Diet Culture and Pyramid Schemes: MLMs and Herbalife
Why do diet culture and pyramid schemes go hand in hand? Because the first multi-level marketing company in America sold vitamins. Nutrilite, 1945: alfalfa pills, a booklet claiming they cured cancer, and a compensation plan called The Plan. The FDA raided them within two years, and everything since, from Amway to Herbalife to the girl from high school who wants you to try a shake, is running the same play. In this episode we trace the MLM model from a self-appointed milk evangelist in 1920s China through the Amway ruling that wrote the industry's own rulebook, into Herbalife's unmarked nutrition clubs, the billionaire hedge-fund slap fight, and the $200 million FTC settlement. Kylee explains why the club shake tastes nothing like the one you mix at home, why "supports immune health" is a linguistic dodge invented in 1947, and who gets recruited on purpose. The short version: MLMs and diet culture run on the same loop. You fail, you blame yourself, you buy back in.
- 00:00Hey girl: the DM every woman over 25 has received
- 04:13MLM vs. pyramid scheme, and why the line is thinner than a cheap protein shake
- 08:00Nutrilite, 1945: alfalfa pills, The Plan, and the first downline
- 10:58The FDA raid and the birth of "supports immune health"
- 13:13Amway, the DeVos family, and the 1979 ruling that wrote the rulebook
- 17:58MLMs were influencer marketing before the internet
- 22:19Why pills and powders are the perfect MLM product (hello, DSHEA)
- 28:15Herbalife: Mark Hughes, Formula 1, and an embellished origin story
- 31:32Inside the unmarked nutrition clubs, and why the shake tastes better there
- 40:38Ackman vs. Icahn: the billionaire slap fight
- 41:20The $200 million FTC settlement and the word that wasn't in it
- 44:17Your body is the ad: why weight loss and MLMs are one machine
- 45:30The roll call: AdvoCare, Beachbody, Optavia, Plexus, It Works, Arbonne
- 50:00Positive thinking, Tupperware, Avon, and the feminist history of the party plan
- 55:53Who gets targeted: low-income women, immigrant neighborhoods, ED recovery
- 60:01The independent numbers: who actually makes money
- 61:40Where is the FTC in all this?
- 64:00Bottom line, and how to talk to someone in the downline
- What multi-level marketing is
- MLMs vs. pyramid schemes (and the Koscot test)
- The downline and the auto-ship
- Carl Rehnborg and Nutrilite
- The Plan (1945)
- The 1947 FDA action and "state of non-health"
- Amway and the 1979 FTC rules
- Rich DeVos, Jay Van Andel, and the DeVos family
- Why wellness is the top direct-selling category
- DSHEA and supplement gatekeeping
- Herbalife and Mark Hughes
- Herbalife nutrition clubs
- Undisclosed ingredients in club shakes
- Loaded teas and caffeine
- Bill Ackman, Carl Icahn, and the Herbalife short
- The 2016 FTC v. Herbalife settlement
- AdvoCare, Drew Brees, and the 2019 FTC ruling
- Before-and-after photos as recruitment ads
- Dale Carnegie and Norman Vincent Peale
- Tupperware, Brownie Wise, and Avon
- MLMs and the gig economy
- Targeting of low-income women and immigrant neighborhoods
- MLM recruitment in eating disorder recovery
- AARP and FTC income data
- How to talk to someone in an MLM
- AARP Foundation. (2018). Multilevel marketing: The consumer experience. AARP. [VERIFY exact title and URL]
- Federal Trade Commission. (2016, July 15). Herbalife will restructure its multi-level marketing operations and pay $200 million for consumer redress to settle FTC charges [Press release]. https://www.ftc.gov
- Federal Trade Commission. (2019, October 2). AdvoCare and its former CEO agree to pay $150 million and be banned from multi-level marketing to settle FTC charges [Press release]. https://www.ftc.gov
- Federal Trade Commission. (2024). Multi-level marketing income disclosure statements [Staff report]. https://www.ftc.gov/reports/multi-level-marketing-income-disclosure-statements
- In re Amway Corp., 93 F.T.C. 618 (1979).
- In re Koscot Interplanetary, Inc., 86 F.T.C. 1106 (1975).
- Read, B. (2025). Little bosses everywhere: How the pyramid scheme shaped America. Crown.
- Richard, C. (2012). Herbalife: The nutrition club business model [Research report]. [VERIFY publisher and year]
- Taylor, J. M. (2011). The case (for and) against multi-level marketing. Consumer Awareness Institute. Hosted in the FTC public comment archive.
- Dietary Supplement Health and Education Act of 1994, Pub. L. No. 103-417, 108 Stat. 4325 (1994).
- Direct Selling Association & World Federation of Direct Selling Associations. Annual industry reports (industry-reported; cited for category share only).
Hey girl: the DM every woman over 25 has received
Zoë: Welcome to Your Diet Sucks, the podcast that won't tell you to lose weight now. Ask me how. I'm Zoë Rom. And I'm Kylee Van Horn. Kylee, what do you know about multi-level marketing or direct selling or pyramid schemes or Ponzi schemes? What do I know about them? Yeah.
Kylee: Or what experience have I had? What experience do you have? Okay, this makes me think about people I graduated high school with.
Zoë: Oh, yeah, yeah.
Kylee: That are, they think they're trying to make some money, but unfortunately they're getting scammed and scamming everyone else.
Zoë: What else in the process? I know, I mean, I feel like it has gotten, or I'm just not on Facebook as much, but I feel so many women that I went to high school with are selling tote bags with Bible verses or jewelry that you get your kids' names engraved into and all these sort of like- Is that a-
Kylee: Is that a real, that's a thing?
Zoë: Both of those are absolutely real things that I've been attempted to be sold to.
Kylee: Okay, I feel like the ones I have were CBD and then the shakes and vitamins.
Zoë: I feel like that makes it seem like you went to high school with cooler girls than I did, because mine are all super frumpy clothes and Bible verse weird cheap jewelry. There's always so many Bible verses. Oh, the jewelry!
Kylee: Yeah, actually, now that I'm thinking about that, yeah, there was somebody that would post earrings and be like, you have five minutes to buy this, like, special limited edition pair. It'll be some girl, but like.
Zoë: It'll be some girl that like low-key bullied me in high school and then she slides into my Facebook DMs like, hey girl, long time no see. If you don't buy this jewelry now, I'm going out of business. And I'm like, whoa, Cheryl. My kids can't eat. Yeah, exactly. Like, holy shit. Oh my god. So things have not been good is what I'm hearing.
Kylee: A lot of people out there have had that one person kind of slide in their DMs. At minimum one person.
Zoë: I feel like if you're a woman in the United States of America, you have had a brush with direct selling. And when you look at the stats, one in 13 American adults has been in a multi-level marketing company at some point. Has been in one? Wow. Yeah. Okay. Has been like directly involved in one. That's higher than I would think. Right. And an estimated 17 million Americans have tried. So this isn't a fringe thing. This is like mainstream American way of losing a profound amount of time and money. So, other countries, you're saying, are not... We will talk about the unique regulatory landscape that makes these so sticky in the United States. But the reason we're doing this on Your Diet Sucks is that about a third of the entire MLM, which is short for multi-level marketing, but also, you know, these things get called direct selling. A lot of times they will be known as a pyramid scheme, And then we will talk about the. Subtle but important distinction between direct selling and a full-on pyramid scheme. But a third of that MLM industry is wellness, supplements, and weight loss. So that is the largest part of it. And so the pitch for these things is always two promises sort of braided together. Fix your body, fix your bank account, become a girl boss, lose the weight, get healthy. Buy the shake, sell the shake and both your waistline and your wallet will be miraculously saved. So. The thing that I really want us to keep our eye trained on here is that this entire business model was literally invented to sell vitamins. So from the jump, the MLM industry and the diet industrial complex, the wellness industry have been holding hands in a way that I think is really important to talk about because a lot of these are privately held, so they don't have to publish numbers in the way that publicly held companies do. But some economists estimate that there are between 500 to upwards of a thousand multi-level marketing companies operating in the U.S., and this is a 40-plus billion-dollar industry. So this is big, and it is inextricably bound up with diet culture.
