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- [00:00]
Sachi Kol
Hey, scamflancers fans, Sachi here. If you live for the outrageous stories and unbelievable cons that we cover, you need OneDryPlus. It's like sitting in the room with us as we unravel every twist ad free, a week ahead of everyone else and packed with exclusive content you won't hear anywhere else. Start your free trial in the wondry.
- [00:18]
Sarah Hagie
App, Apple podcasts, or Spotify.
- [00:26]
Sachi Kol
Sachi, have you had the experience of like a random stranger from your past all of a sudden changing their entire social media presence? You know, posting pictures of them with perfect makeup. They're on fabulous vacations, talking about self empowerment and being their own boss, and you just know they've joined an mlm. Honestly, I don't see a lot of this, and I think it's a testament to how disinterested I stand in other people's lives. You know what it is? Like, it's something you would have seen from people you knew in high school or when you worked, like, other jobs. And then you kind of see it in your 20s and by now you've probably removed them from who you see. Yeah, they're just not in my life. I actually did have one person try and recruit me. It was someone I'd worked retail with, like, for many years. And she kind of hits me up and I'm like, oh, yeah, you know, we were friends at work. Maybe she wants to get coffee or something. And it turns out it was a multi level marketing scheme. Very quickly did I realize it was. I was like, she's never been interested in me and now she wants me to be my own boss. Why does she care? She was not trying to empower you. No, she totally wasn't. Sarah, it's funny that even you have almost gotten clipped by one of these people because it does really speak to how ubiquitous they are. I feel like I see them all the time, like on TikTok or on whatever ex is anymore. Women who are, like, talking about being their own bosses, but it always seems a little unlikely. Yes. And as you know, multi level marketing, or mlm, is so ubiquitous, it's almost hard to imagine where they started or how deep their influence goes. But I got to talk to a journalist who spent years researching and uncovering not just how predatory these schemes are, but how government policy helps them flourish. It's 2016 and Josie Nikoi is at a company retreat. Josie is in her late 20s with long dark hair and a perfectly applied cat eye. She used to work as a makeup artist and hairstylist before Joining her current job, a network marketing company that offers workout routines and health shakes. Today, Josie is meeting with about a dozen of the company's top earners. They're gathered in a huge rented mansion, sitting around an enormous marble kitchen island with their laptops in front of them. These women are power hitters in the company. Almost all of them rake in millions of dollars a year. But when Josie looks around the room, she notices something. These successful, high powered women all look exhausted. And as the weekend wears on, the group never leaves the retreat house. They hardly change out of their pajamas. Everyone just wants to lay around and rot because they are so burned out. Alarm bells start ringing in Josie's head. She she's here to learn how to be more like these women. To finally reach the highest tier, rake in big money and live the good life. But these women are not only tired, they're unhappy. Here's how Josie describes a moment years later. I also witnessed the top the seven figure earners in it being miserable. Everybody was miserable. Everybody. And that scared me. This is already a problem for anybody operating in capitalism, unfortunately. But an MLM is capitalism on speed.
- [03:53]
Sarah Hagie
And so all the things you really.
- [03:55]
Sachi Kol
Hate about capitalism and about what it does to us, what it does to our spirits, what it does to our bottom lines, what it does to our quality of life happens in a bigger, faster, harder way in an mlm. Yeah. And Josie has overcome a lot to get where she is. She was raised in a small town in Missouri. Her family was very religious. But after getting divorced in her early 20s, she left the church. Josie went to cosmetology school and found work in a salon. But at some point, she sustained a whiplash injury. She needed physical therapy, and paying for that was tough. She was fully booked at the salon. But you can only cut so many people's hair in one day. Before long, Josie was swimming in medical debt. Plus, cutting hair was aggravating her injury. Around this time, Josie discovered a brand of workout DVDs and protein shakes that helped her lose some weight. And one day in the fall of 2013, she saw a video posted by a woman who worked for that company. In it, the woman said that her job had changed her life and enabled her to pay off all of her debt. Josie was intrigued, so she sent the woman a message. And before long, she started working there herself. The job is in multi level marketing. Sachi, do you know how those jobs generally work?
- [05:14]
Sarah Hagie
Yeah.
- [05:14]
Sachi Kol
Okay, so it's a business that recruits people to sell a product directly to a consumer. So it's sort of like how Mary Kay works, where there was like a.
- [05:22]
Sarah Hagie
Lady in your neighborhood who was a.
- [05:23]
Sachi Kol
Mary Kay rep and she sold lipstick to your mom. So let's say you're recruited to sell makeup. You buy the products from the person who recruited you, otherwise known as your upline. Then it's on you to figure out how to sell the makeup at a markup. But the real way to make money is by recruiting people to come in.
- [05:39]
Sarah Hagie
And work under you. And then. And those people have to buy makeup from you, which is guaranteed money.
- [05:45]
Sachi Kol
Those people are in your downline, and soon enough those people are recruiting other people to work under them.
- [05:51]
Sarah Hagie
And on and on and on.
