Another Bad Week for MLMs (And Potent New Red Flags)

Another Bad Week for MLMs (And Potent New Red Flags) February 25, 2020

Hi and welcome back! Every now and then, we touch base with the world of multi-level marketing schemes (MLMs). These schemes have infested and pervaded many people’s lives. As their participants get ever-more desperate and frantic to succeed, these businesses seem to collapse further and further in on themselves. Today, let me show you some of the recent bad news for MLMs–and interesting new red flags that have developed as MLMs decline in popularity.

an egyptian pyramid
(Ricardo Gomez Angel.) It’s just like this, except it involves products to skirt the law.

(MLM terminology: A “hun” is an MLM participant, usually female (the term applies to any gender, but sometimes people use “bro-hun” for a male MLM participant). The nickname comes from their icky habit of calling everyone by false endearments, notably the misspelled “hun.” An “upline” is the person who signed up the hun, plus the person who signed up THAT person and so on up the pyramid. Meanwhile, a “downline” consists of people the hun signs up under herself, plus all the people those people sign up under themselves.)

The Pyramids Might Be Collapsing!

A while ago, I theorized that maybe people were getting over multi-level marketing schemes (MLMs). The news coming out lately about MLMs has only confirmed that opinion. A new popular TV series criticizes a thinly-disguised Amway. Meanwhile, blogs and news articles openly discuss the horrendous financial and emotional damage MLMs do. So yeah, it seems like MLMs’ star might finally have begun to fall.

Speaking of the evil overlord of MLMs, Amway recently laid off another bunch of workers from their headquarters. The 50 people laid off came from their marketing and R&D departments. Last fall, they laid off almost 50 IT people. The year before, in 2018, they laid off 45 managers. Oh, and in 2018 they also closed two manufacturing plants. In just this past 10 months, they’ve laid off 210 people total. Maybe these measures helped them achieve a teeny-weeny 2% rise in sales. But dang, that isn’t even keeping up with inflation.

Like I dunno, maybe people have figured out just how bad Amway’s energy drinks taste. Or maybe people are over having their wallets emptied, relationships destroyed, and futures sabotaged all in the name of enriching a fraction-of-a-percent of participants at their own expense.

Oh, sure, people still sign up for these scams. Yes. Tons do. But anecdotal evidence at least suggests that many of them are getting talked down from their contact high very quickly. And when people inevitably get burned, they no longer hide in shame.

Instead, they’re right out there on social media telling their stories and warning others. And they are finding audiences eager to hear their testimonies.

They Had It Comin’, They Had It Comin’! They Only Had Themselves To Blame.

The other bad news concerns LuLaRoe. That’s an especially-culty MLM devoted to convincing women to buy expensive random lots of ultra-overpriced, poorly-made frumpy clothes with disastrously-bad patterns and then call themselves small business owners as they try to sell it to anyone they can. Remember that phrase, by the way. It’s coming back in a moment.

LuLaRoe closed their entire California warehouse and laid off 167 people just days before Christmas this past year. That was really only the beginning of a new round of public-relations disasters for this company and its dumpster-fire founders, Mark and Deanne Stidham.

About a week ago, a YouTube vlogger did a couple of excellent–and devastating–videos about LuLaRoe.

Among other things, she discovered that Deanne Stidham’s predictably-antifeminist maternal uncle appears to be an infamous and monstrous unlicensed plastic surgeon. John Ronald Brown butchered tons of people in California and Tijuana a couple of decades ago before getting sentenced to prison for murdering one of them.

It’s a hell of a watch all the way around. If you’re even slightly interested in MLMs or weird Mormon culture, I highly recommend the whole thing.


Part One.


Part Two. This is the one in which the uncle info appears–around 30 minutes in. It becomes a most unexpected and fascinating deep-dive rabbithole.

WHAT.

Even more amazingly, this vlogger ferreted out what appears to be a massive and underhanded lie that the Stidhams appear to have perpetrated on their unwitting recruits:

Almost every single person in upper management at LuLaRoe appears to be related, either by blood or marriage, to Deanne Stidham or her husband Marky Mark. They hired family members to fill key roles in their new MLM enterprise–and then, predictably, those family members screwed up completely because they weren’t actually qualified to perform their roles’ necessary duties.

