How To Know If You're Part Of A Fitness MLM Scheme

Does this sound familiar? A co-worker or old college roommate sends you a DM on social media, raving about the new diet and fitness regimen she's discovered. "I've lost 25 pounds and feel better than I ever have!" she brags. Then she invites you to join her "team," saying you can make tons of money while getting into shape at the same time. It sounds almost too good to be true — and perhaps it is.

Enterprises such as Pampered Chef and LuLaRoe are what's known as multilevel marketing companies, or MLMs. Their members earn money either by selling the company's products directly, or through commissions on the sales of the contacts they recruit as salespeople (via HuffPost). Unlike illegal pyramid schemes, MLMs are legit because members aren't technically required to bring in new sellers, according to the Federal Trade Commission (FTC). However, most MLM companies do urge members to build their own sales teams, with the promise of quicker profits for less work.

Fitness and health brands are one of the biggest MLM categories today — in part because of the COVID-19 pandemic. Between heath concerns and a changing employment landscape, selling supplements from home is sounding ever more appealing (via Time). You've probably heard of many of the top companies, such as Beachbody, Isagenix, Herbalife and Arbonne. Beachbody, in particular, has been particularly successful; in 2018, the company boasted more than 340,000 "coaches" selling their products, and was worth some $1 billion, according to Forbes.

So how can you tell if you're getting into an MLM? And is it worth it?

If you get a message out of the blue from a friend or co-worker touting a diet plan or work-from-home opportunity, it's a sure bet you're being asked to join a wellness MLM. Coaches and consultants are urged to start building their network of sellers through people they know personally (via HuffPost). You might get invited to a party or presentation, where an upper-level consultant will share stories of weight lost, health conditions cured, and sellers going from pinching pennies to buying dream homes. "Anyone can do this," the presenter assures you. "Invest in yourself. Believe in your future."

Before you commit to joining an MLM, be aware that it's not the same as opening your own business. A HuffPost report on MLMs reveals that consultants are subject to the company's rules about how they can operate, down to the language they can use to sell the products. Because consultants' income comes primarily from commissions off their own sales teams, you'll also need to put in the time and energy to build a network. You'll be the one reaching out to old college roommates, and then pushing them to get customers. 

Exercise physiologist Chrissy Giorgetti has spoken to numerous Beachbody "fitness coaches." They report being required to send out 60 "cold messages" to potential recruits every day, and to tout the products on social media. "I think the worst part of it, though, is that they call themselves coaches," she writes. "There is no certification process for becoming a Beachbody coach."

Even if you don't mind putting in the time to recruit sellers and customers to a fitness MLM, the hard truth is that you probably won't achieve that "quit your day job" dream. Making a profit depends on a steady sales flow, and not everyone wants to keep buying protein powders and collagen creams month after month. If your clients stop ordering, or your sales staff underperforms, you lose out. 

Consultants spend plenty of their own money, too, reports the FTC. In addition to an initial joiner's fee, participants are usually required to buy a stock of inventory to get their "business" off the ground. Often, they're required to keep buying products to meet a monthly quota or to earn "points" toward special bonuses. The Finance Guy website warns, "Network marketing companies acknowledge that very little of their sales are due to retail demand. Most of the product being ordered is by members for personal use (or to satisfy volume quotas)." 

More often than not, MLM coaches or consultants call it quits, left with empty wallets and a basement full of unsold shake mixes and cleanses. A report from the Consumer Awareness Institute estimates that fewer than 1% of MLM participants see profit from their efforts. That poor success rate, says author Jon Taylor, Ph.D., makes MLMs "the epitome of an 'unfair or deceptive acts or practice' that the FTC is pledged to protect against."