Rajneesh, Cult, Wild Wild Country, Sheela,
Financial Independence 101,  Personal Finance

MLMs: Cult Companies?

What is it about a cult? They are absolutely fascinating to me. From David Koresh to the Rajneesh (seriously go watch “Wild Wild Country” now), there’s so much to unpack in a movement of people who adhere to a certain belief system. It also extends to certain companies and products.

Unpacking the word “cult” I think it makes sense to define it as a committed adherence to a central figure or object that advocate a particular lifestyle. This lifestyle, by definition, can only be obtained through the worship of this object or person. For me, the definition of a “cult” is pejorative because the end goal isn’t some sort of spiritual philosophy, but it is about furthering the ends and gratifications of owners of the cult. This extends, to a large part, on companies who use multi-level marketing as their marketing strategy.

The thing that strikes me about companies that operate under the dubious title of “multi-level marketing” (you’ll also hear “network marketing”) is how unclear it is on how its workers (read: “distributors) earn a living. Clear words with actual meaning dissipate as you venture into a world of acronyms, bonuses, tax advantages, and mystical owners who make six figures a year.

If you can’t describe what a product or company does in a few sentences, it’s a big warning sign. A company that is involved in a variety of operations that aren’t clear, except for the fact that they promise big bucks and significant forms of gratification (e.g. buying a fancy car or living in a mansion) is something I almost immediately avoid. Cult companies that operate under these terms seek to take advantage of people through systemic manipulation and misrepresentations. They operate like a cult, feeding a line to employees or distributors who believe they can earn a living by selling modern day snake oil.

Often a company that is a scam offers up a niche product while selling customers and their own team of distributors on cult-esque allure. These usually include products like “diet supplements” or “miracle drinks” because a large portion of their products are unregulated by the FDA or any governing authority. They market their efforts towards the down-trodden and fill their minds up with potential riches. Let’s dive into a few examples:

Herbalife, website,
Screenshot of Herbalife website homepage.


A classic example of a dubious company is Herbalife, which operates with a network of distributors who sell the product to their friends, family and recent acquaintances on street. To sign up under a distributor (and pay a fee), then you can sell the nutritional product or recruit others to join you. In their Statement of Average Gross Compensation for 2017 (which is an exercise in wordsmithing), they state their top sales leaders (the top 1%) earned more than $14,175 from the company. But looking further you find a few other dubious numbers:

  • First year distributors in the top 1% only earned more than $2,690. The top 1%!

Looking back to their 2013 statement, which is a lot more detailed than their current ones, you can find:

  • Of their “Non-Sales Leaders with a Downline” the average total payment for the year was $105. For the year!

 Single-level members don’t have a listed level of compensation because it says the economic rewards are being able to buy goods at lower rates (i.e. a discount) and use or share with their family or friends. These numbers suggest there are high levels of people who are not paid very well, or even lose money in the venture. In 2013, 16.9% (12,090 people) of the sales leaders made $0. So if you make $0 from the company, but incur expenses, guess what? You’re at a loss. Now, it doesn’t take into account the amount of hours put into the venture per distributor (as some people will be working part-time), but to suggest that a even a majority of people would be making money on this venture is highly questionable.

It Works

I’ve recently come across another company called It Works. Check out their website for many warning signs of a Cult Company. You might have seen them when some of your distant Facebook “friends” share wonderful posts like:

It Works, MLM, Crazy Wrap, weight loss, weight comparison, It Works wrap

Warnings signs include:

  • Slick advertising or emotive appeals.
  • Founder(s) with an aura.
  • Anecdotes from people changed by the product.
  • Dubious claims like, “After having lived in double-wide trailers and manufactured homes as struggling teachers, Kami and Nathan recently built their dream home on 43 acres.”
  • Vague definitions of how people actually make money.
  • And products like this:
It Works, wrap, It Works wrap
Screenshot of It Works website.

This site hits on all of these. The “Fab Wrap” that works as compression clothing to make you look less chunky is a pretty illustrative example of a product that may not be doing all it promises.

The bottom line about cult companies is that they sell vague products that promise miracle results with little effort. They promote an idea that workers can get out of the confines of their nine-to-five jobs and earn lots of extra income by being their own boss. The vast majority of people who endeavor for these things will not make very to little money in their venture.


Watch out for the cult companies out there, but if you happen to be making tons of money from them leave a comment below with how you did it!

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