However, beneath the surface of this alleged business opportunity, most participants — variously named distributors, consultants, or independent business owners (IBOs)—lose money, as shown earlier by Talented Ladies Club (TLC) here.

But why do participants lose money, given that most join to earn money? A core reason is that they invest far more into their ‘business’ than they ever earn back. Seminars, a lifestyle they cannot afford (see TLC report here), and the often ongoing purchases of products or service subscriptions, cause participants to lose money, ranging from a few hundred to thousands of US dollars (DeLiema et al., 2018).

This raises the question of why participants continue investing in MLMs despite losses. An article published in the journal Public Policy & Marketing (see here) by Claudia Groß and Dirk Vriens from the Radboud University in the Netherlands explains why. 

In short, MLMs have several mechanisms in place that make participants believe that spending money will pay back one day. Here are five core mechanisms that MLMs use.

1) MLM participants are the key customers 

MLMs thrive through people purchasing their products and services. However, a key issue is that MLM revenue does not have to come from customers who love the products and services. Instead, companies also profit through their own participants, people who have joined their business to earn money, purchasing products and services.

As TLC reported earlier, a business insider in a rare moment of truth, admitted that “companies focused 99% of their attention on selling products or services to their representatives” (see here).

MLM participants who buy products or pay for monthly subscriptions in the hope of ‘building their business’ enable MLM companies to earn money. As you will find in pretty much every MLM compensation plan, participants earn points and bonuses on their own purchases. This means they are incentivized to invest more into products and services than they would if they did not see their participation as a business opportunity. 

TLC’s report of a former It Works distributor illustrates how product purchases help create company revenue independent of whether participants ever earn anything through them (see TLC here). It Works provides a so-called ‘10k Diamond Bonus’ and distributors are made to believe that if they qualify, they receive $10,000 directly.

However, as a former distributor explained to TLC in an interview, “what they don’t tell you is that [the] bonus is paid over 25 months (so works out at just $400 a month) and that in order to keep receiving the money every month, you have to keep qualifying at that rank [i.e., ordering for $600/month]. If you don’t qualify at that rank, you don’t get your bonus that month. … One girl placed a $600 order through her brother (she paid for the order) to qualify for the $10k diamond bonus. However, to keep getting that money, she needed to repeat that every single month. How can you do that?”

In practice, sustaining purchases is financially impossible without substantial retail sales. Retailing products is, however, very time consuming and difficult, if not almost impossible except to a few friends and family members who are willing to support participants.

2) Social networks and emotional incentives 

In addition to the financial incentives to buy, MLMs often create an organizational culture where buying and consuming products is presented as a means to prosperity, personal growth, and overall well-being. Buying products is incentivized not only by pay-backs or higher ranks. In addition, most MLMs have an elaborate system of ranks and recognition tied to purchase volumes.

Someone who has achieved a particular rank, might receive a special pin, a new title, a distinctive jacket, or the opportunity to speak at company events. This public acknowledgment of “success” can be a powerful motivator, potentially pushing people to buy more in pursuit of status within the organization.

Additionally, the slogan that you should become “a product of the product” is a common mantra in MLM circles. Participants are encouraged to use or at least display their love for the company’s products extensively – far beyond what they would under normal circumstances. 

The story on TLC of the above It Works distributor explains how the mechanism works in practice: despite having bought into the $10k Diamond Bonus by placing an order through her brother, the distributor presented and used her (alleged) achievement to show off, get attention, and potentially recruit others. Purchasing into the rank “didn’t stop her boasting about qualifying for the bonus all over Facebook. She just didn’t tell anyone that she possibly only actually received it for one month … ‘Faking it till you make it’ was rife (it’s reframed as attraction marketing to make it seem less like the lying it really is).” (Martin, 2022)

It seems like participants pay to appear successful, despite losing money. However, public acknowledgement and the desire for social recognition incentivize participants to buy into ranks, invest money, and exaggerate and lie about how much, or rather little, they earn.

3) The psychological trap: Escalation of commitment 

The combination of hoping for income and social recognition, even if faked, creates an environment that can be difficult to escape. Participants can find themselves caught in what psychologists call “escalation of commitment”: they continue to invest time and money into the business even when facing losses because they hope that success is just around the corner.

This mindset is often reinforced by the company culture and training materials. Distributors are frequently told that those who invest more will earn more later, creating a belief that current losses are simply the price of future success. 

The story of Megan, a former distributor of LuLaRoe, illustrates this cycle. As a stay-at-home mom she was looking for a way to earn extra income and “loved the idea of owning my own boutique.” However, her experience quickly turned sour as she found herself constantly pressured to “buy, buy, buy.” (McNeal, 2017). When her investments in products and time did not pay off, she did not stop. Instead, she turned to her upline for help. And here, it “was explained to me that I wasn’t successful because I didn’t have enough inventory,” Megan shares. “So I went into even more debt to buy more.” 

This push to continually invest in inventory is a common tactic in MLMs, where distributors are often told that success is just around the corner if they only invest a little more. While such investments might seem irrational in retrospect, when participants are in the middle of it, they seem logical and worthwhile. The case of Success by Health (SBH) provides a stark example.

According to the Federal Trade Commission, SBH distributors were encouraged to sign a “Million Dollar Contract,” committing themselves to spending at least $500 on products monthly. While this is a lot of money, participants were told that becoming millionaires was “achievable for the masses” (FTC, 2020, p. 12). Compared to the millions promised to those who persist, the investment seems small, doable, and worthwhile.

What participants were not told is that less than 2% of SBH distributors received more money from the company than they paid in – let alone became millionaires.

4) The power of misinformation

This leads us to the fourth mechanism: misleading income and product claims. Participants sometimes extend their budget because they are promised not only an easy side income, but also ‘a ‘residual income,’ a ‘millionaire lifestyle’, or the chance to ‘break financially free.’ Despite regulatory efforts, thousands of such misleading claims can be found, done by participants of almost all of the biggest MLMs (TINA, 2017).

The same holds for product claims, in particular companies that offer health-related products or services, make numerous dubious, misleading, or outright illegal statements. This covers participants presenting MLM products as curing cancer, infertility, Covid-19, or leading to effortless weight loss (TINA, 2016, 2024). These types of claims not only mislead participants but also cause them to pass them on to potential customers, including their friends and family members who trust them.

5) The eternal cycle – from victims to recruiters

Probably the most insidious aspect of the MLM model is how it can turn victims into recruiters who make new victims. When participants try to recoup their investments and achieve the success they’ve been promised, they often feel compelled to pass on the same claims. They recruit others and encourage high purchase volumes within their downline, suggesting that others fake success by purchasing into ranks and qualifications.

As participants earn on what their downline purchases, recruiting others and motivating them with misleading stories why they should invest more, seems an obvious solution for earning something back on the time, money, and social relations invested. By doing so, participants who were tricked into overspending money, knowingly or unknowingly, continue the cycle of misinformation and illusion.

Beyond MLMs: A broader problem 

MLMs may be famous, but they are only one example of the broader category of “deceptive income opportunity providers” (DIOPs). People searching for a full- or part-time income often turn to so-called ‘income opportunity providers.’ These encompass employed, but mostly self-employed ‘gigs’, platform work, MLMs, franchise opportunities, and money-making claims related to trainings (Gressin, 2021). While these self-employment opportunities flourish, they may simply exploit people’s aspirations for financial independence: the company earns; most participants lose.

What makes these opportunities particularly concerning is how they shift responsibility onto the individual. By classifying participants as independent contractors or entrepreneurs, these companies can distance themselves from the financial outcomes of their distributors. This aligns with deeply held American ideals about entrepreneurship, and hard work leading to success.

How to protect yourself and others

It is essential that anyone considering joining an MLM or similar opportunity is aware of these mechanisms. Prospective participants should critically assess the promises of easy wealth and flexible work, and consider the potential risks and hidden costs. For anyone already involved in MLMs, recognizing these mechanisms can be a first step towards making more informed decisions about purchases and business practices.

It’s important to critically evaluate the true motivations behind buying decisions and to consider whether purchases are truly necessary for business success, personal use, and whether retail customers are available. For policymakers and regulators, this analysis highlights that regulation is needed to effectively address the various mechanisms together to better protect consumers from losing money when joining an MLM. 

Author: Claudia Groß, PhD, Radboud University and TIAS School for Business and Society, The Netherlands.

Sources

• DeLiema, M., Shadel, D., Nofziger, A., & Pak, K. (2018). AARP Study of Multilevel Marketing: Profiling Participants and their Experiences in Direct Sales. AARP Foundation. 
• FTC. (2020). Federal Trade Commission vs. James D. Noland. FTC. Retrieved 23 October 2023 from www.ftc.gov/system/files/documents/cases/netforce_file_stamped_memorandum_in_support_of_ex_parte_motion_fo_1.pdf
• Gressin, S. (2021). FTC puts over 1,100 businesses on notice about deceptive money-making claims. FTC. Retrieved 27 October 2021 from www.consumer.ftc.gov/blog/2021/10/ftc-puts-over-1100-businesses-notice-about-deceptive-money-making-claims
• McNeal, S. (2017). 10 Women Who Have Lost Thousands Of Dollars In LuLaRoe Explain What It Has Done To Their Families. BuzzFeed.News. Retrieved 2 January 2021 from www.buzzfeednews.com/article/stephaniemcneal/lularoe-women
• TINA. (2016). MLM Health Claims Database. TINA.org. https://www.truthinadvertising.org/mlm-health-claims-database/
• TINA. (2017). DSA Companies’ Income Claims Database. TINA.org. Retrieved 2 June 2018 from https://www.truthinadvertising.org/mlm-income-claims-database/
• TINA. (2024). MLM Companies Income Claims. TINA.org. https://truthinadvertising.org/industries/mlm-companies-income-claims/
• WF

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This month, the Federal Trade Commission (FTC) provided further evidence highlighting just how little MLM distributors actually earn. After analyzing 70 MLM income disclosure statements, the FTC concluded that “many participants in those MLMs received no payments from the MLMs, and the vast majority received $1,000 or less per year – that is, less than $84 per month, on average” (FTC, 2024, p. i). 