Kylee: Before we go on, can you explain the difference between an MLM is and a pyramid scheme? I kind of interchangeably use them, but I don't think that's the right thing to be doing.
MLM vs. pyramid scheme
Zoë: Yes. Well, technically, a pyramid scheme is just an MLM that got caught and ran afoul of the FTC. But the technical version, and people that are in and run MLMs are extremely picky about this. But a pyramid schemes makes the bulk of its money from recruiting. So new people pay in, and that money flows up. So the product isn't where most of money is being made, like the actual company, whether it's LuLaRoe or Amway. Herbalife, whatever it is, it's important to pay attention to where the bulk of the profit is made. So new people pay in, that money flows upward, but it's not the movement of product that is driving the bulk the business, it is recruiting people. So when you become a salesperson for YDS shakes, sure you can make a little bit of money actually selling the shakes, but the real money comes from when you recruit people under you to sell shakes. And then you get a cut of the shakes that they sell. So it kind of preys on this idea of exponential math. But if you recruited five people and those five people were supposed to recruit five people at the end of like 40 days, you basically would have recruited the entirety of the United States of America. So the math doesn't math. A legitimate MLM supposedly is supposed to make the bulk of its money from selling actual products to actual customers who are not a part of the business. A pyramid scheme makes the bulk of its money selling products to people who are already a member of the business, not actually truly moving inventory. So when it becomes a closed loop, that's when it starts to actually become, legally speaking, something that looks like a pyramid scheme, although pyramid scheme is not legally defined in the US. So again, we at every turn have basically neglected to take any responsibility or create any regulatory guardrails around this. So. The big catch is what's called the downline. You earn a cut of what people that you recruited buy and a cut what their recruits buy and on and on down the chain. So everyone above you has a direct financial stake in you buying ever-increasing amounts of inventory. Which is why. Exactly. So aggressive. Claws in you. Right. Why they have to DM you on Facebook at two in the morning to try to sell you 30 pairs of horrifically ugly chevron leggings. So the whole thing collapses the second that you notice that the majority of the customers are primarily distributors buying their own monthly quota to stay eligible for a check. Because for a lot of these companies, you have to buy and hold a certain amount inventory to stay active. To move further up the company, you have to buy increasing amounts of inventory for yourself. Supposedly, you're supposed to be selling it, but a lot of these companies don't check that. So the legal sort of line, the discrepancy here, comes from a 1972 case against a cosmetics company called Koscot, where you can pay people for recruiting. But you can't pay people just for loading up recruits with product that they basically have no intention of selling. So that's the entire distinction. And it's basically thinner than a cheap protein shake because presumably most of the money should actually be made by selling product, right? Like that's how the majority of businesses work. And pyramid schemes, a lot more of it comes from recruiting people or selling shit to the people you're recruiting. Like Amway got in a lot of trouble. They're one of the bigger MLMs related to the DeVos family. We'll circle back to them later, but. They were making a huge amount of their money selling tools or basically like motivational pamphlets and materials speeches to their members. So if it's a closed loop, that's the bad thing. But I think the wild part is, like I mentioned, pyramid scheme is not defined anywhere in federal statute. There is no law that has that phrase in it, even though it's sort of a business model and heavy quotation marks that a lot of people recognize, but... We've basically been arguing about the shape of MLMs since the Nixon administration and haven't come very far. So where does this whole model come from then? So the pyramid schemes big bang was actually vitamins. The whole model sort of dates back to this man named Carl Rehnborg and a tub of pills derived from alfalfa grass. Wow, are we rabbits? Essentially. So, Rehnborg spent the 1920s in China. He sort of like appointed himself to be a health emissary to Asia. No one asked him to do this. He just decided to go to Asia and start yelling at people for not consuming enough milk, which also feels like wildly 2026. He decided that everyone in China was somehow malnourished because they didn't drink milk, which like the white savior energy on everything this man writes is totally wild. But he came back to the United States convinced that he could bottle nutrition himself and save the world. So he started a vitamin company in the 1930s. It became Nutrilite in 1939. The product was being polite and mediocre at best. This company did okay, stayed afloat, it wasn't hugely profitable, and sort of limped along until 1945 when two very sharp salesmen named Lee Mytinger and William Casselberry showed up with a new compensation idea that they called, somewhat ominously, The Plan. The Plan! The Plan, trust The Plan I know I'm like, my god, it sounds like really shitty Ben Affleck movie. The Plan is widely credited as the first true multi-level marketing structure in America. So The Plan worked two ways. You buy the pills at a discount, and you sell them at a markup. Or you recruit sellers underneath you and skim a percentage of all of the inventory that they move. So the idea of that downline was born, and it was born to sell 1940s ass supplements. So Rehnborg installed himself as the scientific advisor despite having literally zero nutrition credentials.
Nutrilite, 1945: alfalfa pills and The Plan
Kylee: So what are the, yeah, I'm curious. With the no nutrition credentials, we're just throwing shit in a pill bin and they don't even know.
Zoë: Throwing alfalfa in a pill, and then claiming to be a nutrition scientist. Powdered alfalfa. Which, again, like, how 2026 does this sound? Like, Carl, if you are...
Kylee: I'm like, we are still here, I guess.
Zoë: Exactly. If you can buy a ring light and take your shirt off, congratulations, you're an influencer. He told sales crowds that the pills held a secret base of unusual and mystical therapeutic value. His gross sales hit half a million dollars a month.
Kylee: But now it's a lot of people are like the before and after and like that kind of stuff too.
The FDA raid and the birth of "supports immune health"
Zoë: I mean, I guess like the 1940s version would be like, look at this black and white photo of me before World War II. See, I was real corpulent, see? Now I'm real fit, see. I'm a nutrition scientist, see! So the FDA did end up coming for them by 1947. And the big weapon they had was a infamous booklet called How to Get Well and Stay Well, which was sort of Nutrilite's sales Bible. And all of Nutrilite's roughly 15,000 door-to-door sellers used the claim that the vitamins cured basically every disease on record. They claimed it cured cancer, depression, infertility, rheumatism, arthritis, asthma, literally all the things. And it was all printed in this booklet, which again, you're looking back, you are like, ha ha ha, people in the 1950s were so silly. I still feel like we hear all the same stuff today. Yeah, exactly. Sorry. I think this is another big thread to sort of pay attention to throughout the history and culture here was that under FDA pressure, Nutrilite was forced to rewrite the booklet into what it called new language. So instead of using the word disease, which the FDA was like, yeah, you can't claim this cure is disease because you don't have proof, they changed that language to. Becoming a state of non-health, which is a hell of a euphemism, caused by chemical imbalance. So again, they're not saying that this thing cures arthritis. They're saying this thing helps cure the chemical imbalance that contributes to a state of nonhealth, which again, I'm like, I have seen that TikTok this week. So obviously these alfalfa of pills cured nothing, people were just eating grass. The customer simply got well while taking them. So this is the great-great-grandparent of every supports, immunity, and promotes balance that we see printed on supplement labels today. And the first MLM basically invented this linguistic dodge before it even had much of product to Dodge 4.
