Published in: Banks | April 17, 2020

MLMs and Recessions: How to Spot an MLM and Say No

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Seeing more DMs from "huns" in your social media inbox? There's a good reason why -- and an easy way to say no. 

Two women sitting in a cafe while one looks at a tablet in her lap.

Image source: Getty Images

Whether it's yoga pants, fitness shakes, or skincare products, chances are you're about to be sold to by a long-lost acquaintance if it hasn't happened already. 

These multi-level marketing businesses (MLMs for short) are barely-legal pyramid selling schemes. They may skirt the law by selling actual products, but make no mistake: An MLM consultant's real money comes from recruiting others to form a "downline" beneath them. 

And that's where you come in -- and where the toxic effects of MLMs spread beyond just one person's decisions. MLMs turn you into a business prospect instead of a friend or family member, and this fractures relationships. 

And right now, the economic conditions have never been better for MLM sellers. 

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The rise in recession-related MLMs

No one officially follows how many MLM participants there are in real-time. Yet, it's clear from social media that more people are signing up, and their marketing strategies are getting increasingly desperate. This "Stop MLM schemes from draining your friends dry" Reddit group is one of many.

With unemployment at record highs, MLMs promise a quick income. Can't go outside your home? No problem; you can sell MLM products online. No selling experience? None needed; you just need a positive attitude and a healthy social media account. Worried about the coronavirus? A good chunk of MLMs focus on selling health and wellness supplements. 

It sounds great, but as you might expect, it's too good to be true. 

If your savings account has taken a hit because of the COVID-19 pandemic, you might be tempted. But while there's never a great time to get involved in an MLM, it's fair to say that now is an especially bad time to put your energy into a pyramid scheme. Instead, choose a legitimate side hustle like online tutoring, transcribing audio files, freelance writing, or becoming a virtual assistant. It'll require a bit more work than a cookie-cutter business model, but the rewards will be much greater. 

How to spot an MLM

It's one thing to be savvy enough to not join an MLM scheme, but you also want to avoid wasting your hard-earned cash on them. People in MLMs are well aware of the associated stigma, so they've had to come up with crafty new ways to sell to skeptical customers. Here are some telltale ways to spot them: 

Your friend only sells one brand

It's great if your friend loves a certain type of product so much they're willing to put in their own financial backing and start a business. But the best businesses diversify, and selling only one brand of product is a surefire sign of an MLM. 

"DM me for more details"

Someone who's proud of their business and its products shouldn't be afraid to discuss the full details in an open setting, like on a Facebook post. So watch out for comments along the lines of, "I used this product and it really helped with this problem … DM me for more details!" 

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Once you're roped into an individual conversation, it's easier for an MLM salesperson to isolate you and sell to you. They can refute each of your points without legions of other people pointing out the flaws in the seller's MLM scheme. 

Hearing from an old friend or acquaintance

People in MLMs rely on their social networks to sell their products. They'll quickly get through the people they interact with every day, which means they'll soon need to get more creative and dig back to older contacts -- i.e., you. These sales pitches don't often come on immediately, so be prepared if someone gets in touch out of the blue. 

Asking for donations for frontline workers

One of the more creative recent approaches is asking people to donate so that they can buy their own products and give them to healthcare workers and other first responders who are understandably struggling during the COVID-19 crisis

However, it's a tricky approach. Many hospitals, fire stations, and other public service locations are restricting the types of donations they get, so there's no guarantee your "donation" will actually be made. And if you're truly concerned about helping folks who need it, you're better off donating the cash directly to a hospital or other group's philanthropy organization. They'll be able to direct your money to the best possible use, and you won't be indirectly funding a shady business model. 

Ad-style social media posts

Watching your friends continually extol the virtues of a particular fitness shake while posting pictures of their workout is the surest sign that they've drunk the juice (literally). These posts are designed to show your friend actually using the item, but make no mistake: Close to home or not, it's still just a cleverly-designed ad. 

How to say no to an MLM

It can be difficult to say no to a friend who's trying to recruit you or sell you something through an MLM. That's the nature of the business model, after all. However, the easiest solution is often just to politely decline and move on. You can say something like:

I appreciate you thinking of me! However, I'm just not interested in this product. Anyways, how is your kid/cat/new house/new car?

If your friend presses on, you'll need to decide how worthwhile your friendship is. If you explain your reasons -- that MLM companies are predatory, obnoxious, and a poor business model -- you likely won't find a sympathetic ear. 

Keep in mind that your friend truly believes that this is a viable business solution. They wouldn't be participating if they didn't. And when you question their (very public) decisions, it's easy to see why they might become defensive and shut you out. 

These shady business schemes have broken many a friendship. But remember; if it's a friendship worth having, it'll outlast even the stickiest of MLMs. 

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