[Editor’s note: Mabel Doge Luhan wrote this article to target multi-level marketing scams in the CNMI, but our Guam audience is just as susceptible to these. Guam, this applies to us, too.]
By Mabel Doge Luhan
Have you ever wanted to be your own boss? Do you wish you could buy all the nice things your family deserves? Have you ever wanted to have a reliable income by working from home just a few hours a week?
If you live in the CNMI, you must’ve heard this pitch, probably quite often in these desperate economic times. As soon as the economy gets bad, retirees fear losing their 25%, and government employees fear layoffs, the “be your own boss” vultures sweep in on the CNMI’s struggling and poor. Especially us women.
“Girl, I have a business opportunity for you,” your friend or relative tells you, often on Facebook. They won’t tell you what it is. But they’ll invite you to have coffee with them to talk about it. When you have coffee, they’ll tell you how much they love you and support you and want you to succeed. They’ll tell you how bad jobs are, and how they want to rescue you from the exploitation of employment. And of course they’ll tell you that they just want to help people. It’s not about the money.
My onetime lover HL Mencken said it best: “When they tell you it’s not about the money, it’s about the money.”
They will tell you stories about how comfortable they or their recruits are. How much this thing improves people’s lives. What a great opportunity it is. And, of course, how much they love you. Without telling you anything about what the actual business is.
Once you’re ready for the next step, they might start off by telling you not to listen to naysayers or people who “don’t want you to succeed,” and even train you in how to respond to those people — can you imagine, being taught what to say to people who say it’s a scam, before you even find out what this “business opportunity” is?
Then, finally, at some stage, perhaps at some kind of hotel seminar, they will tell you what the business is: “direct selling.” Which is the new name for multi-level marketing, or MLM. It really doesn’t matter what the product is — maybe laundry detergent or beauty cream or vitamins or NFTs — because the product is just a widget, and nobody buys the product on its own merits. In any “direct sales” organization, almost 100% of the sales are to “distributors” or “partners” — again, almost nobody is buying the products because they’re good products. And they shouldn’t.
And direct selling is a great way to make money. For the people at the top, not you.
Make no mistake: people get rich from MLM. Very rich. The thing is, those people are at the top of the pyramids. And they need you to hand over your money to them, so they can keep getting rich. You’re not getting invited to be at the top. You’re getting invited to be at the bottom, where you’ll be feeding money to those at the top.
Only the people at the very top make money, and everyone else loses money. This is true for every single “direct selling” organization, no matter what they’re selling, and no matter what they tell you.
In 1980, the State of Wisconsin examined Amway distributors. The top 1% of Amway distributors in Wisconsin earned an average NEGATIVE $900 annual profit. They lost $900 per year ($900 in 1980 dollars is $3,300 in 2024 dollars) by doing Amway. And that’s the top 1%.
In 2008, 86% of active NuSkin distributors earned no commissions. That’s 65,000 distributors earning no commission. Only 14% of active distributors earned any commission, and of those who earned commission, the average amount was $1,421 per YEAR, BEFORE EXPENSES. But that was just the top 14%, and that’s commissions before expenses. So much for the “You’ll easily make $5K a month working two hours a day” that the MLM crew tells prospects in the CNMI.
And keep in mind that most people quit the program after a few months, basically after they’ve lost all their money and can lose no more — these numbers only include people who didn’t quit.
A 2009 study (see page 7-27 of the FTC report above) asked the question, “What fraction of MLM participants lose money?”
Amway — 99.94% of participants lose money
Herbalife — 99.43% of participants lose money
Mona Vie — 99.71% of participants lose money
Nu Skin — 99.38% of participants lose money
Tahitian Noni — 99.64% of participants lose money
Tupperware — 99.71% of participants lose money
USANA — 99.53% of participants lose money
What’s so pernicious about MLMs is how they prey on people in vulnerable situations. They up the recruiting anytime there are layoffs or other economic worries. They swoop in anytime a company shuts down. And they try to stoke people’s fears about the economy and their jobs. And they play on some kind of “girl gang” or “women looking out for each other” imagined female solidarity — in order to rob us women blind.
They use classic cult brainwashing. They tell you not to believe anyone who doubts them. To associate only with people who also do MLM. That anyone who won’t buy from you or join under you isn’t really your friend. And, of course, that your recruiter, your “upline,” really loves you and wants you to succeed. My, they sound an awful lot like my third husband, before he ran away with his second-favorite catamite!
MLMs recruit people who don’t know much about business and tell them that they’re “business owners” or “partners” now. Sounds great.
But to be a “business owner,” you’ll have to pay in to the MLM. “You’re a business owner now, and this is an investment,” they’ll tell you. You’ll have to buy a monthly minimum amount of product, plus training materials, seminars, “tools,” and whatever else.
It’s a worse “investment” than throwing your money into a poker machine, because even poker machines have a better than 0.05% chance of winning. Any money you “invest” in MLM, you are certain to lose.
If your “mentor” or “upline” or “manager” or whatever they call themselves really loves you, why are they making you spend all this money?
If this product is so good, why aren’t stores eager to sell it? The products MLM sells are generally greatly overpriced, because again, the products are just widgets in the pyramid scheme. Nobody pays for the products as products. Everybody who buys them is buying them in hopes of getting rich recruiting more people.
On a small island, how many salespeople do you really need to be selling laundry detergent or bracelets or whatever? If this were really a desired product, why would your “mentor” be trying to recruit others to sell it, rather than selling it themselves?
If each participant recruits five people, then you have six people, then thirty-six people, then 216, then 1,296, then 7,776 then 46,656. Even at just three levels, who needs 216 people selling the same bracelets or whatever on a small island?
By the way, ALL MLM-sold products are available much cheaper on eBay and Amazon, because “distributors” have so much inventory they can’t sell, and want to clear out at any price. The items are sold online for about half the official MLM selling price, or even less. If you’re considering selling an MLM product, go look it up on eBay, and ask yourself why you should be selling (or buying) this product for two or three times the eBay price?
Saipan is especially fond of health-related MLMs, maybe because no matter how poor people are, they are still interested in preserving their health. Most of the stuff being sold by these is illegal, either because it’s illegal to sell in the US without a prescription, or because it’s against the law to make unproven health claims.
Those big bad law enforcers who won’t let the vitamin sellers tell you all about how many diseases it cures, right? Those law enforcers are working to protect you, and the vitamin sellers are scamming you — but most people find that out way too late.
There was a wave of MLM in the mainland US in the 1980s. People learned, and now know to stay far away. So MLM moved, first to Latin America and Europe. People there learned too. So now the hucksters have gone to small islands, the CNMI among them.
Some of the people pitching you this stuff really believe it works. Others know the deal, and couldn’t care less about you, as long as they get theirs.
Keep your money, and your emotions, far away from these grifters and manipulators.
https://www.youtube.com/watch?
https://www.youtube.com/watch?
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Mabel Doge Luhan is a woman of loose morals. She resides in Kagman V, where she pursues her passions of crocheting, beatboxing, and falconry.
1 Comments
Rick toney
03/21/2024 at 7:37 AM
I think you need to put Mary Kay in there as well invested thousands of dollars with no results – direct marketing more like direct scamming