Kylee: We've talked about this before. I think maybe when we did our supplements episode, but a lot of these supplement companies, the way that they're allowed to market is to say, supports this kind of thing and they can't use the language like cures or whatever. Cause then that will get them in trouble, but supports.
Amway, the DeVos family, and the rulebook
Zoë: Supports, boosts, yeah. Oh my god. So two of Nutrilite's best sellers, Rich DeVos and Jay Van Andel, watched the FDA circus and got pretty nervous, because in 1959, they spun off their own company to try to sell the model itself. They were like, we love what you're doing with these vitamins, don't love the vitamins, but clearly you can make a shit ton of money doing this. They named it The American Way. You might be more familiar under what it's called today, which is Amway. Amway eventually got so big that it ended up cannibalizing and buying Nutrilite in 1972. And in 1979, it won the FTC or Federal Trade Commission case that legally separated a real MLM from an illegal pyramid. So Amway helped establish the precedent every single one of these companies still hides behind. They had the Amway rules. The salespeople need to actually be selling products. Distributors are required to make sales to a minimum number of actual customers each month. The company must buy back any unused marketable inventory from departing distributors at a reasonable price. Distributers can't earn commissions purely for recruiting new members. Compensation is supposedly tied to product sales. So those are the sort of checklist that a lot of MLMs today point at. They're like, well. We're clearly a legal direct sales company. We're not a pyramid scheme, because pyramid schemes are illegal, and we're not illegal.
Zoë: Therefore, we're not a pyramid scheme. The important distinction. Exactly. So I think there are two punchlines you're worth sitting with. Nutrilite is today the number one selling vitamin and supplement brand on Earth owned by Amway. And the DeVos family fortune built on all of it became one of the biggest donor machines in the American right. They actually went on to be some of the original Founding Donors of the Heritage. Foundation, so you might recognize the name DeVos from Betsy DeVoss fame. She married into this extremely lovely family.
Kylee: How much of the MLM world is diet and supplement stuff? I mean, I feel like we talked about the earrings and the leggings. I also was thinking about Pampered Chef and how that- Is that an MLM too? Because the people that put those quote parties on are like always bugging to try and recreate- Oh, it is.
Zoë: It is, Pampered Chef is a multi-level marketing. Yes. Whoa.
Kylee: Oh my God, and I've gone to some of those. I've really? Like a party? They do them virtually now. They used to be in person, but now they're virtual. What was it like? Tell me what it's like. Oh, they just demonstrate the use of the product, and then they're like.
Zoë: How did you, okay, tell me, I need to know everything. Someone you knew was like, come to my party and you were like, I'm a pampered chef. I'm chef that should be pampered.
Kylee: But then I'm like, oh, I wonder if they have any interesting cookware stuff. Yeah. So I was like, okay, I'll go to this virtual thing and...
Zoë: Product is typically unremarkable. A lot of times, it's more expensive than other stuff you can get, especially like DTC stuff because the prices end up being a little bit inflated because you have to pay everyone in the upline. So a lot of the times, it's not that great a deal. They're really just leveraging people's network and connections in order to sell these otherwise unremarcable products.
Kylee: They're like, buy this little thing that chops off the leaves of an herb when you're trying to cook, you know? They try to make it seem really cool, but it's okay, I can just chop my herbs and hand pick them. It's not like...
Zoë: I don't need to. I own a knife. They're all like monotaskers. It's like, this is exactly for quartering an olive. And you're like, I don't need to quarter that many olives. It really is. If I do need to do that, I'll just use a knife?
Kylee: I guess. What about the diet and supplement stuff, because I have athletes that use MLM shakes and stuff like that. Really? What do you see? What are people using? The Shackley vitamins. I've had a couple of athletes that actually sell those. Whoa. I'm not necessarily... Have they ever tried to sell them to you? No. No, no, no. Shakeology, Beachbody... All the names are so horrific. I know. Herbalife, yeah. Herbalife is the big one. Like, a lot of people will be like... I have this powder from such and such a place. Like, what do you think of it? I'm like, oh God, I gotta enter this conversation. Like, you could probably get a better product for a lot cheaper and it wouldn't be part of an M.
Zoë: Because the economic model of this, because you have to pay everyone in the upline, basically precludes people getting the best price possible, like the economics simply aren't- I think the way these-
Kylee: companies work too is they they think they're getting a better thing like like they're like
Influencer marketing before the internet
Zoë: They're like, oh, it's exclusive, you know? Yes, exactly, because you can't get it in a retail, which I feel like it's different for people, especially my age, because we're so used to just buying shit off Instagram, which is almost kind of its own nefarious thing. But basically MLMs were Instagram influencer marketing before the internet. So it would be like, someone you already have a relationship with, likely another woman, similar socioeconomic status, leaning on her N of one experience to say, this shake. Changed my life. She's just some lady, so the FTC can't control whatever the fuck she texts you on a Sunday morning. So people are allowed to use these totally unhinged marketing strategies to sell these things person to person and just by how human psychology works, that is really sticky and we're less cynical in those situations. Our critical thinking is a little less turned on. Now you know when you see a commercial on TV or YouTube or Instagram, you're like, this is a commercial. But even though we know that that person sliding into our DMs to sell us these ugly-ass leggings or this cock-ass milkshake, we know that their incentives aren't just because they want to help us drink a good protein shake. But we forget that and we buy the shake anyway. So this is one of the reasons that wellness is the number one category in direct selling across the globe. It's somewhere in the neighborhood of 29 to 30% globally. In the U.S., it's even higher than in other places in the world. So it's like in the mid-low 30s for years and years and year. So about a third of this entire industry is the shakes, the capsules, weight loss products, diuretic teas, detox teas, caffeine teas. And among brand new MLM launches, health and wellness is the single fastest growing category still today in the year of our Lord 2026. These things are not decelerating. You'd think people have become more cynical but actually participating and failing. Makes them more likely to participate in the future because they don't always understand that the economic model is what makes them fail. They think it's themselves or the product. And so they'll just switch companies and they'll be like, well, the Shaklee didn't work, but maybe I can do Herbalife, Beachbody. They need to listen to her.
Kylee: Hopefully, yeah.
Zoë: We're very popular with people who have robust social lives and no critical thinking skills. The important caveat here is that almost every one of these numbers traces back to the Direct Selling Association, or the DSA, or its global cousin, the WFDSA, which is the industry's own lobbying group. It's useful, directional, but it is reported by people who are selling the stuff. Again, the majority of these companies are privately held. So they don't publish a lot of public-facing numbers, so we don't even know how profitable a lot these companies are and how many people in them are losing money, though we'll talk about this later, but estimates definitely are not very flattering. So when we get to the independent data on who's making money, it's genuinely hard to say what the true scope and scale of this industry looks like because so much of it happens behind closed doors. Typically, when something's required for your job, the job pays for you to do it. These are unique in that people are often paying to go on these cursed cruises or lime life a palooza or whatever it is to learn how to better sell makeup or jewelry or leggings. And so these salespeople are continually paying in for the opportunity to potentially advance.
