Pyramids of promise

Multi-level marketing schemes can sound like a dream come true to aspirational and often underemployed women, but who actually profits from them, and at what cost?

- GENEVIEVE GANNON

When “Sarah” attended a training day that promised to help her sell lipstick, she was hoping to get some business lessons and a few tips on how to apply make-up. She had recently signed on to sell SeneGence cosmetics after the friend who had introduced her to the products told her she could get a discount if she became a distributor. Sarah’s intention had only ever been to buy the colours she wanted and sell some on to people who were interested. She really liked the lipstick, after all, and you couldn’t buy it in stores. But as she sat listening to the company’s training, she had the sickening realisation that what she had signed up for was not really about make-up at all.

“The whole thing was about marketing. It was about pushing recruitment,” she tells The Weekly. “It was even things like: ‘Just contact your friends and say we’ve got a special deal in your suburb. It doesn’t have to be true. Make a list of all the people you know. These are all people you can approach. Everybody is your market.’ It’s really unpleasant.”

Sarah had been recruited into a multi-level marketing company, or MLM. She’d paid for a business starter kit, thinking she would make a little money. Now it appeared the only way she could turn a meaningful profit was by signing up other people to sell lipstick.

SeneGence denies these allegations, saying distributors’ main income comes from product sales. However, research that has just been published by the Queensland University of Technology found low levels of profitability and financial literacy in MLMs. Have you received a pitch like this on social media?