Smart Money Happy Hour with Rachel Cruze and George Kamel - Are MLMs Legit? (And Is the “Free” Luxury Car a Scam?)

Episode Date: April 13, 2023

Whether you love MLMs or just love to hate ’em, none of us are immune to getting a “Hey, hun!” in our DMs. But have all the boss babes really been conned? Join Rachel and George as they take a closer look to find out if MLMs are an entrepreneur’s paradise . . . or just another scam.   In This Episode:   ·     The fine line between a pyramid scheme and an MLM ·     George’s and Rachel’s personal experiences with MLM products ·     Solved: the mystery of the free luxury car   Helpful Resources:   ·     Be entered to win a $100 Visa gift card when you take our listener survey! Click here to let us know what you think.    ·     Do you have a Guilty As Charged question for Rachel and George? Send a DM to @rachelcruze or @georgekamel on Instagram! Be sure to type “GUILTY?” at the top of your message so we don’t miss it.   ·     Get your finances organized, make a plan, build up your confidence, and kick money stress out of your life for good with the EveryDollar budgeting app. Go to everydollar.com/smart to get started today! ·     Learn more about your ad choices. https://www.megaphone.fm/adchoices ·     Ramsey Solutions Privacy Policy   This Week’s Happy Hour Special:  The Aviation ·     2 ounces gin ·     1/4 ounce Luxardo maraschino liqueur ·     1/4 ounce ​crème de violette liqueur ·     1/2 ounce freshly squeezed lemon juice   Grab your trusty cocktail shaker and fill it with ice. Add gin, maraschino liqueur, crème de violette and lemon juice to the shaker. Shake that thing and strain into a glass. For an elevated experience, garnish with a lemon twist! 🛫 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey guys, I'm Rachel Cruz. I'm George Camel. And this is Smart Money Happy Hour. Wow. Well, that's a drink and a half. That's a special, special sipper. That's a spicy meat bowl. That's a special zipper.

Well, uh, what is this show? Welcome to Smart Money Happy Hour where two friends who happen to be money experts talk about what you're talking about, everything from pop culture, current events, and of course, money. And today, we're talking about those friends from high school who DM you. all about a new business opportunity they've got for you. That's right. We are breaking down MLMs, the pros, the cons, the good, the bad, the ugly, the legal, the criminal. It's all in there, Rachel.

And I'm a little nervous, so I'm glad we have a fun drink next to us. Yeah, before we dive into the very wild and controversial waters of network marketing, let's take the edge off with a drink, Rachel. Today we're sipping on an aviation. Yeah, and I don't think it's my favorite. Well, save that for the rating, Rachel. Now no one's going to listen to the end. So sorry, I'll wait.

But I will say, this is one of the prettier drinks we've ever had on this. It is beautiful. It is beautiful. And we'll stick around until the end to find out what it is, how to make it, what it costs, and if we like it or not. All right. So let's dive into the polarizing topic of MLN. It's so emotionally charged. It's very emotionally.

We are very nervous about this whole episode. But we were like, you know what? You face your fears, George, in life. As my friend, Christy Wright, says, you do it scared. I'm very scared. So, Christy would be proud. I am scared. and we are going to do it.

We're going to dive in. It is polarizing. What is your gut reaction when you hear the word MLM? This is a safe place. I've never done one before, so I don't know if that says anything. Fair.

I mean, I'll be very frank. I'm going to stick up for it later in the episode, so don't hate on me people quite yet. But my genuine just gut reaction is like, eh, not for me, and I'm probably going to get four other texts from this person. That's a very sweet reaction. What's your reaction?

Mine is like projectile vomit. Oh my gosh. And before we go any further, let me just say, because the comments are already flying, if you do MLM, listen to me, I love you. Many of my friends are into MLM. A lot of people that work here do MLM. You are wonderful people. You're not doing anything wrong.

I just don't support it as a business idea. Okay? The products can be great. I know you believe in the products and you believe it. I love that for you. But don't come at me because I'm not against you. I'm against the system. Oh, that's a great way of putting it, George.

Sure. Okay, but let's talk about what is it. So we're saying MLMs, which is multi-level marketing. It is a legal business model that uses a network of independent sales representatives to sell products directly to consumers. So they sell really in two main ways, primary way selling the actual product of what it is. Number two is recruiting new sales representatives. That's right.

That's the business model of an MLM. This is based on the concept of network marketing. And so the best people to market to, here's a quote. The best people to market and sell a product are the people using it. Do you agree with that? Absolutely. If it's something that you love, whether it's makeup or vitamins or a protein shake. Shampoo.