However, the FTC report also reveals how MLMs attempt to obscure their poor financial outcomes. In this article we summarize the key findings from the report on how MLMs misrepresent their income data.

Are income disclosure statements ‘transparent’?

Out of the hundreds of MLMs operating worldwide, only a small number publish ‘income’ or ‘earning’ disclosures. These reports are supposed to provide transparency and demonstrate that the MLM is taking responsibility by sharing accurate data.

Such transparency is crucial for two reasons: first, most distributors join MLMs with the hope of earning money, though most never achieve this goal (DeLiema et al., 2018). Second, MLMs are notorious for making misleading income promises. According to research from the consumer protection organization Truth In Advertising (TINA), 98% of 100 MLM companies investigated “used atypical and unsubstantiated income claims to promote the companies’ business opportunities” (TINA, 2024).

Relying solely on social media claims from companies or top distributors does little to clarify the true earning potential. But do MLM income disclosures provide the necessary transparency? The FTC report provides a clear answer: not really.

What does the FTC report include? 

In 2022 and 2023, the FTC reviewed over 600 MLM websites in the United States to find income disclosure statements. While many MLMs offered no such disclosures and some had ceased operations during that period, FTC staff identified and analyzed 70 statements for the report.

Five ways disclosure statements reveal less than they should

The FTC report uncovers several tactics MLMs use to manipulate their income disclosures. Here are five of the most common – most MLMs used all of them.

1) They exclude participants who make little or no income

Instead of presenting the income of ALL participants, most MLMs exclude in their disclosures those who do not earn anything or little when showing average earnings. While the income disclosures show how low the income is in MLM, if all included all participants, the average of 84$ per month would be even lower.

Instead of presenting data on all participants, most MLMs exclude those who earn little or nothing. This exclusion artificially inflates the reported earnings. While the disclosures already show how low MLM incomes are, including all participants would bring the average earnings below the already low figure of $84 per month. 

2) They don’t include expenses

While earning money is the main goal for most MLM distributors, true earnings are only those that exceed costs.

However, none of the 70 disclosures reviewed by the FTC provides a full account of participant expenses, and most do not include any expense data at all. For distributors, this lack of transparency is significant because expenses often surpass earnings, leading to net financial losses rather than profits.

3) They place emphasis on the very few high earners

MLMs are well known for promoting rags-to-riches stories, suggesting that anyone can achieve financial success. Even though income disclosures paint a much bleaker picture, MLMs still emphasize the large incomes earned by a tiny minority while downplaying or ignoring the limited earnings of the vast majority.

Here’s an example of this from Amway’s 2023 income disclosure statement. As you can see, the pull out box highlights the top earners:

4) They hide important data in the fine print 

Important data, such as the fact that many participants earn little or nothing, is often buried in fine print. While the few high earners are prominently featured, the reality that most distributors earn next to nothing is far less visible to (potential) recruits and the wider public.

Again, in the Amway income disclosure statement, the details about the number of IBOs who earned nothing (compared to the top earners above) are much harder to find:

5) They use confusing or ambiguous data 

Although income disclosures should aim for transparency, many present information in ways that are unclear or even misleading. Key terms like “income” and “earnings” are often left undefined or inconsistently explained, leaving prospective distributors confused about what the presented data actual means for them and what they can actually expect to earn.

MLMs’ income disclosures play a game of hide and seek

In theory, income disclosures could help consumers to make more informed decisions about whether to join an MLM – or avoid them altogether.

At the very least, they could temper unrealistic expectations. Because, as recent research shows, even aiming for “supplemental income” may be overly optimistic. As professor Stacie Bosley (2024) concludes “Does the typical MLM participant earn “supplemental income?” Simply put, no”.

Read more about MLMs

If you’d like to learn more about MLMs we have a number of articles on our own website:

• Is it REALLY possible to make money in an MLM? We do the sums
• Are MLMs really pyramid schemes? Why you can’t make money selling their products
• The 10 ugly truths MLMs don’t want you to know
• Fake it ’til you make it – how MLM reps lie to recruit and sell
• Why 80% of participants in an MLM will earn less than 70 cents an hour (before expenses)
• Seven lies an MLM rep will tell you – and the REAL truth you need to know

You can also read more of our income investigations into the following MLMs:

• Herbalife
• Arbonne
• Stella&Dot
• Younique
• MONAT
• Isagenix
• Nu Skin
• doTERRA
• Acti-Labs
• LuLaRoe

Author: Dr Claudia Gross, an assistant professor at the Radboud University in Nijmegen, the Netherlands, at the department for Organizational Design and Development.

The post Five ways MLM income disclosure statements reveal less than they should appeared first on Talented Ladies Club.

For a few years now, many MLMs seem to have been struggling. Some have been forced to change their business model, and others have gone out of business. Find out why, despite the efforts of their new Director of Sales, Forever Living UK appears to be on a downward spiral.

1) Their top managers are struggling financially

We’ve covered this extensively in articles like this one, but it’s obvious to us that the glory days for Forever Living’s top managers are long gone. 

In the short boom years of 2014-2016, some managers in Forever Living were able to earn large bonus Chairman’s Bonus cheques at their annual Global Rally. They used these cheques as ‘evidence’ of the opportunity Forever Living offered, and bought or rented large houses and cars, and other trappings of wealth. 

Many managers appeared to take this money from their businesses using a Director’s Loan. On the plus side, a Director’s Loan gives you immediate access to money without paying tax on it. But on the down side, this money needs to be repaid within nine months of the end of your Corporation Tax accounting period. If it is not repaid, you must pay Corporation Tax at 33.75% of the outstanding amount, or 32.5% if the loan was made before 6 April 2022.

The trouble with taking the money from their business this way is that, thanks to the subsequent decline in the size of their bonus cheques, many Forever Living managers don’t appear to have had the money to repay their loans. 

As a result, we’ve seen some of their homes put on the market, and luxury cars replaced by more modest vehicles. Some have even filed for bankruptcy or been forced into liquidation as they were unable to repay their debts. Others have abandoned Forever Living completely and either quietly returned to paid employment, moved to another MLM or tried to start their own business.

Case study: The Forever Living ‘millionaire’ who owed over £100,000

In 2021, the limited company of one top UK Forever Living manager, whose videos are still on Forever Living’s YouTube channel today, was dissolved by liquidators. 

The liquidators’ final statement shows her Director’s Loan account overdrawn by £53,047. In total, she owed £115,586 to HMRC and £2,939 to trade and expense creditors. Embarrassingly for her, the liquidators decided that she didn’t have enough money or assets for them to pursue the debt, so it was written off.

Three years after liquidators were appointed to attempt to recover some of her business debts, Forever Living was still promoting this woman as a speaker on their “Excellence” Roadshow:

Today, incredibly, she has repositioned herself as a high performance coach, business consultant, strategist and speaker. Here’s how she now describes her time in Forever Living:

“Within just 18 months, my business had become one of the fastest growing in the UK, it developed into an international organisation with a sales turnover in excess of £4m per annum. I enjoyed travelling to many countries and became a speaker at business events hosted in various European countries, across the Middle East and in the USA.”

This hardly reflects the reality – she was unable to pay her business debts and was forced to put her business into liquidation. To us she is representative of the ‘success’ of the Forever Living Managers who joined at the right time and seemingly lived beyond their means in order to recruit victims… only to struggle with their financial responsibilities once the good times ended.

2) Their turnover is at its lowest in over 20 years

When you look at Forever Living’s UK accounts, it’s easy to see why their managers are struggling financially – the boom years appear to be a distant memory. Here’s the change in their sales year-on-year since 2013:

• 2013: Sales rose by 27%
• 2014: Sales rose by 70%
• 2015: Sales rose by 81%
• 2016: Sales decreased by 25%
• 2017: Sales decreased by 47%
• 2018: Sales decreased by 24%
• 2019: Sales decreased by 24%
• 2020: Sales rose by 11%
• 2021: Sales decreased by 11%
• 2022: Sales decreased by 19%
• 2023: Sales decreased by 12%

Aside from a brief and small increase in lockdown, as you can see the company’s sales have been steadily plummeting since their high in 2015. And their turnover follows a similar pattern, with their 2023 turnover the lowest in over 20 years:

• 2003: £21,590,848
• 2004: £24,057,473
• 2005: £22,075,927
• 2006: £21,413,028
• 2007: £22,082,569
• 2008: £22,682,489
• 2009: £23,412,358
• 2010: £24,157,199
• 2011: £23,878,750
• 2012 £27,167,812
• 2013: £34,726,349
• 2014: £58,993,590
• 2015: £106,489,238
• 2016 £80,066,133
• 2017: £42,553,600
• 2018: £32,193,744
• 2019: £24,510,601
• 2020: £27,466,360
• 2021: £24,139,971
• 2022: £19,643,954
• 2023: £17,260,086

Here’s what this change looks like:

Despite Forever Living’s attempts to explain the current state of their business as due to “continuing challenges post the pandemic period”, it looks very much like a terminal decline to us.