- [05:52]
Sachi Kol
And that, Sarah, is why they call it a pyramid scheme. Yes, that is exactly it. And like all MLM jobs, Josie was required to buy a certain amount of the product every month. She either had to sell it or eat the cost. Josie took to multi level marketing like a fish to water. She believed in the product because she'd actually had success with it. She was soon taking in up to $2,000 a week, but only 200 to $400 of that was from retail sales. The bulk of her earnings came from recruiting more people to her team. And Josie was good at it. By her third year, she made more than $100,000. She quit working as a hairstylist and bought a Mercedes. And she was able to put her sister through college. But she's working nonstop. And she started to notice that there was always a catch. Like, at some point, Josie earned a $500 a month car bonus. So if she leased a car, her company would pay the dealership $500 a month to cover the expense. But to get this perk, Josie had to agree to spend more than $1,000 on company product each month. The math wasn't even girl mathing. It's always amazing to me how bad the margins are and the math is on these businesses and people still fall for them. Yeah, it's like the goalposts never stop moving. There's always one more thing, one extra thing. But at this retreat, the grind is finally getting to her. One of the women there was a top 10 earner in the company who had just made enough to earn a special superstar day. The company flew her to corporate headquarters in California, where all the employees greeted her with flowers and balloons, clapping and cheering. But when Josie asks, how was your superstar day? The woman doesn't even crack a smile. She says it was one day. After all that hard work, one day. Josie is totally thrown. It takes a couple more years and stints at two other MLM companies, but she eventually decides she has to leave. Josie's decision to go has pissed off all of the friends she made in her MLM jobs. She's cyberbullied for leaving and everyone blocks her on social media. And Josie feels guilty for all the people she recruited who she worries she set up to fail. She starts working as an esthetician and tries to heal from an utterly draining six years in multi level marketing. But about a year later, during the pandemic, Josie starts seeing tons of people posting about their business opportunities. She knows they're all getting sucked into MLM and she feels like she has to speak out. So she starts her own YouTube channel called not the Good Girl where she talks about her experience. Josie is part of a big online anti MLM community that warns people about this technically legal but insanely predatory industry. An industry that by one estimation employs more than 6 million Americans. Although it's estimated to be a $40 billion industry, more than 99% of MLM workers will not only not make any money, they'll actually lose money. You know what's frustrating? When you need cash for something important, but payday is still a week away. That's where Earn in comes in. It's an incredible app that gives you access to your pay as you work up to 150 bucks per day with a max of $750 between paydays. Getting started is super simple. Just download the Earn in app and verify your paycheck. Then you can access your money as you earn it and leave an optional tip. Whatever amount you access, plus any tips are automatically repaid from your next paycheck. For unexpected car repairs or vet bills, Earn in can be a lifesaver. Instead of stressing about waiting for payday or putting it on a credit card, you can access your earned wages right away. Download Earn in today, spelled E A R N I N in the Google Play or Apple App Store. When you download the Earn in app tap type in Scamflancers under Podcast when you sign up. It'll really help the show. Scamflancers under Podcast Earnin is a financial technology company, not a bank. Cashouts are based on your available earnings. Standard cashouts take one to two business days with no mandatory fees. Option to expedite your transfer for a fee. Tips are voluntary and don't affect the service. See the Cashout User Agreement for details. Service is not available in all states. Craving your next action packed adventure? Audible delivers thrills of every kind on your command. Like Project Hail Mary by Andy Weir where a lone astronaut must save humanity from extinction. Narrated with stunning intensity by Ray Porter. From electrifying suspense and daring quests to spine tingling horror and romance in far off realms, unleash your adventure aside with gripping titles that'll keep you guessing. Discover exclusive Audible originals, hotly anticipated new releases and must listen bestsellers that hook you from the first minute because Audible knows there's no greater thrill than the one that speaks to you. Discover what lies beyond the edge of your seat. Start your free 30 day trial at audible.com wonderyus that's audible.com wonderyus from wondery I'm Sarah Hagie. And I'm Sachi Kol. And this is Scamflancers. Come and give me your attention. I won't ever learn my lesson. Even if you don't know how multi level marketing works, you're familiar with the biggest names in the industry. Mary Kay, Herbalife, Amway, and odds are you probably know someone who's been involved in one. To spell out how the idea of being your own boss turned into the hamster wheel from hell, we're talking to Bridget Reed, author of the book Little Bosses Everywhere how the Pyramid Scheme Shaped America. She's going to tell us about how a pyramid scheme is a cute little twist on the classic Ponzi scam. Explain who's most vulnerable to these massive billion dollar frauds and share how the biggest MLM companies have used their clout to avoid regulation, fund conservative causes and get a few heartbeats away from the White House. This is multi level marketing. Your product is you.
- [12:24]
Sarah Hagie
Legend.
- [12:26]
Sachi Kol
Hey Bridget. Welcome to Scamfluencers. I'm so excited to talk to you. Thank you so much for taking the time.
- [12:32]
Sarah Hagie
I'm so happy to be here.
- [12:34]
Sachi Kol
We'll start with something very broad. How did you become interested in MLMs and researching them to this degree?
- [12:44]
Sarah Hagie
I started looking at the Instagram hashtag freecar, which it's a an abundant hashtag and it is where MLM recruits of all stripes from many companies post themselves with their car. I think maybe it was my sister, I have a twin sister and she was like, please look at this hashtag. And that was one of my first kind of forays into MLM as it exists now. Obviously I was aware of Mary Kay and Amway and things like that growing up, but that was kind of my first intro into like, wow, these things, things still exist and people still do them. And then I did a short, very short story in 2021 for New York Magazine about MLM companies experiencing this mini boom in the pandemic. And it was just barely scratching the surface. And I just thought, this is a crazy thing. You can barely explain it. So that kind of opened the door, and that was the beginning.
