It's not often that a personal finance blogger says that they are getting involved in multi-level marketing scheme. However, earlier this week, I woke up to an email from a friend saying just that. Specifically it went like this, "I'm really sleepy but had a quick read of this and.... Isn't Rodan and Fields a pyramid/MLM scheme?" Then she posted the link to this Jenny Pincher article on multiple streams of income.
I consider The Jenny Pincher to be reputable, so this came as a surprise. Last I had heard from her was about a month or two ago. She was thinking about taking some off and finding someone to run to the blog. I was initially interested and reached out to her, but soon after I did, I realized that I couldn't keep the "voice" of the blog. She agreed and we moved on. Now I'm wondering if she found someone else.
I had never heard of Rodan and Fields. Fortunately, the Jenny Pincher article gives me a little background:
"The third source of income is from my newest venture which is as a Rodan + Fields consultant. If you are not familiar with Rodan + Fields, its the premier skincare line created by the doctors who created Proactiv. I chose this opportunity because I saw this company was at the ground floor level (preparing to go global). Rodan + Fields is the 4th largest and fastest growing premium skincare brand in the U.S., following Clinique, Estee Lauder and Lancome. I have only been working this business 1 month and I work this business in 15 minute pockets here and there. I received my first check this month, which was almost enough to cover a car payment, I was shocked! If you’d like an overview of the business opportunity, you can click here."
I'm not going to suggest that I am a skin care expert, but I had heard of the others. In consulting my wife, she too had never heard of this #4. Google Trends to the rescue. Here's a comparison of the four brands:
As you can Rodan + Fields is barely a blip on the radar at the bottom. It's hard to find a definitive list top skincare brands in the United States, but I did find a top 10 global beauty brands, which referenced a list here. Here's the top five: Olay, Avon, L'Oreal, Neutrogena, Nivea. Three of the top 4 are from the United States. We haven't even gotten to any of the three big players we were looking for. They show up at 6 (Lancome) and 8 (Estee Lauder), sandwiching the well known Dove. Biore and Shiseido round out the top 10. Clinique didn't make it.
While this list is from 2012 and it is beauty brands, I call BS on Rodan and Fields being #4 in the United States. There's no evidence that such a shake-up happened to move the Lancomes and Lauders to top status and drop all the others down below the obscure Rodan and Fields.
And if such a shake-up did occur, I can promise you that you aren't getting in the ground floor as stated in the Jenny Pincher article. If it's bigger than Neutrogena with all its shelf space in drug stores everywhere, you can simply move on.
So already we've come some inconsistencies in the marketing. As is often the case in MLM, sources for the claims are mysteriously missing.
It's gets worse with the "preparing to go global" comment. In the normal business world, this is a good thing, seen as a sign of success of the business. In the MLM world, it is called pop and drop. In short, if a pyramid scheme starts to implode in one country, start it up in another country. The initial growth in that country (the "pop") will cover up the "drop" in the initial country and overall, the company can pitch a message of "we're growing!" Billionaire Bill Ackman has criticized Herbalife for bringing expensive diet products into countries that have hunger as one of their top problems.
It gets worse. The Jenny Pincher article continues on past the point I quoted. She says, "As I begin to share these products, I gain a customer base and I start building my team where I will get paid for sharing the opportunity."
This is greatest example of Orwell's Doublespeak that I can think of. What MLMers call a team, is what everyone else calls a pyramid. It certainly sounds better to "build a team" than "craft a pyramid scheme" doesn't it? Unfortunately the acts are in the same. A rose by another name, right?
Aren't Rodan and Fields Reputable?
As they claim, they appear to be the dermatologists behind Proactiv. They both Stanford University Medical School, so they aren't dummies. However, it turns out that Proactiv isn't anything special. The active ingredient is benzoyl peroxide. Consumer reports found that Proactiv didn't work better than other products that contain benzoyl peroxide... and the other products are much cheaper.
