Multilevel Money

Avon offers it, and the unemployed want it

We may have been last to join the party, but now that the recession has finally hit Charlotte (hello, 12 percent unemployment), it's no surprise people are getting creative to pay the bills. From Amway to Avon and Pure Romance to The Pampered Chef, the unemployed are signing up for multilevel marketing to make money … fast.

After twenty years in the financial industry at Countrywide and AIG, fifty-nine-year-old Levester Flowers never imagined he'd be working for cosmetics giant Avon after being laid off last year. "I feel like I just discovered the biggest secret out there," says Flowers, who learned about the company at a job fair before joining in February. He says he's anticipating taking home a thousand dollars a month within the next sixty days at what he calls a part-time gig.

Avon is one of the country's most well-known multilevel marketing (MLM) companies, where your income depends not only on what you sell, but also on the amount brought in by the people you recruit to work under you. The move to multilevel marketing has been so popular that Avon and The Pampered Chef, which sells cookware by recruiting people to throw parties highlighting its products, have seen a 7 and 6 percent jump, respectively,  in sign-ups in the first quarter alone. Meanwhile, Pure Romance, which pedals sex toys, has seen a whopping 30 percent increase in consultant growth during the past year.

Christina Sutton was a stay-at-home mom in Denver, N.C., until the recession hit and her husband told her they couldn't afford new clothes for their two children. She hosted a Pampered Chef party at her house and realized she could be the one hocking the merchandise. After four months with the company, she's already pulling in more than $800 a month for about six hours per week.    

But not all MLM opportunities are legitimate (think pyramid schemes where interested consultants pay to participate in a company where compensation is offered but no product is ever provided to sell) or moneymakers for everyone. "The terrible reality is that MLMs cause double harm in a recession," says Robert L. FitzPatrick,  president of Pyramid Scheme Alert (pyra and co-author of False Profits, which investigated pyramid schemes and multilevel marketing. "Now that there is a recession, the market for MLM is expanding, even while the market for their products—pills, potions, lotions, insurance, fruit juice, meal replacements, etc.—is shrinking. So, MLMs can find more people desperate for income, and they can make even more money falsely promising them an income opportunity."

But in spite of the potential pitfalls, nowadays a job is a job. "The kind of unemployment rates we're dealing with scares everybody," says Fred Campbell, a professor of marketing at UNCC's Belk College of Business. "You don't know what's going to happen, and this kind of work offers a quick easy cushion."


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