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5 scummiest MLM companies in USA 

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  • 10 min read

The multi-level marketing (MLM) business model requires distributors to recruit other distributors while simultaneously making a commission on the sold product. This means that when you enter these schemes, you must buy the product while allowing yourself to be the distributor.

Usually, you will have to recruit a certain number of people before you start receiving the benefits. The same goes for other distributors. This way, the company does not have to invest in new warehouses for storage, as the distributor’s home becomes one. The other benefit is that the company’s marketing budget is drastically reduced. The company can make some serious profits with no warehousing and marketing costs.

MLM is different from pyramid schemes. However, the difference is so minute and nuanced that even the authorities have difficulty ascertaining the business model. In MLM, the distributors can make profits while in a pyramid scheme, the distributors do not make much profit, only the top-level bosses do. Also, the pyramid schemes have to be carried out for the cascade to work.

Both MLM and pyramid schemes work on the same business model: recruit and get recruited, so it is quite hard to tell the difference between them.

In this article, we’ll list 5 scummiest MLM companies in the United States that you should be wary of.

Here are the companies that we will cover:


Let us start with Primerica, a company founded in 1977 by Joel M. Babbit and Arthur L. Williams Jr.

The company sells different types of insurance and is based on the same distributor recruiting distributor model. Usually, this isn’t bad per se. However, as insurance is a specific field, the distributor should be trained personnel.

In Primerica, this is not the case. Here, the distributors often have no insurance background and thus, fail to meet the company deadlines.

The Business Insider says this about Primerica: “They’ll deny it, but basically, it’s a multi-level marketing (MLM) company for finance.”

Business Insider also investigated the company’s so-called offices, which were nothing more than the homes and phone numbers of the distributors. Moreover, you will be disappointed if you want to become a distributor to earn a sustainable and respectable income.

By Primerica’s admission, “from January 1 through December 31, 2023, Primerica paid cash flow to its North American sales force at an average of $7,185, which includes commissions paid on all lines of business to life licensed representatives.”

An average salary of only $7,185 is not enough to buy groceries, let alone clear all the bills. That being said, we are pretty sure the top executives of this multi-billion dollar company have made millions.

Also, the company’s recruiting policies are in question. Recently, a TikToker revealed how a Primerica distributor approached the woman at Starbucks and complimented her charming personality and vibe. However, things soon took a turn when the distributor began talking about passive income and financial freedom. The distributor also gave the woman a book and invited her to a seminar.

The company also faces various lawsuits, including one in Florida, where it paid more than nine million dollars to settle about 238 lawsuits. This lawsuit alleged that the company convinced Florida public officials to divest funds from their retirement savings accounts to Primerica products.

Primerica is still thriving in the US and was even recognised by Forbes as one of America’s best women employers for the fifth consecutive year.

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Amway is probably the world’s oldest and largest MLM scheme. It was founded in 1959 by Jay Van Andel and Richard DeVos.

The company sells various products, including soaps, shampoos, toothpaste, and other beauty and healthcare products. Amway has a net worth of billions of dollars and is doing quite well in sales.

However, the company also faces multiple lawsuits that have resulted in millions of dollars in settlements. In 1979, the Federal Trade Commission ruled that Amway wasn’t a pyramid scheme but a legitimate business opportunity. Since then, several lawsuits have claimed just the opposite.

For example, the Enforcement Directorate (ED) of India filed a complaint against Amway, alleging the company is promoting an illegal ‘money circulation scheme,’ which is a nice way of saying that Amway is involved in money laundering. ED also found that instead of selling the products directly to customers, Amway introduced an MLM model and a bunch of intermediaries along the way.

Moreover, the company also faced a lawsuit alleging deceptive business practices and misleading its independent business owners. In 2020, another lawsuit was filed against Amway, alleging that the company spends more resources on recruiting independent business owners than selling products.

Also, the company’s marketing brainwashes people to think they can earn a substantial income. However, the reality is often quite different, especially in countries with weak currencies. Furthermore, the company’s products do not justify the price, making it difficult for the distributors to convince customers to buy them.

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Herbalife is another MLM company focusing on healthcare products, such as supplements, weight loss and management products, and shakes.

