How to Spot the Predatory Tactics of Pyramid Schemes

How to Spot a Pyramid Scheme

Is a measly initial payment the only thing standing between you and millions of future dollars? Probably not.

Buzz buzz. Mary Sue has invited you to her event Passion Party with Mary Sue!

Suddenly an intense wave of irritation washes over me, and I can’t help but mutter unkind words to myself. Perhaps I’m exaggerating my experience with Facebook invitations, but it seems like more than half are for events I would never attend, from women I went to high school with and haven’t spoken to in years.

Let me tell you something about Mary Sue: She’s that former classmate you graduated with six years ago who never left your home town, squeezed out three kids before turning 21, went to one semester of cosmetology school and wants you to join her in a fun-filled ladies’ night of browsing her peddler’s collection of sex toys. She may even attempt to recruit you to join the ranks of her down line team and become part of the rewarding experience yourself.

Now, of course this awfully specific example of stay-at-home moms who fall victim to the targeting practices of multi-level marketing companies may not be applicable to everyone, but I guarantee there is someone on your friends list — or even yourself — who has tried to sling makeup, nail polish, nutritional “supplements,” clothes, sex toys or any number of other suspicious products to women. She could be your old classmate, your sister-in-law or your Intro to economics group partner.

Multi-level marketing companies have been in operation for decades — the definition of “operation” being looser for some than others — and have notoriously been a popular route for stay-at-home moms and poor college students to make “easy cash” or supplement their spouses income.

While these operations have lured in droves of men draw in by the promise of immediate success and more money, the predatory tactics used to spellbind women into making unrealistic investments are infinitely more aggressive.

Unrealistic Promises

One of the most effective ways that MLM companies target women is by using manipulative language that takes advantage of their deepest insecurities.

Feeling unfulfilled watching “Frozen” for the ten millionth time and changing diapers all day? For a small start-up fee of $100 and the right attitude for success, discover your potential to be your own boss and earn extra income for your family.

Not earning enough money making sandwiches at the Subway on campus?

Become a distributor and learn how to make quick cash for your spring break vacation.

Unhappy with your image? Buy three wraps for the price of two and sign up to become a distributor so that you, too, can spread the message of personal success to others while achieving your own weight goals.

If it seems like it’s too good to be true, it probably isn’t what it seems. Did that senior executive distributor really pay for her new car just from peddling vibrators and scented lube? Probably not.

Pyramid Scheme vs. Multi-Level Marketing

Shouldn’t these types of sketchy businesses be shut down?

In many cases, yes — and they are frequently exposed for their shady practices — but this is an industry hovering above a very blurry line of legitimacy.

It’s important to note that there is in fact a difference between a multi-level marketing company and a pyramid scheme, however small and unfair. The problem with these operations is that it is very easy for them to stay in business through an array of legal loopholes.

What allows MLM giants like Mary Kay and Herbalife, who have been suckering women into their ranks for decades, to keep their metaphorical doors open?


Traditional pyramid schemes operate on the basis of recruiting more and more distributors, or consultants, to their hierarchical ladder. Those just beginning their new career are stuck at the bottom, forced to exert an egregious amount of time and effort just to earn back the money they spent on their fantastic start-up kit.

Those located at the top of the ladder, or more appropriately the top of the pyramid, are almost always the creators of the companies themselves who benefit the most of all.

Acting similarly to a vacuum, the profits gained from recruiting more consultants, who sometimes spend thousands of dollars on annual membership fees, are funneled to the top of the pyramid — thus rendering the promise of vacationing in Cozumel an unattainable dream.

An example of a pyramid scheme that, in reality, is simply selling a dream to their followers (and some unnecessary financial management software) is WakeUpNow, which was ousted in 2015 after 95 percent of their members failed to make profit. The kicker is that many of these companies throw in a disclaimer in their distributor agreements that under no circumstances can they disclose how much they actually profit from their sales.

What differentiates multi-level marketing companies is what they’re selling. Unlike pyramid schemes, MLM’s almost exclusively push sketchy products like non-FDA approved weight loss supplements and 3D lashes that will make you look stunning on your next night out with the girls.

The product is what helps these predatory companies meet “legal” standards. As long as there is a product to sell, despite poor quality or questionable factory production methods, it is very easy for companies like Pure Romance and It Works! to stay in business.

So, Mary Sue — no, I appreciate it, but I do not want to browse dildos and scented lubricant in your living room.


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