Multi-level marketing and pyramid schemes — back on the rise thanks to social media

“Hey girl! Long time no talk, I love your page and was wondering if you’d be interested in an amazing business opportunity!”

If you’re a woman with an account on Instagram, chances are you’ve received something of this nature in your direct messages or comments at some point in your life. Why has that random girl from your dorm messaged you after all these years? Why has that old classmate reached out, despite the fact that you have never spoken to each other before this very moment? And what is this amazing business opportunity/offer to connect/proposal to build an empire of strong, empowered women? Behold the world of multi-level marketing, powered by social media and those random connections it allowed these people to make, which led them to you. Multi-level marketing operations, or MLM, are not new, but social media platforms such as Instagram and Facebook have increased the rate at which they grow and operate. Today, these companies span social networking sites and use them to reach even more potential victims.

MLM is a marketing strategy designed to promote a product through distributors, offering multiple levels of compensation. Distributors recruit their friends and colleagues to join in on distribution with the promise of financial and professional gain. While legal, many MLMs have been accused of being pyramid schemes, which are fraudulent schemes in which the company’s profit comes more from recruiting fees than the actual product being sold. The rise of social media allows MLMs to reach even more people and share products online.

One such MLM that found success through social media outreach is LulaRoe leggings, which promised its sellers the chance to become entrepreneurs by selling clothes directly to their buyers. The pieces first had to be purchased by the sellers themselves, so in order to sell, they would share photos and videos of the pieces all over their social media networks. They would host virtual events and sales, reaching far beyond the scope of their immediate friends and family. Many distributors would share personal success stories on Facebook in order to recruit others to do the same, because the more you recruit, the more money you stand to make.

According to former sellers, “a curated and positive social media presence [was] a must”. One former distributor of a similar MLM, “It Works”, said that the company told sellers specifically to never post anything negative on their Facebook pages— no prayer requests, no drama, no complaining. Posts had to be filtered as if to show that once you join the company, all your problems go away. She said that she and the other sellers were told to create groups on Facebook, add as many moms as she could, and post testimonials. While many were actually losing money, sellers would take to social media and lie to their followers, telling them how rich and successful they were thanks to the company.

While these multi-level marketing operations have been accused of being fraudulent, they are legitimate, albeit detrimental. However, the proliferation of social media has given rise to actual pyramid schemes, circulating quickly and gaining traction through Instagram and Facebook. These schemes hide behind the misnomers of “loom circles” and “fractal mandalas”, and they spread mainly through posts of testimonials about how easy it is to make money through them. If someone is interested, they are added to a Whatsapp group and invest $50 through Venmo (to cover any paper trail). In 2019, VICE counted 200 money-flipping Instagram accounts active on Instagram and more than 5,000 posts linked to various schemes, with images tagged #blessingloom, #circleoftrust, #fractalmandala and #loomblessing.

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