Pandemic Schemes
74% of MLM sellers are women, and 20% are Hispanic
Direct Selling Association
When Christine Baker, a financially strapped stay-at-home mom to two little girls, made up her mind to lose 30 lb., she took a cue from a friend who’d gotten fit with Beachbody. The company’s online workouts and diet products cost Baker about $160, but they worked.
“Literally within 30 days, I looked and felt like a different person,” says Baker, of Roseville, Calif., who was so impressed with her 2015 transformation that she decided to become a Beachbody fitness coach herself. She started paying around $135 per month to set up her own online portal and to purchase Beachbody products, and she got to work looking for customers. Yet as she spent more hours trying to sell people on Beachbody and fewer hours working out herself, Baker says the pounds piled back on but the money did not roll in.
“You’re working your ass off. You’re having to check in every day in your group, you’re having to keep everybody motivated, because if they don’t lose weight and see results, they’re not going to keep buying from you,” says Baker, 48. “It was like I was just throwing money away.” By the time she gave up on Beachbody, Baker says, she’d lost several thousand dollars and countless hours that she wishes had been spent with her daughters.
Multilevel marketing companies (MLMs) like Beachbody, which rely primarily on distributors like Baker instead of salaried staff to sell goods and services, have long been eyed with suspicion by regulators, and for good reason. The Consumer Awareness Institute, whose research has been posted on the website of the Federal Trade Commission (FTC), found that 99% of people who participate in them lose money. “Statistically, it is more likely you will win the lottery than you will make hundreds of thousands of dollars selling for an MLM,” says Robert FitzPatrick, the co-author of False Profits, a book about MLMs, and the president of PyramidSchemeAlert.org.
But as the COVID-19 pandemic sends the economy into its worst tailspin