- [13:45]
Sachi Kol
I think a lot of people vaguely know about multi level marketing and know that it's like scam adjacent, but they're probably more focused on specific companies like Lularoe. I don't think many people could explain, like, what an MLM is exactly.
- [14:02]
Sarah Hagie
The thing I learned about MLM really quickly was that there was a lack of long sustained journalism on it and journalism about it as an industry, rather than looking at specific companies which are scammy and have so many crazy characters. And so at this point, when I started looking into writing a book, there was the Vice documentary about Lularoe. There was Betting on Zero, which is a documentary about herbalife. There was the Dream podcast, which is a fantastic podcast, but they also focus on just a few specific companies. And no one had really looked at MLM like a business, even though MLM calls itself a business. So already that was sort of my primary goal was like, okay, if you're a business, then fine, I'm gonna look at you like you say you are and do that from the perspective of an objective third party trying to figure out what the hell is going on. And I do think MLM was so smart to camouflage itself among, quote, business. Because nobody in the business world, and in a lot of business reporting and financial reporting, nobody wants to confront the fact that a publicly traded company on American stock exchanges might be like a complete fraud. That it opens up a lot of questions.
- [15:18]
Sachi Kol
Yeah, there are a lot of thorny questions. And let's start from the beginning. MLM sells itself as the chance to achieve the ultimate American dream, which is being an entrepreneur. But in your book, you lay out that sales was not always synonymous with American values.
- [15:35]
Sarah Hagie
Yeah, the history of sales was something that I really had to dig into because it feels like a part of our DNA in a way that's really insidious because Americans weren't always salesmen. It really was something that demand had to be kind of created for. Before, say, the civil war, sales, like retail as we think of it now was. Was not a major industry. Right. The US Was an agrarian society. Most Americans worked on a farm. And then around the civil War, expansion, railroads, shipping, urbanization, all of these forces then create a new kind of door to door salesperson. So the Yankee peddler, which is like the Old timey guy going door to door with like knives and books or whatever actually becomes someone who works for another company. But where it really expands is in the early 20th century when US imperialism is really also expanding, right? And then you get the door to door salesman as you kind of think of him in like Death of a Salesman or Glengarry Glen Ross. And that happens with the expansion of US consumer culture. And then when MLM is invented, we've just won World War II and US consumer culture becomes the way you're going to be a good citizen in the world is you're going to buy stuff and demand has to be created and salesmen are the ones who are going to create that demand.
- [17:13]
Sachi Kol
So I want to get to how consumer culture goes from above board to essentially a Ponzi scheme in the form of mlm. Like, could you just explain who Lee Mittenger, William Castleberry and Carl Renberg are? These men are super important in the book, but they're not household names despite having changed the world in so many ways.
- [17:32]
Sarah Hagie
Yes. So the quick and dirty on the the inventors of mlm. Carl Runborg is a homemade vitamin maker who invented a multivitamin around the 1930s called neutralite. And he created these homemade vitamins. While the vitamin industry as we know it today was becoming a thing. Americans were taking supplements, but his company didn't go anywhere. Carl Renborg's life is just like a series of utter failures at being a salesman. Like, he sucks. And it's not even just because he sucks, it's just because it's already really difficult. The trend in the United States is big corporations, big conglomerates. And by the time he invents his vitamin, he's competing with like literally Merck and Pfizer and Bayer, these big companies that still exist today. And so he runs this company for at least a decade before he meets two men who are also salesmen who come up with the structure of the company that becomes multilevel marketing. And one is Mittenger, who's a funeral plot salesman. He actually was the head of a company that was run out of the state of Maine for defrauding people into investing in funeral plots. And then Castleberry was a Stanford educated psychologist who was kind of a bit of a Dr. Ruth. Like he had a self help radio show in Southern California. And in my own research, I found that he was a eugenicist. He was straight up studied under Lewis Terman at Stanford, who's one of the most prominent American eugenicists. So that's the world that those two guys are coming from. And they, they meet when they're both working at the Douglas Aircraft factory at the tail end of World War II. And the sort of parable goes that they're standing around saying, oh, sales sucks. What if we could come up with a solution where no one would have to like give up a cut of their sales? And that's how they invent mlm, which just covers up so much of what really they invent, which is a version of the Ponzi scheme using the vitamins of Carl Renborg's business as a coverup. But instead of one guy at the top, you have a million little Ponzis who get a cut of whatever anybody under them buys. And so that's how MLM is, is born.
- [19:54]
Sachi Kol
Yeah, this is such a crazy concept and it blows my mind every time. It's basically supercharging a Ponzi scheme because like in a Ponzi, the scammer gets people to give him money for a phony investment. The twist here is turning investors into salespeople, pulling them into the con and using real products as a cover. And in your book you say that these two men, Mittenger and Castleberry, call this innovation, quote the plan. Then they make their own company, mnc, to put the plan in action by selling Renberg's vitamins. Can you break down what this actually looks like in practice?
