Caitlin Ruiz, a 30-year-old resident of Tucson, Arizona, first got involved in multilevel marketing companies in her early 20s. Also known as MLMs, businesses such as Mary Kay, Tupperware, Amway, Arbonne, LuLaRoe and a host of others employ consultants who sell products directly to the public as well as recruit new members.
Ruiz was attending school and working full-time, and like many 20-somethings, searching for a fulfilling career. A co-worker introduced her to Mary Kay, an MLM that sells makeup and beauty products, in 2012. The co-worker set up a lunch meeting with her “upline,” the person who recruited her into the company, to pitch Ruiz on joining them. “She said all the right things,” Ruiz said.
Ruiz was promised flexibility, the ability to stay home with her future children and the opportunity to build a business that would eventually allow her to quit working completely.
Ruiz also had a lot of student debt that she wanted to pay off, and her co-worker’s upline assured her she could put an extra $400 or $500 a month toward her loans by working for Mary Kay. “They promise you the world and all the flexibility that you want. They make it seem like this big secret that nobody knows about,” Ruiz said. “I fell for it.”
MLMs hook people with the promise of becoming independent business owners with unlimited earning potential. But for many, getting caught up in an MLM turns out to be a nightmare. That’s especially true for women, who make up the majority of consultants for these companies.
The business model of an MLM is designed so that the majority of participants see modest earnings to none at all (somewhere between 73% to 99% earn nothing). A select few at the top, however, enjoy major financial success ― not because they’re genius salespeople, but because they’ve amassed huge “downlines” and collect enormous commissions and bonuses based on their sales.
So how do even seemingly intelligent people fall prey to MLMs despite the overwhelming evidence that they’re thinly veiled pyramid schemes? Often, it has to do with the cult-like tactics used to recruit and motivate participants.
Understanding The BITE Model
The comparison between cults and MLMs is not a new one. Amway, one of the largest MLMs in the world, has been the subject of several books that detail the company’s cult-like strategies, including “Amway: The Cult of Free Enterprise” written in 1999 by former distributor Stephen Butterfield.
Douglas M. Brooks, an attorney who specializes in representing victims of pyramid schemes, deceptive MLM programs and business opportunity scams, agreed that Amway is one of the prime examples of how MLMs mirror cults.
Brooks recently presented a working paper at the 2019 International Cultic Studies Association annual conference titled “Coercive Techniques in Business Opportunity Cults.” In the paper, he notes that Butterfield’s experiences with Amway, as well as those of others who have written about their time with this particular MLM, included “mass meetings with enthusiastic distributors giving standing ovations to high level Amway speakers, mysterious terminology, relentless focus on recruitment, positive thinking, the avoidance of any questioning of Amway or its high level distributors, and the tendency for Amway distributors to dedicate more and more of their time and energy to the organization, often at the expense of their relationships with friends and family, despite the lack of financial success.”
All of these factors, he said, are consistent with the popular perception of what a cult is. To this day, former distributors continue making the comparison. And Amway is just one of many MLMs that function in this way.
“MLMs hook people with the promise of becoming independent business owners with unlimited earning potential. But for many, getting caught up in an MLM turns out to be a nightmare.”
But what is the true definition of a cult? The term might conjure images of men and women dressed in long, hooded robes, chanting together and drinking toxic Kool-Aid in pursuit of enlightenment. And that is an extreme example of what a cult might look like. However, many cults aren’t so easy to spot.
Steven Hassan escaped the Unification Church (also known as the “Moonies”) in 1976 and has since become a mental health counselor and one of the leading experts on mind control and cults. According to Hassan, a cult is an organization that exercises undue influence over its members to make them dependent and obedient. Undue influence is defined as persuasion that takes over any free will or judgment; as a legal term, it refers to a person or group taking advantage of their position of power over others.
In cults and other organizations that employ mind control, undue influence is first imposed on victims by showering them with praise and affection and promising a fantasy world or elite status. Once a member is hooked, the organization employs a systematic method of control to disrupt that person’s identity and ability to think independently and rationally.
That process of gaining undue influence follows what Hassan calls the BITE model:
Behavior Control: This type of control is all about dictating who a person is and what they do. Behavior control can include restricting what types of food a person eats, what they wear, when they sleep and who they are allowed to associate with. Financial exploitation, manipulation or dependence is also often a key component of behavior control. Individualism is discouraged and groupthink is encouraged.
Information Control: To exert undue influence, cults will often withhold or distort information to make it more acceptable (or simply flat-out lie). Information control involves using deception, discouraging access to non-cult sources of information, encouraging spying on each other and producing propaganda such as newsletters, YouTube videos, movies and other media.
Thought Control: Cults will also seek to control how members think so that the group’s doctrine is accepted as the truth. Loaded language and clichés are used to stop critical thinking and reduce complex ideas to platitudes and buzzwords. Often, only positive thoughts are allowed; constructive criticism or questions are immediately shut down.