Kylee: Well, there's that, but then there's the earning thing too. The people that are most successful or whatever, their incentive is like they get to go to some tropical place and then they go there, they're like, oh yeah, we get to learn about all the new products. But you're also paying to do that.
Zoë: In most of these cases.
Kylee: Yes, the overwhelming majority. I thought they didn't have to pay. No. I mean, there's like...
Zoë: I mean, there's like, there are, it really depends on the company. There's some where like, when you become extremely high up, yes, you might get a trip floated. But for 99% of people who participate in these, you are paying for all of your own promotional materials. You are paying all of the product. You're paying for the pleasure of being able to pay for the product and promotional materials. You don't get anything for free because again, the majority of the money isn't being made selling the product a lot of the money's being made from that internal system. The goal with those isn't to make people better salespeople and have them advance through the company, it's to make money off of them then and there.
Why pills and powders are the perfect MLM product
Kylee: Okay, why are the pills and the powders and the supplements and things like that the most successful thing?
Zoë: Yeah, so there's three reasons. I think the first big one is that you can sell a supplement without proving that it works, or that it's even safe, especially if you live in the U.S., because:and this is one of those things that comes up on like 30% of all YDS episodes:but in 1994, a law called DSHEA means that the FDA doesn't get to approve supplements before they hit the shelves. In a lot of cases, a company doesn't even have to tell the FDA that a product exists at all. So of course this has to get an honorable mention here. So any ingredient that was already on the market before October of 1994 is grandfathered in. What? Oh, that's kind of weird. You're like, that not how science and safety works? Like, okay. Grandfathered in? So if it was big at the same time Digable Planets was big, it's safe. Great. No testing required, so the FDA mostly only gets to act after a product is already out and being proven to hurt people. So someone has to get actively harmed before we even take a look at it. So it's basically you have a cleanup crew, but no gatekeeper. Right. You're like, that's not how anything should work. And the scale of that gap is absolutely banana pants, because the supplement market went from about 4,000 products in 1994. To over 80,000 and going up every day. So between 1994 and 2012, across thousands of new products, the FDA received adequate notice on roughly 170 new ingredients total. Yeah. So if you wanted to design a product for a sales force of untrained but extremely stoked and motivated people who feel comfortable making enormously large claims. You would design one where nobody has to check the claims and where no one gets to or wants to check the product, so congratulations, you've invented the dietary supplement. Reason number two is that compensatory plan. So you finish a tub of protein powder, and because you're an athlete, you're gonna go out and you're going to buy another one. You finish your round of vitality vitamins or whatever, and you are gonna go and buy another. So consumables means that you get more recurring orders. And recurring orders are exactly what these pay structures need to keep everyone active every single month. Originally a lot of direct sales were things like vacuums, and you can only sell one vacuum, right? Like we're not buying a new vacuum every month the same way that you're buying a new caffeine pill or diet supplement or whatever it is. Because whenever you're able to incentivize people to buy into a monthly auto ship, that's something that's going to keep your downline active and paying into your upline long into the future. So. Reason number three we'll talk to in a minute because it is very specific to weight loss and kind of our whole deal. And I think it is also the darkest and cleverest of the three reasons. But I did want to ask you, I know we've touched on it, but what is your familiarity with Herbalife specifically? See you next time.
Kylee: Whenever I hear Herbalife, I just think about, before we even did this episode, I'm like, yep, that's an MLM. And then I think of. My brain goes to powders because I've had athletes that are like... What kind of powder? Well, they have all these random ones, like they have protein powders. Yeah. But then they start combining like these ingredients that are like will give you energy or they take a bunch of different ingredients and then they make a proprietary blend and just create a new product within herbal. And I think I told you that they have an athlete line now. They have a certified performance line. Certified for sport.
Zoë: Athlete line. Which, I was honestly mind blown that they went as far as to get their stuff certified safe for sport
Kylee: There was a big controversy about this within the Dietetics Association because they were like a big sponsor at one of the conferences, the annual conference, and everyone was so pissed because they we're getting involved in the Dietetic Association. They have so-
Zoë: They're a huge player in the Chamber of Commerce at the national level here in the United States. They have sponsored David Beckham, who you might have heard of.
Kylee: The soccer.
Zoë: Madeline freaking Albright, former Secretary of State under Bill Clinton, was a sponsored Secretary of state. I'm cringing. I'm fringy. Yes. So. We are not-
Kylee: Not getting sponsored by Herbalife.
Zoë: No, but I will tell you that they sell right now, live on their website, 164 different powders. That's just powders! That's just powders.
Kylee: When I hear Herbalife, I literally think of powders, which is weird.
Zoë: Damn, they have so many powders. There's a personalized protein powder, there's a Herbalife 24, that's their sports line, enhanced protein powder. There is a probiotic powder. So many different meal shakes. There are the Formula 1 shake. There're 164 powders, they make one that's pralines and cream flavored. There a protein baked goods mix, that is Lookin' dark, dude. Ugh. Inter-GT, spelled N-R-G-T, multi-burn powdered supplement. Oh, is that like weight loss, actually? It's basically powdered caffeine. There's a beverage enhancer, there's a protein bite, which kind of looks like if the devil made a Snickers bar, a beverage-enhancer mix. I mean, 164 powders is a lot of powders. That's a lot powders! That's like, you could try a new powder every other day and not finish all of the powders in a year. Thank you very much. Thank you. Thank you so much. Thank you everyone.
Kylee: Live off the powders then? Why or how did they become such a giant in this space then with 164 pounds?
Herbalife: Mark Hughes and Formula 1
Zoë: And that's only the powders. So Herbalife basically wrote the modern MLM playbook. They were founded in 1980 in Los Angeles by a 24-year-old named Mark Hughes, who sold his first protein shake, the famous Formula 1, out of the trunk of his car. So the origin myth is pure diet culture tragicomedy and it's Worth knowing that it has been embellished by Hughes himself, because he said he started the company because his mother died from taking weight loss drugs to deal with her weight, whereas the truth is a good bit messier, his m:
Kylee: Well, listening to his, when he talks about the product, he tells the story about his mom and how she overdosed and it was like this terrible thing and it, I mean, it sounds like it sounds really emotional and you kind of like draws you in and then you hear that it's not really true and you're like, okay, wait, this is kind of-
Zoë: Fucked up. Even if it was true, when your story is, dieting killed my mom, so let me make more money off of teaching you people how to diet. I know. Because to me, the response should be, dieting, killed my Mom, holy shit, we need to convince everyone not to diet so they don't fucking die. Yes. But instead he's like, no, take this powder instead. Yeah. So his mother was not actually all that heavy, and she died of an overdose of prescription drugs. She did take a lot of uppers. And also got hooked on over-the-counter sleep from prescription sleeping medication. But he basically built this entire wellness empire on a sanded down version of his family loss. And again, trying to sell this shit because your mom died is like the most like heinous and manipulative bullshit I've ever heard. But their slogan for many years was, lose weight now, ask me how. And it became this huge pop culture artifact that salespeople used to wear button, like giant buttons that said lose weight now, asked me how It was on billboards, bumper stickers, an entire era of American strangers basically wearing their diet powder pitch on their chest. So Formula 1 is still their flagship. It is a meal replacement shake and weight management is Herbalife single biggest product category by sales by a long shot. But the whole company four decades later is still essentially that same shake powder sold from the trunk of a car. So Hughes himself died. In 2000, at the age of 44, from a mix of alcohol and an antidepressant, he had been prescribed as a sleeping pill, so the man who sold Change Your Life and Get Healthy could not, in fact, outrun a very human amount of pain. I say this with zero glee, but the foundation myth that this company was built on is dark as hell.