- [20:32]
Sarah Hagie
The plan is the early euphemism for what becomes multi level marketing. And it is the way that the business is structured in traditional door to door selling. I, Bridget, buy a pack of vitamins and I get them as a, at a discount and I sell them for a higher price and I pocket the difference. That's like classic direct selling. That's your Avon lady or Fuller Brush. Those are kind of the two iconic American companies where that's how you would make a really small living. What the plan is, is they create something called the neutralite business opportunity. So you can make your, you know, pennies on the dollar selling your vitamins door to door. But what you can also do is recruit a team member under you. And what that person buys at their discount, you will get paid based on that. So what people often say when describing the plan, because it's never changed, is that multi level marketing is you get a cut off of your recruit's sales. And the word sales is what's wrong with that. Because what Mittenger and Cassowary invent in the plan is something called purchase volume. And that's what you get paid on you get paid on what people buy under you in what's called your downline. And that again same in MLM today. But that is what makes it a Ponzi, not, you know, some other type of quote selling the sales of the vitamins, which of course was such a problem for Carl Renborg because no one wanted to buy his like weird homemade alfalfa vitamins. Obviously they do away with that problem entirely because now you're just getting paid on what your recruits buy under you and it does not matter if they ever sell it. Which is why the classic MLM scenario of like ending up with boxes and boxes in your basement, that's endemic to mlm because you're getting paid just on bringing people in. So you can see how you tell somebody, oh, you're going to do great, you're going to sell vitamins and you get them to buy a two month supply of vitamins. You've brought in a huge amount of your quote, purchase volume and now that person also has a bunch of vitamins that they need to offload. So they're going to bring people in, do the same thing. So it creates this like sort of ingenious level of like multi Ponzi operators in one pyramid. And what MNC did in the plan is they enabled you to get a cut on an unlimited amount of people under you. So like you have such an incentive to recruit and recruit and recruit, recruit and buy and buy and buy and no one cares if you sell the vitamins. So that's the plan.
- [23:16]
Sachi Kol
Yeah, it's diabolical and baffling and like essentially working in MLM is not about actually selling product to a consumer at all, but it's more just like recruiting other people to buy product from you. And then those people are responsible for selling it, but what they actually do is just recruit more people under them so nobody's actually even buying shit. And I, I, I don't know, like, do you think they really believed like that this business approach could work?
- [23:44]
Sarah Hagie
I have gone back and forth about whether Mittenger and Castlebury at this point in American history, 1945, whether they truly believed that America would expand so much, that there really would be an endless supply of salesmen and that the pyramid really would go on forever. Like how much of that was an optimistic story that they were telling themselves about the United States in this moment and how much of it was fraud, was straight up just a lie that they were telling people and they knew that's impossible, that even, you know, the greatest country in the world couldn't expand like that.
- [24:20]
Sachi Kol
Yeah, and thanks to all the research you talk about in your book, we know that in fact the pyramid isn't endless. Like, people hardly make money. And you cite a 2011 study of 350 MLM companies that found that 99% of participants lost money during their time in an MLM.
- [24:39]
Sarah Hagie
If you get in early, you're high in the downline and you have tons of people paying in under you and even joining just a little bit later, the way those numbers work, you just have such a smaller pool of people to bring in, and so already you face far worse chances of making your money back.
- [24:56]
Sachi Kol
Yeah, but as you talk about it in your book, like those downline numbers are actually reported as retail sales. Like as if the business is actually successfully selling the product.
- [25:06]
Sarah Hagie
That's still how these companies operate. So it's documented in the book. For example, in Mary Kay, they call it production. So what you buy in Mary Kay, they take that number and they basically double it because in Mary Kay you get a 50% discount and they call it your production, which is then called retail sales. None of that has to be documented. All that's documented is me, the recruit, what I'm buying. And that's what's in their internal systems. And that, that's the only thing that they keep track of, which is to me like the most damning piece of evidence. And again, companies over the years have put in place different, oh, we track customers. You have to Prove you have 10 customers. It's all very easily faked. And how could they even keep track of it? Right. These companies are independent contractors and they have millions and millions of recruits worldwide. It would be the most expensive compliance. It would be millions and millions that you would have to spend on reading like receipts from random people. So they don't care.
- [26:02]
Sachi Kol
Damn, it's so crazy.
- [26:05]
Sarah Hagie
It's crazy.
- [26:06]
Sachi Kol
So do you think multi level marketing is inherently a scam?
- [26:11]
Sarah Hagie
I don't think there is such a thing as legitimate multi level marketing with the evidence that we have, and I'm not the first person to say it, there was an Attorney General from Wisconsin named Bruce Craig who went after and prosecuted Amway sponsors who sort of flooded into the state in the 80s. And he, throughout the rest of his career, before he passed away a few years ago, kept writing to FTC officials, government officials, saying, this thing you have decided to call a legitimate mlm, it does not exist. I don't believe it exists. It's a distinction without a difference. And they ignore him.
- [26:51]
Sachi Kol
Okay, Stick around because after the break, we're going to talk about who is most likely to be targeted by mlm, and it's not who you think. And Bridget is going to talk about the former Mary Kay saleswoman she followed while researching this book. You know what doesn't belong in your summer plans? Getting burned by your old wireless bill. While you're planning beach trips, barbecues or three day weekends, your wireless bill should be the last thing you worry about. And you know who's got your back? Mint Mobile. With plans starting at 15 bucks a month, Mint Mobile gives you premium wireless service on the nation's largest 5G network. The coverage and speed you're used to, but way less money. So while your friends are sweating over data, overages and surprise charges, you'll be chilling, literally and financially. All plans come with high speed data and unlimited talk and text. Plus you can use your own phone with any Mint Mobile plan and bring your phone number along with all your existing contacts. Unless you're planning on totally going off grid, having a wireless plan is going to be a part of life. So I will take any chance at lowering that monthly cost. And I think it's great that Mint Mobile is so affordable and makes it so easy for you to switch over. This year, skip breaking a sweat and breaking the bank. Get your summer savings and shop premium wireless plans@mintmobile.com scamfluencers that's mintmobile.com scamflancers upfront payment of $45 for 3 month 5gb plan required, equivalent to $15 a month. New customer offer for first 3 months only. Then full price options available, taxes and fees extra. See mintmobile.com for details.
