THE MLM CULTS: LIES, PYRAMID SCHEMES, AND THE PURSUIT
OF FINANCIAL FREEDOM
PROLOGUE
*Starts with an empty black screen, as testimonials can be heard in the background with their subtitles
displayed on the screen. Voices talk about “cults”, “losing friends and family”, they are powerful gripping
words. A DISCLAIMER is placed in between the testimonials. Suspense and curiosity is immediately built
with the audience as they are left wondering what these voices are talking about*
Narrator:
When the opportunity is presented to you…
When you’re told that your dreams can be achieved faster than you think…
That wealth is not as far off as you think it is…
That financial freedom is yours for the taking…
When these things are dangled in front of you like a carrot on a stick.
When it sounds too good to be true, but believing otherwise means losing hope…
Why wouldn’t you refuse?
*Clips begin to play of a lavish lifestyle from MLM promo videos. Large MLM events are displayed,
crowds cheering, promotional content about how great working with Herbalife, Amway, LuLaRoe, etc
are played. It’s smiles. It’s joy.*
Multi-Level Marketing companies have been around for a long while now.
And if you’re not familiar with what multi-level marketing is, then perhaps you’re familiar with the
companies that follow the multi-level marketing model.
*Big multi-level marketing companies are displayed.*
These are companies that are valued in the billions, international in their reach.
It sounds just fine, doesn’t it? On the surface it seems ordinary, something you may never take a second
glance at…
But once you go beyond the surface level, and uncover what’s underneath…
You’ll find an endless supply of controversy, debate, and uncertainty.
*Clips of arguments against MLMs playing. People calling it a cult. People defending it. People laughing
at it. Legal arguments and documents against MLMs, etc*
Again I ask you:
If it sounds too good to be true, but believing otherwise means losing hope…
Why wouldn’t you refuse?
It’s important that you pay close attention now.
Because when a pyramid scheme or a cult is presented to you… it will not reveal itself as such.
It will come wrapped in well-decorated packaging, with a pretty bow on the top, disguised as a “business
opportunity”.
Disguised as a way to “be your own boss” and earn your “financial freedom”.
When it presents itself to you, it will not come dressed in the robes of an unfamiliar character, it will
come dressed as your best friend, your neighbour, someone you admire, someone you love.
Its message will be that of hope, and that of all that you’ve ever wanted.
It will come disguised as anything and everything but that of which it is.
*title screen intro*
***
Narrator:
Consider the next two parts of this video a simulation of a common collective experience of many who
enter well-known MLM companies.
There are nuances to them all, but the overarching story remains the same.
We’ll discuss the details later – and just how reflective this model is of the industry as a whole, but for
now sit back, and brace yourselves.
This… is the pitch.
***
PART 1 – THE PITCH
*As the narrator continues, the visuals reflect what’s being said. The pacing for this part is slow and
builds up an atmosphere of suspense, mystery, intrigue, and an overall sense of ‘something doesn’t seem
quite right here… but we’re going with it anyway’*
Narrator:
It’s a message – the platform in which it’s sent on doesn’t matter.
But it’s an old friend. A family member. Someone you know. They’ve just reached out asking how things
are going with you.
Or maybe they’ve asked you to meet up for a drink.
It seems harmless on the surface. Maybe a little strange, or something that feels a little “off”? But you
respond. You agree to meet up. You start talking.
Then they mention it.
A “business opportunity”, and that they thought you’d be a good fit for it.
They explain that they’ve been working for a company recently… and this company is changing lives.
Changed their lives. Again: “you’d be perfect for it” they tell you.
Phrases like “six to seven-figure earners”, “financial freedom”, “be your own boss” seem to float around
effortlessly in their carefully constructed sentences.
It sounds great – but there’s still that feeling: something that’s not quite right.
They invite you to a seminar, an event of some sort.
You decide to go.
You arrive at the event – people are dressed up nicely, then suddenly you’re engulfed with positive
energy. People are smiling, cheering, jumping up and down. The “opportunity” has them excited.
A speaker comes to the stage, mouthing off some words of motivation, stating how the company has
changed them for the better, how they’re making so much money, how the company has bought them a
car!
Those phrases appear again: “financial freedom”, “six to seven-figure earners”, “be your own boss”,
“passive income”.
