One of the fastest growing industries in the world is the Health & Wellness sector. Yet despite the promise of relief and improvement, many companies promote unproven products using a predatory business model that actually causes tremendous damage to consumers.
In this article, you’ll read my insights from my evaluation of 403 different Direct Sales companies that sell Health & Wellness products.
The Allure of Direct Sales
I first became aware of the harmful effects of MLM tactics (also known as network marketing, direct sales, and referral marketing) after I joined two different companies myself. You can find out about my experience here.
Once I researched the ways these companies prey on victims and take advantage of them, it became clear that the potential for damage extends beyond stay-at-home mothers; many MLMs rely on recruits who have tremendous influence on others, and this makes it even harder to spot products that could be causing harm.
Who Joins MLMs?
In my quest to find out why MLMs seem to focus almost exclusively on wellness products, I was shocked to realize that recruits are everywhere: stay-at-home mothers and retirees; low-income and executive level; workout buffs and those who are chronically ill. Of the many people I know who have joined an MLM, they are all smart, hard-working, and want the best for their family. They sign up because they truly believe that a Direct Sales opportunity will improve their financial situation.
Even medical doctors are susceptible to joining an MLM, both to augment their income and, to expand their practice, or to have more influence on patients.
The AARP conducted an extensive survey which shows that over 90% of people who participate in MLMs have lost money rather than earning anything from their efforts.
The people who join an MLM or direct sales opportunity tend to be females. They are also likely to have:
- lost their job (or their spouse/partner lost a job),
- are experiencing financial difficulty,
- have significant debt,
- recently moved,
- gave birth,
- experienced a death in the family, and/or
- suffer from a serious health condition.
The opportunity to work from home is very enticing. Direct Sales and Multi-Level Marketing (MLM) companies are experts at displaying very appealing products that seem to solve every possible problem — especially those related to losing weight, damaged skin, and discomfort & pain. They succeed by:
- relying on an untrained salesforce to promote healthcare products (and encouraging reps to share their success story in order to build enthusiasm for the products)
- promising an improvement in health conditions (using phrases such as “reverse the appearance of [disease],” “decrease symptoms of [illness],” “support [mental health],” and other leading phrases)
- making unproven, unsubstantiated health claims and promises that are more likely to convert buyers
- using questionable sales techniques and persuasion tactics to pressure a sale
- requiring the purchase of large quantities of products (which often results in reps being “garage qualified,” meaning that they purchase products to keep an active status, even if they will not be reselling products to end users)
The top-earning Wellness products (and services) include:
- Personal Care, Beauty & Anti-Aging ($1.1 trillion)
- Healthy Eating, Nutrition & Weight Loss ($702 billion)
- Fitness & Mind-Body ($595 billion)
- Preventative & Personalized Medicine and Public Health ($575 billion)
- Traditional & Complementary Medicine ($360 billion)
(source: Global Wellness Institute)
Behind the Facade
Although joining an MLM can look appealing and exciting, there is a dark side.
Instead of achieving financial success and freedom, many Direct Sales reps realize the opportunity is not what it seems. They feel tremendous pressure to sell (or, rather, to BUY) products and to recruit everyone around them to do the same. MLMs are notorious for encouraging reps to recruit new sales reps, rather than focusing on the quality and distribution of the products themselves.
A Giant Industry
The Health & Wellness field is gargantuan, generating sales of more than $4.2 trillion annually. (source: Global Wellness Institute) Once intrepid marketers discovered the tremendous potential of using health products in a Direct Sales channel, the number of MLM companies with a focus on wellness grew like wildfire.
While a vast number of products are sold in traditional direct-to-consumer methods, direct sales is an increasingly popular method of distribution. In the United States alone, Direct Sales as a whole generates $34.9 billion in sales and involves 18.6 million people. (source: Direct Selling Association 2017 Facts and Data) And as you will see, a significant number of these companies focus on products and services in the wellness field.
Unethical and Illegal Claims
One of the reasons for the explosion of Health and Wellness products is due to strong world-wide interest in Complementary and Alternative Medicine (CAM), which is recognized as a legitimate medicine in 80% of countries. (source: WHO)
Consumer demand for natural products and services is increasing year after year, despite the questionable and dangerous methods that are not always based in science. Many products sold through Direct Sales and MLM cross ethical and legal lines by promising miraculous outcomes and falsifying the end results — using fake or doctored before & after photos, company-sponsored studies, and testimonials from experts with unrecognized credentials.
Recently, the Federal Trade Commission (FTC) took a strong stand against 10 MLM companies which promoted false earnings claims and/or unfounded health “benefits” from their products related to COVID-19 (the novel Coronavirus). The FTC has officially warned these companies:
- Arbonne International
- Pruvit Ventures
- Total Life Changes
(for health claims and income claims)
- It Works Marketing
- Rodan & Fields
(for earnings claims)
(for health claims)
source: FTC Press Release
The US Securities and Exchange Commission (SEC) also warns citizens about the dangers of joining an MLM, stating a strong possibility of losing significant amounts of money. The SEC draws three main parallels between MLMs and pyramid schemes:
- They emphasize recruiting others to join, rather than selling alone;
- They promise big earnings in a short period of time; and
- They entice recruits to “be your own boss” and “work from home” with minimal effort or investment.