Even worse, almost every single top-selling hun in LuLaRoe appears to be related to Deanne Stidham as well. Rumors go that she didn’t even make them pay the $5k-12k onboarding fee for inventory.

Obviously, the Stidhams keep their family connections on the way-down-low. Instead of admitting that anyone not related to them isn’t going to get far in “the business,” both of them outright insult failed huns by claiming they just didn’t work hard enough to succeed.

(Does this sound familiar to ex-Christians? Yes, yes it probably does.)

But that’s not true. Those failed huns may actually have simply lacked the right family ties for success in LuLaRoe.

The Truth.

MLMs bake failure into their system as surely as Christians bake hypocrisy into theirs. Victims must wash out of the MLM constantly in order to drive enough profits up the pyramid to its founders and top sellers for them to get filthy stinking rich.

 

a dismal disclosure statement
Part of LuLaRoe’s 2016 income disclosure statement. (See the whole thing here.)

In my opinion, and obviously it is only an opinion, it kinda looks like Deanne Stidham deliberately stacked the deck in designing this MLM so her own family members would get ludicrously rich, all while lying to the very recruits creating that wealth for her family about their own chances of success in her scheme.

But LuLaVictims get indoctrinated to believe that if they only work hard enough, they too can roll in dough at the top of the pyramid. Worse, many of the people who fail to succeed at MLMs believe they failed because they just didn’t work hard enough. 

They blame themselves, not the system that completely guaranteed their failure. And this failure shames them utterly. Until recently, MLM scammers could count on that shame to keep people quiet about their experiences.

And that seems to be the new development in MLMs’ decline: more victims are less willing to allow shame to silence them.

And a New LuLaBlow.

Then, just a couple of days ago, BuzzFeed News did another big huge article about LuLaRoe. It is eviscerating in its stark savagery. It begins with an ex-hun talking about a cruise she took with her LuLaSisters. On her social media, she pretended to be living la vida loca “the LuLaRoe life.” But in reality, she spent the cruise in utter misery as cliques of LuLaMeanGirls ostracized and tormented her.

It all reminded me powerfully of how Christians tend to falsely portray their own experiences to sell their groups to others. I’m sure the whole thing came very naturally to this then-hun, who needed potential recruits to ache for a LuLaCruise of their own one day.

Thankfully, she eventually wised up and quit “the business.” When she did, she discovered–as most departing huns do–that she actually had made next to no money in profit. And because there’s no real market demand for LuLaRoe clothes now, she ended up dumping her remaining inventory for pennies on the dollar.

And that brings us to a new red flag for any potential recruits of this type of sales scam.

The New Red Flag for Potential MLM Recruits.

Before investing in any kind of business opportunity, besides checking the FTC’s guidelines about it, potential recruits should check out the demand for the products involved. How much of it needs to sell for the seller to make a profit over and above fees to the company and inventory purchases? Exactly how many pieces of these products would someone need to sell to make a good living?

(MLMs tend to actively discourage this kind of analysis.)

And how much of the MLM’s products can the seller count on family and friends to consistently purchase?

(MLMs also tend to actively discourage recruits from conducting market research on their social-media and RL connections before taking the plunge. By the time someone reveals they’re “considering” joining an MLM, you can bet the farm on it already having happened.)

Even more than that, though, how easy is it to get those exact same products more cheaply elsewhere? How much competition is there for this product, and how appealing is that competition to the market the seller plans to target?

I mean, if someone can buy a particular blouse new with tags for $5, then why on earth would they ever spend $70 to buy it from a hun?

a bunch of racks of LuLaRoe at a consignment sale
a bunch of racks of LuLaRoe at a consignment sale (r/antiMLM)

What Happens When An MLM Recruit Neglects Necessary Research.

Recently, I saw an interesting news story.

A few years ago, a low-income Virginia woman named Marietta Grundlehner joined LuLaRoe. Since then, she’s sunk many thousands of dollars into inventory, plus whatever she’s laid out for the accessories (like clothes hangers, racks, and price tags) needed to play at being a real live boutique owner. It’s impossible to say how much she’s spent, but her LuLaRoom looks enormous and well-stocked–and that stuff ain’t cheap.

