Multi-Level Marketing Companies - Proceed with Caution
Multi-Level Marketing, or MLM, it's the business model that won't go away.
We've all been exposed to MLM products; the sales reps call themselves Consultants, Independent Distributors, Network Marketers, Industry Experts and so on. They invite us to cocktail parties or a mom's night out for free - but the catch - we have to listen to a sales pitch and a potential guilt-trip to buy the product.
More recently, as times have changed, we are getting pitched via Facebook or Instagram our timelines/feeds are flooded with updates of the products for sale.
What is MLM?
"Multi-level marketing (MLM) is the practice of selling products by recruiting independent distributors who are promised they can earn money not only be reselling the products, but by recruiting more distributors who will also recruit more distributors, and so on."
MLM companies are nothing new. I remember my mom being invited to Amway, Avon, Mary Kay and Pampered Chef parties and since then, an avalanche of brands have joined in; Arbonne, Advocare, Ava Anderson, Shakeology, Beauty Counter, Scentsy, Stella and Dot, Melaleuca, along with essential oil giants Young Living and doTERRA. These are just the main ones I hear about every day, though there are many others you can see here.
I know not all MLM companies are created equal, but the business model is usually set up in a way that puts a heavier price on the products to compensate the multiple tiers of commissions; but the commission package, however, makes it extremely difficult for consultants to actually make money - the majority of the profit filter upward while many of the independent distributors are strapped with monthly mandatory minimum orders, expiring product and debt.
Important: I am not singling MLM out to prove they are dishonest companies, we know there are plenty of unethical organizations operating outside of MLM constraints. I'm singling them out because it's not a random sales rep trying to pitch us; the company sends our friends or family...people we trust, who have, in plenty of cases, been deceived by a company in hopes to make cash off items they may know very little about.
That being said, I have discussed this article with several friends and confidants before posting and encountered one who stated his parents have been in the MLM business since the 70's and have put 3 kids through college on the profit. Stories like this are rare these days as I will discuss below.
Many MLM companies target women, most of whom are stay at home moms trying to earn some cash while making their own schedule. This FTC Report states clearly
Nearly all "consultants" trying to sell the products are losing money. It makes sense why their attempts are so frequent and quite frankly, aggressive. Most MLM companies allow consultants to sell product online using their website domain only (i.e. www.MLMcompanyname.com/jannyorganically.) but are not allowed to promote this site on the internet, some exclude social media sites, so the majority of online traffic is directed straight to headquarters.
Why does this matter? If a rep spends their own money hosting a party to promote the brand/product and customers go home to simply google the company name and place an order, the rep will not receive a commission from the sale. That means many of these reps are working to promote a brand who has a edge to take all profit from internet sales unless customers are remembering to click a specific link.
Qualifications and Trustworthiness
The consultants tend to claim to be "experts" in their particular field even though many have received zero training outside of their welcome packet. When someone claims to be a qualified professional, particularly in regards to health, nutrition and medicine (including essential oils) it is deceptive and can be incredibly dangerous.
Before I go on, please note I have several friends who buy from or consult for a number of these companies. That doesn't mean I don't love or respect these friends, this article is simply to serve as an informational piece for those wondering if an MLM company is right for them to buy from or partner with.
Many of these companies are privately held and not required to release sales figures or legal action against the company to any new recruits. That means you must do your own research and digging on these companies before you invest.
But doing your own research sounds reasonable, right?
In the past year, I've had about countless MLM consultants contact me to sell for them stating I'd "make a great consultant", but what they really meant was I could make money for them because my audience is bigger. Of the ones I actually engaged with, how many of them actually knew their company's history, product safety and ingredients, FTC or OSHA Warnings or any pending or previous lawsuits against the companies? ZERO.
Obviously, I'm big on ingredients and safety, but before you buy from a MLM consultant and definitely before you decide to sell for them, please take some time to research the basics.
- Who are you going into business with?
- Ask all the who/what/where/when/why/how about the company's foundation/creation.
- Who runs the organization?
- What credentials/degrees do they have and from where?
- Any previous or pending lawsuits/litigation, etc.?
- Is the product something you would use?
- Does the product work? Who's testimony are you using? Yourself? Someone else associated with the company or someone with nothing to gain?
