Ugly Truth About the Best 4 MLM Companies

Ugly truth about the Best MLM Companies

What is the Ugly Truth About the Best 4 MLM Companies? Multi-level marketing style businesses existed in the 1920s, 1930s. The very first known company, California Vitamin Company, later named Nutrilife and currently product sold under Amway or California Perfume Company, now named as Avon Products, the second largest direct-selling enterprise in the world after Amway.

Multi-level marketing makes money by selling products by recruiting a big network of distributors. Each distributor can make a commission by recruiting more people and selling products. In a common name, they call this downline, and downline repeat the same way to make money, the people on top will make a commission from all the downlines.

Although the business has been around for years, not everyone can make a fortune. Despite those who can make a big bucket from the big known companies, sadly not all of them running the business ethically and selling the products with heart.

Let see what are the ugly truth about some of the best known MLM companies.

Ugly Truth About the Best 4 MLM Companies

 Herbalife

CompanyCountryRevenue
2018 In Billion
(USD)
Revenue
2019 In Billion
(USD)
Growth RateYear founded
HerbalifeUSA4.8924.8770%1886

Herbalife Nutrition founded by Mark Hughes, operating over 94 countries, and develops and sells dietary supplements. Herbalife is a celebrity-driven marketed MLM company.  The company sponsored more than 100 world-class athletes, teams and events around the Globe. The footballer Cristiano Ronaldo is one of them. A network of 4.5 million independent distributors and customers worldwide. Focus products include weight-loss and protein shakes, as well as protein bars, teas, supplements, and personal care products.

Legal Cases

In 2008, the company was sued after laboratory tests reported Herbalife’s product could lead to liver problems. Over 50 reported cases of liver toxicity attributed to Herbalife’s products in Spain, Israel, Latin America, Switzerland, Iceland, and the US. More reports also found the content of heavy metals, toxins, psychotropic substances, and pathogenic bacteria in the product.

In 2016, Herbalife paid $200 million fine settlement and agreed to have a business “fundamentally restructuring” of its practice and also accusations being a pyramid scheme by FTC.

Legal Cases – China

Herbalife paid $20 Million for making false and misleading statements to investors about its China business model in fillings made between 2012 to 2018. Herbalife falsely claimed they pay distributors hourly instead. They operate the same as how they operate in other countries, distributors only being paid by sales commissions. Paperwork is being manipulated to comply with the Chinese government law of running a direct-selling company but not a pyramid scheme company.

My Verdict

I have seen a couple of times in social media, Herbalife’s products being shared negatively and warned it harms our body and especially the liver. From time to time, people around me that are having the supplements saying the product makes them dehydrated and need to drink a lot of water. The obvious weight management result is there, but our body might be deteriorated without notice.

Amway

CompanyCountryRevenue
2018 In Billion
(USD)
Revenue
2019 In Billion
(USD)
Growth
Rate
Year
Founded
AmwayUSA8.88.4-5%1959

Amway is a well known multi-level marketing company for 61 years. Category of products included health, skincare, cosmetic, and home care. Amway founded by Jay Van Andel and Richard Devos, the billionaire conservative activist and father-in-law of U.S. Education Secretary Betsy DeVos.

Over the years Amway has been facing investigations in many countries by the Federal Trade Commission (FTC) for alleged pyramid scheme practices.

Legal Cases – The US

Amway in the US has alleged fraud in 2010 and agreed to pay $56 million, $34 million in cash and $22 million in stocks to settle a class action filed by Federal District Court in California in 2007. The allege brought against Quixtar and top-level distributors operated Amway business as an illegal pyramid scheme.

The company acknowledged the result of the lawsuit and made changes to its business operation. The settlement approved by the court, the value of the settlement, and the business model changes cost Amway a total of $100 million dollars.

Legal Cases – India

In 2013, William S. Pinckney, Managing Director & CEO of Amway India Enterprises and two other directors, alleged of running a pyramid scheme business. Pinckney arrested once again for an unethical circulation of funds by Amway. He was jailed for two months.

In 2017, two directors William S.Pinckney and Prithvai Raj Bijlani being charged against the Prize Chits and Money Circulation Scheme (Banning) Act. A total of eight complaints in 2002, under a cheating case.

My Verdict

Amway is the least negative news I have ever heard of. Most of their daily use products are good in quality but often overpriced. Distributors or IBOs can be extremely ‘sticky’, aggressively approach to recruit, and make sales. In Malaysia, the salespeople are very competitive. The way of selling makes people think multi-level marketing is nothing but an extremely sales-driven kind of business.

I was a member for a year, that was helping a friend to hit his sales target. I was neither impressed by the products nor the business plan. The membership terminated automatically a year later when you stop maintaining.

Young Living

CompanyCountryRevenue
2018 In Billion
(USD)
Revenue
2019 In Billion
(USD)
Growth RateYear founded
Young LivingUSA1.91.90%1993

Young Living founded by Donald Gary Young was once a controversy of convicted for unlicensed practice of medicine. The multi-level marketing based in the US, Lehi, Utah, main products are essential oils. The company is using Amazon as an official distribution channels and it is generating more than a billion revenue each year. It generates $5.1 billion in 2017 and estimates to reach $25b by 2024.