- [28:35]
Sarah Hagie
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- [28:37]
Sachi Kol
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Sarah Hagie
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Sachi Kol
Thanks.
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Sarah Hagie
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Sachi Kol
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Sarah Hagie
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Sachi Kol
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Sarah Hagie
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Sachi Kol
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Sarah Hagie
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Sachi Kol
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Sarah Hagie
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Sachi Kol
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Sarah Hagie
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- [29:42]
Sachi Kol
We talked a lot about the larger industry of mlm, but in the book, you track one woman's story of getting caught up in Mary Kay and like, you walk us through what drew her in and what her experience was like within that company for years. How did you hear about her story and what made you want to highlight her experience specifically?
- [30:02]
Sarah Hagie
So, Monique, that's a pseudonym, but I met her on YouTube. She had commented on someone else's coming out of Mary Kay video, but she was brand new. She was. Her comment was something like, oh my goodness, I'm gonna have to sit with this one. Or something. Like, I could tell that she had not fully kind of reflected on it. And wow, that really drew me to her because I really did want to like, be with somebody as she was reflecting herself and sort of in the middle of that processing. And I was really lucky that she let me kind of do that with her. And we were doing these interviews, like, literally while she was still technically in Mary Kay. And so she had access to all of her, like, internal stuff. And I could see what it looks like in her, quote, back office online. And she still had all these products and was getting these texts from her uplines. And so it felt important to like, be able to do that with somebody. And she is a veteran in Florida. She is a black woman who left the military and not only had retirement money, but had a disability payment. And that made her like a huge target because she has this stable income coming in. And so even though it's definitely not enough income, that's a big draw if you're an MLM recruiter. Cause it's like, oh, this woman has like a little nest egg every month that she can put towards her Mary Kay payment. So that was interesting to me because it was like, really obvious and a sort of sinister element that made her really vulnerable. And then her military background, I think, really contributed to her being ready to like, seek some order and seek some external validation. But she, she let me really like, go through it with her.
- [31:49]
Sachi Kol
It seems like there's a perfect storm of circumstances that make some people more prone to getting recruited into an mlm. So, like, what did you learn in your research about, you know, the demographics of people who are sucked into these businesses?
- [32:04]
Sarah Hagie
The demographics of MLM are sort of woefully underreported and certainly, like, hard to parse because it is not well studied. We do know that it's women, predominantly women, 75%, but that's also self reported by the DSA, the lobbying trade group for direct selling. So take that with a grain of salt. But then within that, there are a few studies that have helped illuminate that women in labor markets where they don't have access to, like, traditional labor. So like retail wage labor or like service hospitalities. You have to look at who has student debt, who has medical debt, who needs flexibility, who probably can't afford childcare. And obviously, like, that means younger women and that means women of color. Like, we don't have, like, statistical evidence that those people are sort of gaining traction in mlm. But anecdotally, like, that's a lot of who I spoke to was younger women. Many of them are women of color. A lot of them are, like, even in cities, right? Like, one woman at the end of the book is in Brooklyn. She lived very close to me, and that was surprising to me. I was like, oh, you're not in Utah, you know, so I think it's everywhere.
- [33:21]
Sachi Kol
So the people getting sucked into MLM are already some of the most vulnerable people out there, and they have to spend money just to participate, buying stuff that they can hardly sell. You know, from your research, that very, very few people are actually making money. So why do they stay at all?
- [33:40]
Sarah Hagie
I think about it in terms, honestly, of what Mittenger was doing when he was selling people funeral plots, which is like, it's all about your future and the horizon and, like, what's to come. And they get you on, like, you will win one day, and that's how they keep people in. And Monique, the whole time was being told, it'll come back to you. You're gonna get that rung of leadership where you're gonna make everything back and it's all gonna be worth it. They'll bring in PowerPoints with, like, Steve Jobs, and they'll say, like, Steve Jobs spent XYZ on his. You have to invest in business to get it back there. There's so many euphemisms that will just force people to accept that they're spending this money when you buy the products. They told Monique, you can't sell an empty from an empty wagon. Like, there's a truism for everything that convinces people that they're investing in a business. It's incredibly manipulative to teach somebody, like, don't look at your balance. They teach you, like, there'll be one magic moment and you won't know when it's coming conveniently, but it'll come and then you'll, you'll win.
- [34:52]
Sachi Kol
Yeah. You know, it sounds so familiar to influencer wellness culture and like this idea of betting on yourself until you make it. And you know, making it is basically also being an influencer. Like, people get lured into the presentation of wealth and access, but what is it they're actually supposed to buy? Like, they're buying something that I guess isn't real.