Shampoo, fill in the blank. If you love the thing, you're like, oh my gosh, yeah. The essential oils, right? things in our life that we love and we tell our friends about it. Yeah. So this is no different. Yep. Other than the, you know, vested interest because you might make a profit down the line.

Might make a buck or two. Yeah. Okay. So there's a big distinction we have to make between multi-level marketing and pyramid schemes. Yes. They are very different. Yep. Not all MLMs are pyramid schemes, which they're often accused of.

So let's cover the difference between them. It's a thin line in some cases. It is. Okay. So a pyramid scheme uses the same structure. an MLM, except that in the pyramid scheme, the primary source of profit is recruiting new sales reps instead of selling the product. That makes sense.

So less focus on the product, more focus on recruiting. Exactly. Yep. So the money, really, that the company's main profit comes from, is just from recruiting new sales reps, not from the actual sales of the product. Makes sense. So that's a good distinction. Okay.

Now, with a pyramid scheme, the business model can't be sustained. long term. So that's a huge distinction. If an MLM's been around for 60 years, it's probably not a pyramid scheme. Because it would not have survived all that time. Yes. It was just relying on that. So eventually you'll run out of people to recruit and there won't be any more money to make. And that's when it goes out of business and you realize, hmm, that may have been a pyramid scheme. It wasn't entirely legal. Not all the way. And here's the big thing, Rachel. I don't want anyone to get taken advantage of. Yeah. That's really the heart of a lot of this. So here's what you need to ask if you're trying to separate legit MLMs from pyramid scheme.

So let's go through a few questions here. Number one, is there real demand for these products? That's a good one, because a legit MLM, the product is in demand in the public marketplaces. So this could be, like, I think a makeup, right? Like everyone buys makeup. That's a demand vitamins. People are looking to buy makeup. Yes.

Essential oils. Yeah. It's like there's things out there in the world that people are going to buy in a store or through an MLM. So if it's that type of product and it's not so niche that it's the only thing. It only exists as part of an MLM. And that's where – that's a huge red flag. That's where the red flag comes in.

And another red flag, if it's a pyramid scheme, all the customers are also the sales reps. So it's just feeding itself inward instead of having any external customers. That's a huge red flag to me. For a pyramid scheme. Have you ever used any MLM products? Yes, I have. Any specifically that you want to shout out? I had some jewelry from Stella and Dot.

Yes. And it was great. Great jewelry. I've used essential oils. I've gotten like, I'm not an essential oil like person, I would say. Sure. Like some people like have all the. Like they swear by them.

Yeah. And I'm not mad at them. But there's like a Dutera little peppermint. Oh yeah. Breath thing. It's like a little bead. And it has like crazy peppermint. And it's wonderful.

I love that. I like Doterra products. I love that. I love that. I think a great essential oil. Yeah. I've probably done some of, I'm trying to think. Great things about Pampered Chef products, weirdly.

Like, people have had them for 10 years, 20 years. It's the only ones I use, like they hold up. I have the meat grinder thing from Pampered Chef. And it's wonderful. It's this right here. Is that how you grind meat? And you do that, and it gets really fine ground beef. Wow.

Pampered Chef. Okay. Some multi-level marketing products are actually really solid. Yes, yes. I know. What gets me, though, and I've heard this before, is like this, which maybe this is a pyramid scheme. I never thought about it until now.

Someone tried to sell me. It was like a vitamin kind of thing. and they're like, it's the only vitamin that has X, Y, and Z in it without this and this. It's the only thing. And I'm like, yeah, there's just a lot of vitamins out there. Like, that feels like a lie. So when it's that kind of feeling where it's like, it's the only. They oversell it to where you're now skeptical.

Yes. And I'm like, I just don't believe that. Or when they're like, this cures cancer and eczema at the same time. You're like, okay, just back off. Those get me. Yes. Now, here's my thing. I trust Kirkland's signature.

brand over anything. And so I'm like, why would I not just go to Costco to get my Omega-3 fish oil? You know what I mean? I know. That's what I personally feel. If it was so good, it would be in Costco. Okay, I have, I mean, I've had that thought. So even we were doing research for this episode, I was like, yeah, so what makes someone go start an MLM with a product that they've created versus just selling it in stores or whatnot? I mean, I'm sure there's a lot of answers to that. But it's a good question to ask. The factor is profit. If you start the MLM, you make a whole lot of If I just launch a vitamin brand and try to get it in Target, that's an uphill battle. That's fair.

That's fair. Okay. Another question to ask to figure out if there's a red flag here, what's the actual quality of the product? Yep. So a legit MLM, the products are the focus of the business. So the quality is a really high priority and it doesn't decline over time. Like they are in business for the specific product because they believe it, they love it, and so they're going to work on the product versus a pyramid scheme, the product.