A warning letter from FDA

In 2014, a warning letter was sent to the CEO of Young Living, over illegal marketing Young Living products as a cure for Ebola Virus and including “Parkinson’s disease, autism, diabetes, hypertension, cancer, insomnia, heart disease, post-traumatic stress disorder (PTSD), dementia, and multiple sclerosis”. The marketing and distribution of the products without FDA-approved applications violates the act.

Legal Cases

In 2000, an explosion of distiller caused fatal wounding a worker at the Young Living Farms in Utah. Utah Occupational Safety and Health Division (UOSHD) fined Young Living Farms $10,280 for 7 safety violations.

In 2017, Young Living was fined $760,000 and guilty plea on federal misdemeanor charges for illegal trafficking of rosewood oil and spikenard oil in violation of the Lacey Act of 1900 and the Endangered Species Act of 1973. The company was placed on probation for five years.

In 2018, Young Living lost a lawsuit to DoTerra and paid $1.8 million in legal fees and other costs related to a long-run case over executives who left Young Living and to start in Doterra. Doterra was accused of pullover staff and stole trade secrets. The judge agreed with DoTerra that Young Living pursued its lawsuit in “bad faith”.

Lawsuit Claims Members Buy More Than They Sell

Members lose more money than make by purchasing more than selling. The lawsuit has shown Young Living violated the 1979 Federal Trade Commission ruling that aimed to prevent MLM companies by enforcing “70/30 rule, which means distributors must sell at least 70% of their products before purchasing more.

The case alleged that the company claimed the “only opportunity” to earn an income is recruiting members, ended up most members must spend hundreds of dollars each month, in order to maintain the membership and eligible to make commissions from the people they recruit, and the cycle repeats.

2018 – lawsuit concluded that nearly 89% of Young Living members earned $4 yearly averagely. In 2016 and 2018, over 96% of members lost money “working for” the company, some may lose a few hundred to thousand dollars.

To read the whole list of the full complaints about Young Living here.

My Verdict

Young Living is massively marketed in the Singapore market. People that are practicing yoga, meditation, and use essential oil to achieve tranquility, strongly believe that scent can heal the body and soul. A close friend of mine has used one of the essential oil to help her 5-year-old boy with epilepsy. The boy miraculously reduces and even eliminated the periodical pause of consciousness completely. My friend was not only using Young Living products, but also some western and Chinese medications for her boy during the healing process.

I was impressed until I found out the above-mentioned allegations. Falsely claim and promoting the effectiveness of the products will continue to mislead the consumers more. This is definitely an unethical move in the long run.

Nu Skin Enterprises

CompanyCountryRevenue
2018 In Billion
(USD)
Revenue
2019 In Billion
(USD)
Growth RateYear founded
Nu SkinUSA2.682.42-10%1984

Nu Skin Enterprises’ main products are personal care and dietary supplements under both Nu Skin and Pharmanex brands. The company listed on the New York Stock Exchange in 1996, has 1.2 million independent distributors worldwide.

Legal Cases

In the 1990s, Nu Skin being investigated by the Federal Trade Commission (FTC) over complaints of its multilevel marketing practices. In 1992, the company reached settlements with 5 states of deceptive advertising and overstating the income earned by distributors. In 1994, Nu Skin paid $1 million and signed a consent decree prohibiting it from making deceptive claims of its products. Additional $1.5 million paid in 1997 to settle further unsubstantiated promotional claims.

In 2010, Nu Skin was listed in Forbes as one of the “100 Most Trustworthy Companies.”

2014, the Chinese government investigated Nu Skin and People’s Daily newspaper calling Nu Skin a “suspected illegal pyramid scheme” business. In 2016, Nu Skin paid $47 million settlement for the allegation in China. Another bribery reported about Nu Skin bribing a top Chinese official with Nu Skin charitable division funds. Another fine of $540,000 was charged by the Chinese government due to illegal sales and making false product claims.

Supplements Content

Top selling product, LifePak Anti-ageing supplement was tested by ConsumerLab.com and reported false indications of its total vitamin A content according to FDA requirements.

On media, the show Last Week Tonight with John Oliver, blatantly criticized MLM companies and mentioned 93% of Nu Skin’s distributors did not earn a commission check in a typical month.

My Verdict

Again I was once a Nu Skin “evangelist” for a year in Singapore. Shamelessly I spent a big buck buying weight management product for my high-cholesterol dad. I spent most of my salary on a 3-month-program, he lost 7kg, lost some visceral fats, and stop taking the supplements halfway. Because he saw blood in his stool discharge without letting me know. Thank god his health is fine now.

