How I Lost $500 in a Pyramid Scheme

Buyer Beware: Multi-Level Marketing Is Not "Your Own Business"

More women need to be aware of fast-talking, persistent multi-level marketers (for pyramid schemes) who take advantage of trusting individuals. (<a href="" target="_blank" rel="noopener noreferrer">Free-Photos</a>)

More women need to be aware of fast-talking, persistent multi-level marketers (for pyramid schemes) who take advantage of trusting individuals. (Free-Photos)

In the Midwest, certain multi-level marketing (MLM) companies — also kind of known as pyramid schemes — are incredibly popular. I grew up going to these parties hosted by my piano teacher, neighbors, friends, etc. where you would have coffee and snacks and try out the product that they were selling. Usually makeup, kitchen tools, clothes, etc.

I had this one friend who became a “consultant” for an MLM company who sold cosmetic products that I used daily. For five years, she tried to get me to join her team. All I had to do was sign a contract and buy a $99 starter kit and then I would “own my own business.” I always told her no because I was a high-school/college student and didn’t have time, but when I graduated from college, she literally would not stop bugging me about it.

So, because I am/was too nice, I signed up. I figured that since I already used the product anyway, I could reap the benefits of the 50 percent discount and maybe sell some on the side to friends who used it. Whatever, it was a win-win.

It was not a win-win.

I was soon pressured to buy “inventory” and attend a “company leadership conference” two states away — travel expenses not included! Again, because I am/was too nice, I bought inventory which was about $700 worth of makeup.

Two weeks after receiving my inventory, I realized that I needed to sell the stuff to make my profit and leave the company because it was just too much. So, I started selling my inventory through social media, because it was 2015 and … the internet. It seemed like a great idea at the time.

A few days later, I got a letter from the headquarters of this company with a screenshot of my social-media posts and a warning that if I tried to sell the product that I bought and legally owned that I would be in violation of my contract and that they would bring about legal action. (And how did these people find my posts?!)

Which is funny, because my “team leader” never mentioned that you could only sell face-to-face with these products.

At that point, I realized that I never truly owned anything.

So, I contacted the return department of the company and sold back what I had in inventory for 90 percent of what I originally paid and permanently left. Of course, the woman who recruited me wouldn’t stop blowing up my phone after that because she lost her commission on my sales, so I blocked her phone number. (Bye Felicia!)

I thought I was in the clear until … tax season! I had to go back through all of my paperwork with my accountant and figure out what I owed in taxes to Uncle Sam.

And that is how I lost $500 in a pyramid scheme.

More women across the United States are learning why they shouldn’t associate themselves with companies like this, and it’s sad.

Chloe Anagnos is a writer and digital marketer. Her work has been the subject of articles on the FOX News, USA Today, CNN Money, and WIRED websites. She has been a writer, commentator, and panelist for media outlets around the country on subjects like political marketing, campaigning, and social media.

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