Kylee: Yeah, that's terrible. Yeah. The crazy thing with the powdered, the weight loss powdered stuff too, is you get hooked on this Herbalife thing and it's like you don't even know how to eat then. And then you're like, well, maybe you do lose the weight, but in the long term, you have to be on Herbalifed the rest of your life, unless you understand how to eat, right? Which is exactly why it's such a great MLM product. Okay. Have you ever seen those Herbalife Nutrition Club stores? Oh, boy. Do you know what's going on?
Inside the nutrition clubs
Zoë: On in those places? Oh my god. I have been down an insane rabbit hole on this and these are kind of famous because they sort of go against the whole presumably low overhead, right? Like one of the appeals that these MLMs make is that they have really low overhead but in these cases, you actually have the sales people paying for a brick and mortar. I have actually been suckered in to an Herbalife club. Wait, you went to one of these? A friend invited me to a nutrition club which I was like sick, sounds like a book club with less reading and more protein. But what these clubs are is Herbalife brick-and-mortar sort of masterpiece. They're these little storefronts. A lot of times they're in strip malls and they kind of are styled like a cheerful smoothie cafe. And they often are unlabeled or they'll just say like nutrition club, but they intentionally don't have any Herbalife branding. So you don't walk in thinking I'm strolling into a pyramid scheme. You walk in and thinking what a cute little protein shake restaurant. So under Herbalife own club rules cited in a, and this is Chekhov's FTC case, but cited in the forthcoming FTC Case, the people who operate these clubs are told not to advertise, not to hang an open sign, not to have a public website, and not to use the words Herbalife, shake, smoothie, or.
Kylee: Shop on the premises like as an advertising thing outside or like in the shop to not
Zoë: use those words in any context in the shop. Oh, wow. Okay. So the unmarked nature of this all isn't by an accident. It's a policy because a normal restaurant wants you to find it. These are built to not be found on accident and to be found only through referral and networks. And these have actually, the dark part is that these have absolutely exploded in Spanish-speaking neighborhoods. By 2009, 64% of Herbalife U.S. Distributors were Latino. So the clubs let the company reach people who were never going to get the suburban door-to-door pitch, which one former financial journalist who studied them, Christine Richard, called flat-out diabolical because it brought the opportunity to exactly the people who are least able to absorb the cost. Basically, they sell the shakes in these clubs. Okay. The way they sell the shakes in the clubs. They can't tell it a shake or a smoothie. And, like, racking my brain, I can't, for the love of Christ, remember what I was referring to in this. Nutrition potion. Yeah, I'm sure it was called, like a health slop or something. A health suspension, but the way that they make the product in these clubs is wildly different than the product you can walk out of the store with. And this is, this is like, from my experience, this is something I've been, like thinking about for years and years and year because when I went into one of these... Unlabeled Herbalife clubs, I distinctly remember getting a blueberry cheesecake liquid substance. And I remember thinking it was the most delicious thing that I had ever tasted. I was like, oh my god, this has like 20 grams of protein and all of these vitamins. This is the best thing I've ever tasted, it straight up tastes like a blueberry cheese cake. If this is all the nutrition I need for the rest of my life, this is all that I want to drink. So I bought the tub of powder. Took it home, mixed it according to the instructions on the label, and it tasted like absolute blueberry graham cracker ass. They were not even similar. So for my whole life, I've been like, how is that possible? Because in the club, they tell you, they just mix the shake for you and they're like, oh, if you like it, you can take some to go. I am telling you before God in my country, these things tasted nothing like. So this is something I've been thinking about for like years and years and years and did a ton of research. Went down a ton of Reddit rabbit holes, but the way that they build the shakes in these clubs is they take one scoop of the Formula 1 plus a scoop of their pricier protein drink mix, which alone adds an additional 15 grams of protein and roughly doubles the whole thing to more than 200 calories, which they do not advertise. Then they'll add in things like sugar-free instant pudding mix, flavored sugar syrups. Peanut butter or powdered peanut butter, and sometimes they'll add in whole milk or even straight up ice cream.
Kylee: Oh my god, ice cream.
Zoë: They do, I guarantee, because the thing that I drink definitely tasted like ice cream. So a loaded specialty shake that you get in one of these clubs can be 300, 500, up to 700 calories.
Kylee: Oh my god.
Zoë: That is a very different beverage than the 200-calorie, 15-gram of protein shake that you are walking out of.
Kylee: Well, people are buying this for like weight loss, right? Or, well, some people are, but...
Zoë: No, most people are like absolutely no. There's literally your 50% of all Americans who might consume protein, not for weight loss. Like the way that this is being marketed is absolutely weight loss and they are absolutely putting ice cream in these shakes. So this is insane for many reasons, one of which is you are being served undisclosed ingredients. And like this is the thing that I feel like haunts me to this day is that you're what you're buying in the store has no nutrition labels. A lot of these places do not have food service permits. So they're existing in what I think could most generously be called a legal gray area, but you don't know the calories, the sugar, the caffeine, or the additive content because it was improvised by vibes in a blender by someone who has zero nutrition or food safety training in the first place. And Herbalife own rules say that clubs should serve only the core trio prepared to label instructions. And so these elaborate builds. Arguably break the brand's own rules and, per FTC filings, might actually run a stray of local law if the club lacks food service permits, which many of them absolutely do.
Kylee: I would think that that could run into some serious problems with allergies, or like- Again.
Zoë: Again, one hundred per- Thank God I don't have any allergies, but I am-
Kylee: Like peanut powder or something. 100%.
Zoë: Yeah, yeah, yeah. Right. Like, this is sketchy as hell, but like a lot of them are just, you know, they're not even, they are clubs, so they fall into this legal gray area of like, you may not pay for the shake, you pay to join the club, and then you get a shake.
Kylee: So did you just want one more thing? Yeah. So you just walked in, everyone's like, here's a liquid whatever, and they just give it to you? Or is it like people standing around socializing, like anything?
Zoë: So this happened, I think I must have been like probably 17 or 18, I was either a freshman in college or a senior in high school and one popped up at a strip mall near my gym and I went in with a friend who used to go to the gym with me and she was like, I heard there's this new place. She brought me there. Neither of us knew what Herbalife was, part of me is like, I guess good on you for not trying to recruit an actual 17 year old into your pyramid scheme. It was this weird, unlabeled, honestly, it sort of had, like, the vibes of a dentist shop that also sold smoothies, like it was not a very, like comfortable or happen in place. And I remembered and I paid to join the club, but not for the actual smoothie. And I was like, that's a weird business model, but I'm sure it makes sense to someone who's not 17. And what it shows you is that they know that their protein powder is weak and not because they have to doctor it to high heaven and the clubs. So, and I think the dark one is that what you sort of mentioned, that a lot of these people buy these things chasing weight loss. And again, as a younger person, I can admit there was like some dark part of me that was like, oh my God, this actually tastes good. If I can replace meals with this, I'm set for life because it's only 200 calories and it tastes like an actual dessert. Well, it certainly tastes like a actual dessert because I was eating an actual dessert, because lo and behold. Actual dessert fucking rocks, but it's crazy to sell an actual dessert to someone under the guise of weight loss. Like, you know, serving someone who thinks they are trying to lose weight a 400-calorie sugar-loaded liquid dessert three times a week, believing it's a diet shake, but the one that they take home to cut calories, Formula 1 made with water. Is a 90-calorie beverage that Herbalife says is not even a complete meal. These are just fundamentally two different products, and a lot of the teas they sell get a similar treatment. On Reddit, these are referred to as loaded teas, are spiked with Herbalife's proprietary product Lift Off, or energy caffeine powder, which commonly carries somewhere between 160 60 to 200 milligrams of caffeine. So, roughly double a cup of coffee just in an unlabeled styrofoam cup, sometimes called Mermaid or their Bahama Mama is a very popular one. Again, no label, no disclosure of the stimulant load. They do tell you it'll help you lose weight because it speeds up or boosts your metabolism. Again, the full adults making these claims to you do not have any education in nutrition beyond clicking around on the MLM's website.