Then you’re finally told that the company that’s changed everything for them is a company that sells
nutritional supplements, clothes, essential oils, skincare, financial products, makeup, perfume, the list
goes on – but the principles remain:
They have a product – but the only people allowed to sell this product are their “distributors”, their
“consultants, their “coaches”.
And whenever you sell, you earn a commission.
“There’s no cap on the earnings”, you’re told.
You tell them that “you’ll think about it”. And although something feels off, you can’t help but feel
tempted.
You browse the social media pages of the “friend” that got you into this in the first place
*Instagram Page(s) appear that reflect what is being described*
Motivational quotes. A happy lifestyle. A car given to them by the company. They’re working from
home.
Those phrases appear again: “financial freedom, be your own boss, work from home”.
They’re enticing concepts.
Why?
Perhaps you’re a stay-at-home mother that wants some extra income on the side, you’re a student
that’s just trying to get some work experience and the “dream” or the “opportunity” is everything you’re
looking for, or you’re from a low-income family and are looking to make a change for yourself.
The dream has been presented to you.
There’s hope in this “opportunity”.
You call back that friend, you reach out to them, or perhaps they ask if you’ve decided yet – and
although something doesn’t feel quite right, the promise of a greater life has enticed you enough.
You agree to join.
PART 2 – THE OPPORTUNITY
Narrator:
It starts by purchasing a starter kit, or a monthly membership fee.
“This is important” you’re told. For your business to thrive, you need to invest in it.
And how could you possibly expect to sell any product without first using it yourself and understanding
what it is exactly that you’re selling. You’re told that you must become a “product of the product” – and
you’re encouraged to purchase as much stock as you can – that’s what it means to invest in your
business.
You’re shown a list of tiers in the company, and that as your sales increase you are granted points that
allow you to progress through each tier, and with each tier you’re given “bonuses” from the company.
The friend that recruited you into this “opportunity” is now labeled as your “upline”.
Your “manager”, so to speak.
They encourage you to start posting about the company and its product on social media, to start talking
about it as much as possible. To your friends, your family, the people you meet every day.
But the products are overpriced. Compared to other products on the market, these shakes, these
clothes, this makeup – it seems far too expensive.
But before you can even start worrying about that, you’re called to attend another weekly seminar,
meeting, or some form of get-together with other distributors of the product.
The usual motivational speak begins.
You’re told that the “opportunity” can make you so much money – that it’s possible, but only if you
“WORK REALLY HARD” at it.
You’re told that you have to stay “positive”, that negative people will get in your way, but you must rise
above it and stay positive no matter what.
You’re given some self-help material to read as homework.
Then something else happens: you’re told that if you want to make good money in this business, you’ll
have to start recruiting.
It’s simple: you recruit someone else into the company, and when they make a sale, you’ll get a
commission for it.
Do the maths: if you have just five people working under you, and they each earn you £500 commission,
and each of them recruits five people, that’ll get you £12,500 in commissions every month, without
having to do anything yourself.
The maths impresses you, and the logic is sound.
… imagine what you could do with that money.
*Images of beaches, mansions, fast cars, and a dream life start to flash into view*
Narrator:
You’re told to write a list of 100 names.
Friends, family members, people you haven’t spoken to in a while, numbers on your contact list,
Instagram followers, anyone, and everyone.
You have to contact them all.
That’s easy enough, right?
They’ve even given you scripts – ways in which to approach these people, the specific words to say.
You start messaging your friends, you start telling your family members about this “opportunity”. You
start posting more to your social media pages. You buy your next months’ supply of products – once
more you’re told that you must “invest in your business”.
You continue reading the self-help material.
You attend the weekly seminars, calls, events – your upline continues telling you that anything is
possible if you work hard at it. If you stay positive and get rid of the negative people who doubt you.
You’re showered with more stories about others in the company who are living the dream thanks to this
opportunity.
***
Narrator:
You’ve gotten a few rejections now, your friends weren’t as open to the idea as you had initially thought
– perhaps some chose to buy some product off you, but when it came to recruiting you just couldn’t get
them to cross that bridge.
More team meetings, seminars, calls, more self-help, and motivation.
No recruits yet? It’s because you haven’t worked hard enough, you weren’t thinking positive enough.
Your friends aren’t interested in joining? It just means you need new friends.
If you want to change your income you better change who you’re hanging around with.
You’re told to post more on your socials – even if it feels like you’re faking a lifestyle, or faking your
income, you’re told that it will be enough to attract curious eyes.
