Tens of thousands of workers have signed up to risky direct sales schemes, which can be notorious cash sinkholes, after waves of redundancies have starved many for income during the pandemic.
Many have been enticed into working for multilevel marketing groups, where people sell goods independently on behalf of a company and earn commission on sales made by their recruits. There are an estimated 563,000 people involved in the modern day version of Tupperware parties.
Recruiters have lured new starters on social media with promises and slogans such as: “Are you ready for the travel boom?”, “What if I told you £69 could change your life?” and “Work your own hours and get paid instantly.”
Susannah Schofield, of the Direct Selling Association, said a growing number of unsafe and predatory MLM firms, some of which are illegal pyramid schemes, were set up this year to prey on the most vulnerable. Those on the Direct Selling Association’s list of “approved” businesses, which adhere to a code of conduct and are deemed less risky, have also had a surge in new starters. The DSA is not a regulator.
Make-up brand Avon, a well-known direct selling group, has had a 114pc growth in the number of new joiners since lockdown. Usborne Books at Home, the direct selling division of children’s publisher Usborne, has recorded a 231pc increase. InteleTravel, a travel agency, signed 4,000 new agents between March and July, bringing its total to 10,550. It charges a £142 fee to sign up plus £32 a month.
Emily Heath, a 56-year-old carer whose name has been changed, is down over £300 since she joined an MLM scheme in June after losing clients during lockdown. She said she was lured in by online adverts promising big profits. But she soon found the costs added up and she was unable to make a profit.
She said: “You have to pay to join and then every month. It’s like a positivity cult. There is no pressure to sell because they are already making money out of you every month.”
Ms Heath said she was encouraged to pay to join webinars and training courses. “I haven’t sold anything,” she said. “I tried but was called a scammer.”
A spokesman at the Anti-MLM Coalition, a campaign group, said the jobs were being sold to people on a “dishonest” basis.
“It can be really damaging, emotionally and financially,” he said. “Most who signed up during lockdown probably haven’t found out yet what they have got themselves into. You are the customer, you just don’t realise it.”
Often the perpetrator is also the victim, with those who have signed up pressured into recruiting others, which can put “enormous” strain on relationships, the spokesman said. Women are the biggest target for MLM companies.
However, there are opportunities to make money. Rachel Watson, 44, from York, joined the 1:1 Diet, a weight loss business, in March after her make-up business closed during lockdown and she lost her restaurant job.
Ms Watson said: “I lost everything overnight because of the pandemic and I don’t know what I would have done without this job. I have completely replaced my previous income.” There has been no direct pressure to recruit but she does get additional income for sales made by her team so would benefit from recruiting, she said.
Cliff Jones, of the 1:1 Diet by Cambridge Weight Plan, said: “We offer a very real business opportunity to those wanting to earn an additional or full-time income.” He said there had been a 15pc rise in sign-ups during Covid-19.