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Empowering your money

Popular MLM businesses are leaving young women broke and friendless

Shortly after being laid off from her retail job in 2016, Kayla Imhoff, then an undergraduate student living in San Diego, accepted an invitation over Facebook to reconnect with an acquaintance who started a health and wellness company.

Over lunch, the banter between the two quickly turned into a sales pitch for Kyäni, a nutrition and skincare multi-level marketing company, or MLM, that was “curing” her acquaintance’s fibromyalgia. Her acquaintance didn’t start the company; she simply was an independent distributor for Kyäni and wanted Imhoff to join her downline.

Eighteen months later, Imhoff conservatively spent about $3,000 of her family's money that she couldn’t afford to pay back and was blocked by friends on social media. It all dated back to a seemingly harmless Facebook message.

“The one thing that really made me lose faith in humanity and what irks me about MLMs is just money is king and this push on money and kind of screw everybody else,” Imhoff said. Beyond the priority placed on money, it was the “brainwashing” Imhoff found that made her the most upset.

Kayla Imhoff became an independent distributor for the MLM Kyani, but lost friends and family during the 18 months she tried to make the business work.
Kayla Imhoff became an independent distributor for the MLM Kyani, but lost friends and family during the 18 months she tried to make the business work.

Young women know Imhoff’s story all too well.

Many have at least one old acquaintance, friend or relative who uses social media as their own digital storefront to sell LuLaRoe’s psychedelic leggings, cosmetics from Arbonne and Younique, essential oils from DoTerra and Young Living, skin care products from Rodan + Fields or Lip Sense, or shakes from Beachbody.

These distributors are the 21st century Tupperware Ladies and instead of hosting parties in living rooms, they have taken over social media to peddle their wares. But behind the saccharine posts littered with emojis promoting shakes or mascara are multi-level marketing companies that often become traps that cost women their finances and friendships.

What’s an MLM?

Multi-level marketing — also called direct sales, or person-to-person sales or networking marketing by companies that don’t want the stain of an MLM — all operate the same way.

Unlike a retailer, an MLM’s salesforce are not employees but rather independent contractors, consultants, or distributors. They receive no salary and benefits are rare. But distributors are the only way to buy a MLM’s product — there’s no brick-and-mortar store or online site that carries the products.

On paper, distributors make money in two ways: By selling the products and often, more lucratively, by adding to their so-called downline, or salesforce members underneath them. The distributor then makes a percentage of every sale made by those they outrank in their downline. That leads distributors to encourage their downline to recruit more and more salesforce members.

MLMs technically aren’t pyramid schemes, but the difference between the two is full of nuance. It comes down to how distributors make their money. In a pyramid scheme, compensation is driven from recruitment. In an MLM, the compensation structure and emphasis is placed on sales and recruitment.

Experts are quick to point out that both structures are inherently flawed because it’s based on a model that’s mathematically impossible. If each recruit were to recruit five people and those five people were to recruit five people each, that chain would eclipse the world’s population after 13 cycles.

MLMs target women

It’s no accident that MLMs are proliferating as the cost of childcare is soaring. Many two-parent households are forced to make a tough call. Should both parents work outside the home and pay for childcare or should one stay home and eliminate that cost?

Three in four of the country’s independent distributors are women — mostly white women and between the ages of 35 to 54, according to the DSA.

Multi-level marketing employs mostly women between the ages 25 and 54, according to the Direct Selling Association, a trade group for the industry.
Multi-level marketing employs mostly women between the ages 25 and 54, according to the Direct Selling Association, a trade group for the industry.

Appealing to that demographic are rally cries like “girl boss,” “boss babe,” and “fake it ’till you make it.” The mantras have been co-opted by the MLM community on social media to sell a fantasy: With only a $49 starter kit, you can become the founder, president, and CEO of your own business. With the liberal use of the word empowerment, MLMs sell women a special kind of product: themselves.

The promises of entrepreneurship and side hustle aren’t just in the social media profiles of the foot soldiers. Marketing materials and literature packaged in pastels and curlicue fonts claim that women can have it all. They can raise their children and make an income by not having a job outside of the home. There’s no boss. There’s no sitting in traffic on a daily commute.

Arbonne’s website tells prospective distributors they can “run a business” from their smartphone and be their “own boss,” making the endeavor seem like a hobby that pays you in spades. All they have to do is “share the opportunity.”

