The Internet Is Starting to Turn on MLMs

Multilevel-marketing companies rely on social media for recruiting. TikTok just became the first major platform to ban it.

Pink and blue bubbles in the shape of a pyramid, with an X through them
The Atlantic

This week, when TikTok announced an updated version of its community guidelines, one small addition was more surprising than the others. Under a section of policy prohibiting various types of “Frauds and Scams”—which used to focus on outright Ponzi schemes, get-rich-quick hoaxes, and phishing attempts—the company became the first major social-media platform to declare that multilevel marketing was verboten as well. The addition “helps our community understand what to expect on TikTok and what to report to us,” a spokesperson told me. “Which further helps to protect people, especially those who may be vulnerable or unaware of MLMs.”

By word count in a set of company policies, the change is a small one. But in the broader context of online MLM recruitment, it could be huge. A generation ago, the phrase multilevel marketing was associated with suburban Tupperware parties and teens selling Cutco knives door-to-door. Today, MLMs thrive mostly online—in the spammy invitations to virtual Scentsy parties from people on Facebook you barely know, in the Instagram Stories of glamorous influencers who promise that some product changed their life (just DM to join their team!).

Most people who join multilevel-marketing companies must constantly be recruiting more people to their “downline” in order to make money. When they do so, they get a cut of whatever that person sells, and a cut of whatever is sold by whomever that person recruits, and down and down and so on. The people at the top can earn big; the people at the bottom typically earn little or nothing. On TikTok—where “flexing” accomplishments and possessions is part of the platform’s basic language—MLM salespeople could post short videos about the car they won, or flash their income statements, or show off boxes of new products, not just to their followers, but to anybody who might see their content in the main feed. From there, they could drive strangers over to their Instagram or Facebook and recruit them more personally. Recruitment is vital to MLMs, and social media is vital to recruitment. Now one channel of that recruitment has been cut off.

Though the industry is notoriously opaque, and reliable numbers are hard to come by, multilevel marketing has clearly benefited from the way social media provides access to a broader pool of salespeople. More recently, the pandemic has been an MLM gold rush. Salespeople from companies such as Young Living Essential Oils and the jewelry and accessories brand Stella & Dot have been recruiting aggressively as unemployment numbers stay high, the unemployed spend more time online, and working from home sounds even more appealing.

But in the past few years, significant pushback against MLMs has also been building online. “Just like social media allowed MLMs to explode in growth, now the message that it’s not a good idea to join them is also spreading,” says Alanda Carter, the host of the anti-MLM YouTube channel The Recovering Hunbot. (Hunbot is the common term of disparagement for an internet MLMer, because of their tendency to recruit with copy-pasted, impersonal messages that typically start with the fake warmth of “hey, hun.”) “There are more people speaking out against MLMs than there ever have been before.”

Carter is part of a broad online coalition: On YouTube, an entire community of creators focuses on “exposing” the false promises of MLMs. Reddit’s r/antiMLM subreddit has 674,000 members as of writing. Though the world it’s critiquing is enormous, made up of millions of sellers, this opposing force has attracted significant attention and regularly produces hits that go viral. On TikTok, videos tagged #antimlm have been viewed more than 34 million times, and individual creators who focus on snappy explanations of multilevel-marketing deceptions have tens of thousands of followers. (The company clarified that the new rules will still allow content that is critical of MLMs.)

“I believe people had been reporting MLMers on the app for fraudulent behavior long before TikTok specifically banned the businesses,” says Heather Rainbow, a TikTok creator who started dissecting MLMs on her account in March, in response to the spike in recruitment she saw around the start of the pandemic. TikTok said she’s right: It was already removing MLM content before it added the clarifying wording to its guidelines, and nothing in particular has changed to make the situation more urgent. “This update is driven by our commitment to our community’s well-being and providing more transparency into our policies rather than any sudden increase in this content,” a TikTok spokesperson told me.

However, enforcement of that internal policy seems to have been spotty up to this point. Throughout the past year, the anti-MLM group on Reddit has been documenting what it refers to as the efforts by the “hunbots” to “infiltrate” TikTok. Though the language might be dramatic, the group wasn’t wrong about the uptick in activity: On YouTube, marketing coaches with substantial followings had started encouraging MLM salespeople to use TikTok to bolster their personal brands. “It is maximum exposure over there, and it is amazing,” the MLM coach Julie Reynolds told her audience in a video posted in May.

TikTok has several reasons to be wary of MLMs, which might help explain why it is the only major social-media platform to adopt such an explicit position on them. One is its generally young users, who could be particularly susceptible to the grandiose promises of multilevel marketing. The company has struggled in the past with scams proliferating in its algorithmically generated “For You” feeds; most notably, the iMoney-app scam promised minors that they could make money by performing basic tasks online, then collected personal identifying information from them and paid them pennies, if anything at all.

Multilevel-marketing companies are legal in the U.S., and generally make an effort to distinguish themselves from illicit pyramid schemes—though whether they’re actually different is a matter of perennial debate. Perhaps incidentally, TikTok’s parent company, ByteDance, is based in China, where multilevel marketing was entirely illegal from 1998 to 2005. Currently, the key element of the MLM business model—a salesperson’s ability to make commission off the sales of anybody they recruit—is still against the law there.

As with any content-policy update, the ban has been big news within the communities it affects. Reynolds, the MLM coach, told me that she shared it in a Facebook group dedicated to multilevel-marketing strategy, and the people there were “saddened” to see their businesses in the same category as pyramid schemes. Meanwhile on Reddit, anti-MLMers have been celebrating the update, and commending TikTok for “fighting the good fight.”

Although Carter was supportive of the update, she told me that she doubts it will make much of a difference, because anybody who is recruiting for an MLM online knows how to play by the rules of each platform to get the best results. “They’ll use different words, different hashtags,” she said, just like members of other groups who get removed from social-media platforms for one reason or another. “They will find a different way.”