Emotional Control: Members of cults experience extreme emotional highs and lows; they’re showered with praise one moment and then made to feel guilty, fearful and unworthy the next. They’re told that any problems they experience are their own fault and never that of the leader or group. The cult instills irrational fears about leaving or questioning the leader’s authority.
These are just some of the examples of how cults and other mind-controlling organizations employ the BITE model of undue influence. They likely sound very familiar to current and former MLM participants.
Here are some of the biggest ways MLMs mirror cults in their tactics.
MLM Tactic #1: Love Bombing
One of the reasons MLMs are successful at recruiting new members is because the introduction is made through someone familiar. It doesn’t come from a stranger off the street.
Typically, the first pitch you get is from a friend or family member who invites you to a meeting. However, the details of this meeting are purposely kept vague. All you know is that it’s about a financial opportunity. “It’s all very mysterious,” Brooks said. The key is getting you to that first meeting.
Once there, the recruiter uses a technique known as “love bombing.” Love bombing is a term reportedly invented by the Unification Church that has evolved today to mean a type of toxic, manipulative affection.
MLM members will shower prospective recruits with warm welcomes and excitement, saying how wonderful it is that they came, what an exciting opportunity it is and congratulate them for joining. It’s almost as if the recruit is being seduced ― they feel special, important and like they’ve uncovered a precious secret no one else knows about.
The meeting starts when someone high up in the company inevitably gives their rags-to-riches story. They explain how bad things were before, how they were trapped by debt and a dead-end job. But by selling products for the company, they’ve changed their lives. Meeting attendees are encouraged to pursue the same happy ending.
Meetings are a big part of the MLM culture. “All of it is designed to get you to the point where you’re willing to give it a shot and sign up as a distributor,” Brooks said. “And course, if you’re serious about this business, you’ve got to keep on coming to meetings to learn how to do this.”
A large amount of pressure is placed on recruits to come to weekly meetings, as well as special events such as product parties and conferences. They pay out of pocket to attend these events.
Hoping to achieve the same level of success as the Mary Kay spokespeople she met at meetings, Ruiz bought about $1,500 worth of products within the first two months of joining. She attended meetings often, as much as once or twice per week. She spent so much time working on her business that it eventually began to affect her relationship with her now-husband.
“They always want you doing things for the business,” she said. “You work nine to five, and then you get off at five and go to the Mary Kay meeting until nine at the earliest,” she said. “I wouldn’t see him.”
Tactic #2: The Art Of Deception
The people who get up onstage to talk about the incredible income they earn and luxurious lifestyles they live don’t actually make that money selling products, Brooks said. Rather, the income is generated by a huge downline, and it’s only available to a tiny fraction of the group (those near the top of the pyramid).
“The truth is that you’re not going to be that person on the stage,” Brooks said. “That person has a very intimate relationship with the officers of the company. In addition to the commissions that they’re getting paid based on their downline, they’re getting money from selling recruitment tools and systems, and they may also be getting additional compensation from the company for appearing at meetings and speaking.”
Eventually, the allure of the Mary Kay lifestyle wore off. Unimpressed with her results and tired of hounding her friends and family members to make sales, Ruiz let her Mary Kay business fall to the wayside. A couple of years later, however, she fell for another MLM pitch and dabbled in Younique. At the time, the makeup company was fairly new and she thought she could get in on the ground up. Now, instead of attending meetings in someone’s home, she spent hours online, watching Facebook live presentations and learning how to hook new customers on Younique products through carefully crafted cold messages.
“They’d get really irritated if people weren’t participating,” she said. “It was all about empowerment and building the life you want, but if you didn’t attend these groups ... they’d sound kind of pissy.”
But Ruiz didn’t believe in the products and found the experience to be underwhelming. “I put about $500 into it and got maybe five orders. Two of them were my mom,” she said. So she left after a few months.
“They’d get really irritated if people weren’t participating. It was all about empowerment and building the life you want, but if you didn’t attend these groups ... they’d sound kind of pissy.”- Caitlin Ruiz, 30
In 2015, Ruiz was invited to another Mary Kay party and went only in a show of support for her friend. After attending, however, she was hooked again thanks to a particularly charming speaker who convinced her she just didn’t go about the business the right way before. This woman gave her special attention and listened as she lamented about everything from her skin problems to the stressors of her upcoming wedding.
“I decided that night because of her confidence, because of her willingness to work with me on my skin and because I felt like I had given up this product that I should have never gone away from,” Ruiz said. “I thought, ‘This time, I’m going to rock it. Especially under this lady.’”
From then on, Ruiz was in constant communication with her upline. They attended the weekly meetings together and regularly met for lunch to discuss the business. Ruiz received endless texts and phone calls from her upline. She described her as a mother-like figure who used everything from her fears about the cost of her upcoming wedding to her longing to spend more time visiting her parents in Michigan as fuel to keep at it. “Again, I put a lot of money into products,” she said.
