Alexis Krystina – The Lifestyle Blog

How To Spot A Network Marketing or MLM Scam

Recently I watched the LulaRich documentary and can we say…. sketch.

That shit was sketch AF, let’s be real. Let’s also be very clear: I have zero issues with Multi-Level Marketing aka Direct Sales aka Network Marketing, etc. in general. When the business stops being about the products and it shifts towards being all about recruiting, there’s a problem. High minimum purchase requirements in my opinion is a huge indicator that shit ain’t right.

This kind of shady shit can also be mirrored in any industry.

The online coaching industry, for example, is FILLED with “coaches” showing off their lifestyles promising that they can teach you how to make millions while working 10 hours per week and you can have all this in less than a month if you just pay them $5K.

When it comes to business, if it sounds too good to be true, it usually is. There’s mindset topics I can dive into here, but let’s be real—you can’t have a successful business that is sustainable if you don’t put in the work. The work is the mindset work and the systems and processes. And I promise you, it’s not going to be overnight, and you do need to actually have some experience—some type of value needs to be provided to the customer—a product or a service.

The coaching industry is filled with coaches teaching someone how to be a coach who then teaches someone else how to be a coach and it’s like… when does the cycle end? This is a pyramid scheme of sorts in a different way—at some point the bubble has to burst, no?

At the end of the day, any business that overly focuses its marketing efforts on the opportunity of a lavish lifestyle should be looked at with a fine tooth comb. When the business stops being about the actual service, it’s a problem. Focusing on how much money someone can make as the primary source of marketing is sketch.

Where is the strategy?

The entire foundation is build on alluring people with an opportunity vs providing actual results and outcomes to the customer base. And this is a shaky foundation.

We all know that MLMs are known for their less than authentic marketing tactics, but honestly, people don’t know what they don’t know. Attraction marketing is a thing that’s TAUGHT so until someone learns of it, the door to door method is it—and these days, ‘door to door’ means cold messaging you on social media. Most of these people are just ambitious women doing what their uplines tell them to do as far as marketing their business—this also isn’t limited to MLMs & NWM because I’ve certainly got many entrepreneurs in all industries trying to slide into my DMs. So why does NWM get all the hate? The reality is this type of marketing is becoming more prevalent with the online service industry than with NWM.

I guess the reason for the bad rap is tactics like LuLaRoe—the money is made in the recruiting, not from the product sales. And therein lies the real issue.

So how do you spot a NWM scam like LLR?

1. High Minimums

Why such high mins, bro?! The reason: their products are mediocre, the company can barely sell them, and so, they need you to commit to buying X amount of their products so they can pay their owners. High minimums are the sketchiest of the sketch. Funny thing is when I used to sell Senegence—love them, ok, don’t get me wrong, I do love their lipsticks—their minimums were pretty hard to keep up with.

Of course I wanted to stay a representative but like damn give me a minute to build some momentum. How can you expect me to consistently sell $100s of inventory when I just started last week. The high mins were not joke—and the best part was, to cover their ass they had us checkmark a box that stated that we had sold over 70% of our inventory before making this purchase. That’s because according to whatever anti-pyramid scheme law that’s out there, 70% of a network marketing company’s revenue needs to come from actual product sales and not commissions from recruiting. Obviously, many of us were lying when we checked that box.

I personally loved Senegence but at the end of the day, I was also running my accounting firm and I just had to choose. Senegence had to go and at the time, those mins were hard to keep up with if you were running it as a part time gig. LLR is a prime example of this sketchy tactic. Women putting up thousands to get started and then struggling to sell, but their uplines are bringing in the bank. Uplines were paid on what their downlines purchased, not what they sold. So no one really gave a shit on how much you were selling, it was all about how much you were buying.

2. Pressure To Recruit

Did I say the last one was the sketchiest of the sketch? No, it’s this. Pressure to recruit is a major red flag. Yes, recruiting a team in a NWM structure is going to get you more money, but if you’re not ready to recruit or have no desire to be a mentor to your recruited team, it should be cool with everyone around and you should still be able to make a little cash and stay an active member of the MLM.

This is where the LLR example hits the nail on the head. No one was able to make money without a team and that’s a big part of what led to all the lawsuits and the documentary. Most of the uplines made money off of their downlines and everyone knew this so the strategy became: make this opportunity look so good that people just sign up. How do you live this lavish lifestyle? Because of the people below you—not because the products are so amazing that they’re easy to sell. This brings me to the final sketch tactic.