There’s no conceivable way we can see Forever Living UK return to the brief glory years of 2014-2016; especially as they are not the only MLM struggling now. Indeed, it seems like the entire MLM industry may have peaked.

3) They’ve lowered their promotion requirements for Supervisor

If there was one single sign that Forever Living UK are struggling to recruit and sell, for us it’s the temporary change in requirements to become a Supervisor.

Traditionally, you have needed to sell or buy 25CC over two months to reach the level of Supervisor:

In the UK, you earn one CC, or case credit, for every £170 of products you buy wholesale, or £244 retail:

This means you usually need to either buy £4,250 or sell £6,100 worth of products over the space of two months to achieve the rank of Supervisor.

However, from 1 August 2024 to 31 January 2025, Forever Living are changing the requirement to just 10CCs in a single month:

This has been spun by Forever Living managers as an exciting ‘enhancement’:

But if enough people are already qualifying as supervisors, why make this change? Given the year-on-year drop in sales and turnover, to us this looks like a desperate attempt to recruit more people to the business, and encourage them to sell – and buy themselves.

To us, it’s certainly not the actions of a company that is confident in the success of its business plan. Rather it’s yet another indication that the outdated network marketing model no longer works, and a sign that the glory years for Forever Living UK are well in the past.

Read more about Forever Living

You can read more about Forever Living in these articles:

• Is this the end for MLM Forever Living UK?
• The lies and dark secrets top Forever Living managers are hiding
• Are we seeing the downfall of MLM Forever Living’s top managers?
• Shame on The Sun newspaper for ‘promoting’ MLM Forever Living
• How much money can you earn with MLM Forever Living?
• What does it take to reach the top of an MLM like Forever Living?

The post Three signs that Forever Living UK is failing appeared first on Talented Ladies Club.

We’ve uncovered people who have reached the top of their company’s (often) pyramid-shaped earnings plan hiding huge debts and company liquidation, and telling some pretty blatant lies about their downline.

MLM reps are even happy to tell what appear to us to be blatant lies to the media, including The Times and The Sun, both of whom apparently published these lies with zero fact checking. And we’ve compiled a catalogue of the many lies and outrageous claims made by MLM reps here.

The biggest and most dangerous lies though, happen when MLM reps are attempting to recruit a victim… usually knowing (in our opinion) that the poor person they have in their sights is very likely to lose money. You can read some of the lies MLM reps use to recruit here.

Proof that MLM reps lie in an attempt to sell

And here’s more proof that MLM reps will lie in order to try to sell. As you can see below, numerous reps from the same company posted the SAME photo, and used the same cut and paste explanation (with tweaks). They all claimed that they or a friend (with a different name each time) had accidentally over-ordered a self-tanner, so were offering it at an amazing deal to get rid of it.

The sheer number of virtually identical posts (there were dozens more) proves that the claim the MLM reps are making is a lie.

What’s the product these reps claim to have over-ordered?

We believe the product these reps claim to have over-ordered is Nu Skin’s Sunlight Insta Glow:

Although every product in the social media photos above has been painstakingly turned around so you cannot see the labelling on the front, the Nu Skin branding is clear, and the description and packaging look the same.

Why are Nu Skin reps trying to deceive people?

So why the deceit? Here are a few reasons we think could be possible:

• Firstly the company may be struggling to sell this product, so has suggested the plan.
• The second is that an upline is going for a promotion and has come up with this scheme for her downline to help her boost her team sales.
• Or thirdly the company has decided to push this product for summer and challenged teams to get ‘creative’ in selling it.

Whatever the reason, it is clear that Nu Skin reps are happy to lie and deceive in order to make sales.

If you want to learn more about MLM Nu Skin, we have investigated them a few times over the years:

• How much can you earn with MLM Nu Skin?
• Can you really earn £20k a month with MLM Nu Skin?
• How deception in MLMs destroys people – watch our video to see the proof

Why MLM reps need to resort to lies

So why do MLM reps need to resort to lies? The simple answer is that the business just does not work. Research published on the Federal Trade Commission (FTC) website shows that, on average, 99.6% of people who join an MLM will lose money once expenses are deducted.

We know from speaking to people who have joined an MLM that it is incredibly difficult to sell products. They are often overpriced and friends and family can only make so many sympathy purchases. MLMs also usually have an ‘active requirement’ – a sales target that reps need to reach in order to earn commission or even remain in the business.

Combine this with pressure from uplines who need to reach their own team sales targets, as well as achieve bonuses and promotions, and it’s easy to see how MLM reps reach the point where they are desperate to make money or stem some of their losses.

Sadly, this can lead to people telling lies – something that we know can be encouraged by uplines who have achieved their own position on deception and manipulation.

The good news though, is that it looks like the MLM industry is dying out. This is reflected in the DSA UK’s own data, as well as an analysis of 20 years of company accounts for Forever Living UK. Soon we hope people won’t need to lie, because there are no MLMs to join.

Hannah Martin is a media expert on multi-level marketing (MLM). She’s been investigating MLMs since 2016 and has appeared on the BBC’s Woman’s Hour speaking about MLMs. 

She was on the steering committee for the world’s first global MLM conference and has helped journalists and TV producers create investigative content into the MLM industry, including the BBC documentary Secrets of the Multi-Level Millionaires: Ellie Undercover. 

Photo by Curology 

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When MLM reps attempt to recruit, they often make promises of easy income – money you can earn in ‘pockets of time’ around your busy life. It all looks so easy, and so doable.

What they don’t tell you is that many MLMs have a high churn rate (Herbalife admitted in 2005 that it had a turnover rate of 90% of distributors who were not supervisors, and 60% of supervisors.)

Nor do they tell you that, according to research published on the FTC’s website, an average of 99.6% of MLM reps will lose money once business expenses are taken into account.

So it’s no surprise that the MLM industry in general appears to be in a possible terminal decline. As an example, here are figures for Forever Living UK. As you can see, the company’s turnover in 2022 was its lowest in 20 years:

So while we don’t believe there was ever a good time to join an MLM like Forever Living, it absolutely does not look like a wise financial decision now.

Ironically, the fact that the business is struggling just places MORE pressure on the business to recruit. They need more people coming in at the bottom (and spending money) to keep the cash coming in for the people at the top.

So the recruitment drive (and lies) continue apace. And to highlight just how far the gap between promised potential income and genuine potential income is, we thought we’d contrast the numbers shared in a recruitment pitch by a Forever Living rep with the company’s latest income disclosure statement.

Forever Living reps claim you can earn up to £2,000 a month

So what are Forever Living reps claiming you can achieve with the company? Here’s a slide from from a recruitment pitch shared by this Forever Living rep:

As you can see, the message appears to be that it’s possible (if not easy) to earn “anything from £100-£2000 a month over the summer” around what people already do. So a part-time income.

The potential earnings per rank shared in the screenshot are as follows:

• Assistant supervisor: Typical earnings £100-£400 a month
• Supervisor: Typical earnings £500-£700 a month
• Assistant manager: Typical earnings £700-£1,000 a month

These figures are taken from the company’s First Steps to Manager guide, so are clearly approved.

But how accurate are they? Let’s look at the latest Forever Living income disclosure statement to find out what the ‘typical earnings’ really are.

Less than 5% of people who join Forever Living earn more than £100 a month

According to Forever Living’s latest income disclosure statement, here’s what people who joined the company have earned:

• 89.8% earned nothing
• 1.76% earned less than $42 a month
• 4.22% earned more than $42 a month
• 2.91% earned an average of $111 a month
• 1.26% earned an average of $1,670 a month
• Less than 0.04% earned $31,235 a month

So, according to these numbers, only 4.21% of people who have joined Forever Living earn over £100 a month. And if you want to earn the promised potential £2,000 a month you need to be in the top 1%.

This contrasts VERY dramatically with the recruitment claims above.

Is it possible to make money selling Forever Living products?

The numbers above don’t tell the full story though. They are just the amount people earned from the compensation plan. There is also the potential to make money from selling the products to customers.

So how feasible is this?

The first thing you need to understand is that all MLMs have what is known as an ‘active requirement’. This is a sales target you need to meet to remain with the business.

Forever Living go one step further and require you to personally use their products: “To be considered active for the month in his/her home operating company, an FBO must have a total of four active case credits in the home operating company during that month, at least one of which is a personal case credit.”

Given a case credit (CC) is worth around £166 wholesale (around £237 retail) that means you’re out of pocket before you have even sold a product. And selling isn’t easy.

We’ve examined the possibility of earning a living from retail sales in an MLM before, and calculated that it is just not realistic. This is confirmed when we’ve interviewed people from MLMs, all of whom failed to earn enough from retail sales to even meet their monthly active requirement, let alone earn an income from them.

