Many people bring up Tupperware as a great example of a legit MLM. They also often use it as justification that all MLMs must be legal because Tupperware is. As we know a square (a legit MLM like Tupperware) is a rectangle (MLMs), but a rectangle (MLM) is not necessary a square (a legit MLM like Tupperware). This is why the FTC says:

"Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money."

If someone makes the case about Tupperware being legit in an MLM discussion you know that they are trying to trick you. In fact, CNBC recently wrote about MLM and included this about Tupperware:

Tupperware, for example, no longer calls itself a direct sales company, instead using the term direct-to-consumer. The company didn't return calls from CNBC. But speaking to the Wall Street Journal (subscription may be required) , CEO Rick Goings said, 'Direct selling left us, because the industry became dominate by buying clubs and what looked like pyramid schemes.'"

So that's the CEO of Tupperware saying that they aren't in MLM or direct selling any more. They don't want to be associated with MLMs based on self-consumption buying clubs that appear to be pyramid schemes.

Clearly the CEO of Tupperware sees what is going on and is smart enough to distance themselves from it. Let's do the same and distance Tupperware from the dominate number of MLMs that hit the basic pyramid scheme guidelines.

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There's a good article in Harper's Magazine on Mary Kay and MLM this month. (It seems to also include this article)

The stand-out quote in my opinion was:

Most who make money earn about minimum wage, while fewer than 300 of the 600,000 Mary Kay ladies in the United States net a six-figure income. The women I interviewed for “The Pink Pyramid Scheme” told me stories about struggling to patch together daycare or to survive high-risk pregnancies while working long hours scouting prospects and hosting parties without any guarantee of a sale. Debts mounted, marriages failed. They couldn’t have it all because Mary Kay’s business model (like that of any multilevel-marketing enterprise) is designed primarily to profit from, rather than enrich, its workforce.

This really highlights a few key points with MLM:

  • Income Opportunity is Minimal - The expectation should be a minimum wage job. However, that's in earnings, it may not factor in costs of running the business (samples, training, travel, etc). The six-figure income is far from the norm and considering that only 1 in 2000 people make it, it's very unlikely that one can expect to work harder and smarter than the competition and succeed.
  • The Risk To Your Finances - Patching together daycare, high-risk pregnancies, working long hours, and hosting parties that might not lead to a sale... Mounting debts, and failed marriages. These are all very bad things that could be avoided.
  • Designed to Profit from its Workforce - Those six words are very powerful and very clear. They should be on the warning label of anyone looking into an MLM. Anyone looking to join an MLM should have to sign a waiver that they have read and understood this.

For those looking to learn more about Mary Kay, there's extensive information at The Pink Truth.

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