- Does the product sell itself or are you going to be twisting your friends/families arms to buy product for the length of your venture?
- What are the ingredients? Do they disclose ALL the ingredients or use "propriety formulation" in any of the products?
- Do they provide information on where ingredients are grown/sourced?
- Do they come with any certification to claims of being organic, etc.?
- Do they provide third party testing and verification of their claims and safety? Do they disclose who the third party is?
- Are there any buzz words being used? (marketing jargon with no clear definition)
- Are consultants required to "buy-in"?
- What is the pay structure?
- If you truly believe in the product and company after researching, can you make your ideal profit off of selling the product without recruiting others to sell for you?
MLM Companies On My Radar
Uses low quality, synthetic ingredients, including those toxic to those with the MTHFR gene mutation (that's over half the population) along with Splenda/Sucralose, (shown to cause leukemia in rats, alters gut flora in rats, ) loads of caffeine (120mg per serving) and "natural" and artificial flavoring.
Their board maintains synthetic supplements are "no different" than natural versions, however, if you research actual scientific and medical studies, they will show the natural derived version is better for your body.
Company claims to be 100% Natural yet uses synthetic ingredients known to be cancer causing, hormone disrupting, reproductive system-toxic, iummuno-toxic and allergy-causing ingredients such as: Retinyl Palmitate, Oxybenzone, Butylene Glycol, Polysorbate 20, HDI/trimethylol hexyllactone cross polymer, hydrogenated olive oil, Disodium EDTA, Triethanolamine, Diazolidinyl Urea, the list goes on.
Ava Anderson Non Toxic
Has continually stated their products are certified organic, but they don't choose to put the label on the products. USDA made them remove their claim of using organic essential oils, because, they were indeed, not.
Customers also claimed their diaper cream seemed to contain zinc oxide, yet it was not on the ingredient label. They later admitted it contained zinc oxide and changed the label. What else will show when other products are tested?
Update: As of 1/26/16, Ava Anderson has shut down. Their official notice is posted on their website. They admit several of the products contain(ed) ingredients they spoke against, but blame their suppliers.
Claims to provide "whole-food" nutrition with 17g of protein and nutrient-dense superfoods. Shakeology's products contain:
- Whey protein isolate (highly processed whey stripped of important components and contaminated with synthetic additives, chemical detergents and heavy metals),
- rbGH (growth hormone) and
- GMO corn and soy since they are not sourcing milk or whey from organic, grass fed cows
Beauty Counter launched in 2013 when a mom, Gregg Renfrew, became aware of the dangerous and toxic ingredients lurking in beauty and skin care products. In fact, they have been campaigning in Washington to bring attention to the 1400+ chemicals banned from beauty and skin care in Europe, while the United States has only banned 11. Gregg shares with MSNBC "We have not passed a federal law regulating (the beauty) industry since 1938. We have introduced over 85,000 chemicals into commerce since WWII, of which almost 80-90% have never been tested for safety or human health."
While this line is significantly cleaner than drugstore and green-washed brands, they still choose to use 80+ synthetic ingredients/preservatives, including Phenoxyethanol. They also have a few products where they have combined sodium benzoate with vitamin C (absorbic acid) which has been known to create the carcinogen benzene.
The main ingredient in many of their products is: water. This is disappointing because products with water require a preservative, hence the use of phenoxyethanol, and now you've paid a premium price for product that is primarily water and a potential neurotoxin. This is why I tend to use concentrated, waterless products.
The good news is, Beauty Counter isn't hiding anything. They are upfront with ingredient disclosure, their reasoning and admit they don't know everything.
While these are good/not-so-bad things about this particular MLM brand, their reps act like any other pushy sales marketer. The brand states they are "non-toxic" but really, what does that mean? When I questioned one rep about their use of the ingredients listed above, they stated there are no health risks associated with them. Those specific ingredients may be of moderate concern, but with a product you are using daily on your skin, absorbing into your blood stream, it deserves some attention. Everyone's bodies are different and people like me are ultra sensitive to even the smallest amounts of toxins or synthetic ingredients.
Additionally, the reps seem to insist Beauty Counter is NOT an MLM company, but a "Tiered Affiliate" system (sounds like a fancy way of saying MLM).
