Some time late last year, a client of ours was recruited by one of her friends to participate in a "great business opportunity". It was only after it came time to do tax returns that it became apparent for her that her "great business opportunity" was little more than a flashy looking pyramid scheme. Admittedly, the company in question didn't want to call it a "pyramid" because of all of the negative connotations but that still doesn't change the underlying truth that a multi-level marketing scheme, which is being touted as a vehicle for "small business", is scant disguise for a company which is very effective at severing the chain of business risk and abrogating all of its responsibility. Turning contractors into "small businesses" is wonderful because the company doesn't have to worry about any kind of employee entitlements. Also, if the thing goes bang, the company doesn't have to pick up any of the pieces either.
The name of this multi-level marketing company is Monat; which I assume is an invented word which is pronounced like that of Claude Monet. Monat produces hair care, skin care, and other beauty products, which are as far as I can tell of average quality but at vastly inflated prices. From the outside the obvious question is why anyone would choose to become a third-party seller of a product over which they had little to no control over the stock and unless you are running a retail premises which sells a vast array of produce, then I just don't understand it.
The first inkling that I ever got of this, was an email from this person:
Dear Andrew,
If you're looking for quality anti-ageing hair care products that work, the Monat range is definitely worth a try.
I am a local rep based in Mosman, this brand launched into Australia Oct 2021, started originally in America in 2014 and has seen huge success.
The results speak for themselves.
- 30 day money back guarantee.
- Vegan
- Gluten Free
- Safe for color treated hair
- Custom Products to suit your hair needs.
Message me here for a free consultation, I'd love to help.
Yours faithfully, (name withheld).
This person then came into our office and wanted to have a meeting; which when it happened, was an attempt to hawk their wares and to sign me up for the 'great business opportunity'. Never mind the fact that I am gainfully employed in a small business already and I am quite happy being an employee of a small business as it is.
It appears to me after reading through the documentation that Monat gives its marks, that Monat is the perfect textbook pyramid scheme. Of course, it is not going to admit that it is a pyramid scheme and even after hundreds of complaints to the USDFA and the Better Business Bureau and dozens of lawsuits, it has still managed to recruit half a million rubes and charlies.
The U.S. Food and Drug Administration has received and is in the process of assessing 187 adverse event reports related to Monat products. The FDA received these reports between Aug. 2, 2017 8/27/17 and March 9, 2018.
More than 500 complaints have been filed with the Better Business Bureau in South Florida, where Monat is headquartered.
- WXYZ Detroit (ABC7), 14th Mar 2018
Yet despite the lawsuits and constant controversy around the company, it still hasn't been shut down yet. The reason for this is because it has such a disjointed structure, it is really hard to cut all the heads off of this horrible hydra.
Of course it's reaction, is to file defamation cases; on the basis that everyone who signs up to join the program, has already signed a nondisparagement contract with them:
4.3 – NONDISPARAGEMENT
Monat wants to provide Market Partners with the best products, compensation plan and service in the industry. Accordingly, we value constructive criticisms and comments. All such comments should be submitted in writing to the Customer Service Department. While Monat welcomes constructive input, negative comments and remarks made in the field by Market Partners about the Company, its products or compensation plan serve no purpose other than to demotivate other Monat Market Partners. For this reason, and to set the proper example for their Marketing Organization, Market Partners must not disparage, demean, or make negative remarks about Monat, other Monat Market Partners, Monat Products, the Compensation Plan, or Monat’s directors, officers or employees.
Wow. Just wow. It is one thing to ask for discretion but these prize knaves do not even try to hide their motives and actions.
I however am not a Monat Market Partner; so I am not covered by this nondisparagement contract. I can make all of the value judgements and disparaging comments I like. Monat is a cult. Monat is an expletive deleted cult. It exists purely to prey on trusting people, it eats widow's houses, it alienates its marks. It's a scumbucket cult.
Having been given a saved video of one of this person's "training sessions" via an online Zoom call, I came to the opinion that Monat was not merely a cult but in this case, a licence for the kind of bullying that one would find in the school yard. I bet that the second that anyone attempts to shed doubt on anything that they'dbe ostracized by their "friends" in the "community". You’re literally brainwashed.
The experience from this lady (and I am assuming that it is not uncommon) is that you're going to stop hearing from your "friends" the moment that they have decided you are are of no used to them in getting to the next level of whatever the rewards structure of the organisation is. Your "friends" in a multi-level marketing company are your upline; which means that the prime reason that you are going hear from them, is because you hitting a certain number of sales, or achieving certain rank, or bringing on new marks helps them get a new rank or maintain the one they are currently on.
Depending on how narcissistic you upline "friends" are, they might not even acknowledge you in public any more and in the case of this lady, she was ostracised by her teammates and then blacklisted by the group. It seems pretty obvious to me that Monat, is just another scumbucket multi-level marketing company which has successfully developed an internal cult like culture.
After doing a bit of ferreting, I have found that there is a nickname for the logical endpoint of a lot of multi-level marketing small businesses - the GFC, or "Garage Full of Crap". This is the final metastisisation of the cancer, where the rube has been taken for so much of a ride, that they've been dumped out in the middle of nowhere with a bunch of stuff that they're only likely to get cents in the dollar for.
The reason for this is to do with the parasitic nature of the cult. The incentive structure is set up such that the biggest incentives come from to recruit new distributors into the company. Like any classic pyramid or ponzi scheme, most people get a commission based on the product sales that the distributors below them buy from the parent company.
Unlike any legitimate business, advancement in the up the chain is achieved by recruitment rather than by job promotion. Nobody goes up a level by being good at the job but rather by the number of people they recruit and everyone in the downline sub-recruits.
Monat is also running a confusopoly by deliberately shading what is going on with really stupid terminology such as "Market Partnet", "Product Volume" and "Group Volume" which adds a level of abstraction and distraction to the underlying fact that it is really nothing more than a parasitic pay-to-play system where the objectives are met by ongoing recruitment minimums and "incentivized purchases". As the only way to start off and become a distributor is to to buy a starter kit and to maintain that distributor status is dependent on making minimum monthly purchases/sales, then the primary buyer of the crap is the participants themselves.
The problem is that the scheme is designed such that people make more money getting commissions off the product that distributors beneath them are required to buy from the company than they can from selling the good at retail prices to customers outside of the business. That means that the main customers of the company’s products are not customer outside the company but the distributors within it; hence the common end point of the GFC.
No, this isn't a "business opportunity". No, this isn't actually a way to make money on the side. I don't respond to positivity because as an accountant, I want to see things like balance sheets and profit and loss statements, before I cast judgement. I will look at the expected future maintainable earnings, the actual rate of return on investment, and whether or not this thing actually spins a profit or not. I do not care what you call "levelling-up" or what your fancy titles are. I'm going to call a spade a spade and say that Monat, is very much the spade with which people dig their own financial graves with and pay for the privilege of doing so.
Monat is a multi-level marketing scumbucket scheme; which exists to eat the houses of the easily led but first, it will fill their garages with rather average bottles of goop.
Surely if the products were good enough in the first place, then the company would retail them themselves like any other company? No. The sad truth that Monat preys upon is that the product is not their relatively average bottled goop but rather, the product that they are in the business of trading, is the trust and goodwill of their participants. Just like any good ponzi scheme, the product is their marks and it appears that the naive trust of ordinary people, is a market which will eventually glut but not before they've ripped the wallets of their marks for everything they could get.
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