The psychology of attraction to multi‐level marketing

• Published date: 01 July 2023
• Author: Lucas J. Dixon,Matthew J. Hornsey,Nicole Hartley,Cassandra M. Chapman,Justin P. Brienza
• Date: 01 July 2023
• DOI: http://doi.org/10.1111/joca.12526

RESEARCH ARTICLE

The psychology of attraction to multi-level

marketing

Lucas J. Dixon | Matthew J. Hornsey | Nicole Hartley |

Cassandra M. Chapman | Justin P. Brienza

Business School, The University of

Queensland, Brisbane, Queensland,

Australia

Correspondence

Lucas J. Dixon, Business School,

University of Queensland, 37 Blair Drive,

St Lucia, Brisbane, Queensland 4072,

Australia.

Email: l.dixon@business.uq.edu.au

Funding information

Australian Government Research

Training Program Scholarship

Abstract

Despite being a risky and controversial business model,

little research has investigated personal characteristics

that increase attraction to multi-level marketing busi-

ness opportunities like Amway and Herbalife. A two-

wave survey (N

total

=1503) revealed that attraction to

multi-level marketing opportunities was associated

with stronger extrinsic life goals (for becoming rich,

famous, and attractive), belief systems related to spiri-

tuality and thought-action fusion (i.e., the belief that

thoughts alone create reality), and a cognitive decision-

making style that emphasizes intuitive over rational

thinking. Intrinsic psychological needs (e.g., for control

and meaning) showed the least consistent associations.

Based on these findings, we provide guidance for con-

sumer advocates and policy makers to consider individ-

ual psychological factors in education campaigns to

improve decision making and participant wellbeing.

KEYWORDS

consumer protection, decision making, direct selling,

entrepreneurship, multi-level marketing, network marketing,

pyramid schemes

Received: 13 January 2022 Revised: 16 December 2022 Accepted: 11 March 2023

DOI: 10.1111/joca.12526

This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits

use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or

adaptations are made.

© 2023 The Authors. Journal of Consumer Affairs published by Wiley Periodicals LLC on behalf of American Council on Consumer

Interests.

J Consum Aff. 2023;57:1213–1235. wileyonlinelibrary.com/journal/joca 1213

1|INTRODUCTION

Approximately 120 million people worldwide are involved in the direct selling industry, which

generated US $180.5 billion in 2019 (World Federation of Direct Selling Associations

[WFDSA], 2020). By far the most common business structure in direct selling is multi-level

marketing (MLM). MLM companies (MLMs) claim to offer individuals an egalitarian, self-

employed pathway to achieve financial and lifestyle goals by marketing and distributing the

MLM's products to their social network in return for reselling margins (Groß, 2010). Partici-

pants also earn commissions from the wholesale purchases of other salespeople that they

recruit into their “downline”(Keep & Vander Nat, 2014). A generic structure adopted by MLMs

is demonstrated in Figure 1.

There are well known risks and controversies surrounding MLM. Exponential recruiting

can quickly saturate the market with distributors, leading to difficulties finding customers

(Bosley & McKeage, 2015; Stango & Zinman, 2009), high internal consumption (i.e., products

consumed by participants, not customers), and the risk of becoming an illegal pyramid scheme

(i.e., earning through recruiting, not selling; Bosley & Knorr, 2018; Groß & Vriens, 2019;

Koehn, 2001; Vander Nat & Keep, 2002). Because these pitfalls are not intuitive, participants

tend to overestimate the odds of succeeding (DeLiema et al., 2018; Taylor, 2011). In addition,

MLMs have been criticized for promoting a strong culture of influence, which discourages criti-

cal thinking and potentially promotes unethical behavior. Examples include using atypical testi-

monials as evidence of success, encouraging unrealistic goals, merging spiritual faith and

wealth generation, pressuring friends and family members to buy and join, and encouraging

separation from people who are critical of MLM (Groß & Vriens, 2019; Hassan & Shah, 2019;

Pratt, 2000).

These factors may pose financial, emotional, and social burdens on participants and their

families, particularly if unrealistic expectations of success are encouraged by some MLMs.

These burdens include the startup and training costs incurred, as well as excess money, time,

FIGURE 1 Generic MLM structure. Potential compensation: distributors may receive income from product

margins on individual sales, plus a percentage of their recruited downline sales team's wholesale purchases.

Distributor network: training and mentoring relationships between up/downline members and third party

training organizations which service MLMs (Groß & Vriens, 2019). Leadership hierarchy: titles which are

conferred as members reach purchase/sales milestones.

1214 DIXON ET AL.