Not to focus. Declose. The quality then suffers, because they don't really care about the product. It was never the goal. They only exist to hide the real money maker, which is recruiting people. Yeah.

It's like money laundering. It's like a front. I've seen Breaking Bad. I know what's going on in the back of that chicken restaurant. And we'll probably talk about this one later, but I feel like the most like exposing documentary was that Lulu Roe, Lulu Rich. Yeah.

And that's a great example of the product because like people were getting... Quality went way down half. Yeah, they were like getting these shipments of yoga pants that had like holes in them or like were deformed. I mean, like, it was just crazy. So that's a good one. So a legit MLM, they really do care about the product. Yes.

And if it sounds too good to be true, it is, and you should probably run. So if it says, hey, this product cures, it cured my cancer. Like, no supplement is going to do that. An MLM hair product that looks amazing. I've heard like both sides of the story of that one. But you see before and after pictures of stuff and you're like... Of course they use the best before and afters. It looks amazing.

Yeah. So like, does it work? I don't know. But is it true? I don't know. Okay. Another question to ask, are you required to buy inventory up front to become a sales rep? This is a huge way the multi-level marketing companies make money is what the starter kits and the upfront costs. So a legit MLM up-front purchase of inventory is not required and no inventory purchase is required to stay in the company.

That's big. So that's a, so to get in, they say, yes, you can start, you know, yes, you can buy a starter kit and all that, which we'll get into in a little bit. but it's not required. And then the other side, it might be a pyramid scheme if up front inventory purchase is pushed heavily or is required to join as a sales rep. That would be a huge red flag. So the key here is don't overpay for these membership kits, these starter fees, these business kits. Yeah. That is a trap.

So. And a lot of them have affordable options. Yes. And a lot of them, yeah. I mean, Rodan and Fields is $75 to $99. Dutera, $35 to $160, depending. depending on what kit, Arbonne, 49 to 500. And this was a big criticism of Lula Rowe.

Yes, this is where the pyramid scheme kind of feels because Lula Rove was like thousands, right? At one point, they reportedly required their consultants to pay between 5 and 10 grand for a starter pack of inventory. Don't do it. Just say no. Okay, another question. What is the primary incentive structure? Yep. So a legit MLM, if you never recruit a soul to sell stuff, you can still make money.

money by just selling the products. Whereas with the pyramid scheme, you only start making money when you recruit new sales reps for the company. And you really only make good money if you're heavy on the recruiting side. There's this much money to make with products. There's a whole lot to make with your downline. Yes, the downline. The downline. Which I think is part of MLM too, right? Like, yeah, upline, downline. It's part of your network marketing structure. Yeah, that's how they make a lot of money, MLMs. I've got to get you to sell it and then you get Lindsay to sell it and all of a sudden I have a downline. Yeah, which is an MLM though, right? That's not a pyramid scheme. No, no, that's not a pyramid scheme. Yeah. But the pyramid scheme is the only way.

Yeah, the only way. That's the key here. Okay. Another question. What's the recruitment incentive structure? So a legit MLM, you get money when sales reps you recruited, sell the product, just like we're talking about. I get you, I recruit you, you now sell product. I get a commission from that. Yep. That's essentially the structure. Yes. With a pyramid scheme, you get money when sales reps you recruited pay membership fees and buy inventory up front. So they're having to spend their own money in order for you to make money versus an MLM, they just need to sell more product and then that's how you make money. Yes.

It's good. It's a fine line, but we are making the distinction of people because we are here for everyone. That's right. I just don't want people to get scammed. And truthfully, I've heard too many stories where people lose tons of money doing this stuff versus make a dime because people get into it because they want some side income. They're trying to pay off debt. They want to save up that emergency fund.

And some people have done that. Like I've gotten lots of people like on Instagram and stuff. few people here that they've taken the time. Of course. Yeah. And they do great. They're great, wonderful people. Yes.

And there's nothing, you know, savory going on there, if you will. But there's a lot of red flags still. So if you're told that real money comes from recruiting people to the team, that's a red flag. Yep. And the last question to ask George is how long has the MLM been around? So a legit MLM, if the products are good and in demand, the company should say in business for a long time. They are reputable. they have a history.

Yeah, all of it. And if pyramid scheme, it's not sustainable, it will collapse on itself like a house of cards when the profit from recruiting fees slows down. Okay. I feel like we just educated the people. That's what we needed. This was our baseline foundation.

