MLM companies in Utah: Why there are so many, links to LDS Church - Salt Lake Tribune

Driving along Interstate 15, there are many indicators of Utah's status as the unofficial capital for multilevel marketing — from multiple headquarters in Utah County to billboards to Young Living's lavender farm in Juab County.

With more MLM businesses — or, as the industry and many economists call them, direct selling companies — per capita than any other state, Utah has become the "global hub" for that line of work, according to research from the University of Utah's Kem C. Gardner Policy Institute.

The MLM model often is touted to prospective sellers as a way to make money while working from home or on a flexible schedule. However, as the Federal Trade Commission wrote in a July 2022 article, "most people who join legitimate MLMs make little or no money. Some of them lose money."

There also are cases, the FTC wrote, in which "people believe they've joined a legitimate MLM, but it turns out to be an illegal pyramid scheme that steals everything they invest and leaves them deeply in debt."

Dozens of MLMs, based largely in Salt Lake and Utah counties, directly employ as many as 14,000 or so people, and indirectly employ thousands more through suppliers.

Young Living, doTERRA and other giants within the industry also hold conferences that draw thousands of visitors and their tourism dollars.

(Kelly Cannon | The Salt Lake Tribune) The Nu Skin corporate headquarters building in downtown Provo on Aug. 2, 2022.

The Direct Selling Association, the national trade group for the industry, said direct selling companies thrive in Utah because the state supports entrepreneurs and stresses community.

Researchers and industry leaders also point to The Church of Jesus Christ of Latter-day Saints as a major factor that draws these companies to Utah. MLMs are so common in the Beehive State that there's a well-documented joke: The acronym MLM could also stand for "Mormons Losing Money."

More than 90 companies in Utah

A 2022 report from the Kem C. Gardner Policy Institute identified 91 companies with headquarters in five of Utah's 29 counties, mostly along the Wasatch Front.

The Salt Lake Tribune found data for 78 of those companies, using a state system to search. (Utah Department of Workforce Services' search system requires at least five characters, but some company names contain only four.)

Two other companies — Clad & Cloth and BeneYOU — appear to have closed or have been absorbed into another organization.

The Direct Selling Management Association, the industry's lobbying group in Utah, did not respond to requests to verify the list in the Gardner report from August 2022, to see if there were additional companies or whether some businesses had closed.

Disclosure limitations prevent the reporting of exact employment counts, but the 78 companies for which The Tribune found data employ between 7,200 and 14,500 workers.

The state's numbers don't include potentially thousands more independent sales representatives living in Utah.

For example, doTERRA boasts on its website 3 million independent distributors worldwide. Young Living claims 6 million, and Zyia Active says it has thousands across the United States and Canada.

(Steve Griffin | The Salt Lake Tribune) A LEGO model of the Young Living Essential Oils lavender farm in 2018.

According to DirectSelling.org, there are nearly 1 million full-time direct sellers in the United States, and 6.8 million people who sell part time.

The Direct Selling Association says more than 163,500 people are involved in the industry in Utah.

Conservative women, missions and self-reliance

So why do direct selling companies thrive in Utah?

It could be the state's reputation for being business-friendly. As the Governor's Office of Economic Opportunity touts, Utah "continues to be at the forefront of innovative and awe-inspiring economic opportunity initiatives."

Gov. Spencer Cox has said Utah set the bar for entrepreneurship and growing startups.

Others — from WalletHub to U.S. News & World Report to CNBC — routinely rank Utah as one of the best states for business.

The Direct Selling Association said in a statement that companies in the industry have "found Utah to be welcoming for many reasons, including its inviting business atmosphere for entrepreneurs and the focus on community that is prevalent throughout the state."

The national group has several members based in Utah, including Nu Skin, Stampin' Up! and USANA.

Another explanation may be something many associate with the Beehive State: The Church of Jesus Christ of Latter-day Saints.

Deborah Whitehead, an associate professor of religious studies at the University of Colorado, concluded after research that the Salt Lake City-headquartered faith is one possible link between MLMs and Utah.

(Rick Egan | The Salt Lake Tribune) Attendees walk to the Conference Center in Salt Lake City for a women's session of General Conference of The Church of Jesus Christ of Latter-day Saints, Saturday, April 2, 2022.

Whitehead dove into the topic after looking at the rise a decade ago of the "mommy blog" — particularly among women who were Latter-day Saints and evangelical Christians — and noticing many were also involved with MLMs.

She found direct selling can be attractive to conservative women in general.

"There's this bind that's created for a lot of women in these situations," Whitehead said. Traditions in some conservative households say it hurts families for mothers to work outside the home, she said, but the economic reality is that most families can't survive on a single income.

MLMs serve as a solution, Whitehead said, by allowing women to contribute by having a business they can run without leaving the home.

That meshes with what direct sellers told The Tribune in 2022 as they lauded the flexibility of their hours and ability to call the shots in how they operate their business.

Latter-day Saint experiences and doctrines add to that, Whitehead concludes in an article published early last year in the journal Mormon Studies Review.

"When young people go and serve missions," Whitehead said, "they come back with a certain set of skills that actually translate really well into direct sales."

Latter-day Saints who serve volunteer church missions become comfortable going door to door to deliver a pitch that they've memorized and polished, she said. They also get used to rejection.

Members of the faith also are community-oriented, Whitehead said, giving independent sellers a strong network they can draw on to build their business.

In addition, she pointed to the doctrine of self-reliance, a theological virtue that translates into storing food, getting out of debt and sticking to a budget — but also can mean starting your own business.

Entrepreneurship is "not something every Mormon has to do," Whitehead noted, "but the church provides resources to help members start their own businesses if they wish."

Even leaders within the direct selling industry have acknowledged the link between the faith and MLMs. The CEO of Perfectly Posh told KUTV in 2016 that the prevalence of direct selling companies "must have something to do with the way LDS culture works."

Whitehead stressed the church has acknowledged the dark side of direct selling, such as actions documented in the 2021 docuseries "LuLaRich." The four-part series chronicled the rise and fall of the MLM leggings seller LuLaRoe, whose founders are Latter-day Saints.

(Amazon Studios) DeAnne Stidham and Mark Stidham, the founders of LuLaRoe are interviewed in the Amazon documentary "LuLaRich."

"Within the LDS Church," she said, "there are critiques of the tendency to take the theological doctrine of self-reliance and maybe distort it into purely material success."

Whitehead added that church leaders have cautioned against falling prey to the idea that making lots of money is the equivalent of spiritual health.

The church even updated its online General Handbook — which contains instructions for lay leaders and members — in 2021 to pointedly warn Latter-day Saints about illegal business schemes, especially those that seek to take advantage of their membership.

"Affinity fraud occurs when a person exploits another's trust or confidence to defraud him or her. This can happen when both people belong to the same group, such as the church," the guidelines state. "It can also happen by abusing a position of friendship or trust, such as a church calling or family relationship."

The handbook makes clear that "members may not state or imply that their business dealings are sponsored by, endorsed by, or represent the church or its leaders."

Megan Banta is The Salt Lake Tribune's data enterprise reporter, a philanthropically supported position. The Tribune retains control over all editorial decisions.

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