09/27/2016 Steph Anderson

Multi-level marketing: Flexible opportunity or job scam?

shutterstock_387193792Hop on Facebook and you’re likely inundated with posts about essential oils, nail wraps and weight-loss products. You’d expect these to come from advertisers, but these days they are probably coming from friends and other personal connections.

Welcome to the age of multi-level marketing.

“Also known as network marketing,” according to the Better Business Bureau, “MLM is a system of retailing in which consumer products are sold by independent salespeople (distributors). Earnings in MLM are based on effort and ability to sell consumer products supplied to the distributor by the company.”

MLMs like Pampered Chef, Beach Body, YoungLiving and Stella & Dot serve an important role in the employment landscape. An estimated one in seven U.S. households include someone involved in direct sales. For people who are ambitious yet require a flexible schedule, these might offer an appealing opportunity. As Sheryl Sandberg encourages women to lean in, it’s no surprise that participants skew female.

Do the constant sales posts get annoying? Sometimes. But when it comes to people you love and respect, you want them to succeed. You may even be a fan of some of the products and happily support their business. Even so, skepticism has probably left you wondering whether they really make any money.

The unfortunate truth is few MLM people make enough money to really impact their budget. In general, it’s the top 1 percent who earn a significant amount of money, and that takes many years of hard work networking and building up the business. If you want to know more about typical rep incomes, look at the financial disclosures on the company website.

Bottom line: Most people are not getting rich selling MLM products, and it certainly isn’t happening overnight.

What’s arguably most concerning is that too many people are signing up for these programs — which typically require an initial investment of $100–500 — without really understanding what’s needed to succeed. Not only do you need to sell products every month, but you must build a team that’s enthusiastic and effective because you get a small cut of their sales. That’s right, you’ll be trying to get your friends to sign up, too.

All of a sudden, MLMs are starting to feel like pyramid schemes and look notoriously similar to a job scams.

While you will find corporate jobs for these companies on LinkUp (hello, salary and benefits!), you won’t find listings to become an MLM rep. That’s because we promise to never include duplicate, fake, or scam job listings, and most MLM opportunities feature several of the job scam red flags we caution, such as requiring payment to assume the position, being offered the job without question, and unrealistic promises of amazing things.

Does that mean you should avoid the allure of an MLM opportunity? That’s an entirely personal decision. If you are interested in joining an MLM to supplement your income, you must do your research, understand your responsibilities and have realistic expectations. That’s the only way to wisely decide if it’s a career path you’d like to pursue.