Now, I want to get into why do people love to hate MLMs so much, George? Why are you looking to meet? Because you are... I don't enjoy this. I want nothing to do with this. Okay, so... I think the biggest thing is because the way a lot of people try to recruit you and try to get you to buy the product.

Can I give it an aggressive term? Sure. I think it's social suicide to go all in on MLM. And here's why. It makes sense. So I've made the joke that cryptocurrency is just Mary Kay for young men. And it gets a fun laugh, right? We all love it.

But here's why. The people that are in it are obsessed with it and they've sold their souls to this idea. And if you're not in, you just don't get it, Rachel. You just don't get. And I need to cut you out. Because if you don't understand crypto in the blockchain, you just, you're not here to build it. That's the vibe I get from the MLM folks. Yeah.

Yes. They're so obsessed that it's a huge turnoff. Yep. And they lose friends. Yes. Because here, there's probably some great stories here because I'm like, there's, I've seen it done really well. So I have a friend and she has a friend that does a clothing MLM. So she has like parties and stuff.

But it's very up front. It's very like obvious. Like, hey, this is an MLM party with clothes. Come. and if you want to come, you can. There's no pressure, and they have cute clothes. I've bought stuff from them. But, yeah, so, like, it's legit.

Yeah, it's great. And so I'm like, that's great. But then you've been in situations where you don't know you're at a quote-unquote party. It's a sneak attack. And then it's a sneak attack. And I'm like, whoa, you're sending me a, I'm getting a form right now.

I'm getting a form right now. And that's what I don't like it. Yes, I have towards twice. And I feel so used. So what are they say? They say, Rachel, we're having a party. We'd love to have. Have you?

Yeah, yes. There was a wine night. Oh, the classic one. And they had a somnire or what I thought. Samoye? You say somnire? What even is that? Somalier.

Somalia. I'm not fancy. It's a very bogey French word. I've watched the wine documentary. They're wine experts. That's all it is. Say it again. Somalia.

Some. Say it again. A som. A som. I'm going to call it a saum. I'm going to call it a song. It's the wine experts at nice restaurants. So I was thinking like a wine tasting in my head.

And I was like, oh, my gosh, just like a fun girl's night out. And we went. And then at the end, the lady started passing out forms to buy cases of this wine. I was like. Did you buy a case? Literally, no, it turned to the girl next to me. I was like, is this like a, is this like an MLM kind of thing? She was like, yeah, I think so.

And I was like, I was just like me neither. But then the pressure to buy is, I mean, it's there. But I said, no, I really felt. I'm proud of you. I feel very. I'm proud of you. Yes. Because you felt, it felt dirty, didn't it?

Yes, because I'm happy to support people if I know what I'm, like, that I'm supposed to be in it to support them. I'd rather just buy a ticket to your wine tasting. Oh my gosh. So I, and then I had a friend, this is one of the worst ones I thought. And she, so the friend was getting married, okay? Sure. And her friend was like, hey, can I throw you a bridal shower? That's nice. So yep, so you think. So they go. And then at the end of the parties, she like walks them up to a room in her house that was like this entire like shop for the MLM to have all the girls. I think buy the stuff there for the bridal shower. Can you believe that? God bless women. Now, this stuff doesn't happen.

Like, there are some, like, man MLMs, but most of them center around, like, females and female products. So that's why I said love to hate social suicide because you hear these stories and you're like, oh, man. Listen, I would block a bro without hesitation if that happened to me. I'm like, well, didn't need that friend anymore. So here's what these messages sound like. I'm going to attempt it. Hey, hon, I'm launching a new business and really think you should take a look at joining me. Right?

That's the kind of stuff they say. Yes. Let's see your pitch. Hey, George, would you be open to a side hustle that wouldn't interfere with anything that you're doing right now? I mean, that sounds wonderful. Sounds amazing. One of the big things, too, that people love to hate is the over-promising and under-delivering. So MLM reps and consultants will try to hype you on on, like, living your best life.

You're a boss, babe. You can own your own business, like all this stuff. Wow, thank you. So it does make it feel like, oh, I can, like, create my own schedule and do my own thing, which is true. I mean, sure. It's on your terms. It is on your terms. Just like if you're a commissioned salesperson,

hey, it's on your terms. You can make as many calls as you want and make the calls when you want to make them. But it's a lot of hard work. It can be a full-time job. And unless you devote your life to it, is really hard to make money. It is.

So we actually pulled some income disclosure statements. This. Okay, I'm going to let you do it because it just feels, I don't know why. It's facts. Yes. So we're not being mean about it.

No, they legally. all multiple marketing companies. They legally have to disclose their income disclosure statement, which is how much money people actually make doing this. And part of it is because of regulation after all these pyramid schemes and scams and over-promising. You ready for this? Yes.

