So it really it has become bipartisan that in that no administration will help crack down on multiple marketing. Let me go to caller Bruce and Benicia next. Hi, Bruce, you're on.

Hi! Thank you for having me on. I was a former Amway independent business owner and IBO, which is how they recruit and register us as independent distributors.

It was a good experience in the beginning when I was young to be a top earner. And the best way for new people to become earners is to recruit people who have former MLM experiences. They can also handle majority of like the building the network.

It got unsustainable the night that I went to a meetup where someone above us was sharing the pitch, trying to recruit, trying to really get all the new people to sign up and become IBOs.

One night I asked one of the hosts if they can provide me some supplement drinks because I was so addicted to it. It tastes so good. He said, yeah, come back into our shop. And it was their garage, their home garage, and they had shelves all along the wall.

with all the entire inventory of products, supplements, wash, clean, everything you can think of from the physical catalog. And I asked them, is this for your customers that are on hold? He said, no, this is for me from 10 years of just buying products. So MLMs get sustainable because they have to cannibalize their own sales.

and turn that into a little store, which they retail back to anyone and everyone that can pocket the difference. At that point, I realized that these are not earners. They're basically just trying to hoard all the products, and they become their own little convenience store themselves, too. And bringing people underneath them to do all the recruiting just made me realize that I'm not a business owner. I'm just part of their business machine, basically.

Wow, Bruce, what an eye-opening experience that was for you. And Bridget, we'd love to hear your reaction to what Bruce just shared here. It reminds me also so much of your description of Monique with her boxes and boxes of Mary Kay products. Yeah, I mean, that's amazing, Bruce. And I'm glad to hear, I mean, maybe there's more nuance to that, but it doesn't sound like, at least for a period of time, it seems like the business building part of it actually was okay for you. And I'm really glad to hear that. And I think that that's also a

a wrinkle in how MLM works and whether it's sort of easy or not to say whether it's "bad" for someone, right? Because I think there's so many people in it. There's such a range of experience where some people were able to get in and out without a tremendous financial or emotional impact.

And it almost seems like you seeing that amount of inventory was a great kind of, you know, it maybe opened your eyes earlier than it might have had you not seen how that person above you really operated their business. But I do think that's an insidious part of how it works is if you get higher and higher up the ladder, you do get to that unsustainable part where you are being

having a massive amount of buying and that that's really what's sustaining you and your downline is just a bunch of people buying products and that phenomenon the caller described of you know sellers or excuse me distributors buying and then actually selling at a discount you know selling to anybody selling to other distributors undercutting their actual quote retail market I mean that's just classic right and and every MLM

What's ironic is that even though you're really only supposed to buy it from another participant, from an IBO-like distributor,

You can buy them on Amazon, you can buy them on Poshmark, you can go to somebody's house and they'll give it to you for cash. You know, everybody's constantly trying to get rid of this stuff on what is essentially like a vast black market. So if you really, like I don't know if the caller would speak to this, but if you're really addicted to the products, you can get them for cheap from an IBO that's trying to make back a fraction of what they've spent. Well, let me remind listeners, you are listening to Forum. I'm Mina Kim.

So with all this, there's little hope of scrutiny or regulation in the industry, especially as you talk about how intertwined MLM is on the right and even with the Trump presidency. Listener Josh writes,

Why wouldn't the company expand to more traditional wholesale resale channels via brick and mortar and or web retails? I guess that's a good question to ask yourself if you're in the process.

Another listener, Jen, writes, I lost a very good friend who moved to Texas. We lost touch for a while. Then she found my son on Facebook and asked for my contact info. But the first thing she did was start pushing free Mary Kay products to me. I never replied to any of those messages but tried to rekindle our previous friendship, which she did not seem too interested in because I ignored her sales tactics. So we fell apart, and I feel bad about it. Another question that I have for you, Bridget, is at the very beginning of the show, you mentioned how –

popularity booms for MLM, they tend to follow economic trends. And so they happen during the pandemic. With the uncertainty right now, do you think there will or are you seeing signs of another boom? Well, on the whole,

traditional direct selling, I believe, is on the decline for the reasons that one of the people who just wrote in actually mentioned, which is that direct-to-consumer retail is its own legitimate and separate business that I think is helping to put out a business MLM simply because it doesn't make sense. And there really is just a long decline in many of the older companies in terms of participants and in terms of profits. But unfortunately,

MLM is morphing and booming in other ways where now there are hundreds, if not over a thousand other multi-level marketing companies and new ones are started all the time. But there are also related business models that rely similarly on a constant churn of promotion and recruitment.

