Why Multi-Level Marketing companies are a bad investment for college students
BY: IAN SCHRAUTH
Staff Writer
Every college student wants to earn some extra money. Either to put gas in their car to get to their next class, to eat something other than Ramen, or to buy their textbooks for the semester. Some college students, such as myself, have taken advantage of the world of Independent Contractor roles. Some students are customer service representatives for companies like Working Solutions and LiveOps, some use their skills and sell art pieces on Etsy, and some are just contractors in a specific field as a temporary role.
However, there is one type of contractor role that every college student should stay away from. That is becoming a “Business Owner” for a Multi-Level Marketing company.
Multi-Level Marketing companies (MLMs) are companies that are riding the fine line between being a legal, ethical company and an illegal pyramid scheme. Pyramid schemes are classified by the FTC on their website as entities that “…are set up to encourage everyone to keep recruiting people to keep a constant stream of new distributors — and their money — flowing into the business.” The same website also gives some tips and explains some ways one can decipher between an MLM and an illegal pyramid scheme.
Wonder why MLMs are a bad investment for college students? A lot of students I spoke to around the Meramec campus thought the exact same thing.
The first reason that I believe MLMs are a bad investment for college students is because of the earning potential of products sold to consumers. Not many students who are not affiliated with the world of MLMs have heard of “Artistry Face Cream” or “Satinique Anti Dandruff Shampoo”. The reason why nobody has heard of these products is because they are sold by the Multi-Level Marketing conglomerate Amway. If a fellow classmate has ever heard of the product, are they willing to buy it? If someone said yes and did buy a .28L Anti-Hairfall Shampoo bottle from their fellow classmate’s online Amway store at the full price of $14.50, their classmate are taking home anywhere from 44 cents to $3.63 in commission!
The next reason why I believe MLM companies are a bad investment for college students is because the company can slice away their income at any given time. In 2024 alone, there were four MLM companies that (so far) closed their MLM doors. Those companies are BeautyCounter, FinMore (Formerly TranzactCard), Seint, and Rodan + Fields. Some of these companies are still in operation, but just removed the MLM side of the business, while the rest closed down completely.
The last reason why I believe MLMs are a bad investment is because in order to make decent money, you have to recruit other individuals into the company. When you recruit others into an MLM company, you earn commissions on everything they buy, everything they sell, and even on the products THEIR recruits buy and sell. If you have nobody recruited (Or as they call it, recruited in your “downline”), how can you make a lot of money?
With the price of groceries, rent, and other costs rising up, it’s hard to live off of being a commission-only salesperson for an MLM company, especially if said companies are setting you up to fail.