Like I stated before, I think Beauty Counter is doing some great things. I think their consultants should be better educated on the ingredients, terminology, buzz words and claims about health risks when discussing the line.
I also think they should focus on lowering the product costs. Spending upwards of $40-70 for a product is hardly accessible to the masses they claim to be trying to educate about toxins. The problem with choosing MLM to sell your brand is the product costs are inflated more to pay for the levels of reps selling products. Even if they had something like a Basic Kit that was truly affordable and able to be sold at Walgreens or Target, then I'd truly believe they were trying to get their products into the hands of the average folk (not just the ones shopping at J. Crew and Goop, where their product is also offered).
Young Living and doTERRA
These two companies have a sordid history. It's not a hidden fact that some top level executives from Young Living exited the company and started doTERRA. There's been an ongoing war between the companies and their reps ever since. Reps from either company are incredibly loyal to their brand and many openly bash the competitor.
Besides not wanting to participate in any war between something as trivial as essential oils, neither of the company seems entirely reliable:
- Both brands use misleading "certifications" when calling their oils Therapeutic Grade or Certified Therapeutic Grade, doTERRA has even trademarked the latter term, misleading consumers to believe their oils are certified, and guess what, there is no such thing as "therapeutic grade" and the FDA does not regulate "therapeutic grade" even though doTerra maintains it is FDA issued.
- Both brands encourage customers to ingest oils and/or apply to the skin without diluting, neither of which is endorsed by the National Association of Holistic Aromatherapy or the Alliance of International Aromatherapists without direction of a trained physician which your Independent Consultant is NOT
- Young Living has used synthetic materials they claimed were "pure"
- Both companies have been issued FDA Warnings for continuing to state their items cure, treat or prevent disease.
- Young Living has been in violation of OSHA for several infractions
- Young Living's leader and CEO has falsified credentials stating he is a Naturopathic Doctor
- doTERRA is being sued for Trademark Infringement, False Designation of Origin and Forgery, among others.
- Young Living has numerous lawsuits against them for injury related claims
- Young Living is being sued by doTERRA in a claim that states a Young Living Employee asked an analytical chemistry testing and analysis firm (ALS) to test four samples of oil for the presence of ethyl vanilla, a synthetic compound; after testing revealed high amounts of ethyl vanilla in one sample, the employee requested ALS list doTERRA as the source of the sample.
As mentioned above, it is highly recommended you work with a licensed practitioner when using essential oils, particularly when ingesting or applying neat. Robert Tisserand, a highly respected expert in Aromatherapy and Essential Oil Research along with Rodney Young, a Chemist and PhD., wrote an incredible book on Essential Oil Safety. I don't even sell oils or use daily and I own this book!
It's a high-price item, but it's a text book full of each essential oil, the source, key constituents, safety summary including hazards, cautions, dosage/dilution, advice, regulatory guidelines, specific effects and more. Anyone using oils should have access to this book.
Tisserand also suggests there should be a separation between essential oil sales essential oil education. I couldn't agree more. Read an interview with Tisserand where he discussing this along with ingesting oils, neat application, allergy reactions and other safety concerns.
The safety book is kind of like a text book, so if you want to start out simple, easy but still get a TON of great info, check out Essential Oils Every Day by Hope Gillerman, whose oil blends I use regularly!
Additionally, since I published, a reader forwarded me a link to an Indie Go Go Campaign called Uncommon Scents: An Aromatherapy Documentary about bringing awareness to essential oils. One of my favorite quotes in the promo video sums up my feelings about oils and education: "Anything that is powerful enough to heal, and these oils are, is powerful enough to do harm.”
This film recognizes the influx in essential oil demand along with the misuse and misinformation about these powerful substances. They seek to educate the public about proper use and safety of these ancient oils.
Some other questions to ask in regards to essential oils:
- Are the oils sourced from organic or wild-crafted plants from indigenous regions?
- Is an organic certification available where applicable?
- Did you know the purity tests can be tricked? Adrienne over at Whole New Mom breaks it down.
I hope everyone curious or enthusiastic about essential oils will continue their learning and education about oils instead of becoming defensive about their brand of choice.