Scamfluencers - Episode 162: Multi-Level Marketing: Your Product is You

Release Date: June 9, 2025
Hosts: Scaachi Koul and Sarah Hagi
Guest: Bridget Reed, author of Little Bosses Everywhere: How the Pyramid Scheme Shaped America
Podcast: Scamfluencers by Wondery

Introduction to Multi-Level Marketing (MLM)

In Episode 162 of Scamfluencers, hosts Scaachi Koul and Sarah Hagi delve deep into the pervasive world of Multi-Level Marketing (MLM). The episode explores how MLMs operate, their historical origins, the psychological manipulation involved, and their significant impact on individuals and society.

The Pervasiveness and Personal Encounters with MLMs

Scaachi Koul opens the discussion by sharing personal experiences with MLMs, highlighting their subtle infiltration into everyday social media platforms:

“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…” (00:26)

Despite this, Sarah Hagi emphasizes the omnipresence of MLMs, especially on platforms like TikTok:

“I feel like I see them all the time, like on TikTok or on whatever ex is anymore...” (02:00)

These anecdotes set the stage for understanding MLMs' hidden yet widespread influence.

The Story of Josie Nikoi: A Case Study

The episode introduces Josie Nikoi, a woman whose journey epitomizes the allure and eventual disillusionment with MLMs. Initially thriving, Josie's experience underscores the emotional and financial toll of MLM participation.

“I also witnessed the top seven figure earners in it being miserable. Everybody was miserable. Everybody.” (03:53)

Josie's narrative illustrates the stark contrast between the glamorous facade of MLM success and the underlying exhaustion and unhappiness experienced by its members.

Understanding How MLMs Operate

Hosts dissect the mechanics of MLMs, explaining the recruitment-centric model that often masquerades as legitimate business opportunities.

“You are going to grow infinitely. And there's... there's no limit.” (42:31)

Sarah Hagi breaks down the pyramid structure, emphasizing how earnings are primarily derived from recruiting new members rather than actual product sales:

“What people often say when describing the plan... is that multi level marketing is you get a cut off of your recruit's sales.” (05:39)

This model ensures that only those at the very top reap significant financial rewards, while the vast majority face losses.

Historical Origins of MLMs

The episode traces the roots of MLMs back to the mid-20th century, highlighting key figures and their contributions to the industry's development.

Bridget Reed explains the genesis of MLMs through the actions of Lee Mittenger, William Castleberry, and Carl Renberg:

“They invent MLM, which just covers up so much of what they invent, which is a version of the Ponzi scheme using the vitamins of Carl Renborg's business as a coverup.” (17:31)

This historical perspective reveals MLMs as a sophisticated evolution of traditional pyramid schemes, leveraging legitimate products as a veneer for exploitative recruitment.

Interviews with Bridget Reed: Insights and Analysis

As the guest author, Bridget Reed provides an authoritative examination of MLMs, offering critical insights into their operations and societal impact.

The Evolution from Sales to MLM

Reed discusses how MLMs transformed the American entrepreneurial spirit into a predatory recruitment system:

“MLM was so smart to camouflage itself among, quote, business.” (14:01)

She emphasizes that MLMs exploit the lack of sustained journalism focused on the industry's systemic issues rather than isolated fraudulent companies.

Political and Ideological Ties

A significant portion of the episode explores MLMs' deep connections with conservative politics and how these ties have facilitated their growth and regulatory evasion.

“Jay Van Andel and Richard DeVos... had deep ties in conservative politics.” (40:27)

Reed illustrates how MLM founders actively supported and influenced right-wing think tanks like the Heritage Foundation, shaping policies that favor deregulation and minimal government intervention.

Psychological Manipulation and the Promise of Success

Reed highlights the psychological tactics MLMs use to retain members, such as fostering a relentless belief in eventual success despite consistent evidence of widespread financial loss:

“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 win.” (33:39)

This manipulation ensures continued recruitment and financial contributions from participants, trapping them in a cycle of hope and disappointment.

The Human Cost: Victims of MLMs

The episode sheds light on the devastating personal and financial repercussions for individuals ensnared in MLMs. Bridget Reed shares stories of recruits who have invested substantial sums without recouping their investments, creating a sobering picture of MLM's true cost.

“Monique spending $80,000 over a decade... it's devastating.” (48:29)

These narratives underscore the systemic exploitation inherent in MLM structures, where only a tiny fraction at the top benefit financially.

Regulatory Challenges and Future Prospects

The discussion transitions to the regulatory landscape, highlighting efforts and obstacles in curbing MLM practices.

“Lina Khan, she was the FTC commissioner appointed by Biden, and she initiated what's called an FTC rulemaking.” (50:46)

Bridget Reed discusses potential regulatory measures, such as the business opportunity rule and earnings claim rule, which aim to increase transparency and reduce deceptive recruitment practices. However, she expresses skepticism about their efficacy given current political and administrative challenges.

“The new administration... that rulemaking is probably... could die on the vine.” (52:03)

Conclusion: The Enduring Influence of MLMs

Bridget Reed concludes with a poignant reflection on MLMs' role in shaping societal values around wealth and self-reliance, warning of their long-term implications on critical thinking and financial literacy.

“MLM is an oligarchy that teaches everyone to want to be an oligarch.” (52:10)

The episode ends on a call to awareness and action, emphasizing the need for collective resistance against the insidious practices of MLMs.

Key Takeaways

• MLMs as Modern Pyramid Schemes: MLMs utilize legitimate products to entrench a recruitment-first model, ensuring profits for those at the top while the majority incur losses.

• Historical and Political Roots: Originating post-World War II, MLMs have intertwined with conservative political movements, leveraging deregulation to flourish.

• Psychological Manipulation: MLMs employ sophisticated psychological tactics to maintain hope and suppress critical thinking among recruits.

• Devastating Human Impact: Individuals involved in MLMs often face significant financial and emotional hardships, with minimal chances of profit.

• Regulatory Hurdles: Efforts to regulate MLMs face significant opposition and bureaucratic delays, questioning the future efficacy of such measures.

• Call for Awareness and Change: The episode emphasizes the urgent need for increased awareness, critical evaluation, and collective action to dismantle the exploitative MLM structures.

Notable Quotes

• Josie Nikoi:
  “Everybody was miserable. Everybody.” (03:53)

• Bridget Reed:
  “MLM was so smart to camouflage itself among, quote, business.” (14:01)
  “It's incredibly manipulative to teach somebody... it'll come and then you'll win.” (33:39)
  “MLM is an oligarchy that teaches everyone to want to be an oligarch.” (52:10)

For more insights into the world of deceitful influencers and the scams that prey on unsuspecting individuals, subscribe to Scamfluencers on the Wondery App, Apple Podcasts, or Spotify.