Kylee: Is this, I mean, come on, think about this. I don't understand, is this legal? Do they get into trouble or?
Ackman vs. Icahn, and the FTC
Zoë: They sort of did in the most 2010s way imaginable, which is sort of the billionaire equivalent of a slap fight. Picture white wine throwing, real housewives, but it's all billionaire dudes. So in December 2012, hedge founder, Bill Ackman, bet about a million dollars that Herbalife stock could go to zero, basically trying to short sell it, and stood on a stage calling it a sophisticated pyramid scheme. He and his hedge fund did this internal, pretty intense investigation. And they publicly called out Herbalife for being a pyramid scheme and said they were gonna short sell it. His research claimed that most distributors lose money and that the odds of hitting the headline income in the testimonials was something like one in 5,000, according to their internal research. Then, surely to spite Bill Ackman, another hedge fund billionaire, Carl Icahn, took the opposite side and bought a huge steak so that the stock went up. Wow. Ackman eventually tapped out and lost around $500 million. So again, this has nothing to do with the quality of the product or the legality of the business model, but two of the richest men in America basically turned a company that profits off working class strivers and people trying to lose weight into like a personal grudge match, and the strivers were eventually the people who basically had to foot the bill. But the real reckoning came from the FTC in 2016. Herbalife paid $200 million and was forced to restructure so that the rewards actually track retail sales instead of recruitment, which again, usually the way that businesses work is that you sell a product for money. Not the case here. And they were like, yeah, you're right, you right. We'll do that crazy thing where we sell a products for money
Kylee: They're like, this $200 million, is it a drop in a bucket? I mean, if you have Madeleine Alba:
Zoë: and David Beckham on speed dial. Like 200 million is Tuesday for you. And I think the detail that really sticks out in my head is being like, ah, there's the story, is that the FTC pointedly refused to use the word pyramid. The then chair of the FTC noted that the word does not appear in the complaint. So Herbalife has since then treated that as total vindication and basically threw itself a parade, congratulating itself for not being a pyramid. So even by the company's own extremely generous and gentle math, only about 3.7% of US distributors grossed more than $25,000 in royalties before expenses, before you have to pay for all the promotional materials and the gas and the stuff for the club storefronts and the parties that you're throwing. So more than half of everything that the company paid out went to the top 1% of salespeople. So. If you're thinking in your head about what that looks like, bear with me. What does it look like when- Geometry class. Let's say that there's something that has an extremely wide base. And then as you work your way up to the top, that base becomes narrower. It does form a certain shape and it's not a rhombus. 3.7 is not the worst math when you look at the industry as a whole. 99% of people lose money in MLMs. Not only do they not make money, almost everyone who participates in these ultimately taps out poorer than when they started. And then they join another one. Yes, and then, yes, a lot of times they do because while it wasn't the shitty leggings or the shitty caffeinated pudding tea, it must be me, I didn't work hard enough, or the next product will be better.
Your body is the ad
Kylee: So when we look at the breakdown of things, why are there so many weight loss, or there are a lot of weight loss MLMs, right? Yeah, almost.
Zoë: Almost 30% weight loss and supplements, yeah.
Kylee: So, so why are there so many of those specifically in the MLM market?
Zoë: Because it does something really critical that you don't see in other product categories. A lot of times the distributor's own body and own story own N of one.
Kylee: One, the before and after.
Zoë: The before and after becomes the advertisement. Like you said, a before and after photo is the product testimonial and the recruitment ad in the same image. You can't model your cleaning spray or your soap. We do see the same sort of thing with makeup or jewelry, but not to the same extent as with diet and weight loss supplements. You can always wear the leggings in a way that proves they work, but you can show up to your high school reunion in a smaller body. And we've basically spent a... Century or more training everyone to read a smaller body as proof of discipline, virtue, and success. So, the merchandise will sell its people off your body. Your body recruits the next person. Oh, that's... Ugh. Dark. Yeah, makes me feel ill. Yes. Stack that on top of the consumable auto-ship thing and the no-proof-required thing and The Weight Loss is the perfect MLM product. The way that MLMs transmit is really similar to the way that diet culture is transmitted person to person. Especially in groups of women. The majority of people that work in MLMs are women and we've been taught over a century or more to bond over the one thing that brings all women together, a shared hatred of our mutual bodies. And so I think when you stack, yeah, so the roll call and I think people will recognize it either in their DMs or their own like cursed email inboxes, Herbalife at the Formula 1. You have AdvoCare with its Spark Energy drink and shakes. Forgot about that one! Beachbody and Shakeology. You've got the workout takes. You have Optavia with its little fuelings and near starvation level meal plans. Plexus with the pink drink. Have you seen It Works? No, what is that? Oh my God. It Works is basically Saran Wrap where you take a cream. You cream up your legs and then you wrap them in saran wrap. It looks like a giant diaper. It does look like a gigantic diaper. So yeah, what it works is cream in a, you just wrap your body in wet stuff and it makes you lose weight because that's how things work. Okay. Yeah. You have Le-Vel with the thrive patches that you literally stick on your skin. Isagenix, Arbonne, Juice Plus, Modere. Oh my God, Juice plus, sorry. I keep having reactions to these. I feel like we each know like 50% of these and it's like, it's probably just like, yeah, what high school did you go to? Oh, that's hilarious. Cause like half of these, I also have like a very visceral reaction to her. I'm like, oh Arbonn, and you're like, ah Juice Plus. I feel advocate is one that a lot of people in the endurance and sports world would know because it papered the sports world in these huge endorsements. Drew Brees was the national spokesperson. Patrick Mahomes was on their roster. In 2019, the FTC did call it an illegal pyramid scheme. They used pyramid schemes. You have to be such an obvious pyramid scheme to be called a pyramid scheme by the FTC Find it $150 million and then permanently banned it from multi-level marketing. So by the f.t.c.'s own numbers, in 2016, more than 72 percent of AdvoCare distributors earned nothing. And over 90% made less than $250 in a single year. Wow. That's worse than gambling. Wow. You know? So those Super Bowl quarterbacks were basically selling a lottery ticket that was just never gonna get picked up.
The roll call
Kylee: We kind of talked about this a little bit, but it kind of feels like MLMs are the parallel of diet culture.
