By: Lily McCormick, ValloVision News

The posts about financial freedom and the ability to stay home and work from her phone finally wore Jessica Hickson down.  

 “I saw my friend post about her weekly bonuses and knew if it was real, I was going to give it a shot” For Hickson, the magic of multi-level marketing seemed to be working. 

 “I rose to the top very quickly and began recruiting to share this with everyone,” she said. “I thought if I could succeed, anyone could.”  

 Her company’s income disclosure statement reads a different story. The “magic” for over 85% of the company has them making less than $50 a month before taxes.  

The Income Disclosure Statement for “It Works” Courtesy: It Works website

The Federal Trade Commission defines MLMs as “companies that sell their products or services through person-to-person sales.” In the modern era of MLMs, this means the majority of distributors are working from their social media pages. The FTC also points out that not every MLM is a pyramid scheme. However, the issue lies when a company pays its employees to recruit others to the business.  

The FTC shows the difference saying, “If the MLM is not a pyramid scheme, it will pay you based on your sales to retail customers, without having to recruit new distributors.” 

Jessica Hickson was a member of the It Works MLM for several years and now uses her Youtube Channel to prevent others from making her mistakes. Her videos breaking down the structure and recruitment tactics of these companies have created a backlash and even death threats to her family. In 2020, things took a turn for the worse.  

Video From Jessica Hickson’s Youtube Channel Courtesy: Jessica Hickson

During the pandemic, MLMs started marketing towards the thousands of people in isolation, many of them jobless.  

“It makes me sick to think about how they manipulated people,” Hickson said. Many MLM recruiters even suggested families use their COVID-19 Relief check to start their own business at the bottom of the pyramid. The issue was so prominent, the Federal Trade Commission released letters to these companies “to immediately stop their distributors from telling people that they’re likely to get rich by investing in the business.”  

However, there is still a large following for those within MLMs. The most recent trend within the MLM, “Herbalife” has their distributors opening up nutrition shops to sell their products. 

These shops have been popping up across the country, and usually within a small radius of another store.  

The “Calera Nutrition” shop opened in November of last year and sits less than ten miles from both a shop in Alabaster and the planned location for a store in Montevallo that has yet to open. 

These shops, according to Herbalife’s guidelines are actually “nutrition clubs”. They are not allowed to sell these shakes, but instead a membership fee where the customer is entitled to one shake or tea per day. The majority of these shops do not advertise their affiliation with Herbalife and keep their menu’s information limited to the public.  

The shop in Calera is no different, and their menu was flavors written on a board without any nutritional content posted.  

The menu available about Calera Nutrition Courtesy: Lily McCormick

“A lot of the shops won’t give people the packets to read the ingredients or calorie count when someone asks for them,” said Brittany Fulgham, the owner of Calera Nutrition. Fulgham explained that many clubs won’t post their menus in fear that a competing Herbalife club might steal their recipe. The recipes are usually consisting of Herbalife’s tea concentrate and one of their flavored energy tablets.  

“I called another store’s owner to ask for a recipe one time and she gave it to me in exchange for one that I had,” Fulgham said. But, Fulgham is certain that there is no competition between stores despite their proximity and similar products. 

“I know the owner of the new store in Montevallo and if she called me with any problems, I’d be happy to help,” Fulgham said.  

Many on the anti-MLM side speculate the shops are the newest scheme for the companies.  

Jessica Hickson stands by this statement and suggests that most will close within the next five years.  

“This is Herbalife’s way of getting more money out of their distributors, who are really the customers to them,” Hickson said, “They don’t really care if they succeed because they’ve already made their money.”  

Fulgham ensured that her shop is separated from the recruitment tactics of Herbalife.

“A lot of people I know do try to recruit with their shop and will try to recruit employees to sell underneath them,” Fulgham said. This recruitment style can cause the market to be overly saturated, meaning there is too much product and not enough demand. 

The Consumer Fraud Reporting Organization recognizes the flaw within MLM saying: “the MLM is set up by design to blindly go past the saturation point and keep on going. It will grow till it collapses under its own weight, without even a bureaucrat noticing.”

“They’ll recruit anyone, but a lot of college-aged students and people who don’t have a stable income are at risk,” said Hickson. The anti-MLM movement points out the harmful tactics the companies use to persuade people to join. The Huffington Post did an article comparing how MLMS and cults use the “BITE” method of mind control. 

This method includes things like “love bombing”. The article describes how “MLM members will shower prospective recruits with warm welcomes and excitement” in an attempt to get new members excited.

As more shops open up, there are many in the anti-MLM movement pushing to educate customers about Herbalife’s business practices. “I just encourage everyone to research the business they’re looking into,” said Hickson. For more information about MLMs, visit the FTC’s page on MLMs and Pyramid Schemes.