By Jessica I. Marschall, CPA
February 9th, 2025
For 25 years, I have worked as a CPA, reviewing tax returns and financial statements for clients in a wide range of industries. One recurring theme I have noticed is the financial failure of Multi-Level Marketing (MLM) participants—particularly among women, including stay-at-home moms. While MLMs promise financial independence, flexible schedules, and unlimited income potential, the reality is far grimmer: most participants lose money or earn so little that their involvement becomes a financial burden rather than an opportunity.
The Numbers: Do People Actually Make Money in MLMs?
The Federal Trade Commission (FTC) and Consumer Awareness Institute have conducted extensive research into MLMs. The data shows that:
- 99% of MLM participants lose money after expenses. (FTC)
- Only 0.4% of MLM participants earn over $100,000 annually before expenses. (Consumer Awareness Institute)
- The median annual income for an MLM participant is $2,400 before expenses. (AARP Foundation, 2018)
- A staggering 95% of MLM participants quit within 10 years, compared to 30% of traditional small business owners. (U.S. Small Business Administration)
From my professional experience preparing thousands of tax returns, the vast majority of MLM participants I have encountered are women. About 95% of these women receive 1099s reporting less than $2,000 in commissions for the year. When factoring in expenses—such as buying inventory, attending conferences, shipping costs, and promotional materials—many are paying to be part of the system rather than profiting from it.
My Top MLM Earner—Still Struggling
The highest MLM earner I have ever had as a client was a top-tier leader within her company. She spent an exhausting 60 hours per week managing her team, recruiting new members, and selling products. After accounting for business expenses, inventory, and travel, her net income was just $35,000 for the year. That’s $11 per hour—hardly the financial freedom promised by MLMs.
Why MLMs Target Women—Especially Stay-at-Home Moms
MLMs disproportionately target women—particularly stay-at-home moms—because they market themselves as a solution to financial dependence while promoting a sense of community and empowerment. However, these promises mask high failure rates and exploitative business structures.
- The Emotional Manipulation
Many MLMs present themselves as sisterhoods or female empowerment movements, leveraging emotional appeal rather than business viability. They use phrases like:
- “You’re building a legacy for your children.”
- “We are boss babes supporting each other.”
- “If you didn’t make money, it’s because you didn’t work hard enough.”
2. Financial and Time Burden on Women
Most MLMs require their members to:
- Buy inventory upfront to remain “active”
- Host online parties, create social media content, and attend events
- Recruit friends and family, leading to strained relationships
Most participants invest far more than they make and do not account for their time cost—time they could have spent earning money elsewhere.
MLMs in Utah: The MLM Capital of the U.S.
Utah has the highest concentration of MLM companies in the country. A 2018 AARP study found that Utah has:
- The highest per capita number of MLM participants in the U.S.
- A disproportionate number of women involved in MLMs compared to other states
- A cultural emphasis on stay-at-home motherhood, making MLMs appealing as flexible “side hustles”
Many MLMs—including doTERRA, Nu Skin, Young Living, and USANA—are headquartered in Utah and have deeply ingrained themselves in the culture, particularly within LDS (Mormon) communities. These companies prey on the need for flexible income, community belonging, and personal development while offering little financial return.
The Harsh Reality: MLMs Are Not a Business—They Are a Financial Liability
When analyzing MLMs as a CPA, it becomes clear that they are not viable business models for participants:
- MLMs Are Pyramid Schemes in Disguise
- MLM structures reward recruitment over product sales, meaning the top few earners profit at the expense of the bottom 99%.
- The FTC has investigated and shut down multiple MLMs, including Vemma and BurnLounge, for operating illegal pyramid schemes.
- Expenses Outweigh Earnings
- Participants often fail to account for business expenses such as:
- Inventory purchases
- Event attendance fees
- Marketing materials
- Shipping costs
- After expenses, most MLM sellers operate at a loss.
- The “Hope Strategy” Keeps People Hooked
- MLMs rely on hope marketing—convincing participants that if they just work harder, recruit more, or buy more products, success is around the corner.
- This leads to a sunk-cost fallacy, where participants stay involved to “recoup” their investment, but end up losing more money over time.
The Alternative: Real Financial Freedom
Instead of MLMs, women—especially stay-at-home moms—can explore legitimate, profitable business models, such as:
- Freelancing (writing, bookkeeping, graphic design, engineering, paralegal and legal, finance). Websites such as Upwork connect subcontractors with companies looking to hire non-employee help.
- Remote part-time jobs
- E-commerce (Etsy, Shopify)
- Service-based businesses (tutoring, virtual assistance, social media management)
Final Thoughts
As a CPA with 25 years of experience, I have seen countless women lose money, time, and confidence by joining MLMs. The promise of financial freedom and flexibility is rarely realized, and the predatory nature of MLMs disproportionately impacts women, especially stay-at-home moms.
Before joining an MLM, I encourage women to carefully analyze the financial reality—not just the marketing hype. If an opportunity sounds too good to be true, it probably is. True financial independence doesn’t come from recruiting friends into a system designed for them to fail—it comes from building real, sustainable income streams.