Zoë: Yeah, no, I think you're spot on with that. So, diet culture, a lot of times what we talk about here is how it invents a problem. Your body is wrong, you're the wrong size, you shouldn't look like this, you are too hungry, and then it sells you the fix. The MLM invents the second problem, which is both that your money is precarious and you deserve more. If only you could work for yourself, girl boss. And then sells you the identical fix as an answer to both. And like, who in the United States of America doesn't always feel at least a little bit dissatisfied with their body and a lot bit diss satisfied with their wallet? Yeah. Very easy to sell to those two insecurities. So it's one product that speaks to both of those fears. And then both run through people that you already trust. About half of MLM recruits get pulled in by someone they know. The pitch, I feel like I've gotten these in like a birthday text from, again, some girl that was an absolute dick to me in high school. Just like, hey, girl, happy 28. Do you want to buy some diet pills? No, Charlotte, I do not. We haven't talked in 15 years, but. I definitely hate you, but I don't want you to prevent yourself from being the best girl boss you can be. And it's the same channels that Diet Talk travels along's mom at the table, the friend narrating her own prescription, you're sharing punch at a party or a baby shower, and suddenly everyone's talking about how bad they feel about their bodies.
Zoë: Both of them are moralizing. Diet culture assigns virtue and value to bodies, and MLM culture assign virtue to hustle and showing up and doing the work. But in both, failure gets recorded as a character flaw instead of just a math problem or a fact of biology. And that same mechanism was basically installed in the DNA of both of these things, because MLM culture grew up wrapped. Around the Dale Carnegie and Norman Vincent Peale positive thinking gospel where all you have to do is want it bad enough and you can like manifest wealth. If you want a Corvette, you just need to get up every day and think pink Corvette pink Corvettes pink Corvet. So when the plan fails, the only explanation they offer is that you simply didn't want it badly enough and you didn't work hard enough, which is what we do with diet culture too. You didn't lose your money because the math is against you and because 99% of people who do this lose money, you lost money because your mindset was weak. Same thing with diet culture. You uniquely are wrong. It's not just that the shit doesn't work and you have a set point and there's biological factors that go into this and socioeconomic factors. You simply didn't grit your teeth and work hard enough. And they both survive on that same statistical magic trick. They show the one person it worked for, the one effective before and after photo, the one top earner with the Instagram post next to like a rented Lamborghini or some shit. And they make you want to ignore the thousands of people who were cropped out of that photo that have a garage full of unsold pink drink or praline flavored meal replacement shake. Similar to diet culture, this is mostly women, right? Yes, weirdly, I do remember the guy that owned the Herbalife club that I wandered into was a guy. So like, shout out to him for being an ally and taking one for the team. But yeah, this really runs on a track right next to the vitamins story. So Avon, back in the 1880s, when it was still called the California Perfume Company, which is one of the biggest MLMs, figured out first that women's friendships were basically a free distribution network. If you sell to women through women, you can use social obligation as the pitch. So Avon mostly stayed single-tier, so it was the prototype for the audience, not just the pyramid thing. Tupperware in the 1950s is really where the multilevel structure got focused on women and started leveraging the housewife, because this woman named Bonnie Wise, who was a divorced single mother with an eighth-grade education, became the first woman on the and she, for Tupperware, had built this massive recruiting engine of Tupperwares dealers recruiting dealers and directors earning money off of the team before them, and primarily moving product through what many women felt were genuinely fun and connected parties. And her read on this market, I think is still extremely sharp, was that post-ware housewives who were freshly isolated in the brand new suburbs, they weren't getting sold Tupperwear as much as they were getting sold Connection and a paycheck in the same living room. And what are things that women often struggle to find when life gets hard? Connection and equal participation in the economy. Hey, Zoë, it's been 15 years. Yeah, again, I'm like, fuck. Charlotte, get out of my email. You still don't like me, I don't you, I'm not gonna buy this like shitty jewelry." The promise then was be a businesswoman but from your kitchen and the way that threatens no one's idea of a life in the same way that buying into diet culture, buying into direct selling is sort of this thing where you can kind of pretend to be a girl boss and you can take on this like really superficial language of feminism while doing absolutely nothing that threatens to disrupt the status quo. So, it's basically the same thing, is that women want money and autonomy, but they keep getting handed these structures that are from the jump, designed to limit both of them.
Positive thinking, Tupperware, and Avon
Kylee: Honestly, this, like, girl-boss thing, too, just kind of drives me a little bit nuts. Yes.
Zoë: Yes, it's like, be your own boss. I'm like, no, you're Betsy DeVos's grandpa. Like, he's your boss. The guy that helped found the Heritage Foundation is your boss, and this is the part that literally makes me want to set myself on fire and walk into the ocean, is that wellness is the word that sort of launders diet culture in the same way that the words female entrepreneur, CEO, or girl boss, boss babe. Are words that make the MLM feel more palatable to women. We know we're supposed to be empowered and we're not supposed to take no for an answer and be like the master of our destinies and the captain of our soul, but we have to do so in a way that doesn't threaten to disrupt capitalism or the patriarchy whatsoever. So it's the vocabulary of women's liberation that's basically doing unpaid PR work for a system that mostly still just functions on moving money out of women pockets. And two again, Betsy DeVos. It's engineered so that criticizing the MLM still feels like criticizing a woman's right to run more for herself. So the genuine problem here is that women are still significantly underpaid and economically stuck. And the MLN takes that very real grievance and instead of offering a real solution, sells women an expensive ass starter kit and tells her the only thing between her and freedom is her go-get-em attitude, but. The overwhelming, like, upwards of 80% of people that participate in MLMs are women. The less money your family makes, the more likely you are to be recruited into this structure, and it really appeals to a lot of women who maybe want to make a little bit of money but work from home, have to do childcare obligations, and it just creates one more to add to their to-do list.
Kylee: Yeah, and so I feel like they're just kind of preying on vulnerable communities, right? People that are already struggling to kind of participate in traditional economy. Yeah. They're just sliding in those DMs. Yes, exactly. Trying to get you to participate as well, Zoë.
Who gets targeted
Zoë: You seem economically precarious with these chevron leggings that will absolutely make you look like you have the camel toe of a lifetime, change your mind. Haven't you always wanted mint green patterns around your genitalia? I know I do. So the empowerment pitch gets loudest exactly where people have the least amount social capital and actual capital to absorb a loss. You know, the thigh wrap company, It Works, have been documented. They have shown that their strategy specifically is to go after young, low-income women with the double hook, fast weight loss, and fast money. The Herbalife Clubs did the same thing in immigrant and working class neighborhoods. So that pattern is not an accident. It is literally their strategy to go for people that they know are disenfranchised by the traditional economy. And they're like, whoa. You want to lose a little bit of weight, you want to make a little bit of money by losing weight, don't talk about food deserts, don't t talk about socioeconomic inequality, sell people a diet shake. That sounds so ethical. Yes, exactly. And it's, you know, it's sort of parallels with the entire gig economy because people get lured into both MLMs and app work with the be your own boss pitch and both hand you all of the risk that an employer used to carry. With none of the protection. One of the books that I read researching this episode that I would really recommend, which came out this year, is Little Bosses Everywhere by Bridget Read, which tells the story of an older woman who could never sell her Mary Kay, still has boxes and boxes of it decades later, and now drives for Lyft just to get by. So it's the same dream being sold over and over again and just is never, ever delivered upon. So I think one thing that I really want us to sort of like handle carefully, because I think it hits really close to the bone in the show, is that people in eating disorder recovery will get recruited by these companies on purpose. Really? Yes. An interest in health, a fraught history with body, and someone primed to want a fresh start all line up perfectly for a recruiter. These products are built around restriction and control. Again, the energy, teas, the weight loss supplements, like... The meal replacement shakes, all of those things are basically a well-branded relapse risk. The same way these products get transmitted socially is mimics pretty closely how eating disorders can get transmitted. Socially, tons of registered dieticians have described getting pulled into nutrition MLMs early on.
