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, an investigative podcast produced by Little Everywhere

THERE’s a scene in The Dream that I can’t shake. The podcast’s host, Jane Marie, has convinced MacKenzie Kassab, a fellow producer, to infiltrate a direct sales company in the US. This firm sells decent quality make-up, but it costs so much that even Kassab, a beauty marketer in a previous life, has trouble selling it. Soon she gets a corporate email “suggesting” it is time she attends a shockingly expensive sales conference.

Kassab expects the others there to be frivolous housewives looking for “mad money” to throw away on Italian holidays or pink Cadillacs. But by the end of the episode, we hear that she can barely hold back the tears.

There’s a woman whose disabled child needs a special school way beyond her means. Another has a husband whose three jobs barely keep the family out of poverty, but leave him so little sleep she fears for his life. She’s just trying to help him. There’s not a Cadillac in sight.

The women (and it’s only women we hear about) are exhorted to pour out their grief in front of a D-list motivational type. His only words on how to improve sales are “tomorrow’s a new day!” along with variations on the industry mantra that “the only way to fail is to quit”.

In fact, the best way to fail is to get involved in the first place, to judge by the work of , an expert on a variant of direct selling called multi-level marketing, or MLM. He says that 99 per cent of all distributors who get involved in MLM suffer “net losses”, a bloodless description of the sellers’ plunge into credit card debt, with money transferred into the coffers of the sales firms.

“Companies now have a keen understanding of the forces shaping our decisions and behaviour”

Marie (a former producer of This American Life) got interested in the subject because of her family’s often unsuccessful history with the schemes. Told across 11 episodes, The Dream zooms out from her family to the origins of the financial model and the tendrils it has extended into every corner of US politics, from the Nixon era to the age of Trump. The podcast is part history, part exposé, part conspiracy thriller. It shows how the original firms protected themselves by getting close to government and regulatory agencies.

So what is MLM? Think nontraditional firms whose products aren’t available in stores, but are sold largely via word of mouth, by friends and family to friends and family. Thus its other alias, “network marketing”.

These companies usually sell their products to salespeople at such a markup it covers all the firms’ costs, whether or not the products are sold on. The salesperson essentially becomes a customer, encouraged in the face of supertough sales targets to refocus their energy on recruiting more sellers – for a cut of the money they make from sales. “You’re just transferring money from the later entrants to the earlier entrants,” lawyer Doug Brooks explains in one episode.

So why do people fall for it – to the tune of $154 billion a year worldwide? The companies have now acquired a keen understanding of the forces shaping our decisions and behaviour. And some of The Dream‘s most disturbing insights come when it explores the cognitive science weaponised by many of these companies to find, secure and keep their salespeople.

In one seminar, a woman called Danielle is told to sell to people living in trailer parks: “They’re the women who just got their pay cheque, and they live a different world than the rest of us. When they have money, they’re afraid of where it’s gonna go – so they use it.” Research shows why being bad with money is linked to poverty: its challenges can reduce mental bandwidth and towards the short term.

There are some tried and tested tricks to get people to take the plunge. As Kassab’s story illustrates, you need to find people under extreme pressure. The ensuing loss of equilibrium makes people more credulous, if not desperate for a miracle.

Next, apply tech. Kassab is exhorted to post on Facebook six times a day to advertise products and the company. This creates the “mere-exposure effect”: people are more likely to find something agreeable if they have seen it before. This effect may explain why people sign up as sellers even if someone they know has got into debt through MLM schemes.

Once signed up, people are required to spend significant sums on products just to stay affiliated with the firm, often driving them into credit card debt.

Part of the blame lies with the “sunk-cost fallacy“, in which people throw good money after bad. Plenty of studies show how our critical thinking is impaired when we commit money to something. And thanks to the “loss-aversion fallacy“, we are then keen to pretend we made a good decision even if it is very clear that we didn’t.

To prevent frustrated salespeople from jumping ship, companies must give frequent cues for the “jackpot heuristic”, the crazy idea that any day now they will get a direct sale that propels them out of a debt they have taken on.

And then there is the “just-world theory”, hinted at in the conference. This is the idea that we live in an orderly place where we get what we deserve. To get rich is to be rewarded for your skills and grit; to be poor means you are feckless and undeserving.

At the end of the day, Taylor found that the vast majority of sellers make no profit. Of the few who did, most earned “up to $235” – the take-home pay for a year of 15 to 20-hour weeks. Even the very few heavy hitters only made close to the average teacher’s salary. The MLM industry in the US alone is worth more than $50 billion per year.

“Of the few sellers who did make a profit, most earned ‘up to $235’ – for a year of 15 to 20-hour weeks”

By now you may be feeling outraged. Or maybe you think a fool and their money deserve to be parted. If it is the latter, you’re not alone. Most economists don’t study MLM, and similar languor afflicts regulatory bodies. Few collect data on the sharp rise of these business models or how their profits align with their sellers’ fates.

Some evidence suggests that the US market will burn out. One MLM company has 400,000 distributors of lotions and soaps. Compare that to the 20,000 stores run by the US’s two biggest drugstore chains. Because they require ever more people, MLM firms are unsustainable if they stay still. Once the model has saturated an area, it needs new territory.

It could still take decades to exhaust the model globally, and play out the The Dream‘s awful irony: the MLM ratio in which 99 per cent of the money flows up, leaving the rest fighting for scraps, mirrors world inequality: the wealth of the eight richest people combined equals that of the poorest 3.5 billion. Money is a proxy for the full experience of poverty: reduced health, shorter life expectancy, limited educational opportunities.

That said, some countries are less welcoming of this quintessentially US business model. In the UK, a trade show for mothers has banned MLM firms, while the Mumsnet forum has barred the kind of MLM adverts that once used its network.

Back at the sales conference, one woman is tearfully confessing that before she found this opportunity she was thinking about suicide. While she tells this story, the bored corporate staff at the back check their email. Perhaps Marie’s investigation will spur regulatory authorities to add spice to their working lives.