Tactic #3: Financial Exploitation
Despite all her effort, Ruiz didn’t come close to making a profit. She said the largest sales she ever made were around $200, though most were along the lines of $25 to $50. Considering how much product consultants were expected to keep on hand, “you’re not making back crap,” she said.
If MLMs were legitimate businesses, there wouldn’t need to be such a strong emphasis on recruitment. Retail sales would support the business model.
But Brooks explained that the nature of multilevel marketing forces these companies to be recruitment machines due to the rate of attrition. “The one thing you’ll never see [an MLM] disclose unless they have a gun to their head is what their attrition rates are,” he said. The longer they can keep consultants on board, the better the company will do financially ― especially those at the top of the pyramid. But ultimately, if all you’re doing is buying and selling products, it’s nearly impossible to make any money.
“In essence, you have an unlimited number of recruiters who are all selling the same stuff at the same prices,” Brooks said. “If you look at what’s really going on, there are some retail sales … but it’s not an efficient way of selling. Making a few bucks here and there isn’t going to do it.”
Brooks added that when you look at the compensation plans of MLMs, there’s usually a monthly purchase obligation, though these companies will often deny that’s the case and attempt to dress that requirement up as something else.
“You have to really get into the weeds of the compensation plan with each company, but ultimately, you find that in order to really participate, you’ve got to buy $100 or $500 worth of stuff every month,” he said. Often, you can’t reap the benefits of the downline you’ve created unless you meet that inventory purchase qualification. In essence, the employees of MLMs also end up their biggest customers.
According to Brooks, a major problem with the MLM industry is the fact that these companies are not bound by the Federal Trade Commission’s franchise rule, since the initial buy-in is usually less than $500. That means MLMs don’t have to disclose important information such as business costs, success and attrition rates, and other financial details to help consultants make an informed decision before joining.
“Frankly, if you knew and you understood and you thought about it, you’d never join an MLM,” he said. “I’ve noticed that even with the companies that do provide some disclosures ― and even though those disclosures are flawed ― they still show that a tiny percentage of people make money … and yet, those companies don’t seem to have any trouble recruiting people.”
“The one thing you’ll never see [an MLM] disclose unless they have a gun to their head is what their attrition rates are.”- Douglas M. Brooks, attorney
It was during one lunch meeting with her upline that Ruiz realized her business wasn’t the glamorous opportunity she was made to believe. “She basically broke down for me how she makes her income,” Ruiz said. It became clear that the way to make money was not by selling products, but by recruiting a downline that would do the selling for her.
After crunching the numbers, Ruiz knew the women telling their success stories at parties probably didn’t earn as much as they said they did.
“The other thing that dawned on me was holy shit, this actually is a pyramid scheme,” she said. “I realized at that point in time what it actually took to be successful at that kind of business and I didn’t like it. So I stopped accepting her phone calls.”
Tactic #4: Guilt, Shame, Fear
When it comes to MLMs, having a regular 9-to-5 job is considered a failure. Members are fearful of becoming stuck in the rat race or unable to reach all of their goals because they’re limited by their paychecks. MLMs prey on this desire to “own” a business with flexible hours and limitless earning potential.
But when consultants reach out to their uplines and complain that reality isn’t matching up to what was promised, the blame is always placed back on them. “The No. 1 thing that they tell you when you get to that place of discouragement is that ‘You get out of it what you put into it,’” Ruiz explained. Never mind that the market might be saturated, the products inferior or the limited network of potential customers fed up with hearing about it. “If stuff isn’t moving, it’s your fault.”
Brooks said becoming involved in an MLM often results in a combination of guilt, shame and fear because this is a business where you are not only the victim; you’re also the perpetrator. “Not only were you sucked into it; you’ve sucked other people in,” Brooks said. And for those who eventually recognize what the business is really about, the realization that they’ve roped loved ones into the same situation is demoralizing. “You know that it’s just not going to work,” Ruiz said. “You know that you’re basically just turning this person into a means to your own end. It doesn’t feel good.”
In fact, according to Brooks, victims of pyramid schemes are the least likely of consumers who’ve been defrauded to actually report it. “As part of the cultic conditioning that takes place, [what] you’re taught right from the beginning is that if you fail, it’s your own fault,” Brooks said. “The system is perfect. You just didn’t follow it well enough, or you didn’t stay with it long enough.”
Are all MLMs cultist pyramid schemes? Maybe not. But the numbers overwhelmingly say there’s no good reason to get involved with one and find out. “The odds are just that bad,” Brooks said, adding that you’d be better off trying the lottery, where everybody at least has an even chance of winning. “With MLM, it’s like buying a ticket for last week’s lottery.”