A career that lets you work from home and create your own schedule while making friends and raking in cash? Who wouldn’t be tempted by that?
Ladies are signing up left and right for the “boss babe” life, because who doesn’t want to sell makeup and cute clothes for a living? And if you’re lucky, you may have gotten a DM invite to some random, last-minute “lipstick party,” at which you’ll learn how you, too, could create the lifestyle of your dreams. It sounds too good to be true – because it really is. Welcome to the world of Multi-Level Marketing, an age-old corporate structure that leaves much to be desired for many unsuspecting women who simply want a better financial future.
In uncertain times when steady employment is questionable, women may decide to turn to a “done-for-you” business model – like LuLaRoe – that at first glance seems low-effort and flexible. This is especially appealing to moms who need a handle on the hustle and bustle of their households and could use the extra cash. But there’s a bleak reality about these “opportunities” that women should know before investing their time and money.
What Exactly Is Multi-Level Marketing?
Best known as a “pyramid scheme,” a Multi-Level Marketing, or MLM, is a controversial business practice that essentially creates a “pyramid” commission model. In essence, one salesperson at the top recruits a host of salespeople who then recruit their own salespeople to deliver an end-product to consumers (who could also become salespeople and recruit too).
I first learned about MLMs by way of a family member who worked a number of jobs to support her family of three and needed help making ends meet. She sold Herbalife, an MLM from back in the ‘80s that sells weight-loss shakes and supplements still to this day. For my cousin, the sales model made sense considering she wanted extra income that was attached to a greater purpose – creating economic opportunities while helping others achieve their wellness goals. After all, she was a customer of the product herself, a scenario that snags the interest of many retailers, hook, line, and sinker.
This business model has resurfaced in the age of social media as new MLMs target a new generation of “boss babes.”
But her time as a “health consultant” was cut short. The company went through a litany of legal issues during the ‘90s and early 2000s that caused many aspiring retailers to do an about face. But it wasn’t until the public learned about Herbalife’s lawsuit with the Food and Drug Administration that awareness spread about the risk of working for MLM companies – particularly those with a questionable product for sale.
But like any trend, this business model has resurfaced in the age of social media as new MLMs target a new generation of “boss babes” like we’ve never seen before. And in some cases, it cost some women everything.
Retail Hell: The Rise and Ruin of LuLaRoe
2010 seemed to mark a new awakening of social business as Instagram and Facebook became prime drivers of retail sales that catered to a surging online shopping frenzy. A new generation of work-from-home entrepreneurs emerged, generating earnings like never before from the comfort of their homes via livestreams and blogs.
Enter LuLaRoe, a company started in 2012 that lured women in droves using vibrant leggings and exclusive apparel. The founders – DeAnne and Mark Stidham – sold young moms on “financial salvation” by converting them into “fashion consultants” to sell at pop-up boutiques, parties, and social media. The message was that women could generate full-time income with part-time work.
As chronicled in Amazon Prime Video’s four-part docuseries LuLaRich, many of the women-turned-retailers started out as customers who were sold on the appeal of cute-cozy clothing and who believed that they too could make money selling on their very own to support their families – but for a steep price tag of over $5,000 to get started.
Unfortunately, the owner’s sketchy suggestion to pay the startup costs by any means necessary (like selling breast milk) wasn’t enough of a red flag for many of these ladies who were swindled and hoodwinked by the income potential of selling LuLaRoe. In fact, this is a classic hook for MLMs to urge new retailers to make a significant investment in the product to get started. Often packaged as a “business in a box,” these schemes make becoming an entrepreneur seem easy to achieve as many of these boss babes would learn.
MLMs urge new retailers to make a significant investment in the product to get started.
In the docuseries, one retailer said she was so sold on the opportunity that she took out a loan to make her initial investment (and informed her husband about it after the fact). She went on to become the top retailer for LuLaRoe, though many women, wives, and moms wouldn’t become so fortunate. For many, the seemingly heavenly entrepreneur experience swiftly descended into retail hell.
As shared in the documentary, Roberta Blevins made a wholesale investment of $78,000 for her boutique, only to earn $83,000 from actual product sales. But her bonus earnings raked in $65,000, leading her to question where the real earnings came from. She essentially kept her boutique afloat through LuLaRoe sales. This is because, like many MLMs, it’s not the product but the commission earned by recruiting retailers that generates income. Unfortunately, underlings who don’t catch on to this scheme could only hope to break even or even dig themselves deeper into debt, as chronicled in LuLaRich.
It’s not product sales but the commission earned by recruiting retailers that generates income.
And following suit with other infamous MLM schemes, LuLaRoe grew so fast that the company found itself producing sub-par products like these 20 legging fashion fails that are so hard to believe actually happened under even the laxest quality control measures. (Lipstick marks on the crotch, anyone?) Without any control of the product, these women were left feeling embarrassed, shocked, and disappointed – not just for their customers but for having gone all-in on a sham.
The sad reality is that this predatory business model is nothing new and that many women are being swindled into it once again, but in now mass numbers, thanks to social media. Truth is, if you’re not recruiting, you’ll remain at the bottom of the barrel and companies like these don't plan to throw you the rope – that is, unless you invest more of your own time and money.
As a self-made business owner and a supporter of free enterprise, I don’t knock anyone’s hustle, especially single moms who are doing their very best for their families. But if there’s anything we can learn from MLMs, it’s that it makes running a business seem like child’s play – something that anyone can do overnight. Companies that adopt this model instill false hope in the financially disadvantaged, leaving out key truths that would encourage personal and professional growth (like any responsible company does). No, these kinds of businesses aren’t going away anytime soon, but it’s essential to look for the signs before putting your family through further hardship to earn a dollar.
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