You remind yourself of the ranks and how much money can be made – success is yours for the taking,
just keep working hard, keep trying to recruit.
Hope keeps you going, the self-help stuff makes you feel better about it all. You’ll get there.
***
Some friends have begun distancing themselves from you, or perhaps you’ve distanced yourself from
them?
After all, if they weren’t willing to join the company, then they’re just negative influences – at least,
that’s what your upline tells you whilst encouraging you to buy more product and into the business.
You haven’t made much money yet – sure… but hope keeps you alive.
The company holds a conference that year – a conference where countless distributors across the world
come to celebrate the “opportunity”.
It’s a spectacle. Flashing lights, performances, motivation, and the “dream” is once more sold to you.
Dangled in front of you like a carrot on a stick.
Successful people tell you on stage that it’s possible to achieve this dream, they tell you that it’s thanks
to this company that they could achieve it. Maybe the founder comes to the stage, showered in
applause and gratitude.
A fresh wave of motivation overcomes you.
This is your community. Your family. People with likeminded goals, opinions, and interests.
***
The cycle continues.
You reach out to more people now.
Scouring Facebook groups, Instagram posts, finding anyone that seems like they would need some cash,
someone that you could sell the “dream” to.
More team meetings and motivation, more self-help content.
Work harder. Stay positive. Remove negative influences. It’s all on you. It’s all on you to make this
happen.
Perhaps you finally recruit someone, or a few people. And suddenly a little more money comes in – it
may not be a lot, but “it’s the start” you tell yourself.
You’re officially their “upline” – you’re officially hosting your own meetings, telling them that they have
to work “harder” for the dream, encouraging them to buy more product to invest in their business,
encouraging them to stay positive, to reach out to as many people as possible.
You need these recruits to stay on board. They’re essential to the “dream”.
***
But there it comes again: that feeling that something isn’t quite right. Something just feels “off”.
A look through your social media profiles reveals a lifestyle that you aren’t really living, a “dream” that
you haven’t even achieved for yourself yet, products from another company that you don’t really own.
Bank statements that reveal that not much has changed over these last few years. A bookshelf worth of
self-help content.
Old friends that you haven’t spoken to in a while, who you’ve either distanced yourself from or cut out
from your life entirely because you thought they were “negative influences”.
The people you hang out with now are mostly those from the company you’re a distributor for.
“And how many of them are living the dream?” you wonder – “why is it that we’re all faking it till we
make it?”
Who are the ones that are actually “making it” here?
These are dangerous thoughts, you realise. Any mention of these thoughts to your upline, and that
spells trouble.
But yet this feeling has been here from the start – as though you were lied to about something, as
though the truth of the matter has been concealed from you.
***
And you’d be right. You see – before you joined this company, there were some critical details that you
should have understood about what you were getting yourself into…
Stick with me now, because it’s time you find out exactly what you got yourself into.
***
But first - a quick ad break.
***
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PART 3: THE INDUSTRY
Multi-level marketing companies fall under different names, different products, different people – but
the overarching structure remains the same.
These companies don’t sell their products via retailers, but rather a workforce of people who are paid a
commission on their sales.
Sounds just fine, so why the controversy?
Let’s start with its pyramid-shaped recruiting model.
*A chalk board animation starts to visualise the following dialogue*
MLM’s, as they’re often shortened to, allow their “distributors” to recruit other distributors who are
called their “downlines”.
“Uplines” are able to earn a commission on any sales that their downlines make.
But remember: these downlines are also able to recruit their own members.
“So it’s a pyramid scheme, right?” you ask.
We’ll get to that.
MLM’s have been around for a long while.
With roots that go as far back as the 1880’s.
These companies have existed for generations, and many of their practices remain the same:
The promotion of self-help content and concepts, big conventions, the selling of a “dream” – all of these
themes are prevalent in many of these companies.
Some of the top MLM companies are well known for their female target market.
According to the Direct Selling Association, 74% of those involved with MLM companies in America are
women.
If you visit any “stay at home mum” pages on Facebook, it won’t take you long to find someone
promoting their MLM company.
The MLM pitch appeals to those that are struggling to make ends meet financially, or those who are
young and naïve enough to be taken-in by the grandeur of the events, and the barrage of self-help
messages.
The controversy that surrounds these companies is endless.
