Is Arbonne a Pyramid Scheme? Good question. Since I write about ways to make money from home, and indeed work from home myself, I am always coming across MLM companies in the many ‘work from home’ Facebook groups I am part of. It’s scary. One company I have been hearing a lot about recently is Arbonne. If you’re thinking of joining Arbonne, you should read this article first, it will give you all the information you need to make an informed decision about joining this company.

I recently wrote a blog post on MLM’s vs Pyramid Schemes, which touched on Arbonne, and questioned whether the company is a pyramid scheme or not, so today I’m going to dig a little deeper.

Analysis of Arbonne (Arbonne International LCC)

What is Arbonne?

Arbonne, or Arbonne International LCC to give the company its proper title, was founded in 1980 by Petter Mørck in the United States. It is a cosmetics and skincare retailer which promotes itself in the ‘natural’ market, selling Swiss-formulated products.

Arbonne’s structure is a direct sales company or MLM (Multi-Level Marketing), this means it produces growth by continuously recruiting new people into its company to sell its products, as consultants rather than employees. Consultants make money via a complicated system of commission – both from sales they make themselves and sales made by those they recruit personally to the company.

According to their website, the company currently has offices in 6 countries – the United States, the United Kingdom, Canada, Australia, New Zealand and Poland. Arbonne currently has around 21,000 consultants in the UK, all selling Arbonne products on behalf of the company.

Arbonne has been at the centre of a number of controversies during its history including several lawsuits in the United States and the bankruptcy of its parent company Natural Products Group LLC in 2010. However, this has not stopped the company from enjoying enormous commercial success, the company in 2018 reported payments to consultants in excess of £10 million in the UK market alone.

What does it mean to be a consultant for Arbonne?

There is a significant amount of promotional material on Arbonne’s website which describes the recruitment of consultants – not as simple employees – but as members of a growing community of like-minded and supportive (mainly female) entrepeneurs, promoting empowerment and health.

The company’s communication material describes joining as financially beneficial through earning commission, with exciting benefits such as discounts, cash and car prizes and trips overseas for those who meet targets. However, Arbonne uses the word ‘consultant’ rather than ‘employee’ with care, because those who sign up to sell through them do so without any guarantee of any income, as Arbonne acknowledges in the recruitment section of their official website.

Before we discuss the pros and cons in more detail, the process of joining Arbonne goes something like this:

  1. Current Arbonne consultants “recruit” other women from among their family and friends, usually via social media, to join the company.
    Each consultant pays £53 to sign up for a year. In subsequent years there is a subscription fee of £25.
  2. In order to sell products, consultants need to buy products so that they can demonstrate them to family, friends and their wider network. It seems that Arbonne doesn’t publicise how much it recommends consultants to buy, but the basic range of six items costs £200. It is not clear how much a typical consultant may buy, it may be much more. Consultants are encouraged to buy product as an investment into future sales, and also need to pay for marketing materials. Each consultant is given a target of a minimum amount of “QV”, which means that they can only remain as a consultant with Arbonne if they have sold more than a set amount. These targets aim to pressure consultants to sell.
  3. Arbonne provides training materials and sessions for consultants, urging them to monetise their social circle by approaching people they know (often through social media) using a targeted campaign which emphasises persistence and optimistic messaging.
  4. Those who have joined Arbonne report that they join a network of mainly women, who sit under the individual who recruited them, in a team. These teams share ideas and motivate each other to sell.
  5. New consultants are encouraged not just to target family and friends as customers, but also as potential new consultants, so that they can lead their own teams. There is widespread evidence that the focus on recruitment internally is often higher than on sales. Consultants are told to write a list of their entire network which they will contact to try to sell Arbonne products. This is done primarily through social media, but also emails and phone calls.
  6. Some people are able to make some money, but this is usually those who have joined earliest, and therefore sit at the top of the recruitment hierarchy.
Fig. 1 taken from Arbonne UK income disclosure statement 2020.
What makes Arbonne so appealing?

Arbonne sells itself as a leading provider of skin care and cosmetic products, which it describes as pure and natural. The products are luxury, with products such as foundation retailing at around £35. While it is not a ‘designer’ brand, it is a health-conscious brand, recognised by PETA for avoiding animal testing and containing vegan ingredients and celebrating a “plant-based” approach. However, its products do not seem to be particularly natural and have come under some public scrutiny regarding the ingredients of products which were not originally publicised.

