Tuesday, October 4, 2022

Pyramid schemes prey on women looking for a side hustle

When you think of a Tupperware party, the mind instantly conjures up images of women playing party games, tossing lightweight plastic bowls back and forth and chatting about their lives as they pass around an order form for Tupperware.

At first glance, Tupperware parties are light-hearted socializing and networking shindigs for women, the truth however is much stranger.

Despite the friendly veneer, Tupperware is part of the controversial multi-level marketing (MLM) industry. Richard Harriman of The Botswana Consumer Watchdog has for close to a decade now been the lone voice in the campaign against the MLM industry in Botswana.

His position has been backed by the American Consumer Awareness Institute, which revealed that 99 per cent of people working for lawful MLM schemes lose money.

When Dr Poloko Ntshwarang, senior Social Work lecturer at the University of Botswana speaks about MLM, you would be forgiven for thinking that she is describing snake oil salesmen – seedy profiteers exploiting unsuspecting women by selling the fake dreams.

Dr Ntshwarang explained that, “MLM companies look for individuals who desire a lifestyle that would be otherwise unattainable. They often use rags-to-riches success stories and deceitful marketing ploys to convince unsuspecting individuals to buy into their business model.Another issue with MLMs is their business structure. The pressures individuals feel to sell and make a return on their investment often means they have to turn to friends and family members for sales. MLMs often set people up to manipulate those who are recruited—leading them in with false expectations and then completely blindside them with the reality. They even have the people who recruit the women act as friends, but that doesn’t last for long. Soon enough, the recruiters start to get aggressive in pushing the women into recruiting more people and telling them the numbers aren’t high enough.”

MLM, otherwise known as pyramid selling, is a business model in which a company distributes products through a network of distributors—often known as representatives—who earn income from retail sales and recruitment. MLMs like Tupperware, Herbalife and Avon have always been part of Batswana’s aspiring business women .

Those at the top often rake in lots of money each month, while those beneath them end up losing more than they can make back. Aside from selling average-quality products, MLMers are expected to recruit a certain number of new salespeople to their team. There is nothing set in place to protect vulnerable individuals from getting involved. People are lured in by promises of working from home, getting to set their own schedule and making quick money easily. Some companies also promise rewards for their top sellers, including brand new cars and tropical vacations. Typically, to become a representative for an MLM or pyramid scheme, you need to buy the products outright. 

If you are unable to sell the products and expand the business, whether through hosting at-home parties or by recruiting your friends and family on Facebook, you are out of luck, and you are out of money. Every year, women are driven into deep debt by multi-level marketing companies. These companies target young women who are looking to make extra money whether it is because they aren’t employed full-time, because they are looking to pay off some debt, or because they want to make their own money. One might ask why people are so prone to opt in if loss seems inevitable. MLMs have relatively low-cost opt-ins for representatives. Because the startup fees of an MLM are much smaller than starting a small business or a franchise, it is easier to invest in and walk away from these “sunk costs.”

Dr Sophie Moagi, a Gaborone clinical psychologist explained that, “to recruit new sales reps, MLMs use language that echoes their targets’ dreams. They call recruits “entrepreneurs” and “business owners” and encourage them to talk about themselves that way. The allure of suddenly being able to say “I’m a business owner” or “I’m an independent consultant” for just a small down payment on goods is powerful. Many prolific posters also share images of luxury goods and aspirational lifestyle shots to sell the idea that it’s easy to make a modest side income, or even fund an upper-middle-class lifestyle, via direct sales. Sometimes, they also use social media to post statuses that tell a story of how their money grew many times over with very little work. Naturally, people will get curious, and once they bite the bait, recruiters will start telling them how MLMs can help them achieve the same material wealth.”

MLMs prey on women, especially those who are already in vulnerable positions, such as stay-at-home mothers looking to make some extra money. Women are typically chosen because they are perceived as having large social networks; an MLM only works if more and more people are consistently recruited. Women are often seen as having connections with friends, family members and co-workers who could be potential customers.

There are two groups of women pyramid multi level marketing schemes set their sights on and both groups are aiming for freedom. The girl boss go-getter who wants to stand firmly on her two feet as an entrepreneur and the working mother who would love the freedom to be able to be fully provide for her family without the burden of working typical 9-5 job. To start, many of these companies sell products that women would want, which is how many become interested in the first place. They market products that women would want a discount on, because they want to purchase them themselves. Today, it is the same game as decades ago, but the playing field looks much different. Instead of going door to door with product samples and in-person demonstrations, sellers now promote via private social media groups, Facebook live presentations and Instagram posts to make sales and garner attendees for “parties.”

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