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Why YouTube lets MLMs run rampant on the site

Other social media has taken a stance against MLMs—why hasn't YouTube?

 

Jules Schulman

Tech

Published Nov 5, 2021   Updated Nov 6, 2021, 4:39 am CDT

Have you come across a YouTube video where someone is touting an “exciting business opportunity” that you can be a part of for the low price of $5,000? Are they showing you their brand new Prada purse that they can now afford due to their small business that you should absolutely join?

If you answered yes to any of these, then that YouTuber is probably part of a multi-level marketing (MLM) scheme. Recruitment is the lifeblood of these companies, and there’s no doubt they’ve become popular on YouTube.

Multi-level marketing is a business strategy where the vast majority of compensation comes from recruiting others in your network to sell products. In most cases only the top 5% pf people profit, while the rest fail to make back their original investment. With social media now ubiquitous with daily life, it’s easier than ever to get sucked in.

Gone are the days where MLM’s were forced to recruit door-to-door. The rise of social media platforms ushered in a new and effective way to mass recruit.

“It’s so much easier for these distributors to find new people to join than it was pre-social media in the days of Avon ladies knocking on doors. MLMs have used social media to evolve from door-to-door sales to what I call the ‘Girlboss Era’,” Hattie Rowe, who runs a popular anti-MLM account on TikTok, told the Daily Dot.

While some social media platforms have taken a stance against MLMs, YouTube hasn’t. That has resulted in the massive video site providing a solid platform for these companies to gain new distributors with an array of videos touting the opportunity that their particular MLM offers.

Monat, the popular hair care MLM, boasts over 61,000 subscribers. Meanwhile, the makeup MLM Mary Kay’s subscriber count is 134,000. Herbalife, a nutrition MLM, has racked up over 129 million views on their videos, and MLM Amway has an impressive 88 million total views.

Numerous people have even reported seeing MLM ads on YouTube while watching unrelated content.

YouTube’s spam and deceptive practices policy bans videos “making exaggerated promises, such as claims that viewers can get rich fast or that a miracle treatment can cure chronic illnesses such as cancer,” or “promoting cash gifting or other pyramid schemes.”

Several pro-MLM videos also seem to make “exaggerated promises” that YouTube says are banned, but are still allowed a space on the platform.

In the video, “How to make MONEY with MONAT,” YouTuber Alina Rekshta tells her viewers: “You can make anywhere from $100 a month to a couple $100,000 a month so your income with this business is unlimited… The only person that can limit you is yourself.” 

However, in 2020 the median annual gross earning for 92% of Monat’s U.S “market partners” was $0. The average annual earnings of those market partners was $161.

YouTube did not respond to a request for comment by the Daily Dot.

While the videos generate tons of views, MLM’s have real victims. Their prevalence on YouTube, one of the most popular social media sites in the world, all but guarantees there will be more victims in the future.  

One of the victims of the MLM LuLaRoe, Roberta Blevins, shared her story in the Amazon Prime documentary “LuLarich.”

Blevins paid over $9,000 to sell LuLaRoe leggings at a markup. At first she enjoyed the community, parties, and vibrant Facebook group filled with encouragement. Like the infamous LuLaRoe leggings, her experience quickly deteriorated.

After receiving packages of leggings with odd designs that not-so-vaguely resembled genitalia, her concerns were promptly dismissed. She was discouraged from separating from LuLaRoe. 

“There was a lot of excommunication, a lot of harassment, a lot of people telling me I was crazy, or saying ‘You’re going to ruin your life by leaving,’” Blevins said in the documentary. 

While MLM’s are still prevalent on YouTube, other social media platforms have taken a stance against this business model. 

In December of last year, TikTok banned MLM’s from their platform for violating their “frauds and scams” policy. 

The policy aimed to clarify what content a user should report, “which further helps to protect people, especially those who may be vulnerable or unaware of MLMs,” a spokesperson for TikTok told the Atlantic.

The success of this ban is debatable, as MLM content continues to be prevalent on the app.  

But TikTok’s decision to ban MLMs shouldn’t come as much of a surprise, as the internet has begun to gain awareness of the increasingly predatory recruitment tactics used by these companies.

While MLMs are allowed on YouTube, there’s been a rise in anti-MLM content across social media. On the Reddit page R/antiMLM, a user posted about their grandmother being targeted and charged $200. These stories are increasingly common.

“Social media allows them to specifically target certain demographics of people, often those who are on lower income or are vulnerable,” Rowe, the anti-MLM TikToker, told the Daily Dot. 

Various anti-MLM YouTubers have also become increasingly popular. YouTubers like CC Suarez have more than 50,000 subscribers, Isabella Lanter has nearly 14,000 subscribers, and Deanna Mims has close to 18,000 subscribers.

While there’s a rise of anti-MLM content, the reverse has also happened. The pandemic became yet another opportunity for MLMs to gain new recruits.

Vox reported that The Young Living Essential Oil Group posted: “If you want to keep away from working around crowds of people and you’re looking for a way to earn money from home ~~ I’ve got an excellent opportunity for you!…Avoid exposure to the Corona Virus and still provide for your family in such an amazing way.” 

Meanwhile in April 2020—just as people became used to lockdowns and quarantines—the Federal Trade Commission (FTC) warned that MLM’s were recruiting with the promise of extra money, and asking their followers to spend their stimulus checks to become distributors.

If this predatory behavior wasn’t enough to violate YouTube’s policy, then MLM’s questionable legal record could have been. In 2016, Herbalife was forced to restructure and pay a $200 million settlement to the FTC due to their company’s business model and lofty promises. Herbalife, and Herbalife distributors continued to recruit on YouTube during this period of time. 

It’s unclear why YouTube hasn’t taken similar action against MLMs that other social media companies like TikTok have. But for as long as they remain on the platform, it’s only a matter of time before more people report becoming victims of them.

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*First Published: Nov 5, 2021, 7:00 am CDT