MLMs: Scams or Legitimate Side Hustles? [2021 Study]

We’re all looking for ways to earn a little extra cash. If you scour the internet, you’ll find side hustle suggestions that run the gamut from freelance writing to virtual assistantships. But one form of a side hustle is exploding in popularity, particularly amongst women: selling for multi-level marketing companies.

In the U.S., pyramid selling is a fairly common, and sometimes controversial, marketing strategy among direct sales companies. Known as multi-level marketing (MLM), this practice centers around the constant recruitment of new distributors. This business structure resembles something of a family tree, widening at the bottom in a pyramid-like shape with branches in all directions. While pyramid schemes are illegal, MLMs are not because they include the sale of physical products.

In an MLM, existing distributors are encouraged to recruit new employees through the promise of receiving a percentage of that recruit’s sales — a process that can spread to thousands of people. Distributors can also earn money from making direct sales to clients.

With MLMs being so popular, do they have the potential to be a great side hustle for earning some extra cash? Here at Upgraded Points, we’re all about helping you maximize your earnings, so we decided to find out. We conducted a multifaceted study in order to determine Americans’ experiences with MLMs, as well as analyze the most popular MLM companies in the U.S. Read on to discover what we found!

Methodology

Based on a list of multi-level marketing companies in the U.S., we collected Google Trends data from May 2020 to May 2021 over the course of a year to see which MLM companies were the most searched and where. Additionally, we conducted a survey of over 1,000 Americans over the age of 18 to find out their experiences and perceptions of MLMs. Our findings are discussed below.

The Most Popular Multi-Level Marketing Companies in the U.S.

First, we looked at the most popular MLMs in the U.S. overall and in each state. Have you encountered any of these companies in your day-to-day life?

Vector Marketing was the top-searched MLM overall, ranking number 1 in 6 states and earning the title of America’s most popular MLM. This cutlery-based MLM received the most searches in Arkansas, Colorado, Connecticut, Indiana, North Carolina, and Virginia.

The second-most popular MLM was the skincare-based company Rodan + Fields. This MLM ranked first in 3 states: Illinois, Pennsylvania, and Ohio. BioPerformance, Cutco, Discovery Toys, Juice Plus, Market America, and Herbalife all tied for third place as the top-searched MLM in 2 states each. If a potential side hustle of yours involves any of these companies, consider that you might be joining an MLM.

If you take a look at the most popular MLMs overall, you’ll notice how these companies span a wide range of product offerings. From cutlery and skincare to educational toys and gas efficiency in automobiles, there seems to be a popular MLM for every kind of business. It’s part of what makes them such a popular business model, and such a tricky one, too.

Next, we wanted to analyze which states are searching for MLM companies the most as a whole. To do this, we combined search interest for each MLM in every state to determine which states had the relatively highest collective interest in MLMs. According to Google Trends, these numbers don’t reflect exact search volume, but instead seek to represent overall search interest in the terms relative to the highest point in the set for the given region and time.

With a search interest of 2,116, Texas tops the list of states that searched for MLM companies the most. Nebraska ranks as the second state to search MLM companies the most, with a total national search interest of 1,910. Close behind is Utah, followed by Virginia and the rest of the top 10 states that searched for MLMs the most: New York, Michigan, Minnesota, California, Arizona, and Ohio.

Maybe you didn’t know one of the above-mentioned companies uses MLM tactics, or that your state is particularly interested in MLMs. You might be one of the many Americans who have interacted with a multi-level marketing company, whether you were aware of it or not. Check out our survey results of their experiences below.

Americans’ Experience With Multi-Level Marketing

Fascinatingly, over half of Americans have been recruited by a friend or family member to join an MLM, and close to half of American women have purchased an MLM product. These numbers show that MLMs are much more integrated into the life of the average American than you might expect.

One thing is clear, however: MLM recruitment is not often well-received. For example, over 40% of Americans have blocked someone trying to sell them an MLM product. And getting blocked on social media isn’t the only consequence you may face when joining an MLM. According to our survey, 17.6% of people have lost a friend or acquaintance due to them joining an MLM.

The recruitment tactics of MLMs, especially as they increase in popularity, are putting a strain on the relationships of their members, which we’ll discuss more in the next section.

How Americans Feel About MLMs and Their Impact on Relationships

Overall, Americans tend to have a negative perception of MLM companies. Around 61% of people gain a more negative perspective of someone after finding out they joined an MLM, and over half of respondents would not be friends with someone in an MLM.

Friendships aren’t the only form of personal relationships that are sabotaged by MLMs. Romantic relationships also suffer the consequences. In fact, nearly 3 out of 4 Americans would not start to date someone after finding out they were in an MLM, and over 32% would break up with their partner if they joined an MLM.

MLMs: Scams or Legitimate Side Hustles?

We were able to draw 2 major takeaways from our study: MLMs are overwhelmingly popular in terms of number of members and pervasiveness in social groups, and yet overwhelmingly unpopular in terms of people’s experiences and opinions of them.

We at Upgraded Points suggest that you exercise an abundance of caution when considering the possibility of joining an MLM. If a company is more concerned with recruitment than they are with product sales, that’s a good sign to stay away. MLM companies may have the potential to be a great side hustle for earning extra cash, but they also run many risks.

The Risks of Joining an MLM

We wouldn’t personally recommend joining the companies on this list, but if you do, make sure you remain aware of the practices of these companies. Here are some common pitfalls of joining an MLM company:

• Many companies require you to invest your own money in order to start selling their products
• Your relationships may become strained
• You only earn if you are selling or recruiting, so there is little pay stability
• You will likely end up with inventory you can’t sell
• You likely won’t reach the top percentage of earners, since the pyramid is not designed that way

Final Thoughts

If you’re looking for a legitimate side hustle, look into different freelance opportunities around your own skills. Become a freelance writer, editor, consultant, or bookkeeper, or make money selling objects on Etsy or delivering food via DoorDash.

One thing is for sure: the best side hustles let you answer only to yourself and your clients, and don’t cost you a ton of money upfront in order to start making money of your own!