3. Mediocre Products

The truth comes out. Here’s the story: The product sucks and you know it. But you’ve already invested your time and money. You see so many people in the company doing amazing things—making millions, living the life. And since you’re ambitious, you just know you can do it too.

This comes full circle with the other two red flags because when the products suck and the company knows they’re mediocre, they require those minimums because honestly, without them no one would buy. They also put pressure on recruiting because without the lure of the opportunity to have this luxurious lifestyle, no one would sign up to sell.

Are people signing up because they love the product or because they love the lifestyle? If it’s more about the lifestyle than the products, look elsewhere.

I do have a soft spot for MLMs because that’s how I started my entrepreneur journey.

When I was 18, I signed up for Avon. I’d always wanted to be an entrepreneur and I was finally able to get a taste of what it’s like to own my own little business. That was really before social media made MLMs take off. I was bringing the little brochures everywhere. I really enjoyed it.

What I don’t have tolerance for is MLMs like LLR that scam ambitious women out of their cash and drain their hopes and dreams.

It’s up to those of us who truly love the NWM world to step up and call out the shady tactics and to showcase the MLM companies that do right by their customers as well as their representatives.

My MLM Journey

After I stopped selling Avon—honestly don’t know why I ever stopped lol, I started selling Mary Kay. I enjoyed their products—they were nice enough. In my opinion, they weren’t any better than Avon and Avon was cheaper. As a struggling college student, Mary Kay was just too expensive for me and I dropped it. What rubbed me the wrong way, though, was my upline who shamed the fuck out of my little 20 year old self into thinking that I would fail at life because I stopped selling Mary Kay—like sorry bitch, but my fucking college student friends can’t afford your $30 body wash ok. lol! Onto the next…

It had been YEARS since I had been involved in any MLM and then came Senegence. I was AMAZED that this lipstick would last through everything. Simply amazed. I bought a couple products, they worked—much to my amazement, and so it didn’t take a lot of convincing to get me on board. I loved my upline (HI HAYLEY if you’re reading! LOL) and I loved the team. What I didn’t love were the high-ish minimums that were required to stay a member—when I left I had SO MUCH FUCKING LIPGLOSS lol. Overall it was a great experience—I learned how to do little fast forward makeup tutorials, I gained confidence in front of the camera and on social media and it really helped to enhance my online marketing presence and confidence. This one was a great experience, but I was also building my accounting firm at the same time and ultimately, something had to give so I let it go. That being said, I still LOVE their products and if anyone sells this, let me know because I’m going to need to re-up one of these days.

My last MLM adventure was with Color Street—at the same time that I was selling Lipsense and building my accounting firm. Overly ambitious much? lol That’s me. Needless to say that didn’t last long just because I didn’t have the time. With this one though, I did absolutely LOVE how hands off it was—no real minimums, no inventory to buy, just direct your customers to a link and they could direct shop. That was a game changer, something I had never seen in MLM! Ultimately though I just couldn’t keep up with 3 businesses all at once and I had to focus on what I truly wanted to build: my accounting firm, Pink Moon Financial.

Fast forward to today and I felt that intuitive hit to take action.

It started honestly with the dead of my paternal grandmother, Abuela Tina. When she passed I started reminiscing and what really stood out about her was her love for delicious smelling body lotions and body washes. For some reason I thought of Avon. I remember how she used to love to buy the body washes and lotions when I sold Avon. I then remembered how my maternal grandmother, Abi, also loved Avon so much. They both supported me in my first ever real entrepreneurial gig—and they genuinely loved the products too.

I asked my network who sold Avon because I was ready to buy some stuff. I missed their products. Not a peep. I thought, how is it that almost no one sells Avon?! I’m sure you can guess what I did. I went to find out what it took to sign up. Barely any minimums—from my understanding as it stands, I have to place an order of any size once every 3 months—that feels easy. No recruiting requirements. I literally signed up under a random person. I don’t need to recruit anyone to make a little money or be entitled to my discount. And obviously the products are not mediocre. I always loved Avon products. There are SO MANY THINGS. And everything is affordable, high quality.

Not that I don’t love me some expensive luxe items—I am after all a Taurus and ruled by the lovely Venus—luxe is my thing. But let’s also be real, I love getting high quality products at a bomb ass price. So basically, it checked off all three non-red-flags so I signed up! I mostly did it for me, but hey, I’m never opposed to a little affiliate cash on the side.

So, if you’re so inclined and you wanna check out what Avon has to over after 135 years of being in business, CLICK HERE to shop my store! Side note—I think it’s awesome that I got the intuitive hit to sign up the day before their official 135th birthday! Coincidence? I think not. Read more about inspired action HERE.