Even a former Younique Black Presenter – the highest rank in the company – admitted that she had to personally buy stock to meet her monthly sales requirement.

Top Forever Living reps have also claimed to only have as few as “nine regular customers”. And given the cost of Forever Living products, this isn’t a surprise. When we price matched them against equivalent or superior high street products, we found they were consistently significantly more expensive.

To earn £400 you need to sell £1,000 of products

So how much do you need to sell with Forever Living to earn an income? This text exchange, shared by a Forever Living rep demonstrates just how tough it is to earn money from retail sales:

To recap, a woman in the rep’s downline says she’s sold 5.2 CCs of products. CCs, or case credits are the units Forever Living uses to measure sales. And according to this text exchange, a CC in this instance is worth £272, and gives this woman £81.60 in commission.

The woman is celebrating earning £424.32 in commission. But in order to achieve that, she’s had to sell an eye-watering £1,114.40 of products in a month.

It is clear from the wider text exchange that this woman is going for a promotion in the company, as this volume of sales does not appear normal for her (she’s been with the company for around 10 years and is still at the bottom rank, from what we can see).

From experience, some of these sales will be personal purchases, or guilt-buys from friends and family to help her reach the promotion. But once the promotion is reached, that volume of sales won’t be maintained.

The Forever Living ‘success’ who earned just £87 a month

Here’s another example of how hard it is to earn money with Forever Living – even when you are trying hard and being mentored. This social media post was written by the same woman who shared the texts above:

Incidentally – another lie – the aspiring manager she mentions here was not “working up to Head Teacher”, but was in fact a school assistant.

Here’s another post from the same woman (again, lying that the aspiring manager is a teacher):

Here’s a photo showing this same aspiring manager sharing the secrets of her ‘success’ a talk at a Forever Living Success Day:

And here’s the reality – a Facebook comment by the aspiring manager:

As you can see, despite all her hard work, and the mentoring from her upline, she only earned £87 that month. Sadly, this woman also posted on social media that she was forced to catch the bus with her children because her car “broke down and is gone”, and she couldn’t afford to replace it.

So clearly, even with her determination, hard work and mentoring, she struggled to make money with Forever Living.

Don’t buy MLM recruitment lies

Right now, MLMs like Forever Living are putting an increasing amount of pressure on their reps to recruit, in an attempt to stop the downward industry trend and save their profits. This means that more people are being subjected to potential recruitment lies and whitewashing.

Unfortunately, the people who fall for these lies are more likely to LOSE money than make it, according to date from both Forever Living themselves and research into the industry as a whole. So please be wary about falling for an MLM sales pitch.

Read more about MLM Forever Living

You can read more about MLM Forever Living in these articles:

• How much money can you earn with MLM Forever Living?
• The lies and dark secrets top Forever Living managers are hiding
• What does it take to reach the top of an MLM like Forever Living?
• Are we seeing the downfall of MLM Forever Living’s top managers?
• Shame on The Sun newspaper for ‘promoting’ MLM Forever Living
• Review: Is this the end for MLM Forever Living UK?

Hannah Martin is a media expert on multi-level marketing (MLM). She’s been investigating MLMs since 2016 and has appeared on the BBC’s Woman’s Hour speaking about MLMs. 

She was on the steering committee for the world’s first global MLM conference and has helped journalists and TV producers create investigative content into the MLM industry, including the BBC documentary Secrets of the Multi-Level Millionaires: Ellie Undercover. 

The post The recruiting lies MLMs tell you appeared first on Talented Ladies Club.

Over the past seven years we have been investigating the multi-level marketing (MLM) industry. And over that time we’ve noticed a dramatic decrease in their fortunes.

This is across the board in companies and countries – particularly mature markets like the UK, USA and Australia. Even the UK’s DSA’s own figures agree, showing a sharp decline in the industry’s numbers.

But why is this? And how has the company Forever Living in particular fared? To find out we explore the three reasons we believe are behind the slow death of the MLM industry, and review Forever Living UK’s finances over the years.

Three reasons why MLMs like Forever Living are failing

So why are so many MLMs struggling right now? We think there are three key reasons for the decline of MLMs.

1) The market is saturated

The success of MLMs over recent years has been fuelled by the mass adoption of social media, and the access that gave distributors to a much wider market. But the pool of potential people in mature markets like the UK and the USA has now been over-exposed to MLMs, leaving fewer prospects.

There are few people today who aren’t already aware of MLMs, and those who may be inclined to join have usually already been approached. The industry’s high churn rate (in 2005, Herbalife admitted that it had a turnover rate of 90% of distributors who were not supervisors, and 60% of supervisors) also means that many potential victims have already been burned by an MLM.

Or they may have simply run out of money to invest in another business, due to their prior losses with an MLM. Whatever the reason, the market saturation means there’s continually slimmer pickings for distributors to recruit from.

2) A vocal anti-MLM movement

Over the past few years there has been a growing anti-MLM movement that incorporates everything from documentaries like Betting on Zero and Secrets of the Multi-Level Millionaires, international conferences, podcasts, such as The Dream, investigative articles like our own, mass media coverage, YouTubers and TikTok accounts, and Facebook groups.

The anti-MLM movement has cast a cold, critical light on how MLM businesses recruit and sell, the quality and value of their offerings, the tactics used by distributors, and the culture within the organisations.

This has raised awareness of the negative side of the business, such as the purported 99% loss rate of people who join, and emboldened people to say no when offered products to buy or the opportunity to join an MLM, making sales and recruitment much harder.

3) Increased legislation

Authorities have been very slow to catch onto, and clamp down on, MLMs in our opinion. But there are positive signs of change.

In 2015, the Federal Trade Commission (FTC) in the US sued MLM Vemma Nutrition Company. The company settled with the FTC and agreed to “end the business practices that the FTC alleged created a pyramid scheme”. Vemma was ordered to pay a US$238 million fine, restructure its compensation plan, and forfeit some company assets.

In 2016, the FTC also forced Herbalife to restructure its multi-level marketing operations and pay $200 million to former distributors. The FTC’s claimed the company’s MLM compensation structure was unfair because it rewarded distributors for “recruiting others to join and purchase products in order to advance in the marketing program, rather than in response to actual retail demand for the product, causing substantial economic injury to many of its distributors.”

In 2019, Italy’s Competition and Market Authority (AGCM) fined companies trading under the Juice Plus + brand with a €1m penalty, citing dubious marketing practices that were in breach of EU advertising law.

And in 2021 LuLaRoe settled out of court for $4.75 million after being sued by Washington Attorney General’s office for being a “pyramid scheme”.

There is also pressure on the FTC to include MLMs in their Business Opportunity Rule. The rule says that if you offer someone an opportunity, such as joining your MLM, you need to:

• Provide proof of any income claims you make
• Disclose if the company has been involved in certain legal actions
• Detail their refund and cancellation policy
• Provide a list of at least 10 other people who have bought in

This needs to take place seven days before the person you’re recruiting pays any money or signs anything.

All of this seems good business practice to us, and is a requirement in other industries, but so far MLMs have got away without the need to provide this information. And there is good reason why the industry is fighting hard to avoid being included in the Business Opportunity Rule. Because if the truth about the ‘opportunity’ people are selling is really made clear, we doubt anyone would join.

Collectively these court cases, agreements and creeping legislation mean that things are only likely to get harder for MLMs… we hope!

Are Forever Living UK’s top distributors in financial trouble?

Now we’ve looked at the industry as a whole, let’s focus on one company: Forever Living in the UK. There have been signs that the aloe vera MLM Forever Living UK may be struggling for a while. As we cover in greater depth here, many of the companies top managers have seen their fortunes fall in recent years.

Despite attempting to project an image of success and wealth, their personal finances appear to be in dire straits. One of Forever Living’s former top stars is having to sell her dream home – we suspect to pay off her debts – and her company accounts are overdue:

An attempt to close the company down has received an objection. This could be due to unpaid tax, a bank loan and overdraft of around £35,000 (shown on her last submitted accounts), or a director’s loan taken from the company. Whatever the reason, it certainly doesn’t look like an ongoing, viable business for her.

Indeed, despite failing to submit accounts for this company, she’s since registered a new company, seemingly unrelated to Forever Living, with Companies House.

Another top Forever Living distributor who in years gone by had collected cheques of over $1 million on stage, has put her “dream home” on the market too. As of 2022, she had an outstanding director’s loan of £217,043. (We track the decline in her bonus cheques further down.)

And yet another top Forever Living distributor, who has collected cheques of up to $490,000 in the past, has left the company. Her last set of accounts for her Forever Living business show her as owing creditors over £145,000. And her second business (selling planners to predominantly MLM distributors) is late filing its accounts too:

Its last accounts showed the company owing over £41,000 to creditors, including a bank loan of over £12,000. On top of this, there is an outstanding director’s loan of over £72,000.

These are/were some of the company’s top distributors, and if they are struggling to make the business work – as it appears from the debt they seem to have accumulated and the need to sell their houses – then things don’t bode well for less successful distributors, and anyone joining the business now.