It is clear from researching Arbonne online that the company has put a great deal of effort into managing its online presence. The company and its affiliates dominate Google searches. Although there have been many, well-publicised criticisms of Arbonne (in traditional media, blogs, review sites and social media) they rarely feature highly in Google searches as criticism is, seemingly, being deliberately lowered via extensive SEO by the company.

What criticism has Arbonne received?

Thanks in part to social media, Arbonne has been openly criticised across social media platforms, blogs and forums, particularly by current and former consultants. For example, there are significant numbers of YouTube videos made by Arbonne consultants, with criticisms of the business putting them under extreme pressure to sell products to family and friends and detailing how they were not able to make money from their involvement. Arbonne responds by saying that it is upfront about its offer to consultants and operates within the law in all territories.

One issue is the manner of their recruitment as consultants. Arbonne promotes and encourages recruitment from among its current consultant base. It operates a high-pressure strategy to encourage consultants to enlist new consultants from among their family and friends.The company hires people as ‘consultants’ but they do not have a fixed wage or any benefits. All earnings are made purely on a percentage of an individual’s sales, plus a percentage of the sales of consultants they have recruited. The difficulties of making money are myriad and leave Arbonne open to accusations it is a pyramid scheme.

Is Arbonne a pyramid scheme?

A pyramid scheme is an illegal business under UK law, they are defined as organisations where participants are financially compensated by other people paying into the scheme rather than by the selling of a product or service. The result of this is that the vast majority of participants are likely to lose, rather than make, money through their involvement.

Typically, pyramid schemes thrive from a highly compelling and sophisticated marketing pitch which encourages participation and does not reveal the true nature of the enterprise. They tend to assure potential collaborators that they are offering a unique opportunity to make money, quickly and easily, but providing very little detail of what is actually involved.

To state that Arbonne is a pyramid scheme is difficult to say with certainty. There is an ongoing debate between policy makers, business leaders and academics as to what exactly constitutes a pyramid scheme and how it differentiates from a MLM (Multi-Level Marketing) which is Arbonne’s business model. This topic has been investigated more thoroughly in the United States, where MLM schemes operate with less scrutiny and greater scale than in the UK. The American Consumer Awareness Institute published a paper in 2011 attempting to analyse the available evidence of the legality and fairness of MLM schemes and found that across the sector MLM organisations were structurally unfair and that loss rates were around 99% for those recruited.

However, “the main distinction between MLMs and pyramid schemes is MLMs actually have a product,” says Daryl Koehn, a professor of business ethics at DePaul University in Chicago. “In pyramid schemes, you’re just selling the opportunity to make money.” However, most specialists agree that MLM organisations are de facto pyramid schemes if there is a significant cost of entry or if participants build up inventory they can’t later sell.

So, the question becomes, is the cost of entry and the build-up of inventory required to become a consultant with Arbonne sufficient to class it as a pyramid scheme, i.e. something that should definitely be avoided? There are definitely plenty of examples of individuals online who seem to fit this criteria.

Even Arbonne’s own data shows that in 2018, it had 21,000 consultants in the UK and of that number only 2,600 received any earnings at all. The vast majority of Arbonne consultants in the UK in 2018 (88%) made nothing, and Arbonne states that the figures do not include any payments made by the consultants as part of their membership of the company. Less than 20 Arbonne consultants received more than £20,000 from Arbonne, and we do not know how much of their revenue was profit, as that is not included in Arbonne’s figures (Fig. 1).

This seems to fit the overall picture of MLM schemes in the UK. As all Arbonne consultants in order to sign up must have spent at least the £54 registration fee, plus many will have purchased products, then it seems self-evident that there are many more people losing money than making money. It also implies that Arbonne are being deliberately manipulative with their information, as Fig 1 implies that an average Arbonne consultant is making £503 a year, but these figures do not include the vast majority of consultants who earned nothing. Statistically, you are unlikely to make money, but some are able to do so.

There are hundreds of testimonials from those with first-hand experience of Arbonne online, a typical example quoted from the Guardian newspaper in its 2019 article describes the story of Fiona, who was encouraged to take out a credit card to pay for Arbonne products (a debt which she has not being able to repay). Arbonne’s promotional materials encourage women to spend more than they can afford to motivate them to sell to make back their money. Consultants are given training to aggressively target customers, who are her network of friends and family.

Fiona’s description of “working” within the company seems to suggest that Arbonne encourages consultants to sell themselves on social media as more successful than they are, so as to encourage others to join up.