Countless lawsuits, and news headlines – one infamous example in 2012 saw billionaire investor and
hedge fund manager Bill Ackman take a “short position” on the MLM company, Herbalife in December
2012.
He called the company a flat out “pyramid scheme” which sparked a wall-street rivalry between himself
and “rival” Carl Icahn who started buying shares into Herbalife to counter Bill Ackman’s position.
And yet despite Ackman’s confidence – he exited his short-position in 2018, without success.
So what’s really going on here?
Is the dream real? Or one big lie?
Why all the self-help content and the grand conventions?
Why aren’t MLM’s illegal if they’re supposedly pyramid schemes?
PART 4: PYRAMID SCHEMES & CULTS
A pyramid scheme usually operates under the following premise:
There’s a founder.
The founder tells a select few people that for a certain price they can join his amazing “business
opportunity”.
It sounds great, and they agree to buy in. These people are then encouraged by the founder to recruit
other people for a “buy in” to recoup their initial investment.
Each new member of the scheme is encouraged to recruit somebody new, and the money continues to
be funnelled up the system
But any mathematician can see the colossal problem with this model – and why it’s made illegal.
For everyone to make money in a pyramid scheme, there needs to be an endless supply of recruits. But
that’s impossible.
If the founder recruited five members, and these five members recruited five more members, after 13
tiers you would have exceeded the entire population of the United States, and after 15 tiers you exceed
the entire population of the planet.
Pyramid schemes are mathematically designed to collapse, and when those on the bottom of the
pyramid start realising that nobody is making money and drop out of the scheme, the tiers above lose
their ability to make money, and suddenly each tier begins collapsing once they lose their only sources
of income.
These schemes are disguised as many things, and come in different shapes and sizes, but their effects
can be devastating.
They place an emphasis on recruiting others, and are riddled with promises of high returns in short
periods of time, and claims of easy money or “passive income”.
It is only those in the top tiers that make the money from a pyramid scheme, and since most people
come in at the bottom tiers, the vast majority of those entering a pyramid scheme will lose their money
as finding enough recruits to pay for their initial investment gets harder and harder.
Keep that in mind.
Now, let’s look at cults.
***
To spot one can sometimes be difficult – because just like pyramid schemes, they hide in plain sight,
disguised as many things but that of which they actually are.
Some red flags on their own are not enough to draw conclusions, but combined they create a
mantelpiece for manipulation and indoctrination.
They’re designed to influence who you are as a person – step-by-step, until you’ve walked so many
steps that you’re no longer what you used to be and haven’t even realised it yet.
Those red flags include:
A high level of commitment from its members, and a seemingly unquestionable loyalty towards its
leader or anyone at the top of the hierarchy.
A feeling that you’re working towards some sort of bigger goal, mission or dream with the group –
perhaps you feel as though your group is going to change the world.
The promotion of an Us vs Them mentality – the idea that you are a collective group, a “family”, and
those that oppose the ideals of the group are an enemy and must not be listened to. Anyone who leaves
the group are shunned by others.
Because of this, critical-thinking is often abandoned by group members. You can’t question what you’re
being told, to be negative or critical about the group’s ideologies is the equivalent of betrayal.
You’re made to feel dependent on the group. Over time, the group becomes your only environment –
you don’t see or speak to your friends and family as much, and in some cases you’ll be made to lose any
connections with your friends and family unless they’re a part of the group too.
It’s an process designed to isolate you from your past identity, turning you into a drone that is entirely
dependent on the group, and the hopeful mission and vision that what you are doing is for the
betterment of the world.
***
With both pyramid schemes and cults, there’s an assumption that to fall for it you must be a fool. But
that isn’t true.
IN almost all cases, an individual falls for these schemes and groups because of their circumstances,
particularly when they are in a vulnerable position.
The loss of a job, a loved one, a lack of high-quality relationships, a feeling of helplessness with your life
– these groups and schemes are designed to use your emotions against you and exploit you in some way
or another, whether financially or emotionally.
And that… brings us back to MLMs.
PART 5: UNRAVELING THE TRUTH.
At its core, Multi Level Marketing is a strategy to market a product or service without needing to worry
about advertising costs, or paying employees on a standard payroll.
Legally, these companies are not “pyramid schemes”.
As we saw, a standard pyramid makes its money solely off recruiting.
