We have the power to exert tremendous influence on others.
Sometimes, people use this power to take advantage of those who are vulnerable by exerting tremendous control on their choices and behavior.
Today I want to share some insights about why Multi-Level Marketing companies operate exactly like a cult and how to build risk intelligence to keep yourself safe.
When I was an impressionable young college student, I signed up with a global multi-level marketing (MLM) company as an “Independent Sales Representative.” Despite my enthusiasm and best efforts, a year later I was left with shame and financial loss. (Read more in Why I Hate MLMs: My Story).
Prior to that, I was part of a cult-like religious homeschooling group that has been embroiled in allegations of abuse against minors. (Read more in Why #MeToo Inspired Me to Be Transparent and Share My Failures).
Both of these environments were extremely destructive. Not only did I feel isolated and unworthy unless I did exactly what the group leaders wanted, they also resulted in deep-seated psychological, emotional, and spiritual pain that has taken years to heal.
In order to make sense of what happened to me, I decided to analyze why controlling organizations are able to exert so much influence. I was curious about the root causes that would make someone want to join a manipulative environment, and the factors that make them want to stay.
Eventually, I heard from dozens of people who were harmed by both MLMs and by religious organizations. I read a detailed article about the cult-like dangers of MLMs written by David Brear, who is an author and anti-MLM campaigner.
This eventually led me to question why people are so attracted to the MLM business model, which is proven to cause tremendous financial, social, and emotional harm.
As I peeled back the layers, a pattern began to emerge.
One of the reasons why MLM reps defend their company so passionately is that they use cult-like tactics to recruit and keep people.
MLMs and other predatory businesses use exactly the same methods as those used by cult leaders.
Based on David’s excellent article, here some ways MLMs operate exactly like cults:
1. They Promise Utopia
Cult leaders will assure you of a spiritual nirvana with endless riches and other rewards. Similarly, Multi-Level Marketing companies make ridiculous, unsubstantiated promises. Here are a few:
- easy money
- work from home
- do what you love
- become “your own boss”
- feel accepted in a group
- make tons of friends
Unfortunately, MLMs are notorious for presenting an alluring image of what life will be like. But 99% of the time, they fail to deliver even a fraction of that promise. The vast majority of people involved in MLMs actually lose money (evidence of this is here).
2. They’re Led by a Guru
Every cult has a top person, or group of people, who are adored and treated like a demi-god. Everything that person does is viewed as divinely inspired. They can do no wrong.
The founders and CEOs of MLM companies are treated the same way. Their words are repeated and memorized. Everything they say or do is deemed worthy of imitation.
Nearly every MLM company uses celebrity endorsements to add even more credibility. This sends the subtle message that “If that important person is using the product, it must be amazing!”
3. They Promise “Secrets to Success”
Best-selling concepts such as the “Law of Attraction,” “The Secret,” “Think and Grow Rich,” and “The Power of Positive Thinking” all follow the same basic premise: If you follow these steps I alone can share, you will see immediate and incredible benefits.
Similarly, MLM supporters are told “all you have to do is follow steps A, B, and C and you’ll be rich/famous/independent!”
That promise of success is one-sided, however. The onus rests on the follower to do exactly what is prescribed. When someone fails to succeed (which is unfortunately the norm, not the exception), blame is placed solely on the person, never on a flawed business model.
An MLM promoter who fails is told that it must be due to their:
- “lack of faith,”
- “negative mindset,” or
- inability to “work hard enough.”
The reality is a skewed model will is not designed to help everyone succeed. MLMs are designed to make the majority of members lose money, and for the very top earners to see any real reward.
That’s exactly the same recipe for success used by cults.
4. They Tell You to Reject the Haters
MLMs commonly encourage their sales team to reject anyone—family, friends, neighbors, acquaintances… ANYONE who tries to dissuade them.
When someone shows concern or disapproves of your decision to join the MLM, you are urged to see them as a negative person and cut them out of your life.
Anyone who criticizes you is labeled as a “hater” who is “jealous of your success.” Devil’s Advocates are viewed as a threat to predatory groups, because they reveal the truth about what is really going on.
Thus, all haters (even close relatives and friends) must be discredited and eliminated from the group.
This is exactly the same MO used by cults.
5. Their Structure is Confusing
When an organization is extremely secretive about what they are doing, and when they frequently changes their policies, it’s is usually a sign they have something to hide.
Both cults and MLMs are predatory. Their goal is to keep people moving up the endless “ladder to success,” which never seem to end. So they design a long list of award, titles, and promotion levels to lure new converts into staying committed for as long as possible.
Here are some examples:
- Amway’s 23 “pin levels”: Silver, Gold, Ruby, Pearl, Sapphire, Emerald, Diamond, and Executive Diamond.
- ItWorks: Double Diamond, Triple Diamond, and Presidential Diamond.
- Avon: Executive Leader, Silver Executive Leader, Gold Executive Leader, and Platinum Executive Leader.
- Juice Plus+: Sales Coordinator, Senior Sales Coordinator, Qualifying Marketing Director, and National Marketing Director.
To support their pyramid business structure, Multi-Level Marketing companies use the straw man argument that “all corporations have a pyramid shape too.” But the difference is that an Employee is promoted based on their performance, not on how much product they move.
For the majority of MLM independent contractors, moving up the ladder requires them to purchase large amount of stock themselves.
6. They Use Predatory Tactics to Recruit
Both MLMs and cults prey on vulnerable people. They start by luring you into a seemingly safe, welcoming, and exciting environment.