We review Forever Living UK’s accounts

This all tracks with the fortunes of Forever Living UK, when we review their finances on Companies House. Here’s what their accounts show in terms of sales over the past 10 years:

• 2013: Sales rose by 27%
• 2014: Sales rose by 70%
• 2015: Sales rose by 81%
• 2016: Sales decreased by 25%
• 2017: Sales decreased by 47%
• 2018: Sales decreased by 24%
• 2019: Sales decreased by 24%
• 2020: Sales rose by 11%
• 2021: Sales decreased by 11%
• 2022: Sales decreased by 19%

Aside from a brief and small increase in lockdown, as you can see the company’s sales have been steadily plummeting since their high in 2015.

To give you a picture of their current financial state, their operating profit in 2012 was £1,147,392, compared to £417,552 in 2022. Their turnover also paints a stark picture; in 2012 it was £34,726,349, but by 2022 it has shrank to £19,643,954.

So that means:

• Their operating profit in 2022 was £729,840 lower than in 2012
• Their turnover in 2022 was £15,082,395 lower than in 2012

Forever Living UK’s turnover in 2022 is the lowest in 20 YEARS!

Not only is Forever Living UK’s 2022 turnover lower than 2012, it hasn’t been as low for more than 20 years:

• 2003: £21,590,848
• 2004: £24,057,473
• 2005: £22,075,927
• 2006: £21,413,028
• 2007: £22,082,569
• 2008: £22,682,489
• 2009: £23,412,358
• 2010: £24,157,199
• 2011: £23,878,750
• 2012 £27,167,812
• 2013: £34,726,349
• 2014: £58,993,590
• 2015: £106,489,238
• 2016 £80,066,133
• 2017: £42,553,600
• 2018: £32,193,744
• 2019: £24,510,601
• 2020: £27,466,360
• 2021: £24,139,971
• 2022: £19,643,954

Here’s a visual demonstration of how the company’s turnover has risen and fallen over the years:

It is clear to us from this diagram that the glory years were a temporary peak. And with the entire MLM industry struggling right now, we don’t foresee that peak returning.

How one top distributor’s bonus cheques highlight the decline of Forever Living UK

To give you another picture of the changing fortunes of Forever Living UK, here are the size of the bonus cheques the UK’s former number two distributor has earned over the years:

• 2013: $4,440
• 2014: $45,762
• 2015: $682,012
• 2016: $1,007,066
• 2017: $677,108
• 2018: $430,108
• 2019: $457,593
• 2020: not disclosed
• 2021: $153,228
• 2022: not disclosed

Bonuses are calculated based on a percentage of the company’s profits. As you can see, the size of the cheques track with the increase/decrease in sales. The only anomaly is 2019, after the company changed how they awarded cheques to give higher earners, such as this distributor, a larger share, and smaller distributors less.

We believe this was an attempt to hide their falling fortunes and protect the headline-grabbing large cheques, which are used by distributors as a recruitment tool.

Forever Living’s latest income disclosure statement shows a decline

It’s not just the UK market that is suffering either, from the looks of the latest Forever Living income disclosure statement. We calculated the earnings off people who join the company based on their numbers they provide:

• 89.8% earned nothing
• 1.76% earned less than $42 a month
• 4.22% earned more than $42 a month
• 2.91% earned an average of $111 a month
• 1.26% earned an average of $1,670 a month
• Less than 0.04% earned $31,235 a month

To compare, these are the figures from their income disclosure statement in 2019:

• 88.6% earned nothing
• 7.86% earned an average of $105 a month
• 3.42% earned an average of $1,493 a month
• 0.2% earned an average of $28,512 a month

More than 1% more now earn nothing in an average month, while the number of people right at the top has shrunk from 0.2% to 0.04%. The number of people hitting the middle earning ranks has dropped too.

So, if 100,000 people join Forever Living this means:

• 89,800 would earn nothing
• 1,760 would earn less than $42 a month
• 4,220 would earn more than $42 a month
• 2,910 would earn an average of $111 a month
• 1,260 would earn an average of $1,670 a month
• 40 would earn $31,235 a month

Here’s a visual representation of the average monthly earnings of 100,000 people in Forever Living, according to their income disclosure statement:

To put this into context, the average salary of a waitress in the US is $31,200, or $2,600 a month. To earn at least this from the Forever Living compensation plan, you would need to be in the top 1% of the company.

So, according to their income disclosure statement, if 100,000 people join Forever Living, it looks like only 40 would earn more than a waitress.

Are Forever Living UK’s fortunes fading permanently?

In an effort to recover their fortunes, Forever Living UK has brought in a new country manager. But is that enough? With a turnover 43% lower than 2012, and a far tougher market, personally we can’t see the glory days returning.

So what will happen to Forever Living in the UK? Will they, like the Body Shop and Cambridge Weight Plan, have to downsize their UK operations? Or do they risk going out of business, like Tupperware?

One thing seems certain to us: the high earning days of Forever Living in the UK look like they are over – and indeed the MLM industry as a whole. And as far as we are concerned, that is only a good thing.

Read more about MLM Forever Living

You can read more about MLM Forever Living in these articles:

• How much money can you earn with MLM Forever Living?
• The lies and dark secrets top Forever Living managers are hiding
• What does it take to reach the top of an MLM like Forever Living?
• Are we seeing the downfall of MLM Forever Living’s top managers?
• Shame on The Sun newspaper for ‘promoting’ MLM Forever Living

Hannah Martin is a media expert on multi-level marketing (MLM). She’s been investigating MLMs since 2016 and has appeared on the BBC’s Woman’s Hour speaking about MLMs. 

She was on the steering committee for the world’s first global MLM conference and has helped journalists and TV producers create investigative content into the MLM industry, including the BBC documentary Secrets of the Multi-Level Millionaires: Ellie Undercover. 

Photo by Mariia Zakatiura 

The post Review: Is this the end for MLM Forever Living UK? appeared first on Talented Ladies Club.

Good health is of utmost importance to us all. As a result, it is popular for multi-level marketing (MLM) companies to sell health-related products.

These are sold through their network of independent MLM distributors – most of whom are unqualified to offer health advice. However, that doesn’t stop many of then promoting these products by promising quick and effortless solutions for various health problems.

We believe this sales system is associated with unhealthy and toxic aspects – and can lead to dangerous repercussions. In this article, we highlight these issues and discuss the necessary actions we believe regulators should take.

How are health products marketed through multi-level marketing (MLM)?

An increasing number of health products are being sold in countries around the world. The distribution of these products is no longer limited to physical stores; rather, it predominantly occurs online through individual sellers.

Many of these sellers are independent distributors of MLM companies such as BeachBody, Forever Living Products, Herbalife, Isagenix, Juice Plus, Prüvit, Livervantage, and Healy World.

These distributors attempt to sell products to their friends, family, and online connections. However, their efforts don’t end there – they also aim to recruit new distributors by offering them discounted purchases and additional income.

Five reasons why we believe it is dangerous to buy health products from MLMs

Despite the companies’ promotion of health, the combination of MLM and dietary supplements raises several concerns. Here are five reasons why we believe it is dangerous to buy health products from MLMs.

1) They make misleading and prohibited health claims 

It’s not uncommon for MLM distributors to make misleading and even prohibited claims about the health products they are selling.

In China, a Nu Skin distributor had apparently been self-medicating with Nu Skin products whenever she fell ill instead of consulting doctors, based on the advice of her ‘mentor’ at the company. Sadly this led to the woman’s death, and forced the company to make an apology.

Another example of what can go wrong is the case of the Healy device in the Netherlands. In this case, both the company and its distributors made medical claims that were deemed misleading.

The Healy is a device that supposedly uses microcurrents to allegedly aid in the treatment of chronic pain, fibromyalgia, migraines, and other conditions. You can find fanciful promises on the internet, for example here.

However, the Dutch Advertising Code Committee and the College of Appeal found these medical claims to be deceptive and unfair. Although the authorities ordered the advertiser to refrain from such advertising, compliance with this directive has been lacking. (If you are interested in a deeper analysis, see here what Quackwatch author Stephen Barrett writes.)

The simple truth is that an MLM distributor is not a medical professional. And even if, by chance, they are, you cannot trust that their recommendation is unbiased as they will make a commission on your sale.

If you have a health concern, do not trust an MLM distributor to sell you a cure or treatment. Instead, see an independent, unbiased professional for a proper diagnosis and recommendation.

2) MLMs repeatedly violate regulations

You might assume that such cases like the examples above are exceptions, as all MLM distributors should comply with regulations – including the stipulation that only claims supported by sufficient scientific evidence and devoid of misleading information should be made.

However, on social media, distributors frequently make claims that are prohibited, such as promoting coffee for weight loss, berry capsules for eczema, psoriasis, and acne, or ketone drinks for weight loss, increased energy, and improved sleep.

The simple truth is that, as you can see here, MLM distributors repeatedly lie, exaggerate and misrepresent in order to recruit and sell. The reason for this is the way the business model is constructed. There is continual pressure on MLM distributors to meet sales quotas for themselves and the people underneath them (their downlines).

As a result, many distributors end up personally purchasing, and going to increasingly desperate attempts to sell their products. To give you an idea of the kind of pressure they are under, here’s a list of 100 things Body Shop distributors are expected to do in order to sell and recruit.