Apparently, not once in all those years did a single person in her upline or at LuLaRoe ask her to make sure that she complied with local zoning laws regarding home-based businesses.

Other ex-LuLaRoe huns hearing this story confirmed that nobody asked them about it, either.

They also confirmed how strict that particular county is about its zoning laws.

And Another Red Flag.

It turns out that Grundlehner lives in a crowded neighborhood of tightly-packed townhomes and next to no parking space. So the neighborhood operates under a strict homeowner’s agreement. Hers happens to forbid all home-based businesses.

She must have agreed to those rules when she bought her home, but she clearly didn’t think her MLM counted.

Her neighbors filed complaints about her misuse of her residence. Eventually, the county authorities ordered her to quit LuLaScrewingAround.

The news story includes this wise advice from the journalist:

Applying for a Home Occupation Permit should be step one for anyone interested in opening a home-based business.

But MLMs don’t bring that up with their recruits.

Maybe that’s because MLMs are not really “home-based businesses,” any more than huns are really “small business owners.”

Why Yes, Maybe They Should Be Shut Down.

In fact, there’s a whole bunch of stuff that a real home-based business has to do to be legal and up to code. As Grundlehner herself noted in her attempt to raise a petition to strong-arm her county to let her continue playing her rousing game of Fake Business Owner,

I know a TON of other women in Fairfax county who are working MLM direct sales businesses that are carrying inventory also, not to mention other LuLaRoe retailers. That would mean that women who sell things like Mary Kay, Avon, or Tupperware, or Thirty-one, are all in violation and therefore should be shut down.

I can’t say that I disagree at all! Yes, they therefore should be shut down. If these huns want to play at being real live business owners, then yes, they should be held to real live business owner rules.

It’d be a death knell for MLMs if their recruits actually began caring what their local governments required of real business owners.

For that matter, heck, it’d be a death knell if local governments actually began consistently caring about making sure that huns were compliant with those requirements!

Karaoke Break!

let's get down to business/to defeat the huns
from r/antimlm

Sorry, I had to do it.

It’s Up To Us.

It comes down, therefore, to regular folks–especially those burned to a crisp by these shady scams–to spread the news and hold predatory huns and MLM owners accountable. As we see in religion, we are in this thang together. There’re no supernatural agents out there trying to help us out, and that’s actually the best-case scenario here. And as we see in religion, what MLMs offer isn’t achievable by almost everyone trying to make them work.

It is up to those of us who can safely do so to talk about our experiences and share our knowledge of what-don’t-work, and up to us to spread the real good news.

Like this:

With an over-99% failure rate, MLMs simply don’t constitute valid work-from-home “opportunities.” But here are some real work-from-home ideas, if you need them.

These really work. I’ve done a few of them myself.

Nobody needs MLMs and their false promises of pie in the sky, any more than anyone needs the false promises that religions make.

There’s a better way out there, and it’s based on reality and real human potential.

NEXT UP: MLMs’ owners are getting downright frantic to maintain their revenues–and, of course, their victim count. I’ll show you how next time. See you soon!


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(Bee tee dubs: Any network marketing/MLM gurus who get upset at this post can just pass me by and save their effort instead of emailing me indignant letters like two of ’em did last year trying to defend their total and sociopathic lack of morals–and trying to strong-arm me into accepting their redefined scammery as a valid business model. It won’t work. I’m on to MLMs. They are nothing but a series of red flags.)

About Captain Cassidy
Captain Cassidy grew up fervently Catholic, converted to the SBC in her teens, and became a Pentecostal shortly afterward. She even volunteered in church (choir, Sunday School) and married an aspiring preacher! But then--record scratch!--she brought everything to a screeching halt when she deconverted in her mid-20s. That was 25 years ago. Now a comfortable None, she blogs on Roll to Disbelieve about psychology, pop culture, politics, relationships, cats, gaming, and more--and where they all intersect with religion. And she still can't carry a note in a bucket. You can read more about the author here.

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