Kylee: Me.
Zoë: Not you, thankfully, but people have asked you. People know that you have credibility and authority, and they're like, if I got Kylee in my down line, I'd be set, because they don't realize that you're bounded by ethics to not sell shit.
Kylee: Well, that's why like Juice Plus or Herbalife try to put a stake in the Academy, because they're like, oh, we got to get all these dieticians on board, you know. But then that leads to people not trusting dietician. So anyway, it's so great.
Zoë: Right. Yeah, I know. Same. Like, I mean, I get the same thing as journalists. They're like, why would I trust journalists? I'm like, I'm sure there's like three people that suck out there, but there's a lot more than three people who don't suck. A lot of these things intentionally prey on the most vulnerable people, both financially and when it comes to diet, culture and eating disorders. When I was in the thick of my eating disorder, I would buy. Herbalife, it was this awful peach tea that was supposed to be an appetizer, which it's just extremely caffeinated, shitty-tasting powdered iced tea that I would drink to try to suppress my appetite. I'm not totally sure that it ever worked. I also didn't know what it was, and I'm like, that can't have been good for me. But also, thank God I figured out how to order it off Amazon and never got suckered into being a sale. I actually did not know that Herbalife was an MLM until years later when I was like, really? That shit I was buying off Amazon is part of an MLM. I feel like I was like a fly that wandered into a spider web but didn't realize it until like years later. And, but for the grace of God, I'm not, you know, somewhere and not selling these fucking diet shakes and like rural witch talk.
Kylee: Okay, I want to go back to something we talked about before, the money piece. Yeah.
Zoë: You were saying most people don't make money, right?
Kylee: Does anyone make money?
The independent numbers
Zoë: Most people lose money, and I think this is the part that the testimonials are engineered to keep you from Googling, but the independent numbers, which we should always trust more than the industries, there was a 2018 AARP study found that 73% of MLM participants lost money or made none at all. Of the ones who did profit more than half cleared under $5,000 for the year. Before expenses. A 2011 analysis put the failure rate at 99.6%. So that is wider than the failure rate for ordinary small businesses by a huge margin. It's basically gambling, but you're working way harder. In 2024, the FTC looked at 70 companies' own income disclosures and found that most participants made $1,000 or less per year. So that's $84 a month. Like that is way worse than just like the worst babysitting gig. You've ever gotten. In at least seventeen of those companies, the majority of participants made nothing or lost money. Also, I think it's important to remember how sales actually get counted because in a lot of these businesses, the only purchases on the books are ones distributors make themselves. So, the customer and the salesperson are frequently the exact same broke person buying their own quota to stay eligible for check that might never come, so I think, again, this financial story sort of rhymes with the diet story, where the fail rate is so high that the failure is essentially the product. You lose, you blame yourself, you double down, you re-up. So that loop or that yo-yoing isn't a bug, it's basically a feature of the system.
Where is the FTC?
Kylee: Where's the FTC in all of this? Why doesn't somebody shut these companies down? It's wild.
Zoë: Because we cannot bring ourselves to do even a tiny amount of regulation in the US. So there's two agencies, both of which have huge holes, and a rule book was basically written by the industry for itself. So the foundational moment is going back to that 1979 FTC ruling against Amway. The FTC accused Amway of being a pyramid scheme and lost, and that loss became the template that every MLM has used ever since. It's like, here are all the loopholes. That we need to jump through. So the referee that got to draw that line was basically one of the team's players. Since then, the FTC works case-by-case and only chases the company doing the most heinous damage. Like, you have to be really pyramid-y to be called a Pyramids team. Herbalife, $200 million in 2016. There was the AdvoCare case where they lost $150 million and received a lifetime ban in 2019. But there is still no federal rule specifically governing the income claims these companies make. Like, you can tell people they will become extremely wealthy selling whatever diet shake. And the FTC's 2024 report all but begged Congress for one. But now that we sit like, Donald Trump has supported, directly supported MLMs. We are not going, again, even fucking Bill Clinton was speaking at Herbalife conferences, Especially in like when the company really wanted to branch into Asia and China, they were like, hey, Bill, want to get paid $700,000 to do a single speech in China. So on the supplement side, DSHEA means that the products themselves face basically zero gatekeeping. During COVID, distributors for companies like Plexus and, oh my Christ, Youngevity, claimed that their products could just prevent or beat COVID. So it's the same exact energy as neutralites, how to get well and stay well and cure your depression or cancer with grass pills. So that's the predictable output of turning tens of thousands of totally unaccountable wildcard contractors loose to sell completely unregulated products. So the structural trap I think is this, you can stop a company from lying. It is significantly harder to stop tens of thousands of independent contractors from lying, all of whom get paid and incentivized to do so via DM, via in-person interaction.
Bottom line
Kylee: This makes me think about like Ozempic and GLP-1s. Yeah. How is that playing out with some of these companies? Is it hurting them at all or?
Zoë: Oh, I mean, you know, the response is almost pure poetry. For the first time, a regulated, tested, actually effective drug is doing the most precise thing these companies spent 40 years promising that a pecan-flavored milkshake would do. GLP-1 medications are basically pulling the floor out from the entire weight loss industry, MLMs included. So the pivot is something called nature's ozempic and like trying to sell supplement marketing. Based around berberine and similar ingredients, which are being sold as the natural, cheaper alternative. You're also seeing the same thing that we see in processed foods, where a lot of these companies are selling ready-made ozempic kits of all the shakes and protein bars and snacks that you need to continue to support your GLP-1 rate loss journey.
Kylee: Wow. Okay. So, if we were to have our audience walk away with learnings from this... If hypothetically we wanted people to accidentally learn something from YDS. But I mean, some of us might have friends or family members that are in one of these. I don't know how many of our listeners are in on themselves, but if you are, what are some takeaways? Must be terrifying if you're, like...
Zoë: And you realize like you're on, you're like, holy shit. Listening to our podcast. Or the life as an MLM. They're calling me out. I think the good news, we're not calling you out. We're calling you in. We're saying blink twice if you need help. People are catching on. There's tons of anti-MLM forums, especially on Reddit. There's the Lula Rich documentary on Amazon, which is really fun. So there's a steady drip of people posting their exit stories. Which is really positive. And I think the reframe that I care most about is that if you got pulled in or you watch someone you love get pulled in, the math was rigged against them before you ever signed the paperwork or pressed buy now. The loss was the design. It's not your failure to hustle hard enough. It's your insufficiency. It's just math and statistics. And similar to diet culture, a lot of the stuff gets sold into an insecurity that should not exist and is totally culturally manufactured. Your body is not a problem. You do not need a shake to solve a problem that doesn't exist. Diet culture and MLMs are selling the same identical thing, basically this crisis that they fully manufactured and a cure that you have to keep paying for forever on auto ship while everyone above you continues to actually make money. So they've been running that exact play since a man with zero medical training started bottling alfalfa. And when he couldn't sell it in China, decided to sell it to middle-class suburban Americans during the Great Depression. And you do not have to buy it, and you really truly do not have to sell to people that you love. And Charlotte, for the love of God, stop DMing me.