But to many people, the promise of earning extra money with minimal effort — using products that seem to have at least a short-term benefits and bring the added bonus of an instant group of enthusiastic peers — is too enticing to pass up.
Health & Wellness MLM Company Analysis
In order to find out just how far-reaching the effects of MLMs are in the Health & Wellness field, I decided to do my own analysis.
I started by listing every Direct Sales company that sells any health-related product or service (you can find it here). It quickly grew to include hundreds of companies, several of which are being investigated for fraudulent claims by the Federal Trade Commission (FTC) and other governing bodies.
I then compiled the data into tables and pie charts to better understand the categories in which each company specializes, and where these companies are located (by continent and by country).
The List of MLM Companies
Here is a graphic that shows the 403 companies I reviewed.
Analysis by Product Type
My first step was to sort each of the 403 companies by the types of products they sell. Some companies sell multiple types of products, (such as drinks + supplements ), so I added these combos to indicate the primary type of product being sold.
Here is a chart with this data:
|Product Type||# of Companies||Percentage|
|supplements + skincare||44||11%|
|drinks (nutritional, coffee, & tea)||17||4%|
|cleaning and supplements||8||2%|
|food and supplements||9||2%|
|drinks + supplements||6||1%|
|essential oils + cleaning||3||1%|
|medical devices and supplements||4||1%|
|supplements + essential oils||5||1%|
|supplements, skincare, and cleaning||3||1%|
|cleaning + skincare||2||0%|
|teeth whitening and supplements||1||0%|
As you can see from the chart above, well over half of the MLM companies I analyzed primarily sell nutritional supplements:
- supplements alone (37% of all companies in the analysis)
- skincare (22%)
- supplements + skincare (11%)
- food + supplements (2%)
- drinks + supplements (1%)
Multi-Level Marketing and Direct Sales companies are not alone capitalizing on the tremendous opportunity to sell nutritional products. Supplements include a wide variety of items such as:
- amino acids,
- whey protein,
- creatine, and
- weight loss pills.
Unfortunately, in the United States none of these products are regulated by the Food and Drug Administration (FDA). This can result in consumer harm due to over-use, interactions with other medications, and an over-reliance on products to the exclusion of conventional medical techniques.
Analysis By Country and Continent
The next part of my analysis was to review where each of the MLM companies are based. I looked at the country of their headquarters, and also the continent.
Health & Wellness MLM Companies by Country
Here is a pie chart that shows the countries:
And a chart with the data:
|Country Name||# of Occurrences||Percentage|
|UK (Northern Ireland)||1||0%|
Health & Wellness MLM Companies by Continent
I also created a pie chart of the companies with its corresponding continent:
The same data is listed in this chart:
|Continent||Number of Companies||Percentage|
You can see that a majority of the 403 MLM companies I analyzed are based in North America (68%), with 63% of those in the USA. Other significant countries’ headquarters are China (5%), Japan (4%), Canada (4%), the United Kingdom (4%), and Australia (3%).
Overall, I am not surprised that the vast majority of multi-level marketing companies that sell health and wellness products focus on nutritional supplements, and that they are most frequently based in the United States.
I also found that over one-third of all healthcare-focused MLMs focus on supplement sales. An additional 19% of companies sell supplements in addition to skincare, cleaning products, medical devices, essential oils, and teeth whitening products — for a total of 56%.
If you look at all 403 companies, the only categories that are not primarily supplement related (non-nutritional wellness drinks, cleaning products, beauty, and training) only make up 8% of all MLM companies; the remaining 92% of MLM companies in this analysis sell nutritional supplements.
This trend is concerning, because the direct sales and multi-level marketing industry is known to be quite predatory of people who struggle with painful and debilitating medical conditions. Supplements are in a gray zone within the healthcare community; some providers promoting them for personal gain, while others take a more cautious approach. There is no proven link between supplement use and long-term health benefits, and many seemingly innocuous products can cause serious damage; read about some of the dangers here.
I find it refreshing that MLMs are being scrutinized by several US government agencies (especially the SEC and FTC). But I also know that MLM leaders are shrewd masters of marketing and influence. It is likely that they will simply pivot their marketing message and continue to recruit in new ways, rather than fixing the root of the problem.
In my opinion, the Multi-Level Marketing structure is flawed to begin with. If a company can only succeed by bringing in new recruits who pay to join and recruit new people, it is destined to eventually fail. I am concerned that MLMs rely on fear tactics to attract participants, but unfortunately this is nothing new; snake-oil sales have been around for centuries.
I hope all potential victims of Multi-Level Marketing schemes will realize that the promise of easy money is too good to be true… and will instead focus their time, money, and energy on services and products that produce measurable results.
Grace LaConte is a business strategist, writer, and workplace equity advocate whose risk management graphics are used around the globe. She specializes in finding hidden threats and opportunities in organizations that employ working parents. Grace is the host of the What’s Wrong with Your Business? Podcast, which provides tools to adapt in a rapidly changing market.