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Is multi-level marketing a dream job or a 'pyramid scheme'? That depends

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Posted at 8:14 AM, Jul 26, 2016
and last updated 2016-07-26 10:02:42-04

Multi-level or network marketing is booming with the omnipresence of social media in our lives. There are many brands, from Thirty-One Gifts to Isagenix who do business this way.

The model most people might be familiar with – Amway – is listed second on the Network Marketing Central’s website in terms of annual sales and third in number of sales associates.

But what is it, exactly?

According to the Federal Trade Commission, “In multi-level or network marketing, individuals sell products to the public, often by word of mouth and direct sales. Typically, distributors earn commissions, not only for their own sales, but also for sales made by the people they recruit.”

Yes, according to some of those who are participating in it.

Natalie Wolff

“You absolutely can make money at this,” said Natalie Wolff, who sells and uses Isagenix products. “Those that do work extremely hard. It’s definitely not a get rich quick scheme. In our company specifically, 84 percent are product users and may earn a rebate or two, but only 16 percent are business builders, or earn more than $500 a year.”

Malina Carnell, a Norwood native who now lives in Louisville, agrees. She sells cosmetics through Younique.

Malina Carnell

“I actually left my corporate America job a little over a year ago, and replaced my income,” said Carnell, who started with Younique two years ago. “With multi-level marketing, you get paid on the work you do.”

“I was in corporate America for over 15 years, and I got promoted to a fairly high level,” she said. “But no matter how much I worked, I was never going to be the CEO of that company. With network marketing, you get paid for the amount of work that you do. If you work the business, you’re going to get paid.”

The surge in popularity of these businesses is due to social media as much as anything, experts say.

“Our company was the very first social media only network marketing company,” Carnell said. “People just see the network marketing a lot more, because you’re seeing it on your friends’ newsfeed, and you’re seeing it on the media. It’s been around for centuries, but it’s more popular because more people are on social media.”

In Wolff’s case, the ability to earn through Isagenix came in handy recently.

“I own my own dog grooming business and I’m a one-woman show. No one can fire me, the economy doesn’t affect my business,” Wolff said. “I have a waiting list a mile long. There’s no reason that I would lose my income – until I tore my rotator cuff and had to take a month off.”

“Thankfully, I had Isagenix and it didn’t negatively affect our finances for me to take a month off unpaid,” she said. “Most people don’t have that option.”

There are other rewards, according to Bryan Dearinger, a Hebron resident who sells AdvoCare. He and his wife have been selling AdvoCare products for 13 months.

“Helping another person to be healthier means a lot to me,” he said. “Since Jan. 16, I’ve lost 30 pounds. My wife has lost 20 pounds, and we’re helping other people as well. We hope people achieve their goals of weight loss, getting better results at the gym, and of having a second income.”

Carnell of Younique had a similar message. 

“Our mission is to uplift, empower, and validate women,” Carnell said. “My goal in life has always been to empower women to find themselves and to know their worth. By empowering a woman to understand that she can make money and own her own business, I’ve seen confidence grown and their lives transform.”

Still, there is a caveat, according to the FTC. Their website says not all multi-level marketing plans are legitimate.

“If the money you make is based on your sales to the public, it may be a legitimate multi-level marketing plan,” they sate. “If the money you make is based on the number of people you recruit and your sales to them, it’s probably not. It could be a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.”

But, for those who make it work, they say the benefits far outweigh the risks. Dearinger and Wolff both would recommend getting involved in their businesses to others.

“I’d recommend it to anybody if they want to be healthier, make some extra money, or just help other people,” Dearinger said.

“I would tell them to be honest and have integrity. A lot of people have given network marketing a bad name, but it’s truly the best way, I believe,” Wolff said. “You have to do your research on your company. Believe in the products, the company, and the industry. Most of all, you have to believe in yourself.”