Why MLMs Still Thrive on TikTok Despite the Scam Ban
TikTok has taken a big step towards banning tiered marketing on its app, but many recruiters are finding ways around the ban, using the social networking site to lure people into pyramid schemes.
The days when multi-level marketing looked like a neighborhood Tupperware meeting are long gone. Even the classic âHey hun! On Facebook of someone you went to high school with is starting to sound a bit like old news.
Now MLM practitioners are finding new language, new wording, and memes to sell their products. Now, instead of being asked to buy goods, you will be told on the app that it’s time to join a “girl gang”.
The MLM approach has changed a lot over the past few decades, but the basic idea behind it has remained the same. Unlike most businesses, the MLM distribution model does not rely on stores to get their products to their customers. Instead, they use sales representatives or consultants to market, distribute, and sell the products.
Following a pyramid structure, as an MLM consultant, you earn money by selling products. But you also benefit from recruiting people and those they recruit by taking a percentage of their sales. In theory, by simply recruiting a few people and having them do the same, you would receive passive income from their sales and recruitments.
However, the truth is far from the quick money-making scheme that it is touted as. After an investigation, the Federal Trade Commission reported that less than 1% of MLM distributors make a profit. In the case of MLM giant LuLaRoe, it’s even pushed sellers to file for bankruptcy.
Despite these figures, thousands of people around the world are still victims of these pyramid schemes. The possibility of high rewards for just a few hours of work looks very appealing, especially in certain demographic groups. From the beginning, MLMs have targeted women, especially housewives and military women in rural areas who seek financial independence without having to leave home. But over time, the ways of these companies have changed, having to find a way to accommodate not only recent times, but content bans as well.
The COVID-19 pandemic has helped to reinforce this, with MLMs shifting their focus from housewives at home to bored and lonely millennials looking for work, money and meaning.
It’s worked. According to the Direct Selling Association (DSA), the national trade association representing MLMs, 59% of companies say the pandemic has had a positive impact on their revenues.
And shoddy make-up to diet teas that don’t work, TikTok has filled with pyramid schemes camouflaged as exciting business ventures. That all changed in December 2020, when TikTok became the first major social media platform to directly target multi-level marketing in its community guidelines. Was it the end of an era?
No. In theory, this sent a strong and clear message to companies like FM World, Avon, Herbalife and Younique that they were not welcome on the platform. But the practice turned out to be quite different. TikTok’s community guidelines state that it “does not authorize anyone to operate our platform to gain user trust and cause financial or personal harm,” clarifying that it refers to “content that represents or promotes Ponzi, on multiple marketing levels or pyramid schemes.
TikTok even has a reporting feature that you can use to directly report MLMs. But those who create MLM content are finding original ways to keep publishing without being directly identifiable as an MLM.
A creator of TikTok using her platform to educate people about the methods and dangers of these pyramid schemes is Hattie louise. In the past few months, since the ban went into effect, she says she hasn’t seen a drop in the amount of MLM-related content being created. What she sees is a change of tone.
Now recruiters completely avoid the word ârecruitâ and replace it from âcome work from home with our teamâ to âcome join our fraternity / girl gangâ.
An account, the Queens Club only (QOC), defines itself as a âfemale empowerment sisterâ where women can be themselves, talk and make friends. Much of the premise of the group is that women “crown themselves”, literally, they are encouraged to buy large shiny crowns which they receive to become a “queen”. With just a little digging, you can find that the QOC is a brand ambassador for SWEETV Jewelry, a boutique specializing in crowns. It is marketing disguised as community.
Another way for these videos to avoid being banned is to link people interested in what the video offers to another social media platform. Users such as a seller for SeneGence will do videos showing these “amazing” products they have or how much money do they earn. When people start asking where they can find more information, they are told to message them on Instagram for answers. As Instagram does not have any MLM guidelines, any kind of overt recruiting or selling is perfectly legitimate there.
Joyce from Victoria, Australia joined Tupperware in 2020 in the traditional way, after being invited to a Tupperware House Party and become interested in what it was offering. She is not the only one, after a drop in 2019, Tupperware sales increased 72% during pandemic and the number of recruiters attending its annual sales conference nearly tripled.
Joyce explains that throughout the year, TikTok was presented as a marketing tool to Tupperware consultants as the company realized its potential to attract new people. While social media platforms have always been considered for recruiting, they have realized TikTok’s potential for network expansion.
Recruiters were encouraged to use TikTok by making eye-catching videos that would appeal to younger generations. But to show how useful plastic items weren’t enough for the platform, so recruiters started creating fun, easy-to-follow cooking tutorials in which Tupperware products are used every step of the way.
As is the case with these accounts, at first glance they might look like cooking videos, but that’s just the bait to show off all the Tupperware items they want to sell. These TikTok accounts do not make any direct sales and therefore cannot be included in the ban. But all of the links on the profile lead to either stores or direct selling Facebook groups.
Despite the ban, there are still plenty of videos that lure people into these programs by enticing them with flexible hours and countless amounts of easy money. Under the guise of “Affiliate Marketing”, some users promise you success with “a very profitable online business without creating products, carrying inventory, dealing with customers, or spending countless hours on activities that you don’t. no money â. ‘
Unlike Tupperware, what is sold to you is not an exact product, but the idea of ââbecoming your own boss. How do you get there? By buying a 15 day course that they sell. Every video speaks show how much money you can earn and how easy it is to start. The name may sound different or original, but it follows the same recruiting style as all other MLMs.
There are different names for it, but they all promise the same impossible dream. And with the pandemic, these jobs have become much more attractive.
TikTok recognized the danger when he banned them. So why is he still allowing these patterns to flourish?
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