Lately, we’ve been talking about authoritarian Christians. As we saw a while ago, these Christians share quite a lot of characteristics with multi-level marketing schemes (MLMs). These two groups also share quite a few pitfalls and shortcomings! When we hear one of these groups promising big huge changes, we are entirely within our rights to feel distrustful of their intentions. Today, Lord Snow Presides over what happens when an MLM really does make big changes–and why neither Christians nor MLMs want to do that.
LuLaRoe Continues to Struggle.
The beleaguered leggings MLM and its TRUE CHRISTIAN™ founders have faced a great many lawsuits in recent years. Earlier this month, a federal judge dismissed a potential class action lawsuit alleging that the MLM charged sales tax to people who lived in areas that don’t even collect it. LuLaRoe said they’d fixed their ordering software to correct the problem and issued refunds to those improperly charged.
It sounds like the company made a narrow escape, but some bigger problems dog their heels.
You see, LuLaRoe also faces a big lawsuit filed last November by their main clothing supplier. That one demands USD$49M in damages and $33M in unpaid bills. This lawsuit still wends its way through the system, it sounds like.
And then, few months ago, the Washington State Attorney General’s office began making noise about suing LuLaRoe for being a pyramid scheme. In February, they filed that lawsuit.
Making matters worse for LuLaRoe, these struggles–accompanied by serious dips in product quality and other issues–accompany a major exodus of sales agents. Without new victims agents signing up continually, any MLM starts to suffer. And when a bunch of top sellers leave their MLM, they typically take all or most of their downline with them–and jump ship to other MLMs. For months now, top performers have been taking this option. One estimate from November has 1/3 of those top sellers leaving the company. Many thousands of other sellers await their refund checks, which come slowly if at all.
Big Changes! BIG!
Amid all of these lawsuits and problems, the founders of LuLaRoe did what we’d expect anyone in their position to do: they promised big changes. On January 16, DeAnne and Mark Stidham gave an interview about it. She claimed that “everybody is saying ‘LuLaRoe 2.0,'” which tickles her pink. She said that her company was totally “starting over.”
Of course, this interview was produced and shared by her company. In the photo accompanying the story I linked above, notice the microphone? That’s the LuLaRoe symbol on it. (We’ll see why in just a hot moment.)
Man, they sure wanted this to look like a real, official interview with a real, official journalist. And yet the Stidhams just had to have a microphone blazoned with their colors!
DeAnne Stidham, the lady dressed like a circus exploded in her wardrobe, declared that her company just loves “starting over. And we like to do that because we want it fresh, and we want new items for everybody to get excited about.”
Her husband, the florid blowhard beside her, elaborated: “It’s fresh and it’s kind of being reinvented, but it’s being reinvented on the shoulders of those things that we have learned in the past.”
And guess what? They promise that agents who stay with the MLM “are going to reap the benefits 10 times or more.”
Yes, But What Changes?
None of that sounds remotely like real changes. Elsewhere, the Stidhams stated that “amazing things would happen with refunds,” and spoke briefly about “a glitch in the fabrics and the prints and everything” that she wanted to fix. You’ll be happy to know that her motivation for fixing this stuff is her great concern for her agents.
Looking at their YouTube channel, I see that in late January (a few days after this fake interview), LuLaRoe began a video series called “The Happy Hearts Club.” The series appears to center around couples who work together at losing money on the MLM. If you like (or like to hate-watch) cringe videos, I highly recommend this series in its entirety. None of the couples in the intro video look like they even know each other, much less love each other.
I see LuLaRoe also released a couple of new frumpy styles and wacky prints. And they put pockets in an existing dress design. (I won’t diss the pockets part. Dresses with pockets FTW.)
The LuLaRoe Instagram page looks considerably more active, but nothing there indicates what these changes are either. But I did find a really scarily worshipful ‘gram about DeAnne’s birthday. Oh, and a hiring notice put out a few days after the fake interview. I also discovered the fake journalist in this video, which was taken during their recent LIFT jamboree. Thus, I assume that’s when this fake interview got filmed.