And maybe the engine of sales is supposed to be something different, like the product might be different. So for example, I believe coaching, many coaching operations I think operate similar to MLM or other kind of self-help coaching therapy kind of operations. There's also affiliate marketing, which is a business model that is different but also relies on a constant promotion of like,

a giant amount of participants who are sort of duped into thinking that they're going to make money doing sort of digital sales, ad sales. But in reality, they're really paying to be involved in a scheme. So that's a sort of separate scheme. And then there's cryptocurrency, which I think, you know, NFT is...

crypto coins and MLMs based on crypto advice, signing up to sell what is supposed to be some incredible proprietary crypto investment scam or advice. It's not supposed to be a scam, but it is. Anyway, so I do actually think what's happening is

MLM-like scams are booming, even if the old-timey MLM is on the decline. And part of that is because those regulatory...

designs by the MLM industry has now actually become de rigueur for a huge part of the financial and the tech world, right? This less regulation that we all would benefit from a freer market and that we should be able to join these investment schemes with very little oversight. I mean, that's really shared by a lot of the financial and tech industry. Crypto and AI, those industries are

are fighting tooth and nail right now for either no regulation or regulation that they have had a huge hand in making. And so that's why the subtitle of my book is "How the Pyramid Scheme Shaped America," because

This, you know, they really want impunity. And that's what MLM, because of a sort of set of circumstances that I think were really kind of miraculous in the '70s that produced this decision, you know, MLM has had impunity for a very long time. And so that trend is now something that we're seeing all over the country. And yes, I think as insecurity is becoming more and more common, I think Americans are very at risk for the get rich quick pitch.

What makes people able to get out? We heard from Bruce who sort of had that mind-blowing moment, right? But what are some things that you have found that were helpful for people to be able to get out? The woman in my book, Monique, she was able to start understanding something similar to what Bruce said, you know, that she wasn't a small business owner. Her kind of revelation was more emotional in that she

She underwent a health crisis and her upline, who was supposedly a family member, like that's what sponsors and downlines, they really call themselves family members. This person, instead of reaching out to her during this crisis, just kept encouraging her to keep selling the pitch. Basically one message this person sent when she was on a hospital bed recovering from this surgery she had, you know,

It was almost like a light bulb moment where she just realized that that had been one big lie. She'd been told that she wasn't a family member. She was just a cog in their machine. Just like Bruce said, he realized he wasn't a business owner. He was just part of their giant machine of people buying products. And it kind of cascaded from there for her where then she was able to really start thinking about

how much she was spending every month versus what she was making and all the debt she had taken on. And then all the lies she was also telling herself in addition to the lies she'd been told about, you know, how she would one day sell these products and she was really successful and all of these things.

You know, that's one way where I think people start to really, just one little thing kind of unlocks the fact that they've been lied to and it then expands outward. I think also when people have been isolated from their family and friends, often like a big family event will do that.

for somebody. You know, they will, you know, I spoke to one person in my book who, you know, a family member had a crisis and they were encouraged by their uplines, you know, not to really talk to that family member because they weren't supportive of the business. So, you know, often that's kind of how it unfolds. And for people it takes decades.

I know in Monique's case, $75,000 later, I think she said she never made more than $5,000 in retail sales and probably her biggest commission check was $1,000 and so on. So she ended up losing quite a bit.

I was, though, left hopeful by the fact that for a lot of people, they were able to sort of recognize a new way to relate to others. And so I hope, listeners, that you also leave with that sense of inspiration, too. Bridget Reid's book is Little Bosses Everywhere. My thanks to Cecilia Lay for producing this segment. Thank you, Bridget. Thank you, listeners. This is Forum. I'm Mina Kim.

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