Why Americans keep getting roped into multilevel marketing schemes

Most multilevel marketers have rebuttals at the ready when potential recruits accuse them of peddling a pyramid scheme. One of the canned comebacks for Donald Trump’s late-aughts MLM—because, of course, Trump once had his own MLM—is a doozy: “If you ask me, corporate America is a pyramid scheme,” went the script. “All the people on the top make all the money. The people at the bottom are spinning their wheels.”

It’s a hard point to refute. Like the stump speeches that followed during Trump’s 2016 presidential campaign, this pitch tapped into average working Americans’ creeping sense that the system was failing them. While in both cases, the prescription may have been questionable, the diagnosis was achingly accurate. As author Jane Marie illustrates in her new book, Selling the Dream, the reason MLMs still rake in billions each year, despite so much evidence suggesting they are scams, she says, is that the American Dream just might also be a scam.

“I think a lot of people recruited into MLMs have bought into the American dream more than others,” Marie says. “They believe in bootstrap-thinking and the power of positivity and that in this country anyone can do anything, and anything is possible, if you just put your mind to it.”

Selling the Dream is a book-length exploration of a topic Marie already tackled in the first series of her hit investigative podcast, The Dream, which wrapped its third season last fall. For the lucky uninitiated, multilevel-marketing companies are those that recruit people to sell the company’s wares—often clothing, vitamins, or household goods—and, more importantly, to recruit other people to sell those wares as well. Participants get kickbacks for each recruit, or “downline,” they bring into the fold. The compensation structures are complicated, though, and they’re typically explained with foggy language. Participants often eventually resort to buying their own inventory to keep up with monthly quotas, which partly explains why an estimated 99% of them make no money—and sometimes end up losing money.  

In her heavily researched book, Marie illuminates the history of MLMs and the way they operate today. She also details how some cultlike companies exploit legal loopholes and deploy extensive lobbying in order to remain in business, even after hit documentaries such as 2021’s LuLaRich have exposed their shadier tactics to mass audiences. But the more perplexing mystery for anyone familiar with MLMs has less to do with how the companies are allowed to continue recruiting than it does with how people at this late date are still willing to be recruited. It’s a question Marie wrestles with throughout the book.

The answer isn’t as simple as geography or education. In the course of developing her podcast and now Selling the Dream, Marie has talked with doctors who were sucked in and bamboozled, along with people from dozens of other professions, living all around the country. One of the reasons people still seem willing to take a chance on an MLM is the same reason so many still play the lottery—they’re convinced they can beat the odds. Some of them will hear the scuttlebutt and see the “Hey Hun” memes and be aware that only 1% of MLM-ers ever turn a profit, and yet still have a sneaking suspicion that they will thrive among those blessed few.

For most people, though, it seems to be the promise of freedom—the ultimate dangled carrot—that is most compelling. Freedom is what America offers and what MLM’s offer, even if both offers are wildly conditional.

Why continue to muddle along in the rat race when you can be your own boss, set your own schedule, and make millions? Sure, you won’t control inventory, pricing, availability, or branding, but you’ll be taking control of your own destiny. The appeal of a pitch like that is timeless, but especially in moments of economic precarity. When people feel squeezed by layoffs and inflation, while also perhaps hearing that superyacht sales are booming, the idea of kicking ass at doTERRA, Beachbody, Herbalife, or Amway (a contraction of The American Way) might suddenly start to make some sense.

“I think we all feel really frustrated because our experience doesn’t match up with the story we’re being told.” Marie says. “I was told, ‘Work your ass off and just keep trying harder, and you’ll make it.’ And now I’m like, ‘When does it happen? When do I make it?’ All of my friends are having the same feeling of, like, ‘Wasn’t this supposed to happen 10 years ago? Wasn’t I supposed to feel like an adult that had a stable job?’ And I don’t think there are very many people who feel that way now.”

Something has changed in America since the founders of earlier MLM’s like Nutrilite and Holiday Magic infused their business models with the can-do spirit of self-help gurus like Napoleon Hill and Dale Carnegie. Over the past half-century, America’s wealthiest have taken an increasingly large share of the country’s economic growth, while wages for most Americans made relatively few gains. Thanks to deregulation, tax manipulation, and anti-union efforts, much of the opportunity and economic stability baby boomers enjoyed has all but evaporated. Members of that generation, however, many of whom make up the U.S. government, still tend to sell the promise of American prosperity in the same starry way it was sold to them.

No wonder younger generations seem less inclined to buy in.

Accurate data about MLMs is hard to come by, for many reasons, but an AARP survey from 2018 states that almost half of all first-time MLM-ers are between the ages of 18 and 25. (Women make up 74% of the MLM workforce, by the way, with stay-at-home moms being especially targeted for recruitment.) According to Marie, people in their twenties are well primed to be “Hey Hun’d” into the fold.

“Most younger people I’ve spoken with are out of college, already in some sort of career, and already disillusioned,” she says. “I think the disillusionment with the regular workplace or joining the workforce is a big factor in people turning toward MLMs. It makes sense that it would happen as they’re approaching 30—they get married and need more money, or have a kid and they need more money. Everyone needs more money.”

Even being aware of the dismal odds for succeeding in an MLM may not be enough to deter someone in a state of economic despair or desperation. In Selling the Dream, Marie describes how recruiters take advantage of destabilizing moments in friends and family members’ lives since that is when they will be most likely to hear them out.

“Something happens in your life and you go, ‘Well, what do I know about anything?’” the author says. “You feel confident in your marriage and then suddenly your spouse leaves and you’re like, ‘Well, I guess I have the whole world wrong. I’m gonna try Amway.’”

In the same way that half of all Americans are said to be one missed paycheck away from financial disaster, many could also be one disruptive event away from being vulnerable to MLMs. And if they do buy in, they may find out the hard way that the promise of MLMs syncs up most closely with the American Dream in that, if you don’t succeed in either, it won’t be because the odds are ridiculously stacked against you, but because you “didn’t try hard enough.”