Arbonne, an MLM company, advertises its business opportunity to potential distributors.
Arbonne, an MLM company, advertises its business opportunity to potential distributors.

“The way they presented the business was that you're not selling anything, you're just sharing information,” Imhoff said, recalling her lunch with the Kyäni distributor, who presented the opportunity as: “People are just going to come to you because you have such an amazing opportunity.”

In reality, these women aren’t entrepreneurs.

They’re not running companies, crafting their own products, or working flexible schedules. They’re at the beck and call of their upline who is imploring them to recruit to their downline. They are slaves to social media, meeting sales quotas, and trying to reach the next level in the hierarchy.

At company pep rallies, impassioned leaders stand before adoring distributors on an elaborate stage, often accompanied by pyrotechnics, to deliver bully-pulpit-style sermons to share how the product changed their life and brought them fame and fortune. Chief among the messaging: Anyone can do it.

Distributors fire up Facebook Live or Instagram Stories to disseminate a similar message directly to their friends. It’s energetic with a good portion carved out for the hostess to share how the product has changed her life with passages lifted from a company script interspersed throughout.

William Keep, PhD, and interim provost and vice president for academic affairs at The College of New Jersey, has studied pyramid schemes and MLMs for decades and attests the company products — which reflect what’s popular now — are irrelevant. What MLMs actually sell is a dream, a fantasy, a distraction, an opportunity for a new life, Keep told Cashay.

LuLaRoe is a popular MLM company known for its brightly patterned leggings. The attorney general in Washington has sued the company, alleging it's a pyramid scheme. The company said the lawsuit is without merit. (Screenshot of LuLaRoe's website)
LuLaRoe is a popular MLM company known for its brightly patterned leggings. The attorney general in Washington has sued the company, alleging it's a pyramid scheme. The company said the lawsuit is without merit. (Screenshot of LuLaRoe's website)

The real problem — despite luxurious company retreats to tropical destinations with their fellow “boss babes” — is that over 99% of MLM distributors lose money or at best, break even, according to a report cited by the Federal Trade Commission.

"MLM makes even gambling look like a safe bet," the report states.

‘I figured out how I could block posts’

MLMs also pose a threat to distributors’ social well-being.

Nearly half of Americans report witnessing their social media feeds going from engagement announcements and vacation photos to posts trumpeting MLM products with recipes, videos, testimonials, and photos, according to a new survey from Lending Tree.

Dylan Istace, 26, started to mute the noise when his social media feed turned into a marketplace bazaar about seven years ago.

“Every time I log on to Instagram, I see five or so people who are posting about pre-workout shakes, protein powders, candles and teas,” Istace, a graduate student from Saskatchewan, Canada said. “I figured out how I could block posts and I’m not as aggravated by it all.”

Istace also found the groundless health claims shared by his social media friends — none of whom have backgrounds in medicine, nutrition, or kinesiology — the most grating and irresponsible.

“All they know is what they know from the company,” he said. “And then they're out there giving that information to people like it's gospel.”

‘It hurts not to have her in our lives anymore’

Distributors predictably lean on those who are closest to them for business. Nearly 1 in 3 people feel pressured by a family member who’s an MLM distributor, while 1 in 4 experience pressure from friends.

It doesn’t always turn out well. More than 1 in 4 Americans say MLMs have ruined at least one friendship, while 1 in 5 say they have caused strained relationships with a family member, according to the LendingTree survey.

Take Jennifer Donovan. When her mother was diagnosed with stage four cancer in 2019, one of her closest cousins leapt at the opportunity to help.

Jennifer Donovan's cousin tried to sell Isagenix, a nutrition and wellness MLM product, to Donovan’s ailing mother. It strained their relationship. (Screenshot of Isagenix website)
Jennifer Donovan's cousin tried to sell Isagenix, a nutrition and wellness MLM product, to Donovan’s ailing mother. It strained their relationship. (Screenshot of Isagenix website)

Except her cousin wasn’t a doctor, nurse or medical professional. She was a former educator who quit teaching to sell Isagenix, a nutrition and wellness MLM product, and wanted to peddle powdered shakes and essential oils to Donovan’s ailing mother.

The cousin claimed on Facebook that “Isagenix would make it all better,” followed by cutting and condescending posts that distressed Donovan’s mother to the point of tears.

