Proof that 99% Lose Money in MLM

Robert FitzPatrick of Pyramid Scheme Alert has conducted extensive research on multi-level marketing companies (MLMs). The research can be difficult with companies like Mary Kay, which are privately owned and therefore don’t release hardly any information about the dismal earnings of the sales force. (Who would want to admit the financial truth unless forced to? And don’t you think that if consultants were doing so well in Mary Kay across the board, that the company would be out there touting these statistics left and right?)

On the other hand, certain companies using MLM models that are similar to Mary Kay’s way of doing business, have released public information about their representatives. Robert studied figures for Amway (Quixtar), Nuskin, Nikken, Melaleuca, Reliv, Arbonne, Free Life International and The study is a bit old, but it’s still valid and the findings are very important.

From his research, Robert compiled figures on a “per 10,000 representatives” basis for each company, in order to allow comparisons to be made between the companies. This research has revealed that 99% of sales representatives in these MLM companies suffer significant financial losses. The research further revealed that on average, no net income is earned by MLM distributors from door-to-door retail sales (direct selling of products).

The research was complicated ever so slightly by the fact that the MLMs generally report figures for only active participants. Naturally, this excludes all participants from throughout the year who may have also failed. Robert determined that if all participants over a five-year period were to be included in the calculations of earnings, the failure rates would be even more devastating.

The success stories in MLM systems lie within a very small group of people, positioned year-after-year on the type of the pyramid. Those people with high earnings are included in a company’s figures each year, while “failures” from years past aren’t reflected in the current year’s statistics.

Here are some of Robert’s general comments on MLM, based upon his years of research into multi-level marketing and direct sales companies:

  • Another element of maintaining the MLM myth of legitimacy and a viable income opportunity is based on the claim that, regardless how it operates, MLM is still “legal.” As a legal enterprise, “success” in the business is then said to be the result of “hard work” and “following the system” recommended by the organizers — as would occur in legal businesses. Failure rates and financial losses among those recruited into MLM — regardless of their scale — are then treated as an outcome of normal business risks and markets forces or the fault of the individuals who lose.
  • The big numbers, which are cited by the scheme’s promoter as providing “extraordinary income potential,” are based on overrides from the deepest level of the “downline.” Only a tiny few can ever recruit to this level. This is mathematically predetermined from the start by the MLM structure and pay plan. The pay plan itself dooms the vast majority to financial losses, not factors of “hard work” or “following the plan.”
  • The trick of the scheme is to cover up this reality and to convince each and every enrollee that he/she can succeed by building this large and deep downline. Recruits are told that the program is a formula for wealth that “anyone can do.”
  • Though virtually none of the “sales representatives” ever earns a profit or has any “customers,” a pyramid scheme can be made to appear as a “sales company.” This is because each new recruit makes a purchase of products and the commissions are all based on the purchases of products by other recruits. There may be virtually no end-users, just a long chain of “distributors.”
  • Such a scheme can never stop recruiting. It can never stabilize since it has no true customer base. For as long as the scheme operates and expands, the opportunity for recruiting declines, thereby further reducing the opportunity for income. Profit in such a scheme is not true profit but only a transfer of money from the latest recruits to the earlier ones.
  • Yet, the laundering of money through product purchases can camouflage the entire operation as a “sales company” based on “products” — not fees. The product sales in a recruitment scheme are induced by the false promises of income tied to ongoing inventory purchases. No purchase may be required to join the scheme, but monthly purchases are required to “qualify” for the unlimited income” opportunity.
  • Even as millions of consumers are solicited into MLM and then quit after losing money, most do not understand why they lost. They are shown the luxurious lifestyles of the top promoters and are told that “anyone can do it.” The promoters convince them that they personally “failed” and that it was “their own fault.” Most have no idea of the sheer scale of people joining, losing and then quitting. They are led to believe that they are unusual in their “failure.” Consequently, they not only do not complain to the government authorities but they do not even warn friends or relatives to stay out of MLM. Shame and disappointment are covered up with silence. The recruitment program continues largely unabated.
  • As has been previously illustrated, the massive failure rates among those who invest in MLMs have almost nothing to do with the individual recruit. These multi-billion-dollar consumer losses are due to the pyramid business model. Retailing is unfeasible and the recruitment-based income plan is designed so that most will lose. It cannot be otherwise. For a few to win, basic mathematics requires all others to lose. “Anyone” cannot do it.