Okay. Entry level. Let's talk about young living. Very popular one. Entry-level consultants, 64% of their sales force are entry-level consultants. They made an average of $22. Oh, wow.

In 2022. $22. Because majority and because majority of people just kind of get into it that first round and then they stop. And because of the upper cost, like there's a lot of investment. And unless you really know what you're doing, you may not make any money. Yeah. Yeah. Here's the kicker, though, Rachel. One percent.

Only one percent of their brand partners made more than $3,500 on average per year. Oh, wow. Now, $3,500 may sound like a lot of money to you. But if you picked up any part-time job at any. retailer or any hospitality job, you would make way more than that. Way more than that for the time you put into it. Yes. Let's move on to Arbonne.

Okay. It's a family favorite, right? 61% of their sales force, their entry-level consultants, made an average of $194 in 2021. Again, that's pennies. Only 4% made more than $10,000 per year on average. That's pretty shocking. A small percentage, yeah. Beauty counter.

Entry-level consultants, which makes up set. 71% of their sales force made an average of $41 a month in 2021. So we're talking less than $500 a year. $500, yeah. Only 4% made more than $10K a year. And that's on top of the $50 enrollment kit, the new brand advocates that spend approximately $273 on average at the time of enrollment and a $50 annual fee.

Oh, man. So they're in almost $400 for the fight, yeah. And that's without making a dime. And that's because majority of them, again, they sign up at a party or something. and they don't do anything with it. So that's the majority that's built up, I'm assuming, of the business, right? As people that just think in one afternoon,

I'm going to do it, and then three weeks later, they're not doing more. What's genius about is I go, hey, Rachel, it's $500 to sign up, but you can make great money if you're serious about it. You go, okay, you know, right, 500 bucks.

And then I take your money, and then you go, wait, I'm not making any money. Because I'm not doing it. And I go, well, you're not invested enough, Rachel. Let me coach you. You need to recruit more people. Do you see how it can become, I know, but I do know people that have done it and have made some money.

Let's call out the people that do make incredible money doing this. If you're at the top, you've got a great downline, you can make bank, like high six figures. Yes, because there's people making, yeah, up to over half a million dollars a year. Now, again, that's over a long period of time and a lot of hard work that they go into it. So I don't want to take that from them. It's kind of like our influencer episode that like... Influencers earn every time. Yeah.

But you can't just go pick that up really quickly and make a ton of money to, like, pay off debt. This is devoting your life to it. Yes, that's exactly right. Very different. Okay, but here's my thing. If entrepreneurship is your goal, you could start a small business and probably do better, instead of being an independent contractor, you know. And here's the crazy fact from the FTC, the Federal Trade Commission. It doesn't get more official than that.

Here's their quote, failure and loss rates for MLMs are not comparable with legitimate small businesses, which have been found to be profitable for 39% over the lifetime of the business, whereas less than 1% of MLM participants' profit. Oh, wow. That's pretty crazy. That's pretty nuts. I mean, that's... You've got a 40% chance at success with a small business, a 1% chance at success with MLM.

Some people that think, oh, I want to run my own business, they don't realize all of the things that you have to do to run a business where in MLM you can just plug and play. You know what I mean? Because truthfully, you're not running a business. Yeah. You're 1090. It's like me working for Uber being like, well, I work for a high profile ride share company. I'm like, okay, that's fine. Yeah, totally. I know, I know. I deliver luxury foods. No, you work for Uber Eats. Let's not, let's not, you know, let's not kid ourselves here, Rachel.

Can we talk about, though, this is probably the one that stands out in my mind. Yeah. The luxury cars that you can get. Oh, and you see them. You see them. You know that, that, that, that, that light pink Cadillac. Would you drive a pink Cadillac? It's not for me. No, I don't know if I would. I think that goes without saying that I wouldn't be caught dead driving a pink Cadillac. You know, for these people, if you're driving that pink Cadillac, it's a sign of success. That means you have devoted your life and you are not embarrassed of that pink catap. But a person off the street, it's not like what I would choose to drive. You definitely have like a Mary Kay tattoo if you are driving that pink Cadillac.

It's a lot. Okay, so what's wild about the car is like it's not technically a free car. No. It's not yours. In your mind, you're like, in my head I thought that gets to keep it forever. This isn't prices right. I didn't just donate a Cadillac to Rachel. I thought they got it forever and ever.