But of the big changes promised, I found nothing at all beyond those vague sorta-promises. However, allow me to point out her lavish 60th birthday soiree at the end of January, a full-blown Venetian-style masquerade dance. It featured acrobats and big cardboard signs of her own face for party-goers to wave around.
(Also, just sayin’, amazing is the last description I want to see associated with a refund I’m due from a company that’s ripped me off. It goes up there with exciting as applied to one’s morning commute.)
How an MLM Gets Started.
Nobody sets a multi-level marketing scheme up to benefit sellers. It exists for one purpose and one purpose only: to fleece gullible marks.
These marks sign up hoping to get rich or even just solve their financial struggles. They see the MLM as their ANGLE. However, they want to achieve their dreams without having to do the stuff that most people have to do to get rich (be born that way; get a good education in a field that’ll yield that kind of money; come up with a great product that people need). MLMs step in to tell them that they have a way to make those folks’ dreams happen anyway.
Really, all MLM founders must do to achieve obscene wealth is sound vaguely plausible to their target audience. That audience will put any critical thinking skills they possess aside to indulge their hope–or their greed. Then the founders simply bleed them dry and discard them.
As you’d expect, then, dropouts are a very serious problem in this industry. At all times, MLM sellers frantically hunt new marks to sign up underneath themselves. They can never retire–not without their downline disintegrating! Even the highest-ranked upline must keep the recruitment hunt going forever. If a very established person drops out or jumps to another MLM, that person’s entire downline might go with them–and those defections can potentially knock their own upline out of qualification for commissions.
How an MLM Makes Its Founders Rich.
In order to stay vaguely on the good side of the law, an MLM needs to center around a product. The product itself doesn’t matter at all. It can be anything. If the product can incorporate a miracle claim about itself, all the better.
All the MLM founders need is for this product to be something they can produce very cheaply, then mark up considerably in cost–to the point where it’s way more expensive than similar products on the market. If anybody objects to the cost, the MLM’s agents can point to the miracle ingredient or claim as the reason for the astronomical difference. (If not, they can also lie about not having middlemen and hope nobody notices, as commenters there point out.)
Nobody in upper management cares if the only customers they have are their own sales force. Their own agents will overpay for these trash-tier products. Those agents are really buying hope, not soap, to paraphrase Amway. The law will care about retail sales, though, so the founders try to do the bare minimum to give the appearance of abiding by that standard.
Despite the effort needed to skirt the bare edge of the law and to maintain a balance between greed and patience, MLM founders are happy to make it. The money flowing to them dizzies the imagination. And it lasts until the MLM collapses under its own weight.
The more greedy the founders are, the faster that collapse will happen.
Why An MLM Hates Change.
Here’s a list of some of the red flags one often sees in MLMs. These red flags represent two things: an MLM that cares even less than usual about its marks, and an MLM that suffers from more greed than usual. The more of these red flags we perceive in an MLM, the more predatory it probably is, the more quickly it will probably run through agents, and the sooner it will subsequently collapse. Once it does, the founders will likely simply create another MLM and begin their process all over again.
Now, starting over again from scratch isn’t fun. It requires a little work in finding a new product to base the new MLM around, persuading top agents to cross over from their current MLMs, and doing all that blitz advertising to get name awareness out there.
But changing the current MLM isn’t fun either. The founders of these schemes don’t tend to be terribly imaginative–ruthlessly cunning, yes, and manipulative too, but not really creative.
Once they get their MLM in motion, it benefits them so greatly that they tend to want to keep everything right where it is. If they get into trouble, they hope that if they just lower their shoulders into that stiff wind, it’ll abate eventually.
MLM Founders Have Good Reason to Fear Change.
A few years ago, an MLM called Vemma got into big trouble with the Federal Trade Commission (FTC). They hit a whole lot of the red flags I mentioned.