And here are some of the numbers that come out of Patrick’s research in this study:

  • A statistical review of twenty-one (21) MLM companies representing 5 million sales people and “projected” retail sales of $10 billion reveals that even if retail sales are assumed to be occurring, the average MLM sales person is not earning a net profit from retail sales.
  • Yet, even using the MLM industry’s own restrictive method of accounting, analysis of available data reveals that more than 99% of all “active” consumers who invest money and time in multilevel marketing never earn a profit. Some lose hundreds, others thousands of dollars.
  • MLM companies sought to make the figures appear more favorable by limiting the calculations only to the sales representatives who stay “active” for a year, or only counting those that are active during one selected month or several months.
  • The income numbers are not “profits.” The costs of doing business (buying inventory, car expenses, phone charges, purchase of marketing materials, training seminars, etc.) are not deducted, nor are taxes. Actual net income, where any exists, would be much lower than the numbers presented.
  • A review of the payouts of six of the larger and best-known multi-level marketing companies and one other more recently formed MLM reveals that more than 99% of all distributors do not earn a profit from company rebates [commissions].
  • The actual retail sales levels of the vast majority of MLMs is exemplified by Amway/Quixtar, the oldest and largest of all multi-level marketing companies. Amway was compelled by government order to provide its retail sales data. It disclosed that less than 20% of its products are purchased by anyone other than its own sales representatives.

So there you have it. Almost none of the participants in MLMs are making a profit from product sales. Almost none of the participants in MLMs are making a profit from commissions. If you read the actual report, you may be sickened at the grossly huge amounts of income paid to a teeny-tiny fraction of one percent at the top of the pyramid. It’s sick. Really.

Especially when you again consider that those at the top aren’t really making profits, they are just being paid money by the lower levels of the pyramid. Those lower level people are paying their money for an opportunity to potentially be at the top some day. Some may say they’re paying money in return for products that they could/should sell at a profit, however the fact is that almost no one turns a profit from product sales. So they are in essence just paying money to the pyramid-toppers.

Probably the most common argument I hear against these facts is “Mary Kay is different”. NEWSFLASH! Mary Kay is not different from the companies in the study. Mary Kay bases its business on the exact same chain of endless recruitment, minimal retail sales, and loading new recruits with inventory packages.

MLM is MLM is MLM… You can dress it up and give things different names, but it’s all the same scam. And that, my folks, is why nearly everyone who participates in Mary Kay loses money. Anyone who can’t see Mary Kay written all over the above research has her eyes closed.


  1. I had to learn the “hard way” that my MK “business” was not making me & my family any money. And by hard way, I mean with a pink 2 x 4 upside the head. It could have been magenta, I’m not sure.

    I lost money or barely broke even during the duration of my “business.” I did the things, saw the faces, followed the directions. I’m a good little rule/direction follower (it’s almost a problem how honest, naive, & gullible I am. A problem for myself and my family. That sounds tacky and self-absorbed, but I have no other descriptors in our American English language to define my characteristics, at least nothing that comes to mind on a Friday morning.)

    I’m sharing to help my healing, and also, to perhaps someone else leave the pink fog.

    It was filing tax returns that flipped one light switch. Several years’ worth, as I had been married to a semi-psychopath who wouldn’t participate in getting the taxes done (see previous part of the post where I mention how gullible & naive I am – I thought he really loved me & cared for me & my children.) Even before this toxic marriage, I wasn’t making money with MK but it “allowed me to be with my kids,” yeah ok, and have a lifestyle at basically the poverty level. But it looked good and I got lots of props from the world around me. It wasn’t more than Visa & Mastercard could handle. They were always there for me, ready to help me finish that goal. Like I said, it looked good. I lived a lie! I could feel in my bones it wasn’t right, but I didn’t know what was WRONG. Does that make sense??

    I’ll come back to finish my thoughts. I’ve got to. PT is like my online journal now. I’ve got to get us up and out the door for Friday – I’m a teacher, and I really love my work. The school district “doesn’t give me a free car,” … but, neither does MK!!

    • I’m glad you’ve been sharing your story here, Intrigue. All the analysis and rhetoric in the world doesn’t carry the same impact as the stories of someone who’s been there and done that. Don’t feel bad about your personality traits – being honest and trusting are good traits to have, and the shame belongs with the scammers who exploit the good qualities of people.