But give us the scoop, George. Okay, here's the scoop insider details that you guys listen to this show for. Every time you see that car. So obviously, you have to meet a certain sales tier in the company to qualify. You have to be crushing it. Then the car itself has to be purchased and leased in your name. Which, if you've been around Ramsey, you know how we feel about leasing cars. We don't.

care for it. Not a fan. No. Of course, it has to be pink. It has to have the low, it's got to be wrapped a certain way. I'm sure they do all that, right? Oh, yeah, yeah, yeah. Yeah.

But I'm just saying you don't get to choose the color. No. You better love pink. Which, by the way, would you drive a Ramsey branded car? I think I would. I don't know. I would do it. If it was tasteful, I would do it.

I don't know if I could. What if it had your face on it? No. If it was your face on the car. I always felt weird. Like, when we used to do book tours, you'd put the book on the side, and your book always had your face on it. And I always felt weird about that. But I was like, oh, it's for three weeks of my life for a purpose.

Sure. But just for the heck of it, like, driving downtown to dinner, I don't, I don't even. If Dave was like, hey, extra grand a month, if you got the R logo, I'd be like, yeah, I'm in. You know, I'll represent. I'm honored to represent. I mean, $12,000 a year, sure. Right? Okay.

Sure. It depends on how big it is. If you agree to all those terms, you're crushing it on the sales side. You agreed to the right color, all the MLM logo displayed in the right places, it's a lease in your name. Then the MLM will give you cash payments to pay the lease. So that's fair. Essentially, that's a cash bonus. So let's say the lease is $500 a month.

They're essentially giving you $6,000 a year to pay this lease. Yeah, yeah, okay. Here's the kicker, though. You have to hit your quota and stay at the same level in the company to receive those payments, which means if you don't, if you take a dip in sales, if you have a bad month. Are you stuck with a lease car in your name? Talk with the lease payments because it's in your name. And, by the way, those payments counts as income.

So you have to pay taxes on that. They're also on the hook for car insurance. And the insurance they pay through Mary Kay is almost always higher than what they would qualify for outside of that. Oh, wow. They own the insurance, too. Is you responsible for the payments? If something happens, you don't keep up. And so here's what happens.

Consultants end up scrambling to make sales to keep their quota. no one wants to be in the hook. Yeah. Which just helps Mary Kay. Because then you're staying there. You're stuck there. It's golden handcuffs. Oh, man.

So it's chains shackling you to Mary Kay more than it is a beautiful gift from Bob Barker on the Price is right. That's all I'm saying. That's the end of it. Oh. I'm glad we got to the bottom of that. I didn't know that, though. I didn't know any of that.

You can Google it. You can figure it out. People choose not to, Rachel. That's all I'm saying. Choose to live with their head. I have just chosen to spill it. There you go. You're a great de-spiller, George.

We're not done yet. But wait, there's more. Another reason people love to hate it is the manipulative tactics. That's right. Which we kind of already talked about here. But we read the story on BuzzFeed that one woman faked a flat tire in Target parking lot. And when people came to help her, she pitched them. They're her MLM.

That's genius. I'm going to like fake a hard to. attack in public and be like, oh my gosh, thank you. By the way, are you interested in making some money as a sidehouse? And this happened to me in Target. I think I've shared this story. Remember this happened to Jordan? This happened to Lindsay's husband.

Oh, yes, who talked about this. But the guy in Target stops me in the aisle, complements my glasses, asks where I work, who tells me I'm a sharp guy. You think I wouldn't fall for it. Now, I was way more, I had my spidey senses were tingling, Rachel. You knew. They were tingling. And he goes, oh, I actually go to church with David.

I saw his grandson get baptized. Hey, are you interested in? doing I this is a fortune 500 company and I soon as I said well what's the name of it and he was hesitant to tell me and I went oh cool thanks I'll look into it googled it it's an MLM oh man and I yeah I know and that's my hard thing you guys is I'm like I'm not mad at them because I think some people do it really well they do it really classy and really well and it's great stuff yes and then again I have a lot of friends that do it and they're not manipulative and they're wonderful people who just want to share how a product has helped them those people who

People are great. So we found this one that apparently you can use this when a potential new recruit says that her husband doesn't want her to join. So they have scripts based on objections. They have scripts, yeah. Which is, you know, that's pretty normal in the sales world. Sure. Yeah, yeah, that's fair.

So let's not bash sales scripts. But this is an especially strange tactic. This is if the hubby says no, you say. Just by the way, can we just call out that just saying the word hubby makes me have a little acid reflux. I don't like it. I don't like it at all. It's what it says on the script.

If you refer to your husband as hubby to another person, you are not okay. I need to ask hubby. No, you need counseling, hon. Sweetie, honey. What do you call Winston in public, like to another friend? Winston. But I call him Babe, like, at home. Like, if I'm, like, call him, like, his name, I'm like, hey, babe.

