What's the Deal: Pros and cons of multi-level marketing

What's the Deal: Pros and cons of multi-level marketing - Alicia Vitarelli reports during Action News at 4:30pm on August 29, 2018.

From leggings to fitness programs to beauty products - multi-level marketing, or MLM, is on fire right now.

The side hustle is attracting everyone from stay at home moms to anyone looking to supplement their income or replace it altogether.

We're breaking down the pros and cons of this new wave of direct sales.

"It is a gig economy and for a lot of us one job is not enough," said Paige Wolf.

Wolf and her husband are both self-employed.

"So we need to pay for our own health insurance for our family of 4 and it's a high cost," she said.

Wolf's side gig is with BeautyCounter, a direct sales company that sells natural skin care and makeup.

"So, for me, selling what I sell on the side is helping me fully cover my health insurance," she said.

From flexibility to independence, many say the side hustle can be extremely lucrative.

"I know people who do this full time, or not even, who have replaced their full-time income and make hundreds of thousands of dollars," said Rosita Lamberti.

Lamberti is a rep for a healthy lifestyle company called Shaklee. For her, it's also a chance to explore an industry she loves.

"It's given me the opportunity to find my passion, so I have a passion for health and wellness and helping people," she said.

Francis Giron says working with Stella and Dot is a chance to get out of the house and make some extra spending money, but still enjoy her full-time job as a mom!

It allows me to be home with my children, it allows me to be home with my youngest. Be home with my daughter when she gets home from school," she said. "It's been amazing because I can literally work from anywhere."

But the experts at the Penny Hoarder, a personal finance website, say before you sign up, investigate things like hidden costs

"Along with cost of inventory, you also need to pay for transportation, to pay for orders or host parties, or travel to mandatory training," said Lisa Rowan, savings expert at the Penny Hoarder.

She says she's also heard horror stories.

"Sometimes people who have invested in these companies can't unload merchandise and if the company doesn't have a good return policy with unsold inventory you can really get stuck and lose some money there," said Rowan.

And every company is different, so the experts say to read the fine lines before you sign on and always have an exit plan.

Some people confuse direct sales with so-called pyrmaid schemes, but the Penny Hoarder says there is a difference.

------
Send a News Tip to Action News
Learn More About 6abc Apps
Related Topics:
shoppingconsumersaving with 6abcwhat's the deal
(Copyright ©2018 WPVI-TV. All Rights Reserved.)