3) Lack of knowledge and qualification requirements in MLM sellers

We’ve already mentioned that, just because an MLM distributor is selling you a health product, doesn’t mean they are qualified to diagnose or recommend treatment.

Becoming a distributor does not require any specific education or expertise. The sole prerequisite is having used the products and being able to enthusiastically promote them, regardless of your level of knowledge or experience.

While distributors receive (some) information about the products they sell, the focus is primarily on sales rather than providing expertise that could genuinely assist customers with their health concerns. This practice raises ethical questions considering it involves people’s wellbeing.

And as we have already covered, the pressure on MLM distributors to sell a particular quantity of products each month means they are often keen to recommend their products for multiple uses – even if they are not designed for it. For example, we’ve seen desperate Forever Living distributors recommending their lip balm as an eye cream!

4) Insufficient or lack of government oversight in MLM

Regulations do exist for MLM distributors, but the question remains: Who monitors them?

In the Netherlands, for example, The Netherlands Food and Consumer Product Safety Authority (NVWA) and the Healthcare Inspectorate (IGJ) possess the authority, yet they do not allocate sufficient resources to address each distributor’s numerous misleading claims on social media and websites. The current approach is akin to a drop in the ocean.

In the USA, the Federal Trade Commission (FTC) has sent several warning letters to MLM companies for “unlawful” and “deceptive” health claims. But what happens behind receiving a chastising letter? Some of the companies receiving these letters are repeat offenders, which makes you wonder whether they work.

Even when MLMs are reported to regulatory authorities, such as the ASA in the UK, they do nothing. There is little in the way of serious repercussions for the companies and their distributors, it seems.

One exception Italy’s Competition and Market Authority (AGCM), who fined companies trading under the Juice Plus + brand with a €1m penalty, citing dubious marketing practices that were in breach of EU advertising law.

The result of this widespread lack of oversight means, in our opinion, you can’t trust what an MLM company or their distributors claim about their products. There’s no obvious penalty for making claims, so what incentive is there for them to adhere to the same legal guidance ‘traditional’ businesses do?

5) Lack of accountability of MLM companies 

While misleading claims are officially disallowed, MLM companies generally evade accountability for the claims made by their distributors. And this seems to lead to a culture within companies of turning a blind eye to the claims their distributors make, and even joining them!

For example, even though the Healy company is aware of the misleading and unfair medical claims made by their distributors, these claims persist and are still present in promotional materials. Shockingly, the senior vice president of Healy World, who is also an independent distributor, openly states in a Healy webinar:

“We can make claims with a clear conscience. ‘Healy’ is a medical product in the European Union for the treatment of chronic pain, fibromyalgia, skeletal pain, and migraines, as well as for the supportive treatment of mental disorders such as depression, anxiety, and associated sleep disorders. How cool is it that we can make these claims?”

In the UK, we have been made aware of numerous complaints made about blatant MLM health claims made to the DSA. And to date, no action has seemingly been taken on any of these claims, as the perpetrators are repeatedly re-offending.

We have even personally met the former Director General of the DSA and informed her of health claims by member companies, following up the meeting (at her request) with emailed examples of these claims. And again, no action appears to have been taken as these companies and their distributors continue to make unfounded claims.

What is the solution? 

So what is the solution? The simple one for us as consumers is not to buy from MLMs! If these companies don’t make sales, they will eventually go out of business. And thankfully, this appears to be a trend that is under way as the industry as a whole struggles.

Aside from this, an effective solution is not easy, but good first steps would be:

• Better supervision: Government authorities need more capacity to enforce existing rules. If only a few social media sources of a few companies are ever checked, misbehavior flourishes.
• Designate one authority to oversee and monitor MLM companies: Hold MLM companies accountable for what their distributors do.
• Hold MLM companies accountable: This will encourage MLM companies to better educate, monitor, and reprimand their distributors. And those who fail to do so should be held accountable.

This article was written with help from Rob van Berkel, a research dietitian and author, and Claudia Gross (Groß), a university lecturer at the Nijmegen School of Management, Radboud University. Both live and work in The Netherlands.

Hannah Martin is a media expert on multi-level marketing (MLM). She’s been investigating MLMs since 2016 and has appeared on the BBC’s Woman’s Hour speaking about MLMs. 

She was on the steering committee for the world’s first global MLM conference and has helped journalists and TV producers create investigative content into the MLM industry, including the BBC documentary Secrets of the Multi-Level Millionaires: Ellie Undercover. 

The post Five reasons why we believe it is dangerous to buy health products from MLMs appeared first on Talented Ladies Club.

You would be mistaken for thinking that a national newspaper would conduct thorough research before printing income claims. But as we already know from The Times, this isn’t always the case.

And now The Sun has shared a story in the Bossing It section of their Fabulous Magazine about a mum of four who “launched her business with £199 while on maternity leave” and “now rakes in a whopping £80k a year”:

You can imagine many women reading that story would be keen to follow in this woman’s footsteps. And The Sun makes her success seem remarkably easy:

“Lisa has since waved goodbye to her ten-year career in the police and now earns an impressive £80k per annum working part time – having built up her business during her children’s nap times.”

But is this really true? Has this woman genuinely built an £80k annual income during nap times?

Quick research on Companies House doesn’t back up The Sun’s claims

Well, given she’s a distributor for the MLM Forever Living, we believe not.

And the facts seem to support this. According to Companies House, this woman is a director of two businesses. One, for her Forever Living sales, is dissolved. And the other, for a business selling planners to MLM distributors, is currently in the process of a compulsory strike off because accounts have not been submitted:

Not only is this company late for both filing its accounts and confirmation statement, but its last set of accounts, filed in October 2021, show an outstanding director’s loan of over £72,000:

That is money that either needs to be repaid to the company, or a tax of 32.5% paid on it.

That’s hardly a secret you’d expect such a successful, inspirational mum to be hiding, is it? And easy to find, if only The Sun had done their research, rather than relying on this woman’s word – as we believe they did.

As already mentioned, this woman’s other business, the one she put her Forever Living sales through, was dissolved in 2021. And the last set of accounts, filed in August 2019, don’t appear, to us, to show a business turning over £80,000 a year. There was just £1,005 in the bank, and the last tax bill shown in the accounts was for £3,076.

And if she really was earning £80,000 a year, why close her limited company? According to these tax experts, once you earn over £50,000, you are financially better off as a limited company than a sole trader.

The Sun makes success look easy with Forever Living

Worryingly, The Sun makes it seem like this woman achieved financial success easily:

“To Lisa’s astonishment, she replaced her full-time detective salary in just eight weeks and never returned to her decade-long career in the police when her maternity ended.”

And they help her promote her opportunity to other women:

“Along with the flexibility, another huge perk for Lisa is that she’s been able to help hundreds of other women.

“”It’s amazing helping women change their circumstances a lot or a little bit, holding their hand and cheering them on every step of the way,” she enthuses. 

“”You don’t have to be great to start something new, I know I certainly wasn’t. 

“”What you do need is a desire to make some positive changes and know that you have to at least start to be great.””

Today, when the dangers of multi-level marketing are well known, and often covered in the media, including The Sun (ironically), we think it is astonishingly ignorant and damaging of a national newspaper to publish these income claims as fact, seemingly un-checked:

“Lisa has since waved goodbye to her ten-year career in the police and now earns an impressive £80k per annum working part time.”

Most women who join Forever Living will lose money – according to their own data

The truth is that most women won’t earn £80,000 a year if they join Forever Living. And we don’t believe Lisa is, either. Here’s what Forever Living’s own data shows people actually earn with the company:

According to these figures, 88.6% of people who joined Forever Living didn’t earn anything from the company in 2018 (these are the current numbers on the company’s website). 

The remaining 11.4% of monthly purchasers earned bonuses based on their downline’s sales (or purchases). 69% of these earned an average of $105 a month (or $1,263 a year). 30% earned an average of $1,493 a month (or $17,916 a year) and less than 1% earned an average of $28,512 a month (or $342,149 a year).

So this means that, of all the people signed up to Forever Living:

• 88.6% earned nothing.
• 7.86% earned an average of $105 a month.
• 3.42% earned an average of $1,493 a month.
• 0.2% earned an average of $28,512 a month.

In order for Lisa to earn £80,000 a year, we estimate, based on these numbers, that she’d have to be in about the top 1% of the company. And she doesn’t appear to be – far from it.

But more importantly, this data shows that the people who read The Sun’s misguided and (we believe) poorly researched article won’t earn anywhere near £80,000 a year. And just one look at Forever Living’s company accounts shows you that this is a company that has been on the decline for the past few years.

In fact, according to research published on the Federal Trade Commission’s (FTC) website, on average 99.6% of the people who join an MLM like Forever Living will lose money after business expenses are taken into account.

Forever Living distributors have a history of lying

Sadly, MLM reps have a long history of lying and distorting the truth, so it is sad to see a newspaper simply regurgitate what one tells them. Especially as many vulnerable and impressionable women will see this article, and some of them may get sucked in – and lose money.

Forever Living in particular seems to have a few distributors who hide dark secrets and bend the truth – as we reveal here. And many of their top distributors are struggling right now.

If The Sun is a responsible newspaper, we think they should remove this article, and stop promoting MLMs like Forever Living, which we (and many other experts) believe are pyramid schemes.

