Jan 27, 2024 - Economy

How MLMs are poisoning the media

Illustration of a megaphone wearing a pair of Groucho Marx glasses

Illustration: Sarah Grillo/Axios

On U.S. social media, false and harmful posts from connections shilling the dubious products of multi-level marketing (MLM) companies have become inescapable.

Why it matters: Trust in media is descending to unprecedented depths — and social media increasingly is media. News is not a distinct category any more, so much as it's a single ingredient in a wide-ranging and often highly toxic stew of highly disparate posts.

  • When a large part of Americans' media consumption comprises untrustworthy posts from MLM shillers, that alone is likely to poison the entire pot.

The big picture: Facebook, TikTok, Snap and other social networks find it easy to sell advertising slots to businesses for hundreds of billions of dollars per year because those ads more than pay for themselves.

  • Alongside the ads appear "native" posts from friends, colleagues, relations, and others — people we know and trust.
  • Since the pandemic, those posts and DMs have been home to an ever-increasing barrage of MLM sales pitches, a huge number of them illegal.
  • Even before the pandemic, roughly half of Americans said they felt inundated by MLM sales pitches — and 51% said they've spent too much on MLM products.

Between the lines: If you're not nodding with recognition, you're an outlier.

  • The phenomenon is underreported, explains MLM expert Robert FitzPatrick, because "journalists are the least affected people."
  • After all, the main thing that MLM sellers do isn't selling so much as recruiting — they hire other people to sign up to become sellers. And skeptical journalists, by their nature, are extremely unlikely to sign up for anything involving selling a product, especially if doing so involves lying about its effects.

How it works: In a comprehensive new paper, Alexandra Roberts, of Northeastern Law School, lays out the multitude of laws, rules, and contracts that are violated by most such posts — the FTC Act; state consumer protection statutes; the Food Drug and Cosmetic Act; the Lanham Act; the social media sites' terms of service; and even the sellers' own contracts with the MLM companies themselves, which are carefully designed to blame the victims rather than the corporations who are profiting.

  • In her own survey, Roberts found that more than 40% of sellers were unaware of any laws they might be breaking — and most of the rest were quite capable of coming up with reasons why they failed to comply with marketing restrictions.
  • "Less than 1% of sellers actually make money from this work," Roberts tells Axios, "so when they make false claims they're exposing themselves to a lot of liability for no payoff."

What we're watching: Roberts makes the case that the only way to de-poison the well is to ensure that MLMs can no longer "run on free advertising and consumer deception" — including by ensuring they're held liable for all false claims made by sellers on their behalf.

The bottom line: So long as the MLM industry continues in its current form, the broad national discourse — which is to say our social media feeds — will remain badly contaminated and untrustworthy.

  • Roberts tells Axios that we naturally trust our friends more than we trust corporations and news outlets. When our trust in our friends erodes, that has knock-on effects for our trust in everything else.
  • We're already seeing the implications for the news media and for democracy itself.
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