A year as a salesperson of Nu Skin life was not awesome. I hate it when they make me compliment all the targeted friends and family unwillingly. My upline stopped pursuing this career cos her husband strongly against the business model. Another workmate diagnosed with a brain tumor and lost his memory after the surgery. Recovering claiming Nu Skin G3 juice has helped him tremendously with his memories. Years later, they are still in this business, but nobody knows are they doing good or just barely sustaining.

Interesting facts of Multilevel Marketing Statistics

  • According to MLM statistics, 997 people out of 1000 surveyed said they lost money
  • 50% of Herbalife agents make less than $370 a year
  • 90 – 99% of distributors in multilevel marketing only receive a couple of hundred dollars commission per year
  • The wellness category of MLM is particularly promising, with 24.1% of total sales by category, statistics about multilevel marketing revenue reveal

What do you think about the ugly truth? Are you surprised by the Ugly Truth About the Best 4 MLM Companies? Perhaps you have a story to tell too about the MLM world. Please leave a comment down below, for more people to understand more about the MLM business here.

Looking for working from home, sick of the MLM scheme, and want to get rid of your day job and build an online business?

Alternately you can check out more about what do I do for a living and read more about online affiliate marketing here.


Sources from:

  • Wikipedia
  • https://jobsinmarketing.io/blog/mlm-statistics/
  • https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/young-living-09222014
  • https://www.epixelmlmsoftware.com/
  • https://sciencebasedmedicine.org/herbalife-or-herbadeath/
  • https://www.sec.gov/news/press-release/2019-195
  • https://www.classaction.org/blog/class-action-young-living-nothing-more-than-an-unlawful-pyramid-scheme
  • https://www.classaction.org/media/penhall-v-young-living-essential-oils-lc.pdf

12 Comments

  1. My philosophical views on down lining may throw one off so I’m pleading the fifth and choosing not to voice my opinion here on the matter.

    • Hi Marie, Your point of view is so much appreciated for further discussion. That’s fine too, to choose not to!

  2. This content should go VIRAL!  I am truly passionate about exposing the dirty underbelly of MLM’s that are not legit.. in fact, I really don’t know any MLM that I have tried that was healthy. Life Leadership was maybe good. The whole focus, the pyramid scheme, it’s toxic! To read all of your data about each of these dynastic 4 MLM’s was a game changer. I had my assumptions but you really nailed the facts! I love how you put your sources at the end of the article – more people need to do that rather than just spout out info willy nilly.  I remember getting exposed to Life Leadership – the concept was intriguing – take away all the product garbage of Amway and just sell the informational encouraging messages that were uplifting and some were even Christian. I am Christian and take my live by faith. So when some messages drifted to other religions I was OUT. Thanks for keeping us all informed. What are your suggest top 5 things to watch out for when researching an MLM? What is the biggest hot button you have that sends off a warning sign it is definitely not a legit MLM?

    • Hi Allan, unfortunately, some distributors know and heard about the dark sides of their companies, but they choose to ignore and continue to believe that their companies are the best and only do good for the environment and society. 

      5 things to watch out:

      – profit-making “hierarchy” sharing sessions
      – you are invited to meet their somewhat “boss/supervisor”
      – “motivational” talk each week, to get you motivated.
      – Buy products and join as a “member” to get more discount
      – The more you buy the more you can save as a member

      The biggest HOT button would be, you need to maintain sales, and sell up to a certain amount of stocks, in order to maintain your membership. And then you need to recruit people and repeat the same.

      Isn’t that sound like a profit-driven company already? Thanks for your insights!

  3. Nice write up…. 

    This really is very much insightful, it has lots of information in it and I enjoyed reading it…… I have heard of most of these products before now but didn’t really know much about their history…. One really need to be careful with the kind of product we take…. Proper research needs to be done before getting any products to avoid regret at the end….. Thanks alot for this it is really an eye opener. 

    • Thanks, Aboribo, I hope the article can help more people to know better about the MLM companies they are working on or looking forward to working for. It is better to know the background of the company before they commit.

  4. hellooo dear, thanks alot for sharing such an amazing post with us all i was actually doing some research online when i saw these post, i really enjoyed your reviews about mlm companies, it really has been helpfull alot, when i first saw your website i wasnt sure of its sincerity but after going through alot of helpfull things on your site i am really glad i got to see these post, thanks alot for the info, ill surely do some recommendations

    • Hi Skuchmane, glad that my posts help! Do check out more other reviews here. My mission here is to promote consumer’s rights.

  5. Multi level marketing, or MLM, is a form of direct sales home business in which independent representatives sell products or services from a company to an end consumer. MLM are pyramid schemes which are extremely predatory because the only way to make any money is to sign up more and more people under you which will just ruin your social relationships and make you a pariah where it matters most: your friends and family members.

    • Some people make it, some people not. Some people choose to succeed alone, some people choose to remain the relationships with friends and family. All I can say, this MLM business might only suit a certain group of people, a very minor group of people.

  6. hello dear,

    what a great post you have here on the ugly truth about the best multi-level marketing companies, I must say that I have booked with this page already for the great courage you put up and putting such an amazing truth on multi-level marketing is so intriguing,,,,

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