Then, they discover and prey upon your weaknesses:
- financial pressure,
- a dead-end job,
- shame as a working parent,
- desire to work from home,
- loneliness, and/or
- feeling trapped.
Finally, they present an “opportunity” to take the pain away and apply enough pressure to convince you to join the group.
The long-term consequences of joining a cult-like organization are extraordinarily high. Most victims
- lose thousands of dollars.
- forego a stable job with opportunities for advancement
- experience years of heartache of broken relationships
MLM and cult survivors also face tremendous emotional damage from the extensive manipulation they endure.
7. They Control by Using Fear and Shame
If you try to leave an MLM, be prepare to lose the support of your “friends.”
Like cults, Multi-Level Marketing companies operate under a closed-group mentality where you’re either “with us or against us.” When the pressure builds and you decide to sell back inventory or stop purchasing more, you are likely to be shunned and chastised.
MLMs often use passive-aggressive techniques to shame, slander, and discredit members who try to leave, in an effort to bring them back. They employ fear tactics by threatening to take away things of value to the member.
We can apply Dr. Karl Albrecht’s 5 Basic Fears to the techniques used by both MLMs and cults to hold members captive.
Starting at the bottom with the Fear of Extinction (Physiological need) and moving up, these include:
- loss of income (Fear of Extinction by not having needs met)
- mental or emotional trauma (Fear of Mutilation by feeling unsafe and being invaded)
- humiliation (Fear of Ego Death by losing the esteem and approval of others)
- rejection (Fear of Separation by being ejected from the group and marginalized)
- diminished independence (Fear of Loss of Autonomy by feeling unworthy of being oneself and having independent thoughts)
If someone does succeed in leaving, they may experience fractured relationships with those who remains in the group—even among family members.
8. They Expect Constant Positivity
Members of an MLM are told they must constantly use positive self-talk.
They are encouraged to “believe,” “trust,” and “have faith”—even if bills are mounting and more debt is required to stay active in the company. Taken to an extreme, this is classic Overconfidence: An unjustifiable assurance that one’s beliefs and actions are completely correct… even if there is proof that it’s not true.
MLMs encourage its members to employ a Sunk Cost Fallacy. This happens when a victim is so committed to seeing results, that they feels compelled to continue spending money, time, and effort even when it’s obvious the investment is not going to pay off.
If the member of an MLM expresses concern or criticism, their loyalty is questioned by others in the group.
9. They Announce Moral Superiority
Just like cults, MLM organizations often partner with charitable and social justice groups to prove their ethical and moral superiority.
MLM members often experience cognitive dissonance between what they see in the group, and what is actually happening. If a leader is verbally or emotionally abusive, this is excused by blaming the victim. Any illegal or unethical behavior is quickly brushed under the rug.
When an MLM leader is confronted with truth, she or he uses logical fallacies to “protect” their investment and attack anyone who disagrees.
10. Their Allegiance Causes a Sudden Personality Change
Once you join a cult or MLM, you are strongly encouraged to do things that may not fit your normal behavior.
MLM members are pressured to convert others into joining as well. They are told to incessantly promote and talk about the company by:
- bringing up the MLM in every conversation,
- using products sold by the MLM every day,
- giving away MLM products as gifts,
- posting constant social media announcements and memes, and
- saying specific words and phrases (“hey hon, just wanted to share this exciting opportunity with you!”).
Concerned friends and relatives often see a dramatic change after their loved one joins an MLM. When confronted with the reality that they are spending too much money, shirking responsibilities, or acting strangely, loyal members are told they need to shut down the haters and pour even more effort into recruiting and promoting the products.
11. They Demand Absolute Devotion
The only way to succeed in a cult or an MLM is by committing 100% to the organization. There is no room for half-heartedness.
MLM advocates are told they must defend the company no matter what.
Even when confronted with the facts (like how much debt they have accrued or how miserable their life has become), a true believer will refuse to acknowledge that anything is wrong.
When leaders of a cult or MLM are accused of unethical, illegal, or immoral activity, they place tremendous pressure on members to doubt the validity of those claims and prove their loyalty by maintaining undying allegiance.
The FLDS (Fundamentalist Latter-Day Saints) polygamist cult instructs its followers to keep sweet, which means “Demonstrate loyalty and absolute obedience to someone, even if it means enduring unspeakable harm.”
Building Risk Intelligence
How can we resist the magnetic pull of cults and MLMs?
You can start by increasing your awareness of how they work. We just reviewed 11 similarities between these two groups, but I encourage you to do more research and come up with your own conclusions.
Strategic risk is the ability to effectively distinguish vulnerabilities and untapped opportunities on an organization’s journey to achieve its goals, and to translate these insights into superior judgment and practical action. You can see that MLMs and cults take advantage of vulnerabilities by discovering a victim’s weaknesses and promising great rewards with minimal risk.
The best defense against getting lured into a controlling organization is to ask good questions. Find out where the money is really coming from. Poke holes in their promises. Ask former members what their experience was like. Encourage your company stakeholders to share honest feedback.
For more information about Multi-Level Marketing companies, check out these resources:
I also appreciated this infographic produced by Direct Selling Australia:
What do you think about the similarities between cults and Multi-Level Marketing organizations? Have you experienced negative results too? I welcome your comments below.
Interested in hearing how you can reverse a toxic workplace? Find out more here.
Grace LaConte is a business consultant, writer, workplace equity strategist, and the founder of LaConte Consulting. Her risk management tools are used around the globe, and she has successfully reversed toxic work environments for clients in the healthcare and non-profit fields. Grace specializes in lactation law compliance & policy development, reducing staff turnover after maternity leave, and creating a participatory work culture.