- [35:16]
Sarah Hagie
I think the collapse that happens when you're an influencer between yourself and your product, that is truly what MLM shares with that world. The idea that your product is you and the way you're going to like bring more people in is convincing them that they are also their own product. The idea that we shouldn't question everything being commodified and why are we selling ourselves, that also feels like MLM world to me. This idea that that's a good way to think about being a person and what you owe somebody is what you can get out of them.
- [35:50]
Sachi Kol
Stay with us after the break. Bridget talks about how MLM doesn't just mess with your money, they go after your mind too. Did you know that parents rank financial literacy as the number one most difficult.
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Sarah Hagie
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Sachi Kol
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- [37:34]
Sachi Kol
So multi level marketing companies aren't actually about selling a product. So the people at the top make money based on how many people are recruited into the business underneath them. And since they can't really justify their existence financially, they recruit people by projecting like a very specific worldview. They claim to embody the American entrepreneurial spirit. And they tell people that working for the company means they're masters of their own destiny. So in that sense, there's kind of a philosophy behind mlm. So what did you find that philosophy to be in your research?
- [38:09]
Sarah Hagie
There's definitely a few different strains of what multiple marketers think about the world and how ideological or political they are. But certainly in the beginning they share this sort of radical free enterprise ideology which then kind of becomes like the New Right or Reaganism in the 80s. But really in the beginning it's a reaction to the New Deal. Like it goes that far back early, early on, Mittenger, Castleberry and Renborg are Republicans, but they also like dabble in this very strange and quite fringe element of conservatives. They're market purists, right? You could call them like Ayn Rand kind of Republicans, or you could call them libertarians, but they really believe that like the market is basically God, that we are market actors and that that is primarily the way to organize society. And so the reason they react to the New Deal is because they don't want anything impinging on the market or on capitalism. So they react against Social Security, they react against unemployment benefits, all the welfare state that is established by the New Deal. They, immediately after, you know, the Depression, start figuring out how do we get rid of all this. MLM, very early on has ties to those movements and then really through Amway and through the devos and Van Andel families, the founders of Amway are very explicitly part of this radical political movement. And they really build power over the course of the 70s. And then Reagan really unleashes all kinds of policies that they want, which are essentially these free, free market policies that are all about deregulation, about cutting taxes, about privatizing industry, and really cutting out the core of what the New Deal did, which with all caveats about the ways that it worked and ways that it didn't, it established like a basic dignity for all Americans that we like get from the government and what, what the ideology of MLMers really they share, that the government turns us into slaves if we are given anything for free, that really we deserve nothing and everybody should be working for what they have and that that's true freedom. Right.
- [40:28]
Sachi Kol
As though all Americans are starting out with the same advantages. I want to focus on one very important company. You mentioned Amway. In some ways, they're the most important MLM in your book. And Amway has been around since 1959. And like you mentioned, their founders, Jay Van andel and Richard DeVos, had deep ties in conservative politics. And in your book you talk about how that continues on today. For example, members of the DeVos and Van Andel families were pretty central to the extreme rights political playbook project 2025.
- [41:04]
Sarah Hagie
The Heritage foundation was started in 1973. And Jay Van Andel of the DeVos Van Andel duo takes up Heritage as really one of his pet projects, although both families give money to the organization over the years. And the Heritage foundation is just one of many right wing groups, think tanks that they funnel their money into, which is of course coming from people enrolled in Amway. Right. So while politicians are spreading these ideas about like, small government and that we should all, you know, the ills of the 70s. Because at this point it's important to remember that the 70s, the economy was tanking, we were in the midst of stagflation. This story that they wanted to tell was, okay, capitalism's not working and we're going to fix it with more capitalism. What MLM does is they build the grassroots effort to seed that in people's hearts and minds and convince people that the path forward is less government, not more.
- [42:01]
Sachi Kol
Right. And that really culminated with Reagan's election and the legalization of Amway and MLM. Because you say in your book, in 1979, the FTC ruled that while pyramid schemes are illegal, they don't consider Amway to be one. And you spell out on the book that the agency was under a lot of pressure and some in Congress are really kind of rallying to get rid of the agency entirely. So they basically want to avoid controversy and said that Amway could continue operating.
- [42:32]
Sarah Hagie
Yeah, Amway makes a billion dollars. Their profits surpass a billion dollars, which at the time was huge. And Reagan wins and they sort of cap off like the best decade ever. So these people who are enrolling in Amway are directly bankrolling things like Heritage. They give money to the Council for National Policy, which is like a dark money group. The Acton Institute, Mackinac Institute. These Are all like right wing policy think tanks. Some of them are explicitly religious or anti choice, things like that. But heritage is really prominent because. Because now J. Vanindel's daughter, Barbara. Barb. Excuse me, Barb van Andel. Gabby is his daughter and she is the head of the board of trustees of heritage. And literally when she inducts Kevin Roberts, who's the new president of heritage, who wrote for Project 2025, she says he will only grow our influence on Capitol Hill. Like, they really see Project 2025 as their vision. But the reason MLM paved the way for this, when I look at it, is because MLM is like the wild west of a corporation, right? There's literally no rules except the rules of the guys at the top. And that's supposed to be the selling point is like, there's no limit. You're going to grow infinitely. And there's. You don't have knows no employees, there's no labor law. You don't even have a store. There's nothing keeping you from doing. You're the only thing standing in your way. Which translates to. There's a line in the book where somebody who's really excited about the Trump administration and mlm, he's from herbalife, but he says it's the post regulatory world. So this idea that there's no rules, MLM pioneered that early. Early on. They are an industry that said we're going to regulate ourselves. They literally have something called the self regulatory council. And so now obviously like doge, that's doge's number one thing, right? It's like the government is a useless arbiter. It's full of corruption and everybody should just be in charge of themselves. Or we're going to use AI to like certify whatever and like make building plans, which is terrifying to me. But anyway, beyond Doge, like self regulation is the new call to arms for the whole tech industry, right? That we're going to regulate ourselves. So like MLM is doing that way before anybody else and trying to sell this idea that like all government regulation is harmful to growth and going to get in the way of. Of growth and productivity.