Women are told to focus on the positives, so most advertising online do not reveal the reality that they have not made back the money they have invested. Arbonne representatives continue to maintain that the business structure is legal and that unethical or improper behaviour should be reported via BEST.Arbonne.com, although it is unclear to what extent this procedure is communicated to Arbonne consultants.

While the UK government has not certified Arbonne as a pyramid scheme, because it does have a legitimate product, it does appear to have the other key characteristics. Unfortunately, there are also other issues with Arbonne.

Many former Arbonne consultants report problems they experienced working with the company ranging from lack of transparency from Arbonne on what was involved, feeling under pressure or bullied to carry out aggressive direct marketing and selling techniques on people within their social circle and being presented with an unrealistic picture of how much money they could expect to make. Arbonne does not openly present the facts to prospective consultants, so it is easy to see why many assume they will automatically make money and are disappointed when this proves not to be the case.

At its most serious, there are even accounts of consultants being instructed to target vulnerable individuals (such as single mothers or those with disabilities) and involvement with Arbonne having a devastating impact on personal relationships, as people take offence to being harangued to buy products. Some people report that when they reported to their team leader that they had a negative response from a family member, friend or partner, that they were told that individual was not being supportive and to not associate with them in future. Because of this more extreme behaviour, which is commonly associated with cults, many investigations by journalists, including by the BBC and VICE, have concluded that Arbonne uses manipulative tactics.

Still thinking of joining Arbonne?

For those considering joining, please do your own research prior to joining and remember the old advice – if it seems too good to be true, that is probably because it is.

If you enjoyed this article, you might also want to check out my recent article on whether or not Monat is a pyramid scheme!

Footnotes:

  1. Company profile, https://www.directsellingnews.com/company-profiles/arbonne-international/
  2. Arbonne consultant information https://www.arbonne.com/discoverca/opportunity/compensation.shtml
  3. Lawsuit filed by Texas couple arguing Arbonne is a pyramid scheme https://topclassactions.com/lawsuit-settlements/lawsuit-news/707132-arbonne-class-action-says-pyramid-scheme-scams-thousands-victims/
  4. Court summary, 2010 https://www.chapter11blog.com/chapter11/2010/01/natural-products-group-llc-files-for-chapter-11.html
  5. Summary of Arbonne UK financial information 2018 http://embed.widencdn.net/pdf/plus/arbonne/nctuaskatk/UK-EN_ICCS.pdf
  6. https://www.arbonne.com/discoverca/index.shtml#approach
  7. https://www.mirror.co.uk/news/uk-news/andrew-penman-arbonne-looking-people-3052814
  8. Arbonne UK Success Plan, August 2019 https://embed.widencdn.net/pdf/plus/arbonne/foppgvmauv/6395R12_UK_SuccessPlan_final.pdf
  9. Article in the Guardian newspaper detailing the experiences of women direct selling cosmetics on social media, includes Arbonne https://www.theguardian.com/fashion/2019/jun/01/online-beauty-schemes-selling-social-media-younique-arbonne
  10. https://www.arbonne.com/discover/customer-service/faq.shtml
  11. A fairly typical example from America: https://www.youtube.com/watch?v=3s6RGN_1NVM there are also “vlogs” by UK consultants, detailing similar experiences an example here: https://www.youtube.com/watch?v=PCRKZ2QXeIM
  12. UK government advice on how to avoid pyramid schemes https://www.gov.uk/government/publications/pyramid-selling-advice-for-the-public-and-communities
  13. ‘The Case (for and) against Multi-level Marketing’, John Taylor, Consumer Awareness Institute, 2011. https://www.ftc.gov/sites/default/files/documents/public_comments/trade-regulation-rule-disclosure-requirements-and-prohibitions-concerning-business-opportunities-ftc.r511993-00017%C2%A0/00017-57317.pdf
  14. https://www.theguardian.com/fashion/2019/jun/01/online-beauty-schemes-selling-social-media-younique-arbonne
  15. Arbonne UK financial statement 2018 http://embed.widencdn.net/pdf/plus/arbonne/nctuaskatk/UK-EN_ICCS.pdf
  16. As documented for example in this BBC investigative piece of companies like Younique, with a similar business model to Arbonne. https://www.youtube.com/watch?v=r4YGQ0l5UeE
  17. Success stories https://success.arbonne.com/en/all
  18. https://www.theguardian.com/fashion/2019/jun/01/online-beauty-schemes-selling-social-media-younique-arbonne
  19. Another testimony of experience with Arbonne emphasises a lot of these points, there are dozens saying much the same thing, but this woman is particularly articulate: https://www.youtube.com/watch?v=EHidzU2QtmU
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