For example, MLM compensation plans already tend to be sublimest works of absurdist literature. They’re complicated, confusing, and designed to benefit as few sellers as possible. The FTC thought that Vemma’s plan overly rewarded sellers who bought tons of stock–but didn’t care so much if the sellers actually sold any of it. They also discovered that this MLM overly rewarded recruitment over retail sales and made illegal marketing claims.
To resolve their disputes, the FTC forced them to change a whole lot of stuff about their structure.
This ruling changed a lot of the game in MLM-Land. For a start, it meant Vemma’s sales began to decline immediately. The company still exists, but it doesn’t look like it’s doing very well.
Another MLM, Yevo (it sold foul-tasting $5/bowl oatmeal and granola, mostly), was forced to change its own compensation structure not long after Vemma’s court battle. It went out of business shortly after the change. Yevo launched around 2014, ultimately lasting only two years. Without being able to use the typical MLM compensation structure, they couldn’t survive.
I can easily see why the Stidhams might be a little leery of making big changes to their own MLM, even with the government breathing down their necks.
The Venn Overlap.
In broken systems, the people at the tops of those systems benefit grandly. Of course, they do so at the expense of everyone beneath them. Only the top people in these systems escape damage and suffering. But they tell everyone joining the system that they’re going to do great in it. This is the lie that keeps their marks’ hopes alive. In truth, all the system’s top dogs want is to bleed those marks dry before the money train pulls out of the station.
When push comes to shove, when they simply can’t put off reforms any longer, then they still have a bag of tricks they can use to delay the inevitable:
- They can make mouth-noises about figuring out what’s wrong, listening to their critics and those they’ve burned, and investigating their problems. They’ll set up committees, even!
- As the Stidhams have done, they can promise big reforms, though they sound quite vague about exactly what reforms there’ll be.
- They can make nebulous promises to their existing flocks to keep them dancing on the line a bit longer (during which time they’ll be buying more stock, paying more fees, attending more expensive jamborees, etc).
That last step is key.
A broken system depends upon its existing victims to pay the bills. The masters of it walk a fine line between delivering so much that they cut into their own bottom line, and delivering so little that their victims see no reason to stay.
The Masters of a Broken System Need Victims.
This whole story with LuLaRoe fascinates me. It’s like looking at religious dysfunction outside of its usual context, and to me, that makes that dysfunction easier to notice, articulate, and understand. Once we can see the similarities in one broken system and understand how it operates, we can perceive these traits in other broken systems–and avoid them.
One of the most frustrating and sad things to see in the MLM world is these desperate people who flit from one MLM to another–or even sell multiple MLMs at once. These victims always think that the ANGLE, their success, is right around the corner. They just need to find the right MLM, get in early enough, or recite the correct magic spells, I don’t know. But they fail, over and over again, because they don’t realize that the model itself is the problem.
Christianity operates along very similar lines. It’s another system designed to fleece sheep–it just usually does so on a slow burn rather than the fast clip of an MLM. It provides as few returns as it possibly can to keep the sheep in the fold. It does the same kind of damage. And once the sheep leave either group, the reaction of the remaining flock remains the same: ostracism, shunning, even retaliation.
So yeah, Christian leaders won’t make any big serious changes to their broken system until it is literally the last and only remaining option for them. If they’re paying any attention at all to what’s happening with MLMs, they already know how this train ride will end.
Today, Lord Snow Presides over the great and understandable reluctance of MLM founders and Christian leaders to make changes to the systems that benefit them so greatly.
NEXT UP: It’s the newest phrase that pays, and a whole bunch of Christians haaaaaaate it. Curious? Join me next time.
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Lord Snow Presides is our off-topic weekly chat series. I’ve started us off on a topic, but feel free to chime in with anything on your mind. Pet pictures especially welcome! The series was named for Lord Snow, my recently departed white cat. He knew a lot more than he ever let on.