We have made a complaint to The Sun

We have made an editorial complaint to The Sun and will update this article when we receive a response. Update: despite acknowledging receipt on 17 March, The Sun has yet to respond to our complaint.

Read more about the MLM industry

If you’d like to learn more about MLMs, and why we believe they are so harmful, we recommend reading these articles:

• The 10 ugly truths MLMs don’t want you to know
• Is it REALLY possible to make money in an MLM? We do the sums
• Are MLMs really pyramid schemes? Why you can’t make money selling their products
• Seven lies an MLM rep will tell you – and the REAL truth you need to know

We also recommend reading the experiences of some of the former MLM reps we have interviewed here:

• What’s it REALLY like as an MLM rep? We interview one to find out
• Thinking of joining an MLM like It Works? Read this cautionary tale first
• How much can you earn as an It Works distributor? How one woman lost £3,239
• Look into the bad reviews… then run!” One former rep shares her experience with MLM It Works!
• The complete lowdown on MLM Juice Plus+ and how it cost one woman £68 a month
• How much can you earn with MLM Valentus? And how even the company admits that ‘most reps’ lose money
• Why MLMs like Younique apparently don’t even work for the top reps

The post Shame on The Sun newspaper for ‘promoting’ MLM Forever Living appeared first on Talented Ladies Club.

We are sad to see a network marketing company like Herbalife use International Women’s Day to prey on women, as we believe they are doing. In this article we explain why we believe their press release is so problematic.

But first, in case you are unaware of who Herbalife is, we have investigated them in depth in this article. They were also the focus of the award-winning documentary Betting on Zero.

Like other MLMs, the failure rate in Herbalife seems very high. In 2005, Herbalife admitted that it had a turnover rate of 90% of distributors who were not supervisors, and 60% of supervisors. They stated:

“We estimate that, of our over one million independent distributors, we had approximately 201,000 supervisors after requalifications in February 2005.”

The FTC found Herbalife made “deceptive earnings claims”

And given the details revealed in their income disclosure statements, we aren’t surprised so many people leave the company. The FTC discovered, when they investigated Herbalife, that, of 464,736 distributors in the company:

• 399,673 made nothing.
• 34,855 made less than US$370 a year (approximately £281).
• 6,971 made more than US$6,965 a year (approximately £5,303).
• 697 made more than US$108,802 a year (approximately £82,846).

The FTC also calculated that “half of Herbalife’s “sales leaders” earned less than $5 a month on average from selling the product. Instead, the incentives were to recruit more people who would then buy more product – whether or not there was a market to sell it.”

As a result, Herbalife settled with the FTC for the damage done to people “victimized by Herbalife’s deceptive earnings claims” in 2016. The company paid $200 million and was forced to restructure its business.

The vast majority of Herbalife distributors earn less than a waitress

It’s hard to tell today what people are making (or not) from Herbalife, as they have reduced the amount of information they share on their income disclosure statements in recent years (like many MLMs under an increasingly critical spotlight).

But Herbalife’s 2021 North America income disclosure statement shows that just 10% of first year distributors (2,4000 people) who made any money, earned more than $1,636 in any month (not every month, but in any month). To contrast, the average monthly salary for a waitress (not including tips) in the US is $2,813.

And don’t forget, this is just 10% of the people who made any money with Herbalife. And we know, from previous years, this appears to be a small percentage of distributors.

So, according to their own data, you are more likely to earn a higher amount as a waitress than you are as a Herbalife distributor in your first year.

After the first year, things don’t get much better. Again, only the top 10% (about 6,100) of people who have been with the company for more than a year and made any money at all, earned more than $3,925 in any given month.

Add tips to the monthly salary of a waitress (the lowest state average is $120 a day) and you would STILL earn more from waiting tables than joining Herbalife, in our estimation. (You would also not have business expenses to deduct from your earnings.)

Herbalife are attempting to exploit IWD, in our opinion

Given how little Herbalife distributors apparently make – and we believe the company is FULLY aware of their terrible success rate as they produce their income disclosure statements – we were disappointed to see the company attempt to exploit, in our opinion, International Women’s Day (IWD).

Claiming to be “the number one brand in the world for active and lifestyle nutrition”, Herbalife say they have conducted research focusing on women in business. Their Regional Vice President for North West Europe, Violetta Zlatareva, has “dived into how an estimated 252 million females are running their own businesses worldwide”.

Herbalife’s research involved 9,000 women across 15 countries, and found that 72% of women want to own their own business, but many aren’t sure how to go about it.

The press release goes on to claim that “Herbalife… wants to provide a direct route to entrepreneurship for women and provide a step ladder for individuals to climb onto their own entrepreneurial career paths.”

Herbalife distributors are NOT business owners

The problem with this is that people who join Herbalife aren’t business owners; they are, in effect, unpaid sales reps. They also are highly unlikely to make money, based on Herbalife’s own income disclosure statements.

In fact, according to research published on the FTC website, on average, 99.6% of people who join an MLM like Herbalife will lose money once business expenses are taken into account.

However, Herbalife’s press release continues to try to claim that they are offering women genuine business opportunities:

“…companies like Herbalife that sell their products via a global network of independent distributors, offer a great option for those who want to begin their entrepreneurial journey with a reassuring element of safety, support and protection.”

And:

“…working with an established direct selling company allows you to build on the success of a brand that’s already established, well known and with a significant share of the market – a supercharged start for those who want to be their own boss.”

In fact, as we explain in this article, the structure of MLMs like Herbalife offer people who join none of the usual protections they would have with employment (including a salary), and none of the freedoms associated with genuine entrepreneurship. It also leaves them vulnerable to “cult-like culture”.

And they are absolutely not “their own boss.” Can they make decisions on branding? No. Can they change suppliers? No. Can they alter the pricing strategy? No. A Herbalife distributor has no influence over the business, as they would if they were a real ‘boss’.

We predict that many of the women who fall for the sales pitch will fail to make money

Herbalife also admit that women are a core target audience for them:

“Over half of Herbalife’s independent distributors are women which reflects the fact that Herbalife provides the ideal entrepreneurial opportunity for women worldwide who want the flexibility, confidence and opportunity to start their own businesses.”

Sadly, we predict that many of the women who do fall for their sales pitch will discover quickly that it’s not really possible to make money in an MLM – as reflected in the 90% of distributors who left Herbalife in 2005.

On the plus side, we anticipate fewer women falling for this pitch than in previous years. As we catalogue at length here, the MLM industry has been in decline for a few years now. Herbalife is also a member of the UK Direct Selling Association (DSA), which admits that their market in the UK has HALVED over the past five years.

Read more about the MLM industry

If you’d like to learn more about MLMs like Herbalife, and why we believe they are so harmful, we recommend reading these articles:

• The 10 ugly truths MLMs don’t want you to know
• Is it REALLY possible to make money in an MLM? We do the sums
• Are MLMs really pyramid schemes? Why you can’t make money selling their products
• Seven lies an MLM rep will tell you – and the REAL truth you need to know

We also recommend reading the experiences of some of the former MLM reps we have interviewed here:

• What’s it REALLY like as an MLM rep? We interview one to find out
• Thinking of joining an MLM like It Works? Read this cautionary tale first
• How much can you earn as an It Works distributor? How one woman lost £3,239
• Look into the bad reviews… then run!” One former rep shares her experience with MLM It Works!
• The complete lowdown on MLM Juice Plus+ and how it cost one woman £68 a month
• How much can you earn with MLM Valentus? And how even the company admits that ‘most reps’ lose money
• Why MLMs like Younique apparently don’t even work for the top reps

Photo by CoWomen

The post How MLM Herbalife is using International Women’s Day to ‘prey on women’ appeared first on Talented Ladies Club.

Un-coincidentally, this downfall has coincided with what appears to be the terminal decline of the MLM industry as a whole. Even the DSA’s own figures show a dramatically shrinking industry. And as long term critics of network marketing, we could not be happier to see it disappear forever.

So why do we believe the fortunes of MLM Forever Living’s top managers (and, seemingly, Forever Living UK itself) are fading? Let’s look at some of the evidence.

The Forever Living manager who couldn’t repay her debts – despite being chased by solicitors

One Forever Living ‘Sapphire Manager’ describes herself as a “Global Business Coach and Trainer who helps people achieve their best personally and professionally”.

Over the years she has been frequently rolled out by Forever Living to train and give inspiring talks at rallies and events, as an example of a success story. However, during this time she was hiding a big secret from the people who looked up to her: she owed HMRC an eye-watering amount of money, and could not pay her debt.

In total, her business owed £183,236:

A large amount of this was for a director’s loan – money a director borrows from the company tax-free. This money must either be repaid, or tax paid on it, neither of which this Forever Living manager did. When she attempted to close down her company, liquidators were appointed in an attempt to recover the debt from her.

They apparently agreed a payment plan with her but, despite her publicly collecting a bonus cheque from Forever Living during that time, she seemingly reneged on the agreement. Eventually the liquidators decided that, after examining her financial assets it was “uneconomical to pursue”:

How embarrassing for this ‘success story’. Her business owed almost £200,000, but she had so few financial assets it was deemed pointless to pursue her for any part of the money.

Not that this woman appears to have any shame. While this was taking place, she was boasting on Facebook about eating out in restaurants, going on staycations and getting her hair done, and busy trying to recruit more people to her team.