Mark Hughes, a high school dropout, founded the company in 1980. In 2016, the Federal Trade Commission decided that Herbalife was not a pyramid scheme. However, the commission forced the company to restructure its operations and even fined $200 million for deceptive behaviour.

The FTC also found that, contrary to the company’s lofty claims, the distributors almost made no profits from sales. The FTC investigation resulted in a fine and a warning to start operating legitimately. The company took this case as a victory, and its PR team sprung into action to spin the story.

However, the company’s woes didn’t end there. In 2020, the US Securities and Trade Commission investigated and found that Herbalife bribed Chinese officials to increase its Chinese business. The company was also accused of falsifying its books for bribes.

Furthermore, a Miami court opened a class action suit against Herbalife, in which the company’s top 44 distributors seek more than $140 million in damages.

The company has also been targeted for deceptive marketing, which almost all MLM companies have to engage in. These companies rely on brainwashing people to believe that they can get rich quicker or have a substantial side income. Usually, the vulnerable consumer groups, including immigrants, are their targets, and Herbalife is no different.

Although legitimate, the company is quite often in the news for all the wrong reasons, and you should do your research before committing your time and resources to such a company.

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The fourth company on our list is LuLaRoe, a women’s clothing brand founded in 2012 by DeAnne and Mark Stidham.

In October 2017, a class action lawsuit was filed in California, and the company’s Better Business Bureau rating was downgraded to F.

In 2019, the Washington state attorney general filed a lawsuit against LuLaRoe, alleging that the company engaged in a pyramid scheme that stole millions of dollars from thousands of Americans.

The suit was settled in 2021, with the company agreeing to pay a whopping $4.75 million.

In a detailed investigation against LuLaRoe, Stephanie McNeal discovered that many millennial women fell for the scam and never made profits due to deceptive and fraudulent marketing. Furthermore, travelling and attending seminars organised by the company reduced the profit margin of middle-class families. The article talks about Willis, a 36-year-old mother from Wisconsin who had to quit LuLaRoe and still had about 3000 accessories left in her home.

LuLaRoe consultants usually open virtual boutiques on social media and transform their homes into warehouses. The company advises consultants to buy more than the minimum to have enough in case of a sales rush. Now, the consultants can order the size and style of the clothing, but they have no idea about the print.

The company does this so that the consultants join more and more groups to find the print of their choice. Most of the design prints are ugly and often mocked online. So, the game is to get your hands on the prized products called unicorns. These products are in demand and the only way to make money in this business.

Therefore, shopping from LuLaRoe is like a hunt, where shoppers must find the right consultant on social media. Each shipment that the consultants receive contains a mixed bag of products. Some products are unicorns and get sold quickly, while others may lie in the warehouse.

Moreover, the company’s return policy was only for a limited time, and customers often had no recourse if they received defective or unwanted products.

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The final addition to our list is Beachbody, a fitness company founded by Carl Daikeler in 1998 in Santa Monica.

This MLM scheme focuses on recruiting fitness coaches who offer products to new customers. Coaches can earn a commission for each sale that they make. This fitness empire claims to have over 300,000 coaches distributing Beachbody products and exercises.

However, the reality is quite different. In 2023, a class action lawsuit was filed against Beachbody, alleging that the company treated the coaches as low-quality labour and that many didn’t receive a check.

The company uses YouTube influencers for marketing, and unsuspecting coaches with experience are lured. This class action lawsuit differs from others as it is based on a new law passed in California changing the worker classification. This suit will determine whether or not the independent contractor tag that Beachbody puts on coaches will work.

Other problems with the company include unresponsive customer support and automatically getting signed up for new offers. The company had to settle a lawsuit of $3.6 million for these practices.

In conclusion, although legal, MLM companies often engage in disruptive behaviour and treat their distributors or independent contractors poorly. However, this is not true of top-level executives who make millions. These companies often use the ‘get-rich-quick’ card to lure customers.

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Kumar Hemant

Kumar Hemant

Deputy Editor at Candid.Technology. Hemant writes at the intersection of tech and culture and has a keen interest in science, social issues and international relations. You can contact him here: