MLMs are often seen as a great money-making opportunity. For this mum, the reality was anything but - ABC News
It was supposed to be a once-in-a-lifetime opportunity.
Instead, it ended up costing Brisbane mum Suzie McDarra thousands — and almost ruined her relationship with her son.
For those who haven't had a friend invite them to a Tupperware party, who haven't been asked whether they want to "invest in an exciting business opportunity", multi-level marketing companies (or MLMs) might seem a bit foreign.
But worldwide, they're part of a multi-billion-dollar industry.
Some of the bigger brands in Australia you may have heard of include DoTERRA, Arbonne, Rodan and Fields and Herbalife.
Given 49-year-old Suzie had been running her own successful small business as a massage therapist for a decade, she wasn't new to the idea of building a client base or taking risks. Far from it, in fact.
Living week to week, Suzie thought that selling a product that she already used, from a multi-level marketing (MLM) company that promised her a "passive income", would be a great way to get ahead as a single parent.
She knew that selling products on the side wouldn't be as labour intensive, and hoped it would be a way for her to make extra money while she continued to spend most of her time on the business.
But for her, it soon became apparent that the promise didn't live up to the reality.
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Read more"It feels like I've been on a crazy quest that began in anticipation of knowing parenting payments would stop [when my son turned eight]," she explained.
"I went along, feeding this hope of owning my own home and affording a decent high school."
"Instead, three years have slipped by and I've invested so much time and money into a business model that is just not designed for someone like me."
MLMs basically work like this: You are recruited into the company via a sponsor, or upline. They then take a percentage of the sales you earn. Any person you recruit into the company will be your downline, and will give you a percentage of their earnings.
While MLMs are not illegal like a pyramid scheme, they've certainly faced their fair share of criticism.
At first, Suzie was doing OK, selling to clients and earning a small commission. But it didn't take long for her to realise two big problems with the business model.
So what exactly does Suzie think went wrong?
Well for a start, she said there simply weren't enough hours in her day.
Supplied: Katie Bennett
)Within the first year of selling for the MLM, Suzie said she barely took a holiday and was constantly putting her six-year-old in after-hours school care, as well as getting her mother to watch him on weekends.
And when she told her upline that it took much more than the estimated 10-15 hours a week to turn a profit, she was told it was her fault.
"You were led to believe that if you're failing to sell the product, you're the one with the problem," she said.
"You weren't pushy enough.
"It's not that I wasn't good at selling, it was that I didn't sell the volume required to make it worthwhile."
By the second year, she said she "spent every spare minute mentally distracted". It was around this time that her son started attempting to run away from home.
"It was an incredibly tough time where we were both fuelled by anger and resentment, and I was beginning to burn out," she explained.
"I took up drinking alcohol again to cope."
Although she was encouraged by her upline to "fake it til she made it", she said she couldn't ignore the other big, fat elephant in the room.
Supplied: Katie Bennett
)She wasn't making any money
Crunching the numbers, Suzie discovered that over the three years she'd been selling the goods, she'd earned $16,500, but she had actually spent $19,300.
Even though she was placed high up in the "tree" with a very influential upline, she had lost a total of $3,700.
Given the time and energy she spent researching and distributing the products, she now feels she was sucked into a scheme "designed to confuse you".
She said the MLM highlights your potential earning power, which is not actually the same as your profit (what you end up with at the end).
Suzie said if she sold $250 worth of product, she'd get a $15 commission on that.
"They keep the model simple so it feels easy to achieve," she said.
"And the more I got into it, I realised there's a loophole here, I cannot make money out of this. The reality is so different."
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Read moreTowards the end of last year, Suzie said she finally "rage-quit" the whole MLM thing.
"Knowing you're failing badly at parenting but feeling like you can't get off the treadmill is pretty shithouse," she said.
"[In 2019] I pulled right back … but it is time with him that I will never get back. And the damage has been done."
She says when she was finally ready to admit defeat, she emailed her upline to let her know.
The reply was brief.
"How many people flog their guts out, for over three years, to then have someone say, 'thanks for letting me know'?" she said.
"I know there's a tiny percentage of people who do succeed at this business model, but I wonder what they've had to sacrifice."
Looking back over the past three years, Suzie can now see the red flags. And she can see how others might be tempted to join an MLM.
But she was quick to point out that she lost more than just time and money.
"I've definitely lost friends … you become so obsessed," she said.
Her biggest regret, however, is the time she lost with her son.
"I'm ashamed I let our relationship deteriorate so badly … it was a nightmare," she said.
"I'm not fixed yet. And our relationship is not fixed yet."
And she said giving up the dream to achieve the kind of financial freedom this particular MLM promotes "has taken a huge weight off my shoulders".
"I'm not sure what's coming, but I know I've got a new perspective on time now. And I'm not going to waste it."
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Read moreWhat do the experts say?
Alexandra Kelly, a solicitor who handles cases at the Financial Rights Legal Centre, helps vulnerable consumers suffering financial stress who need advice or counselling.
In the past, she's worked with women who have been financially impacted by MLM schemes.
Her advice?
"I'd probably just avoid them completely," Ms Kelly said.
"With MLMs, most of the time you're at the bottom, you're not on top."
Ms Kelly said while side hustles were popular these days, joining an MLM was risky business.
Apart from a "lack of guaranteed income" and "no sick days", she said as an MLM rep you're in a potentially saturated market, you may need to purchase goods upfront and invest many more hours of your time than you realised.
"It's just not a viable money-making solution," she said.
But Kate Carnell, who is the Australian and Small Business Family Enterprise Ombudsman, said MLMs could be a great way to make money for some people — provided it was the right fit for you.
"In this space, if you don't like selling, don't be in it," she said.
"My background is in retail and I can promise you that a very large percentage of people really struggle with proactive selling."
She said like any small business, be aware of upfront costs, talk to those already in the network and do your research. Make sure the MLM is a member of the Direct Selling Australia network.
"Read your contract. I'd have lots of questions if there is a requirement for upfront dollars," she said.
And if a deal seems too good to be true, it is, she added.
"For example, if someone's telling you all you have to do is put in three hours a week and you're going to get $5,000 … any of these sorts of huge statements with a limited number of hours," she said.
"[These opportunities in MLMs] don't exist. If they did, everyone would do them. They're the ones you've got to worry about.
"Being sold this rosy dream, working while the kids are at school and somehow you're going to make thousands of dollars. Nope. Not happening."
This article contains general information only. It should not be relied on as financial advice.
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