Save your money, don’t buy into multi-level marketing

By Michelle Boon

Posted on January 19, 2021

Finding a job as a newcomer to Canada can be difficult. As an immigrant to Canada, multi-level marketing companies—known as MLMs—can be a tempting job opportunity. Unfortunately, most people lose money and much more when they join MLMs.

What is an MLM?

You may have heard of Amway, Herbalife, or Market America. These are some of the biggest MLM companies open in Canada. According to the Competition Bureau of Canada, the law enforcement agency responsible for monitoring businesses, MLMs rely on individuals to sell products directly to customers. In a legitimate MLM, salespeople make money primarily through sales. However, as an MLM employee, you are often expected to recruit other people into the business. As you recruit “downlines” to your MLM team, you profit from their sales. Meanwhile, your “upline”—the person who recruited you—takes a percentage of your income. The more people working below you, the more money you make on top of your sales commissions.

This may sound familiar. MLMs are similar to illegal pyramid schemes. Pyramid schemes make money through recruiting others, not through the sale of their product. But while MLMs are legal in Canada, they are still considered scams. Many of the people who join MLMs struggle to turn a profit or tend to lose money. Despite their bad reputation, MLMs remain a tempting business opportunity, especially for newcomers.

MLMs sell themselves as an easy flexible way of making extra money from the comfort of your home. You simply message people on social media about the wonderful products you have on sale, or even get them to join your team. You may have received a message from an acquaintance along the lines of “I have an amazing opportunity for you” or “would you like to start your own business?”

MLM recruiters can be predatory and take advantage of vulnerable people. Newcomers may be more vulnerable to MLM recruiters than others.

Multi-level marketing companies take advantage of newcomers and steal their money. As a newcomer, you may be uninformed, or you may be struggling to adjust to your new surroundings. You may also have difficulty finding a job and achieving financial stability. MLMs take advantage of this when they promise easy income and a glamorous lifestyle.

No experience necessary. No need for a resumé or job interview. Anyone can do it. Why not you?

This is, understandably, appealing to newcomers. It is difficult to find a job in Canada, and it takes time to achieve financial stability. According to Connel Valentine, a successful newcomer to Canada and career consultant, immigrants struggle to find jobs for a number of reasons: a lack of language skills, a resumé that isn’t in Canadian format, lack of work experience in Canada, or they lack the license to practise their trade in Canada.

Newcomers often take “survival” jobs in retail or customer service that they are overqualified for. It is already difficult to settle in a new country, and finding a job can be a frustrating experience.

The “Canadian dream” is different for all newcomers, but everyone has expectations for their Canadian experience. Canada’s immigration website boasts that Canada has a stable economy, high employment rates, and relatively affordable living expenses. It’s understandable to expect to find a job and achieve financial stability once you arrive.

If the reality of your Canadian experience does not meet your version of the Canadian dream, MLMs might feel like your only option. Sales positions require no experience and often an upline will approach you to join.

You might even see MLM sales representatives promoting themselves on social media. It is common for MLM employees to promote their glamorous lifestyle as much as the products they sell. This can be purposefully misleading. In a Business Insider interview, former MLM employees revealed that they posted pictures of cash and vacations to create the illusion that they were making more money than they actually were.

MLMs try to sell you a dream that, for most, will not come true. Take it from someone with experience. Newcomer, Liz, came from Zimbabwe to Canada in 2016 to pursue further education. She landed a job in her field after graduating. Despite successfully getting hired, no one prepared Liz for the high cost of living in Ontario. After securing a second professional position, she was still struggling financially. To earn extra money, she joined Zyia, a fitness clothing brand and MLM. Liz was familiar with MLMs and their negative reputation, but didn’t know all the consequences of working for one.

“I was very naïve,” Liz told The Newcomer over email. “Running the business is a whole lot different. They don’t tell you about the rejection, time, cold messaging, and strain on relationships.”

Liz committed about 20 hours per week to Zyia from June to October of 2019. She paid $625 to start working, which included three months’ access to a personal Zyia website, a gift card to purchase five Zyia clothing items, and training pamphlets.

Despite working hard on her business, Liz was struggling. Like many people who join MLMs, she was losing money and ultimately lost about $900 by the time she left the company. But Liz lost more than money.

“I didn’t have time for my friends anymore because I had to focus on my business,” Liz said. “I was encouraged to get my friends and family to buy, and if they didn’t want to it was okay.” However, both doing what her recruiter instructed her to do and marketing to her friends and family, eventually strained those relationships. “My friends started avoiding me,” she said.

Additionally, Liz still had to pretend to be successful and happy on social media to continue her business. “I had imposter syndrome” Liz said. “The social media anxiety really got to me in the end. My mental health took a hit.”

“It’s not worth it,” Liz said.

If you are currently working for an MLM, it can be hard to leave. Your upline makes money off of you, and they might try to convince you to stay. When Liz told her upline that she was having trouble making sales and finding recruits, they shifted the blame to her. Liz was told that if she did her activities, the sales would come. Your recruiter might try to convince you that success is right around the corner and that if you keep working hard eventually it would pay off.

Do not believe them. In a 2011 study, the US Federal Trade Commission found that 99.6% of MLM employees lost money. Most of the time, hard work does not pay off in MLMs. The products do not sell themselves. While it is possible to make some money as an MLM consultant, it will not equate the hours of work you put into the business.

“I never made any money from Zyia despite the time and effort I put in,” Liz said. “If you have an inkling of doubt or hesitation, I advise you go with it.”

Leaving might seem inconvenient but staying could mean losing even more time and money. At most MLM companies, if you want to leave, you must cancel your membership online and return any unsold products for a refund. You may also have to pay an “inactivity fee” to leave.

MLMs are not a safe business opportunity, but what options are there for newcomers looking for work?

Here are some resources to help you find work as a newcomer:

Helping Newcomers Work offers advice for applying to jobs and provides a list of job boards and careers services in the Greater Toronto Area.

Government of Canada Job Bank will help you connect with employers and work opportunities.

Settlement.org is a great place to find advice on how to find a job and get hired.

Settlement At Work offers a job board for newcomers to find job listings across Ontario.

If you have had a negative experience with an MLM, you can report them to the Competition Bureau of Canada

Multi-level marketing companies sound like a dream, and that’s all they are. Save your time and money and avoid joining MLMs.