She was also on stage at a Forever Living event, teaching people how to make a success of the business, while her company was in liquidation:

For us this is yet more evidence that you can’t trust a word that an MLM company or their reps say.

The Forever Living manager ‘living like royalty’ who was bankrupt two years later

Not that this woman was the first (or last, we suspect) Forever Living manager to end up with debts they can’t repay.

Here’s another top Forever Living Manager in her heyday, collecting a large cheque on stage:

And here’s what she said in 2017 of the lifestyle Forever Living afford her and her family at that time:

Sounds pretty aspirational, doesn’t it? Roll on just two years though, and this woman is paying a pretty heft price for living the high life. As you can see, by 2019, she was bankrupt:

That’s a pretty significant come-down, but not unexpected in an industry that requires you to maintain the illusion you have a luxury lifestyle. It’s not uncommon to see MLM reps build up large debts in order to try to convince their downline they are rich.

The “debt-free” Forever Living manager with a massive loan she can’t repay

The perfect example of this is another top Forever Living manager who continually boasts about her ‘enviable’ lifestyle, and overtly uses these boasts as an attempt to recruit victims to her downline.

This woman can often be seen on social media claiming to be debt-free:

However, as well as a mortgage on her home, she owes an enormous amount of money to her company:

As you can see, she currently owes her business £207,532 in the form of a director’s loan. As already mentioned, this needs to be repaid within nine months of the end of her accounting period. If not, she needs to pay 32.5% tax on it.

This Forever Living manager has increased the money she owes her company since she first took out her director’s loan in 2016:

• 2016: £109,844
• 2017: £188,377
• 2018: £189,175
• 2019: £205,180
• 2020: £206,445
• 2021: £191,520
• 2022: £207,532

Clearly she is unable to repay this money, or pay the tax due on it. Instead she looks to be ‘bed and breakfasting’ her director’s loan, or finding a way to get around it, while still, in effect achieving the same aim – avoiding paying the tax that is due on what looks to us like an ongoing loan.

One thing is clear: this woman is not debt-free. And she is apparently unable to repay her debt as her business has shrunk considerably since the heyday of MLMs.

Like many other Forever Living managers, this woman took out her director’s loan in the years when she was collecting big bonus cheques on stage. But she’s failed to collect any cheque in the last few years, and last year received just a modest-sized cheque.

This is a clear indication that her business has dwindled away, as the bonus cheques are based on the amount of business you and your team do throughout the year.

Despite this woman’s boastful social media presence, it is clear that she is struggling financially, and will at some point need to face up to the reality that, like the woman whose business went into liquidation, she seemingly owes HMRC money she can’t repay.

The Forever Living manager who is having to sell her dream home

Yet another Forever Living manager who has hit hard times is having to sell her dream home. Though in typical MLM-style is trying to spin it as if it’s a good thing.

Here she is in 2018, speaking about the dream home she built:

And here she is at the end of 2022, talking about buying a new property:

Clearly we weren’t the only ones surprised that she was moving so soon:

While this Forever Living manager tries to spin this move as a good thing, the facts indicate otherwise. She’s buying a home almost half the value of the one she is selling, much smaller (despite what she claims) and far less lovely, so it’s absolutely not a move up, or even sideways.

She is also hiding some financial secrets from her social media followers. Her husband’s business went into liquidation in 2019 owing £146,065. And a new business he’s since started (amusingly, it’s a financial consultancy) had just £19 in the bank when filing its 2022 accounts.

Meanwhile, her own company accounts have dwindled dramatically since the glory years of MLM, and her last accounts show that her business owes the bank £35,000.

Despite this woman claiming on social media recently that she took two years off from her business and “my income just carried on growing”, it is clear that she is struggling financially… to the point she needs to sell her home and downsize dramatically.

The Forever Living manager whose bonuses have plummeted, but still has a large director’s loan

Another top UK Forever Living Manager also has a large director’s loan she appears unable to pay back. Here’s what she has borrowed from her company over the past few years:

• 2017: £331,746
• 2018: £753,802
• 2019: £545,688
• 2020: £290,857
• 2021: £243,683

As you can see, she is chipping away at it where she can, but is clearly unable to clear the loan. That’s probably because her income has plummeted since she took out her first director’s loan. Here are the bonuses she has earned over the years:

• 2015: $682,012 
• 2016: $1,007,066
• 2017: $677,108
• 2018: $430,108
• 2019: $457,593
• 2020: No cheque?
• 2021: $153,228

In 2020 she declined to share the value of her bonus. We suspect this was either because she failed to earn a bonus that year, or it was so low that she was too embarrassed to reveal it. Certainly the downward trend in amounts points to her not receiving a large bonus, if she received anything at all. 

There’s an interesting pattern we see with almost all of the top Forever Living managers in the UK. Between 2015 and 2017, the company was doing well, and they were earning big bonuses. Clearly feeling confident the money would continue to come in, they withdrew large sums of money from their businesses as tax-free director’s loans, and bought large houses. 

However, as we now know, the money did not keep coming in at that level, and it looks like they were unable to repay their director’s loans. So they were forced to carry them over, year after year. Some chipped away at the loans where they could, while others increased theirs as they struggled to maintain the enviable lifestyle required to lure in new recruits. 

Interestingly, all these Forever Living managers use the same accountancy firm, which happens to be based close to the Forever Living UK headquarters. And somehow this firm has enabled them to carry over their director’s loans, without being penalised for bed and breakfasting which, in our opinion, they are doing. 

As we’ve already explained, a director’s loan must be repaid within nine months of the end of the company’s accounting period. If not, the company must pay 32.5% tax on it. A director must then wait 30 days before taking out another loan.

The only way, as far as we can see, the Forever Living managers have managed to keep rolling over such large loans were if they were somehow repaying them and then re-borrowing 30 days later. But it is clear they have not had the funds to do this, otherwise why keep borrowing again?

The only answer to this that we can see is that someone was lending them the money (and continues to do so) to bridge that 30 days, or the accountancy firm somehow found a way around this rule.

What is clear to us, is that these women bought lifestyles they could not afford, with money borrowed from their business tax-free; money most have failed to pay back. 

Sadly, this manager has recently been forced to put her “dream home” on the market too.

The Forever Living manager whose company is being shut down with massive debts

And finally, one of Forever Living’s most well-known former managers, who has walked on stage to collect lottery-sized cheques has suffered probably the biggest fall of all – not that you would know it from social media.

At the height of her success, this woman earned a bonus cheque of $490,897. But like many Forever Living managers, she didn’t appear to invest or spend this wisely. Instead, she took out a director’s loan of over £400,000, which she only paid back (which seems a little too coincidental to us) when her parents sold their large house. (Her parents now live in her garden.)

Meanwhile, her business accounts in 2022 showed that her business’ liabilities were greater than its assets. In accounting terms, this means her company is insolvent.

She also owns another business, in partnership with another Forever Living manager, which sells diaries and notepads. This company has been issued its First Gazette for compulsory strike off after failing to submit accounts last year.

Interestingly this company also has an outstanding director’s loan of £72,724. There are “serious implications” if you do not repay a director’s loan and your company goes into liquidation. This does not look good for either woman.

However, none of this has stopped this former Forever Living manager from setting up an online business selling the secrets of making seven figures with another woman, who has a poor reputation online for allegedly scamming people. We’re not sure what either woman can possibly teach anyone about good business practices!

If these women can’t make MLM work, no one can

None of the women in this article are small fry in the world of MLM. Indeed, according to the woman who claims to be debt-free:

These women – while not (despite the ridiculous claim above) the most successful independent owners in the UK or Europe – are some of the top Forever Living managers in the UK. And if they can’t make MLM work now the brief glory years have passed, no one can, in our opinion.

Read more about the MLM industry

If you’d like to learn more about MLMs, and why we believe they are so harmful, we recommend reading these articles:

• The 10 ugly truths MLMs don’t want you to know
• Is it REALLY possible to make money in an MLM? We do the sums
• Are MLMs really pyramid schemes? Why you can’t make money selling their products
• Seven lies an MLM rep will tell you – and the REAL truth you need to know

We also recommend reading the experiences of some of the former MLM reps we have interviewed here:

• What’s it REALLY like as an MLM rep? We interview one to find out
• Thinking of joining an MLM like It Works? Read this cautionary tale first
• How much can you earn as an It Works distributor? How one woman lost £3,239
• Look into the bad reviews… then run!” One former rep shares her experience with MLM It Works!
• The complete lowdown on MLM Juice Plus+ and how it cost one woman £68 a month
• How much can you earn with MLM Valentus? And how even the company admits that ‘most reps’ lose money
• Why MLMs like Younique apparently don’t even work for the top reps

Hannah Martin is a media expert on multi-level marketing (MLM). She’s been investigating MLMs since 2016 and has appeared on the BBC’s Woman’s Hour speaking about MLMs. 

She was on the steering committee for the world’s first global MLM conference and has helped journalists and TV producers create investigative content into the MLM industry, including the BBC documentary Secrets of the Multi-Level Millionaires: Ellie Undercover. 

Photo by Ali Karimiboroujeni 

The post Are we seeing the downfall of MLM Forever Living’s top managers? appeared first on Talented Ladies Club.