“My cousin’s post made her feel like she had brought cancer down on herself,” Donovan said, “as if she wasn’t healthy enough.”

Donovan had enough and was left no other choice but to mute her cousin’s posts and ignore her messages.

“This has just gone beyond anything I would have thought her capable of,” she said. “And it hurts not to have her in our lives anymore because she is the cousin who used to be the closest with my family.”

Megan Dean, an Isagenix spokeswoman, said that kind of behavior goes against company policies and procedures and could not verify the complaint.

"Whenever we hear of any kind of misconduct happening, we take it very seriously and immediately investigate these reports,” Dean told Cashay. “It’s definitely not something that we would ever condone.”

‘Oh my god, I creeped somebody out’

All of this is familiar to Imhoff.

From the beginning after joining Kyäni, the emphasis was on recruitment. At the instruction of her upline, she made a list of 10 people she wanted in her downline — the friends and family she added to her list were considered her warm leads.

But her warm leads ran cold, and during the time she was an active Kyäni distributor, she estimates that four or five family members bought the products and she wasn’t successful in getting anyone to join her downline.

Imhoff was nearing her breaking point.

By the time one of the company’s leaders came to San Diego to hold a summit and armed with a new sales script that yielded a “100% success rate,” Imhoff was already on to her cold market.

Usually by the time an MLM distributor is reaching out to distant relatives and former classmates, they’re grasping at straws. It means their immediate or warm market has turned them down.

While at the summit, Imhoff messaged the new surefire script to a middle school classmate on Facebook about Kyäni. The classmate immediately blocked her.

“Oh my god. I creeped somebody out enough that they felt that they had to block me because they were uncomfortable,” she said.

While Imhoff was horrified, her upline praised her.

“Congratulations, that's awesome that they blocked you,” she recalled her upline telling her. “People weren't people, they were just numbers,” she said.

The income disclosure form from Kyani, available on its website, shows how little most of its distributors make from selling the MLM product.
The income disclosure form from Kyani, available on its website, shows how little most of its distributors make from selling the MLM product.

Months later, Imhoff managed to get another middle school classmate on the phone. At the behest of her upline, Imhoff was encouraged to coordinate a conference call so the three parties could “explain the business better.”

“I haven’t talked to you in, like, 10 years,” Imhoff recalled the former classmate saying. “This is too much.”

‘I really wasn't a happy person’

After 18 months of firing off Facebook messages and social media posts, and was “guilt tripped and manipulated” by her upline to skip her college classes or family event, Imhoff estimated she made just under $400. More than $3,000 of borrowed money from her family went to buying samples, training workshops and conventions.

Josh Chandler, general counsel and chief legal officer at Kyäni, said there was no way Imhoff should have spent so much on training. The company doesn’t allow its groups to sell training materials or profit off of workshops.

“Whenever we discover things like that, we immediately will send a letter and often we’ll even impose a fine,” Chandler said.

As for how many people Imhoff alienated, it’s a number she can’t bring herself to think about too much.

At that point, Imhoff’s upline gave her some drastic and desperate directives to expand her network: Drive for Uber so she could talk to passengers; approach customers at a Starbucks; hand out flyers in the middle of college campus quad; and set up an online dating profile.

This was too much for Imhoff. She was spending about 20 hours a week on the MLM and the criticism and pressure from her upline contributed to her high stress and low self-esteem. “I mean I really wasn't a happy person,” she recalled.

The MLMs priorities weren’t aligned with her own and Imfoff — who describes her family and friends as her “everything” — would never choose money over them.

“This is part of the reason why a lot of people say MLMs are like a cult. There is brainwashing,” Imhoff said. “There is kind of a sense of a collective consciousness that anybody who questions the leadership, the training, the system — you're ridiculed, you're immediately shut down.”

Now 25 and a graduate student pursuing social work, the scars are still there for Imhoff. It wasn’t until she spoke with Cashay that Imhoff officially cancelled her Kyäni distributorship even though she had disassociated herself from the MLM for three years.

“I didn't want somebody messaging me and be like, ‘Hey, I saw you ended your distributorship. Let's talk,’” Imhoff said. “I just don't want to be sucked back into it at all.”

Stephanie is a reporter for Cashay. Follow her on Twitter @SJAsymkos.

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