      And thanks for teaching. Being able to break information down into chunks that someone else can process without sounding superior or condescending is a real talent. A few years ago I taught a crochet class and it was maddening. I’ve been crocheting for 40+ years but I had no clue about the best way to explain the very basic basics to beginners. The class somehow went well and the people in it gave me good reviews, but never again. I certainly couldn’t stand in front of a crowd and pull it off day after day.

      • @Popinki, I really enjoy teaching. Right now I teach reading to K-3 as a Title I reading teacher. There’s an interesting situation developing in education. I’ve been a teacher for over 20 years. I’ve always felt like the way we “teach” reading really wasn’t working. Clearly it’s not, just take a look at the statistics on literacy in the USA. I’ve been uncomfortable with the curriculum, lack of curriculum, the “science,” and such this entire time, but who was I to say something??? It might have cost me my employment (but I had MK to fall back on!! What was I afraid of?😆)Billions of dollars are spent on education. What would a little podunk South Dakota teacher know?? Well, a lot, it turns out.

        I think our society is slowly waking up. We are sleeping lions. 💤 🦁

    • @Intrigue I am really appreciating all of your posts. Thank you.

      When you were an active MLMer, what thoughts would you have had about today’s article? Had you ever come across this information? Or, even if you had not, could you tell us what you might’ve thought in your previous mindset?

      Is there any particular part that just doesn’t/didn’t register?

      • @Char, I love these questions. I was taught from early on that “MK is not an MLM,” so I would have glossed over this article and been like, well, sucks to suck, glad I’m in direct sales and not MLM! 😆🫠

        That’s how good the programming was. I was 💯 on board the MK was “different” and wouldn’t have considered this static.

        Thanks for the words of encouragement!

  2. No MLM downline can be profitable as a whole. This is the smoking gun that proves the validity of the research presented today. If this were a true business opportunity, it would be possible for everyone involved to make positive money (like in real businesses).

  3. 5 million sales people and “projected” retail sales of $10 billion = $2000 annual sales per participant if the retail sales pie is divided equally. Minus the cost of product and expenses, it’s going to be way less as spendable income.
    That pie does NOT EXPAND: for every person who sells $50K there will be a bunch who sell LESS than $2K.

  4. On the monthly sales requirements:
    If Mary Kay was truly YOUR business and a “dual marketing company” then you as the business owner should be able to purchase product at a discount and sell to consumers at a profit. While MK doesn’t have a monthly requirement if you want any discount on product you have to purchase $450 retail in one order for a 50% discount. A couple of months go by and you have to do it again to get the 50% discount. Too bad if you only need to buy a couple of mascaras and a lipstick color you don’t have. You can order those items but no discount-add shipping and tax and you have lost money. So the whole 50% discount/profit is deceptive. A consultant could have a full inventory and still not have what a customer wants, that one lipstick you don’t have in stock. So fork out $450 retail to get what your customer wants meanwhile sitting on $7,000 with of product. That is why consultants buy from each other which is a big no no in MK. Sorry for rambling.

    • @SpunSilk and this is exactly what happens – like the eyeliners that have been backordered since fall 2023. The manufacturer of this product just up and closed shop at the end of September (I thought MK made them all in-house?? that’s what they boast!) I’m sure there is more to the story. Meanwhile, there is no fill in product for the eye liners or lip liners. And of course these are a popular product. But, as you mentioned, oh, you’ve got every mascara on hand except THAT mascara – thus begins the chase down of that mascara from another consultant (ssshhh don’t tell anyone!), or order it from the company and pay $14.95!!!! to have it shipped to myself, but you can’t have a direct ship ordered even mailed to the same address as where you live – example – I am in an apartment building and had a customer here in the building order, and I wanted to direct ship it to her, but I could NOT because MK thought I was direct shipping it to myself – so then what?? pick a dummy address and ship it there and collect it there and then hand deliver it to the customer?? or spend $14.95 to ship it to myself?? Fortunately, it all worked out because the individual that wanted product turned out to be a nut job who didn’t even pay for the product; the problem solved itself. But situations like this are a dime a dozen at least! And I just “figured it out” year after year after year. LOL ok rant discontinued, just like Limited Edition MK products 😀

  5. “‘Anyone’ cannot do it.”

    ^^ This right here is the warning flag so many of us missed, and so many continue to miss. Numbers don’t lie, and the house ALWAYS wins.


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