- [45:12]
Sachi Kol
Can you talk a bit more about this socially conservative and religious component to the MLM philosophy?
- [45:19]
Sarah Hagie
J. Van Andel and devos were Michigan calvinists, which is a conservative type of Christian that really believe in the prosperity gospel. And that certain types of Christians are ordained by God to be rich, like to get riches, to be godly. And so those guys truly believe that like getting money is to get into Heaven. So that's, you know, a really important part of their philosophy nowadays. It's really all about wellness and getting money, getting your bag as a way to be healthy and healthful. Like I see a through line from the early Mlmers all the way to that guy Ashton dipping his face in the Saratoga water and the banana, you know, like there really is this the true conspicuous consumption, but as a like godly activity that the way that you're gonna be the best, you know, person and citizen you can be is through making money.
- [46:13]
Sachi Kol
Yeah. And the way you laid out in the book, it's so clear how, you know, prosperity bible beliefs are kind of exemplified in mlm. And you also connect the world of MLM directly to the rise of like positive thinking. Self help gurus. Because MLM doesn't work for the vast majority of people. Like they don't really want for you to think about it as a system. Like they want you to focus on self improvement and positive thinking. And that way if you aren't making money, they can just say it's your fault. So can you talk about that more?
- [46:49]
Sarah Hagie
MLM is a really unexamined pioneer of self help as a booming business. Like truly before self help exists in the way that it does as an industry. Like MLM was already making self help content essentially. Right. And that actually comes all the way from like old timey direct selling. Before MLM was even invented. Fuller Brush and Avon, they had newsletters, they had, you know, prizes, they were giving you the car. And it's all because the work sucks so badly that they're like, we have to give them something to make them feel like they're getting something out of it. And that's why being a Fuller Brush man, they would say to you, how are you feeling? And as a Fuller Brush guy, you were supposed to say fine and dandy. And it's truly like all about teaching you that you're getting something, you're becoming better even as you're like selling these shitty brushes and making no money. So this like the self help element and the like constant mental work is very key. It keeps you busy, it keeps you occupied, and it keeps you from not thinking about what, what money you're spending. You're just constantly thinking about moving forward and who you're going to be. And that's the most toxic part, I think, because it really teaches you to like not think critically. You don't care about yourself and you don't care about the people under you who you're bringing in. And, and that to me, is like the darkest element of what MLM does in changing how people think.
- [48:14]
Sachi Kol
Yeah. It's just so shocking that MLM is still considered legal when, like, so many people are losing from it. So why do you think this hasn't received the kind of attention it should, even though it is so pervasive and everyone knows it's bad?
- [48:29]
Sarah Hagie
First of all, like, white collar crime is just not considered something that is really that punishable. Right. In the United States. Like, financial crime is just not punished in the same way. And then I do think that the way MLM kind of eats into the fringes of people's livelihoods, the people who really suffer are like, you know, Monique spending $80,000 over decade for her, that was. I mean, it's devastating. It's like, like her savings, it's.
- [49:01]
Sachi Kol
It's truly heartbreaking.
- [49:02]
Sarah Hagie
Right. But like, that's not who Americans are going to read about. And when we really take stock of like, loss, it's Bernie Madoff level loss or like ftx. Right. It's like big corporate. The scammers that really go down have to have, like, taken out somebody. That quote matters. And I think that that's a really awful thing is like, I mean, that it's a pyramid. Even all of us on the bottom, like, even all together, the aggregate of the losses on the bottom is a drop in the bucket with the profits at the top.
- [49:37]
Sachi Kol
Yeah. I mean, it is like, it is about wealth and I think it crosses, you know, whatever political boundary there might be because it's about upholding wealth. And I feel like a huge takeaway for me was that, like, you know, these things are kind of bad or are harming people. And, you know, the government does benefit a lot from this harm. You know, even in our show, I feel like there's so much white collar crime and very often the consequence is just a slap on the wrist or they can just go back to doing the exact kind of scam again. And it does seem like there's a huge contingent of people who've just been like, severely affected by MLM and who've lost so much money and their lives have just completely been changed and destroyed through this lie. There's a big community of people trying to fight it. But as you talk about in the book, some of the most foremost experts aren't really optimistic that anything can be done at all. And I'd like to know, like, where do you stand on that and do you think anything can be done about mlm? Like, can there be any type of justice here.
