Get Task & Purpose in your inbox
The Truth About Multi-Level Marketing Businesses And How They Hurt Military Members
Direct-sales businesses are prevalent in military communities, as military spouses and even some service members try to either launch full-time jobs or just make some extra cash on the side. These sorts of businesses raked in nearly $36 billion in sales in 2015 and have become so prevalent on military bases that one Duffel Blog, a military humor site, referred to the small army of scented-candle and oil-sales representatives as “SCENTCOM”.
Direct-sales businesses — often referred to as multi-level marketing businesses — have been around for decades, ever since companies like Avon and Tupperware recruited employees to sell their products in exchange for a small commission on each sales. They are often conflated with pyramid schemes, although there is an important legal distinction between the two. Pyramid schemes (which are illegal) gain the majority of their revenue from the recruitment of new members, while multi-level marketing businesses receive the majority of their money from the sales to external consumers — as do most legitimate businesses. That said, it can be difficult for outsiders to differentiate between legitimate multi-level businesses and pyramid schemes. Since 1996, 26 multi-level marketing businesses have been charged by the Federal Trade Commission for operating as a pyramid scheme, alleging that these businesses were less than forthcoming about the potential earnings for those who participate in them. Of those 26 businesses, each was either found guilty or was forced to settle out of court.
I spoke to several people who worked for multi-level marketing business, and some did indeed make money, including one person who made a killing selling sex toys to the spouses of a deploying Army brigade. But these are the exceptions rather than the rule. According to a study hosted on the FTC’s website of nearly 350 direct-sales companies, roughly 99% of employees lose money after accounting for overhead costs, inventory, and other fees.
Just take a look at some of the direct-sales businesses popular in military communities. Around 86% of active “designers” at Origami Owl make an average annual income of less than $250 (not including expenses) per year selling jewelry, according to the company’s financial disclosure statement. Selling wickless candles for Scentsy? You’ll need to work for an average of four years to gain “Star” consultant status, with average annual earnings of just $1,300 per year (not counting expenses) — or roughly three and a half hours per week at minimum wage for one year to earn the same annual income.
One researcher who spoke to me studied the spread of these businesses, comparing them to viral epidemics. Military communities are tight-knit and can be isolated from the rest of American society at large. Military communities also represent a giant, untapped labor pool for multi-level marketing companies. Although military spouses are better educated than their civilian counterparts, according to a 2015 RAND study, they face high levels of unemployment as well as under-employment, with nearly half of all military spouses claiming they were over-qualified for their current or most recent jobs in terms of education level. Many military spouses cited difficulties finding jobs due to frequent moves — generally every two to three years — and the perception that employers would not want to hire military spouses. Not to mention, many military spouses may find themselves stationed overseas where costs of living are high, yet there are few job opportunities either on base or in the surrounding communities. Military spouses face further employment challenges, especially considering they are more likely to have children than their civilian counterparts and may have to act as a single parent for months at a time due to long deployments.
That said, when polled, many military spouses still felt a strong desire to work. But surprisingly, only around half of those polled said they wanted to do so to generate income — over 90% of military spouses said they wanted to work for personal fulfillment. Underemployment and a desire for fulfillment drives many military spouses toward direct-sales businesses. One blog catering to the military community touted the benefits of direct-sales businesses, claiming they “fulfill a need.”
Many in the military community reported being bombarded with requests to participate in multi-level marketing businesses schemes or attend parties selling products upon arriving at a new duty station, often feeling pressure to do so in order to fit in and make new friends. Even service members aren’t immune. I was personally approached several times by members of a multi-level marketing firm specializing in energy drinks named Quixtar — I even knew a fellow service member who was roped into the scheme. Quixtar, a subsidiary of Amway, was eventually sued for operating a pyramid scheme, settling out of court for $56 million.
Can anything be done to prevent service members from losing money to these types of predatory businesses? Yes.
For decades, payday lenders and shady car dealerships preyed on young service members, offering loans with exorbitant interest rates. Making matters worse was that payday lenders had plenty of political backing — millions of dollars in campaign contributions and lobbying. But Congress eventually passed a series of provisions, which, although far from perfect, limited the amount of money payday lenders could charge service members. Since then, the Consumer Financial Protection Bureau designated Holly Petraeus to spearhead efforts to protect service members and their families from future scams. Service members and their families might benefit from similar oversight to curb losses from multi-level marketing businesses by requiring companies to buy back unused stock should participants not be able to sell it. Military life makes service members and their families vulnerable to certain unique financial threats — consumer protection agencies should continue to assist military service members and their families.
Finally, more must be done by both the Pentagon and private industry to address the underlying issue which makes predatory businesses so prevalent on military bases: high unemployment rates among military spouses. Although there has been great progress in reducing unemployment among post-9/11 veterans, both public and private-sector agencies should now focus on providing America’s military spouses with meaningful employment by partnering with agencies like Hiring Our Heroes or other such programs.
Until then, just keep deleting those invites.
Benjamin Franklin nailed it when he said, "Fatigue is the best pillow." True story, Benny. There's nothing like pushing your body so far past exhaustion that you'd willingly, even longingly, take a nap on a concrete slab.
And no one knows that better than military service members and we have the pictures to prove it.
A special operations Marine is due in court on March 7 after being arrested last year for allegedly assaulting his girlfriend, Task & Purpose has learned.
Staff Sgt. Daniel Christopher Evans was arrested and charged with assault inflicting serious injury on July 29, 2018, according to Jennifer Dandron, a spokeswoman for police in Wilmington, North Carolina. Evans is currently assigned as a Critical Skills Operator with the 2nd Marine Raider Battalion at Camp Lejeune, North Carolina, according to the Marine Corps Personnel Locator.
Following Trump's inauguration, some supporters of ground combat integration assumed he would quickly move to reinstate a ban on women in jobs like the infantry. When this did not happen, advocates breathed a collective sigh of relief, and hundreds of qualified women charted a course in history by entering the newly opened occupational fields.
So earlier this week when the Wall Street Journal published an editorial against women in ground combat by conservative political commentator Heather Mac Donald, the inclination of many ground combat integration supporters was to dismiss it outright. But given Trump's proclivity to make knee jerk policy decisions in response to falling approval ratings and the court's tradition of deference to the military when it comes to policies affecting good order and discipline, it would be unwise to assume the 2016 lifting of the ban on women in ground combat is a done deal.
R. Lee Ermey was laid to rest at Arlington National Cemetery on Friday.
Best known for his iconic role as the Marine Corps drill instructor Gunnery Sgt. Hartman in the war drama Full Metal Jacket, Ermey died April 15, 2018 at age 74 due to complications from pneumonia, Task & Purpose previously reported.
The U.S. Air Force has two of its most elite aircraft — the B-2 Spirit bomber and the F-22 Raptor — training together in the Pacific, reassuring America's allies and sending a warning to strategic competitors and adversaries about the sheer power the U.S. brings to the table.
These stunning photos show the powerful aircraft tearing across the Pacific, where the U.S. has increasingly found itself facing challenges from a rising China.