There’s A New Age Of Pyramid Schemes. Here’s How Influencers Are Fighting Back

Nyah was scrolling through TikTok last September when a video caught her attention. The 19-year-old had been working as an 'independent consultant' for a cosmetics company, selling products to friends and family to make some extra money while she studied. She was beginning to feel uneasy about the role. She watched as the video discussed how little money others doing her job were earning, despite the long hours they were putting in. Nyah’s fears were confirmed. She was part of a multi-level marketing (MLM) scheme. She wanted out. 

Welcome to TikTok’s anti-MLM movement. 

Multi-level marketing companies (you might also hear them called 'network' marketing companies) like the one Nyah was working for sign people up to sell their products (which they must first buy) in return for a commission. The products range from skincare to makeup, leggings to health shakes. At the same time, salespeople are financially incentivized to enroll others to do the same job. Most MLM companies refute the claim that they are thinly disguised pyramid schemes (MLMs have a product to sell whereas pyramid schemes are more about the recruiting) but after analyzing the earnings data of 350 top MLMs, the Federal Trade Commission in the US estimates that only 1% of MLM members walk away without making a loss.

The video Nyah stumbled upon is one of the thousands of anti-MLM posts circulating on TikTok. Hattie (@hattie.louise), a 23-year-old from Warwickshire, UK, who posted the clip, has amassed 37,000 followers and over 1 million likes by creating this kind of content. The aim, Hattie says, is not to criticize the individuals drawn into MLMs but to educate them about the 'unethical' business models they are part of. Beneath the enthusiastic recruitment messages ("Hey hun! Have you thought about starting your own business?") lurks a darker world that thrives on vulnerable women.

MLMs have always been in the background of Charlotte’s (@charmunrox) life. At the age of 15, she was suffering from bulimia. Around the same time, an increasingly popular MLM was emerging, promoting a juice that promised to shed inches from buyers' waists. When Charlotte gained back the weight she had lost because of her eating disorder, she was inundated with messages trying to sell her the juice. "It just blew my mind," she said.

The MLM sector appears to be booming during the pandemic. In a survey by the USA Direct Selling Association, 64% of MLM companies said that the crisis has had a "positive impact on their revenue". In the UK, Avon (generally deemed less controversial than its social media-hungry counterparts) reported a 53% increase in sales representative sign-ups in the first eight months of 2020. "MLMs have been like an epidemic in themselves," Hattie said. "They prey on lower income people and people who have been furloughed and made redundant."

Ninety percent of multi-level marketing members in the UK and 74% of direct sellers in the US are women, who have been hit disproportionately hard by the pandemic. Women constitute 39% of global employment but account for 54% of job losses during this time. Simultaneously, school closures have meant parents suddenly need to provide full-time childcare, a burden that tends to fall on mothers. In the face of this, the flexible working and 'easy money' promised by MLMs is increasingly appealing. 

Heather (@heather.elise.rainbow), a 20-year-old student from California, started making anti-MLM TikToks at the beginning of the pandemic in response to this trend. The platform’s algorithm helped her to reach people who might not have been looking. "On YouTube," Heather said, "you have to search for the content you want to watch. On TikTok, you’re just scrolling through and videos on any subject in the world could pop up." Heather now has 116,000 followers on TikTok.

Jamie (@jamie.shannon) is an acting coach from Alabama and was part of an MLM when she saw Heather’s videos. "I was like, Oh my god," she said, "I’m in one of these. I have to get out." Now, Jamie is also speaking out against these organizations on social media. 

Neither Hattie nor Heather has ever been part of an MLM but both have seen their effects on friends and family. After doing some research, they were appalled by how few people actually profit from them. The women have now become trusted allies for ex-MLM members to talk to. 

In one of Hattie’s videos, she shares a message from a student nurse who joined an MLM in April 2020. This woman had just got pregnant. She tells Hattie that she initially paid £85 (about $150) for a starter kit and spent an additional £700 (about $1200) working her way up the organization. She earned £154 (roughly $265). In the midst of all this, she was rushed to hospital with bleeding. As Hattie tells the story, she uses TikTok’s green screen feature to show the woman’s message. While she was in hospital, Hattie reads, "she was hounded by [her manager]" who was "trying to get her to sell" while she was there. The woman lost her baby and was later diagnosed with PTSD. 

MLM’s roots are in Avon and Tupperware, which were originally touted as a way for housewives to muster financial independence by becoming an Avon lady or making IRL sales pitches at Tupperware parties. The sector has evolved for the Instagram age and social media has become a vital part of how modern MLMs grow. Valentus, the company behind SlimRoast coffee, encourages its reps to "post consistently at least two times a day", "send five friend requests each day" and advises them that "private messenger is going to be your greatest tool". 

While Facebook and Instagram are teeming with MLM salespeople, TikTok is taking measures to prevent them from infiltrating its platform. The company banned MLM advertising in December 2020. However, users are skeptical about how far this is actually being enforced. "I’ve reported content before and they’ve said it doesn’t violate their guidelines, even though I know it does," Hattie said. Nevertheless, she describes the clampdown as a "huge step forward". TikTok told R29 "We are committed to promoting a safe environment on TikTok and our Community Guidelines explain what is and is not allowed on our platform. We do not allow content that deceives people in order to gain an unlawful financial or personal advantage, including schemes to defraud individuals or steal assets."

As long as MLM content exists on these platforms, the anti-MLM community will continue to fight back. "It’s sad," Heather said, "because women go through enough. We have enough struggles trying to make as much money as men and fighting for the equality that we deserve. We don't need more unethical businesses trying to take that away from us."