- [50:47]
Sarah Hagie
Lina Khan, she was the FTC commissioner appointed by Biden, and she initiated what's called an FTC rulemaking. So the FTC has the power to make rules which are regulatory. They're not laws because they're not passed by Congress, but they function as laws. The process for making a rule is. Is sort of long and bureaucratic. But she did initiate two separate rulemaking that would impinge, if not totally destroy, mlm. One is called the business opportunity rule, and one is an earnings claim rule. So both of these, without getting too nitty gritty, have to do with, like, disclosures that you make when you're recruiting someone into an MLM. They would basically make it impossible to do what MLMers do, which is, like, lie about how easy it is to sell things and how much money you can make and, like, showing you their checks. And it would be impossible to recruit the way that they do if these rules took effect. So that happened before she left office. But now, of course, like the new administration, even though the new FTC commissioner is like an antitrust guy who has kept the lawsuit against Facebook, for example, that rulemaking is probably. It could die on the vine. That's, like, what's probably going to happen.
- [52:03]
Sachi Kol
Yeah, that's very depressing to think about. What worries you the most about MLM today?
- [52:10]
Sarah Hagie
What freaks me out about MLM is like an. It's an oligarchy, but it's an oligarchy that teaches everyone to want to be an oligarch. It's a system that teaches you to aspire to be your own rich person at the top who, like, has inordinate wealth and power. And so that ability to, like, get inside somebody's mind. And when you're looking at a really, really inordinately wealthy person, like, say, like a Jeff Bezos, MLM teaches you to, like, look at that and say, not like, hey, why does that guy have so much more than I do? It teaches you to say, oh, like, I'm gonna do that too, and I'm gonna be that, too, without really thinking, like, well, is that really rational? So that. That lack of critical thinking about wealth, lack of critical thinking about classic where we are at in American history, but also, just, like, the world. That is a bipartisan problem. Like, so many people are not thinking about that, and they're not thinking critically about where we are in our own pyramid. Progress on MLMs is like, how do we just get people to wake up and say, I'm not gonna be a cog in this giant machine?
- [53:27]
Sachi Kol
No, I mean, you just saying that kind of gave me chills. I was like, yeah. I mean, I think it is so important to remember that it's easy to kind of feel dispirited by what you see as those in power and to feel like you don't have any power and you can't do anything. But as corny as it sounds, it does take people to try and change things. Right. Like, things don't have to be forever or set in stone. So, yeah, I think that's a very good note to end on. Bridget, thank you so much. You are genuinely one of my favorite reporters. I like, I love your work. I mean, everything you do. And I'm gonna tell everyone to buy this and I really want everyone to read it. Bridget's book is Little Bosses Everywhere. And it is out now available wherever books are sold. Bridget, where can people find you? Where can people find your work and your thoughts and your beautiful mind?
- [54:23]
Sarah Hagie
I still work my day job at New York Magazine. I'm a features writer there and I'm on X, I guess we call it now. Bridget Gillard is my handle. It's my middle name. And I made a little Instagram for the book called Little Boss's Book. Primarily My Beautiful Mind is in this book. So please buy it and then tell your friends to buy it and their friends and their friends.
- [54:45]
Sachi Kol
And, you know, and if you buy enough of them, you could sell them to other people.
- [54:49]
Sarah Hagie
Yep. And you'll generate passive income for generations. No, no, no, no.
- [54:59]
Sachi Kol
Loving scamflancers get exclusive episodes and early access to new ones. All ad free on Wondry Plus. Join now in the Wondry app, Apple podcasts or Spotify. Before you go, help us out by taking a quick survey@wondry.com survey. This is multi level marketing. Your product is you. I'm Sarah Hagi. And I'm Sakji Kol. If you have a tip for us on a story that you think we should cover, please email us@scamflancerswondry.com Please check out Bridget's book Little Bosses how the Pyramid Scheme Shaped America. And you can find Josie Nikoi ot the Good Girl on YouTube. Our senior producer Sarah Enny wrote this episode. Additional writing by us, Sachi Cole and Sarah Hagie. Fact checking by Lexi Piri. Sound design by Sergio Enriquez. Additional audio assistance provided by Augustine Lim. Our music supervisor is Scott Velasquez for freeson sync Our managing producer is Desi Blaylock. Our senior managing producer is Callum Plews. Janine Cornello and Stephanie Jens are our development producers. Our associate producer is Charlotte Miller. Our producer is Julie McGruder. Our senior producer is Ginny Blume. Our executive producers are Jenny Lauer, Beckman, Marshall, Louie and Aaron o' Flaherty. For Wondery.
- [56:25]
Sarah Hagie
This is Nick and this is Jack. We're best friends, ex finance guys and resident 90s expert.
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Sachi Kol
And every week on our podcast the.
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Sarah Hagie
Best Idea yet, we're bringing you the.
- [56:34]
Sachi Kol
Untold stories behind your favorite products.
- [56:37]
Sarah Hagie
For instance, can you guess which billion dollar fashion company went viral thanks to a rhinestone covered tracksuit? Or which cartoon turned four turtles into a global toy empire by accident? It started as a joke. Last one which cold beverage was so hated by Starbucks they actually ended up acquiring it? Spoiler the Frappuccino.
- [56:55]
Sachi Kol
Howard Schultz apparently thought cold coffee was.
- [56:58]
Sarah Hagie
Super lame and then he bought it. From Teenager Mutant Ninja Turtles to Juicy Couture to the Orange Mocha Frappuccino, Join.
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Sachi Kol
Us every week to learn how your.
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Sarah Hagie
Favorite things got made. Follow the Best Idea yet on the Wondery app or wherever you get your podcasts. And you can listen early and ad free right now by joining Wondery Plus. And if this podcast lasts longer than 45 minutes, call your doctor.