That's normal. That's, like, our, like. But in front of friends, you'd never be like, hey, hubby said no. No, what did you, what do you call Whitney? Do you all have, like, a? Yeah. I think Babe. or tiny for some reason is our little nickname for each other?

I don't know where it came from. Again, I don't know where this came from, but at one point while we were dating, we started calling each other tiny. And we're both, here's the thing. I don't know if you can tell because the camera makes me look really tall. We're both little people.

She's like 5'3. I'm 5'6 on a good day, full confidence. I just can't believe that you slammed women for saying hubby. I don't do it. But again, we're talking about in. public, Rachel. If I'm talking to you, I'm not going to call my wife anything other than Whitney. Okay. Tiny. You better believe I'm going to pull that one out. Oh, gosh. Whitney's watching this. Like, why would you tell you? Why would you tell them that?

Anyways, you want to read the script? I'll read it. Do it in the accent, though. There's an accent. What? There's an accent. Just like the girl accent. Like the Valley Girl, like, yeah. I totally get your concern as far as putting money into something and not getting your money back trust me. And I definitely understand wanting to get the opinion of others to make sure that you're making the best decision for you. But why would you want other people's opinions on something that they know, they don't have any idea on what it is? I wouldn't ask my cashier at the grocery store how to do open heart surgery, you know? I know you're nervous. I promise you, sis. We all just, we all felt like that. But I will be here with you every step of the way to show you

how to be successful. What a journey we just went on. It's so badly, like I want to be at Publix tonight and be like, hey, can you help me with open heart surgery? Because that's a common scenario we've always found ourselves in. There's an emergency open heart surgery that needs to happen in a Publix. And I'm like, hey, sis, calm down. Calm down.

So ethical sales tactics are important. Yes. In MLM. Yep. And I just don't like that predatory. manipulative behavior. I get it, George. I know, but sometimes...

Do you admire the boldness and tenacity of it? Again, if you do it with class, I think there's a time and a place for it. Okay, so if you're asking yourself, should I join one? Here are some things to think about, okay? You want to love the products that the company is selling.

I think that's a huge thing. Like, really, if the vitamins you love or the hair product you love, the makeup, whatever it is, like if you really do love it, that's great. Also, you need to love it. of sales and recruiting. Because that's how you're going to make the big bucks, truly.

If you have people under you selling the product too, that's honestly where a lot of the money comes. Also, you need super thick skin. Yes. Because you're probably going to get a lot of nose. A lot of rejection. There's probably a lot of rejection in this world. And here's the worry with that.

There's a lot of alienation and isolation that happens in this world because when you are rejected from friends and family, you're kind of told to just, hey, cut them off. They don't get it. You need to be around people who get it. all places, George. That's a tactic that is used. That's a cult.

People, MLMs do not do that. Stop. And what I'm telling you is there's some cult-like behavior happening in some of these MLMs. Okay, the ones that I know of friends that have done it, if I say no, they're not like, oh my gosh, you're not buying my Stella and Dot jewelry, we're not friends. No. I saw. No.

Can I just tell you? So there is a, there is a subreddit called anti-MLM. 800,000 subscribers, people sharing their stories. of being affected by this, being anyone getting out. Can I just read this headline to you? This will blow your mind, Rachel. I'm kind of nervous to tell you. My grandparents are cutting everyone out of their will if they don't sell Shakley.

Stop it. For real. They're saying that Shakley is our legacy and there's no inheritance for anyone who won't join up. That is a real post. No. No. George. So that's that.

Wow. So I'm not saying that happened like. A lot of people don't destroy relationships, but a lot of times you end up who's your community at the end of the day. It's the other people in your upline, your downline, who you're coaching, and you lose real friends because you are so laser-focused. It's hurt marriages. Oh, my gosh. Think about it. Okay, so you need thick skin.

George is here to do the therapy for you. That's one way to put it. And last but not least, I would say, are you financially and emotionally in it for the long haul? Because that's how you make the money. You got to be in it for a while. If you need money quickly, just go work. your local Walmart or Target or wait-tapers? Or Uber.

Yeah, Uber. But this is not quick money. Yeah, this is, if you're in it for the long haul, then you can make some great money. So if you answered yes to some of those, it might be a great option for you. Thank you for being reasonable. Okay, George, we got done with it. I got just, the whole thing was just like, I was just very nervous. So a listener shared a story with me, and I just feel like I have to tell you.

Can I just tell you a quick? Here's the thing. Yeah. It's real quick. Here's what it is. They shared with me that they've been a part of seven MLMs. In every single one, between the startup costs and the personal investment, having to buy inventory, they lost money on every single one. Now, say what you will about this person. I counted up how much they've lost.