MLM’s on the other hand, revolve around the selling of a product, or service, and you’re paid a
commission on your sales and the sales of your “downline”. Therefore, it is possible to make money in
an MLM without recruiting someone else.
It’s through this loophole that MLM companies can get away with being “legal pyramid schemes” – and
that’s a fair enough conclusion.
But with each MLM there is a fine-line and an all-important question that must be asked: “where is the
majority of their revenue coming from? The actual selling of the product to organic customers, or
distributors buying product from the very company they’re working for so they can remain as
distributors?”
And what’s encouraged more within your MLM – the recruiting aspect, or the sales? The more recruiting
is pushed, the more you should question your position in that company and the façade that’s being laid
out in-front of you.
The maths doesn’t fail here. It is impossible to follow a recruitment model without the pyramid crashing.
And How real is the “dream” that you’ve been sold?
The promise of financial freedom that draws in so many distributors year after year? What about those
people you hear about who are making so much money from the company?
Legally these companies are expected to release income disclosures each year – a chart that details the
average earnings for distributors in the company, which does NOT include expenses.
In every MLM company that I have seen – the vast majority of distributors will LOSE money, whilst
others will brake even, or make minimum wage.
It is the .1% of those at the top of the company that are making a substantial income. They’re the ones
that are praised and put up on the stages at these events, so that a survivorship bias is spread amongst
other distributors. So “dream” and the “hope” is not lost. So that the other 90% of those in the crowd
don’t realise that most of them are not making much money.
That the dream they were sold is a lie.
And what about the self-help content, the cult-like mentality that some of these MLMs promote?
They’re designed to keep you hooked in. To isolate you from any outside forces that could persuade you
from leaving. And if you feel as though you’re failing – then it must be your fault, after all “you didn’t
work hard enough”, you weren’t “positive” enough.
But is my assessment of these companies too harsh?
***
Truth is, I can’t comment on every MLM in existence.
When Multi Level Marketing is just a marketing strategy – each company has to be looked at on a case-
by-case basis.
But let me point out some key flaws in this business model that you should be aware of:
There is no screening process.
There is no interview to see how qualified you are for the job. The barrier to entry is negligible, as long
as you have enough money to buy the starter pack, or the membership fee.
These companies end up with countless inexperienced salespeople, making money solely through their
commissions, with no sense of accountability – what could one possibly expect from such a scenario?
Especially when these people are encouraged to recruit more and more individuals, not based on their
qualifications but on who they think are in a vulnerable enough state to buy into the “dream”.
There is no grasp on supply & demand.
Anyone can join and start selling the product. And at some point the market for that product will reach
its limit, but the supply will continue to grow resulting with a bunch of distributors competing over the
same market, spreading the profits thinner and thinner between eachother.
And what about the actual products?
The odds are usually stacked up against distributors, especially when they’re selling products that have
prices marked up three times higher than the standard retail price.
And being your own boss?
It’s another façade. You’re simply an independent contractor for the company – you have no control
over the products, nor the commission structure. Your role in the company as a contractor means the
MLM mitigates most of the risks associated with your individual activities, such as not paying the tax
man.
I can’t comment on all MLMs, but I can say that if you are watching this and feel as though you want to
join one then do your due diligence.
If you were sold a dream and quick money – tread carefully.
If you see that the majority of the money is being made through recruiting – tread carefully.
If a cult-like mentality is pushed and you’re made to distance yourself from friends and family, or are
made to feel guilty for not succeeding because you didn’t “work hard enough” – tread carefully.
***
The pursuit of financial freedom, or a “better life” are not uncommon dreams.
They are shared by many, including myself.
But if someone or something comes promising you that goal, that dream, that vision, dangling it in-front
of you like a carrot on a stick – disguised as an “opportunity”.
Then its best you take a moment to pause, think rationally, and remember: that if it sounds too good to
be true – it probably is.
END
Hello, my friends – before you click off the video let me just say:
Thank you so much for watching to the end.
I’ve been wanting to do a video on MLM companies for a long while now so, it’s great to have finally
covered that industry.
If you’re new to the channel, my name is James Jani – and I make documentary-style videos on topics
surrounding business, finance, and life in general so if that sounds like something you’d be interested in
– do hit the subscribe button!
If you enjoyed this video, hit that like button as well.
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With all that being said. As always my friends, I wish you the best. Hand-to-head – SALUTE.