TikTok banned MLMs six months ago, but predatory patterns are still booming on the platform
Even though TikTok banned content promoting multilevel marketing (MLM) programs almost six months ago, it appears the company isn’t actually enforcing this policy. MLMs are trying to recruit new members to TikTok by strategically plugging in their products, many of which promise miracle weight loss results. Some MLMs even sponsor influencers to plug in their products without explicitly revealing that it is an advertisement. TikTok’s negligence and inability to enforce its own guidelines potentially puts its users in financial and even physical danger.
MLMs financially attack vulnerable populations, and TikTok does not protect them
Multi-level marketing programs are companies who recruit salespeople to buy their products and sell them directly to others, and these individual “distributors” earn money through commissions or by recruiting new distributors to resell their products. MLMs are inherently predatory and often targeted women and low-income people to become participants, and studies estimate that almost half to almost all participants lose money – leading critics to frequently liken MLMs to fraudulent pyramid schemes.
Herbalife, an MLM which sells dietary supplements, had to pay a settlement of $ 200 million in 2016 for deceive its distributors on how much money they could actually make by selling the company’s products. According to the Latin Times, Herbalife admitted that only about 11% of its distributors “ever make a dime.”
According to a 2018 AARP study of multi-level marketing programs, MLM participants were more likely to be female and only about 25% of participants reported making a profit; 27% of participants broke even and 47% lost money. In 2011, research submitted to the Federal Trade Commission (FTC) find that “MLM’s loss rate is at least 99%” meaning that “at least 99 out of 100 participants actually lose money.”
One of the most worrying statistics in the AARP Report found that 48% of new MLM participants were between the ages of 18 and 25 – the same age as a significant percentage of the TikTok user base. The report also noted that “household income was generally low when participants first entered direct selling.”
TikTok Policy Banning MLMs Is Corporate “Fraud and Scams” Community rules. “We do not allow anyone to use our platform to gain user trust and cause financial or personal harm” written TikTok, explicitly banning “content that represents or promotes Ponzi, multilevel marketing or pyramid schemes.”
TikTok collected a important amount positive PR after announcing its policy change banning MLMs last December, but the platform is not really keeping its promise. Instead, by not actively enforcing its own policies against MLM recruiting content on the platform, TikTok risks allowing these predatory businesses to exploit their financially vulnerable young users.
TikTok’s MLM ecosystem
MLMs still seem to thrive on TikTok despite the supposed ban, and the platform seems to activate them.
MLMs take many different forms, which is one reason they can be difficult to spot at times. Some of the active MLMs on TikTok sell essential oils, skin care products, nails, scented wax warmers, and more. In one case, TikTok even verified at least five Avon accounts, despite Avon being one of the biggest MLMs in the world. Avon is also apparently sponsoring influencers to promote its products on TikTok in a coordinated advertising campaign.
Other popular MLMs on TikTok sell weight loss products and supplements. Some users post before and after weight loss photos and attribute body changes to certain supplements or products they claim to have used, encouraging users to follow the links in their bio to purchase the same; these miracle products often end up coming from MLM.
Beyond the financial harm participants may suffer from becoming involved in the MLMs pushing these products, FDA regulators report that unregulated weight loss supplements can also cause “serious harm” to users. There have been numerous reports to the FDA of damage from unregulated weight loss products, “including increased blood pressure, heart palpitations (beating or beating of the heart), stroke, seizures. And the dead.”
Despite these potential dangers, content promoting these supplements – and the so-called “opportunities” to get involved in selling them – are commonplace on TikTok.
A TikTok influencer with over 9.8 million subscribers posted what appears to be a video sponsored by Shaklee Corporation, an MLM that distributes weight loss products and supplements.
Her video caption reads: “Let’s reset and choose SANE in 2021 with @shakleehq # 2021reset #MakeHealthyHappen.” There is no reference to this being a sponsored article in the video itself and the caption is vague, apparently violating the FTC. recommendations for influencer advertising disclosures that are legally bound to avoid deceptive marketing practices. The video already has over 4.8 million views.
Content promoting Plexus, an MLM that sells nutritional supplements and weight loss products, also often circulates on TikTok. In June 2020, Plexus was one of many MLMs to send a warning letter by the FTC because some of their representatives have claimed that the supplements can fight COVID-19 by boosting their immune systems. An example cited by the FTC was a social media user and a Plexus distributor who allegedly said, “#VIRUS_CORONA Worried? I have been strengthening my immune system for several years with high quality plexus supplements. You can also!”
Company representatives often feature similar miracle health claims on TikTok, telling users that Plexus products will manage blood sugar, pain, and weight loss. This particular rhetoric is particularly dangerous, as it can encourage users to stop taking medically prescribed drugs and switch to unregulated supplements sold by people with no medical training.
It works! is another popular MLM scam promising weight loss and selling products like “lean tea”, “lean brew” coffee, and supplements on TikTok.
Despite guidelines to prevent predatory programs from advertising on the platform, content promoting MLM businesses is not restricted by TikTok. Users can search for them freely, and the “user” tab is often filled with accounts only dedicated to recruiting others to join specific MLMs.
Take Herbalife for example: although MLMs are allegedly banned on TikTok, the Herbalife community (a well-known MLM) remains extremely active.
This targeted and predatory recruitment of young vulnerable users, often women, must stop. TikTok must start aggressively enforcing its own community guidelines against MLMs or remain complicit in harming its own users financially and physically.