Their net loss. After all the money they've made and all the money they spent, they have a net loss of almost $15,000. No. Between seven MLMs. No. And I will leave it at that. But here's what I'd say to that person. Love you, friend.

And I bet you're great. But after the third, just say no. Yes. Yes. Agreed. Because obviously you're not great at recruit. Like, you're not great at selling. It's not for everyone.

It's a certain skill set. But that is really sad. And I know people that have tried to start a new business on their own and they lost money. Everyone thinks they're going to be the 1%, the top 4%. And they're not. They're the 96. They're the 99%. I know.

So we're just giving you the facts. That's just the facts, ma'am. This was a very dicey episode. My soapbox is over. Please don't come after me. I love you all, including the MLMers. I do too. And the products can be great.

And it's great. Don't pitch it to me. I will block you. Oh my gosh. God bless. Well, since we're almost at the end of the episode, George, we close out every episode with Guilty as Charged, where our producer Lindsay gives us a new guilty as charged question every week.

All right. Hit us. Have you ever taken credit for? something you didn't do. Oh, wow. Deep. I mean, I'm sure in life, I really try not to, especially here at work with our roles. We have so many people that help us on every single thing.

So I really do. I'm like, I never want people to think it's like, oh, you're just doing your job. Rachel's so amazing. I'm like, you have no idea the team that like. I mean, if you spin the cameras around, there's 17 people that make this happen. I know. So the old, I try not to. But I mean, I'm sure there's been a thing in my.

my day. I think when I was younger, I was more apt to try to take credit. But as I've gotten older, more mature, more wise, I'm more likely to give away the credit and accept the blame. So basically, we are all perfect. We are both so perfect. By the way, group projects, 100%. I'd take some credit. We know that both of you've totally taken credit. Yeah, group projects. And early on in my career, I was probably more likely to think, well, technically that was kind of my idea. Like, you kind of want to own it in the meeting because you're trying to like, you know, make your name for yourself and trying to, like, improve your career. and get promoted and all those things.

So you're likely justifying why the success was you're doing. It was so great. Mm-hmm. Which is an unhealthy tactic. Don't do it. Don't do that. Don't do that. Have you done it, Lindsay?

Oh, I'm sure. Do it right now. Take credit for this episode. Take credit for this entire podcast. Yep, MLMs. No, I don't think any of us, like, shows this episode. This was like, I have to do this for America. I'm doing this.

I actually feel like this was probably your- George was. bought for because I'm very passionate. George was really passionate. Oh my gosh. So if you have a new guiltiest charge question, make sure to DM us at Rachel Cruz and at George came with a K on social. And who finished?

You killed it. I'm much closer. Thank you. It just wasn't my favorite, George. You know, it's settled in once I got used to it. Really? Okay, so this is the aviation. A beautiful, it's got a nice lavender hue with a little, what are those called?

A lemon rind. A lemon twist is what I say. That's right. Lemon twist. Correct. Here's what is in the aviation. It's got gin, luxardo, cream de valet. That's the purple stuff. And lemon juice. It's delicious and it costs $4.11 per drink. Oh my gosh, expensive. It's pricier because you've got to get the luxardo, which is like the, you know, cherry liqueur. Yeah, I guess so. But if you want the recipe. How would you rate it? No, your favorite. Four.

Wow. I was going to give it a six. If you like a gin forward drink I just wasn't in the mood I wasn't in the mood for a cocktail right now If I were to be honest So maybe that's why too I wasn't going in like It was unfair

I wasn't going in with like Oh I can't wait Someone from Instagram sent me this recommendation And I was like that sounds nice It's the prettiest drink we've ever had probably 100% I think it's great So if you want to find the recipe

You can find that in the show notes I'm going to give it a six out of ten Rachel gives it a four out of ten Try at your own demise And peril Whatever you feel like Carol. There's danger. Okay, and something really exciting, George, before we close everything out, is your new YouTube channel, which is so great, you guys.

So make sure go search George Camel on YouTube, subscribe, get those numbers high because you're spreading truth. I need them. I need all the validation I can get, Rachel. All across the world, George. You are spread in hope and information. I'm trying. And we'll put the link in the show notes as well, the YouTube description, but it's a personal finance YouTube channel. a lot of stuff we talk about here, but deep dives in just me and my own self without the great Rachel Cruz. But I think people who like this podcast and show will like that. They're going to love it. Thank you.

Well, guys, we'll see you next Thursday on a new episode of Smart Money Happy Hour. Lemon.