Their recommendation: "To treat acne on your own, start with a benzoyl peroxide-based treatment, and buy by price. Nearly all of our test participants were satisfied enough with the topical product they tried to say they would buy it. Remember, acne outbreaks are cyclical in nature, so yours might get worse before it gets better. Also keep in mind that benzoyl peroxide can irritate skin."
Of course you can pay more for Proactiv, but it looks like you are just paying for Justin Bieber and Katy Perry to make Proactiv commercials.
It seems like Proactiv's true contribution to skin care is marketing, not the product.
Oddly, Rodan and Fields eschews what works, marketing skin cream with celebrities, to go with MLM.
By the way, shouldn't Proactiv rank above Rodan and Fields if Rodan and Fields are using it for name recognition? Just another skin cream brand that would seemingly be in the large gap between Clinique/Estee Lauder/Lancome and Rodan and Fields.
Looking at MLM Skin Cream Products
I've stayed away from writing about MLM skin cream products. It seems straight-forward to explain how juice isn't going to heal your cancer, but it's less so about skin creams. One thing you can say about skin creams is that there are no shortage of products claiming to be really awesome... some of them even rock the 3AM infomercial circuit. And certainly the backs of the magazines wouldn't lie.
However, just like how MLM relies on psychological tricks to make it seem juices work, the same can be true of skin creams. In fact, the FTC use to warn of MLM lotions (creams) and potions (juices). The FTC's advice applies to a broader range of products now, but there's no denying that most MLMs focus on unquantifiable consumable products like creams, juices, and weight loss shakes. Have you seen an MLM refrigerator company? Me neither.
Serendipitously, I received an interesting comment on my article about Nerium, which is another cream. The comment author's sister harassed her into buying the product. She never used it, but gave it to her husband. Her sister went on and on about how great her sister's skin looked... and doesn't appear to have ever mentioned the husband's skin. It cost her $700 over several months to "support her sister's business." Not only that, but the comment author makes it seem like there's some kind of Photoshop going on:
"The LOL moment though was I was with her on the day she posted a pic of herself. My sister has terrible acne scars on her face and the day I was with her she looked the same as I have always known her without makeup. That day a pic went up where she said look at me 3 weeks in and see the difference? ummm, where were the scars? I was just with her!"
I'm not suggesting that Nerium and Rodan and Fields cream is the same, just that people see what they want to see. And sometimes, it appears, purposely fake results. If it can happen with one cream, it can and probably will happen with others.
Reddit shows the Evils of Rodan and Fields (and MLM in general)
I could go into much greater detail about Rodan and Fields. Maybe over time I will. However, I found that there's an outstanding Reddit thread filled with juicy information. For example, they have the same car scam as ViSalus, where you can qualify for car payments. You have to first put the car in your name and if people in your team/pyramid stop buying products, you'll no longer qualify for the car payments and be forced to pay out of pocket... an expense of $750 that many didn't plan on.
There's a lot more in the thread, but that's just a taste.
The Reddit thread is started by the person who has created a very good blog on Rodan and Fields.
Rodan and Fields Consultants Mislead the Public
In my research of Rodan and Fields, I came across Bonnie Cribbs asking "Is Rodan & Fields a Pyramid Scheme?". Unfortunately his article is useless because he confuses heirarchical organizations, which do not rely on endless chain recruiting such as a school system with pyramid schemes which do rely on endless chain recruiting. (Read more: Corporate America is Not a Pyramid Scheme). Bonnie even goes as far to say, "Why are people so afraid of a triangle?"
This is a common deception in the world of MLM. Unfortunately the MLMers spread it, because it sounds reasonable and helps them recruit more into the scheme.
He also includes a video on his site that depicts Eric Nelson's dangerous MLM deception.
(By the way as made famous in the Jake from State Farm commercial, the cream doesn't seem to be helping Bonnie as she looks hideous. When "Bonnie" is writing about skin cream, I am thinking it is going to be a girl.)
Like many of the MLMs that I've covered, there is more of the same here. More misinformation, more psychology tricks, more deception (some of it obvious like Bonnie's). I don't know about you, but I stay far away from that kind of crap.This post deals with: