Is Arbonne a Pyramid Scheme?
In recent years, there have been numerous discussions around whether Arbonne, a popular Multi-Level Marketing (MLM) company, is a pyramid scheme.
This post aims to provide an in-depth analysis of Arbonne’s business model, compensation plan, products, and legal history to help you determine the legitimacy of the company.
I’ll explore this question in depth to help you determine whether Arbonne is a pyramid scheme or a legitimate business opportunity.
Arbonne Company Background
A. Founding and history
Arbonne was founded in 1980 by Petter Mørck, a Norwegian entrepreneur with a passion for botanically-based skincare products.
The company has since expanded its product range and now offers a wide array of products in categories like skincare, cosmetics, and nutrition.
Arbonne International operates in several countries, including the United States, Canada, New Zealand, United Kingdom, Poland, and Australia.
B. Products and services
Arbonne offers a variety of products, including:
- Skincare: Facial cleansers, moisturizers, serums, and treatments
- Cosmetics: Foundations, concealers, eyeshadows, and lipsticks
- Nutrition: Protein powders, energy bars, and supplements
- Bath and body: Body washes, lotions, and hand creams
These products are marketed as being vegan, cruelty-free, and formulated without harmful chemicals.
C. Business model
Arbonne a multi level marketing company which operates using a multi-level marketing (MLM) business model.
This means that its products are sold primarily through a network of independent consultants, although anyone can purchase directly from Arbonne’s offical website
Consultants earn commissions on their personal sales and on sales made by their recruits.
What is a Pyramid Scheme?
A. Definition and key characteristics
According to Wikipedia, a pyramid scheme is an illegal business model that relies on the recruitment of new members to generate profits, rather than on the sale of actual products or services.
Key characteristics of pyramid schemes include:
- The main source of income comes from recruiting new members
- Little or no emphasis on selling products
- Unsustainable business model, as it relies on an ever-expanding pool of recruits
B. Illegal nature of pyramid schemes
Pyramid schemes are illegal in many countries because they are inherently unsustainable and often lead to financial losses for the majority of participants.
C. Examples of known pyramid schemes
Some well-known pyramid schemes are Ponzi schemes, BurnLounge, and Fortune Hi-Tech Marketing.
Is Arbonne a Pyramid Scheme?
Arbonne is definitely not a pyramid scheme!
While both MLMs and pyramid schemes have hierarchical structures, there are crucial differences:
- Product Focus: Legitimate MLMs, like Arbonne, have a genuine product line that independent consultants sell to earn commissions.Pyramid schemes, on the other hand, focus primarily on recruiting new members, with little or no real products to sell.
- Income Source: In MLMs, income is generated through product sales, while pyramid schemes rely on recruitment fees and investments from new members.
- Sustainability: Pyramid schemes are inherently unsustainable, as they require a constant influx of new members to support the profits of those at the top. MLMs, with a focus on product sales, can sustain themselves through ongoing business.
Arbonne is also a long standing member of the Direct Selling Association (DSA).
The DSA enforces strict codes of practice, exceeding legal requirements, to ensure consumer and distributor protection.
Arbonne’s compensation plan rewards Arbonne Independent Consultants with commissions for selling products to clients and overseeing team members who do the same.
Arbonne does not offer commissions solely for recruiting new distributors, only for actual product sales.
Furthermore, if Arbonne was a pyramid scheme, the federal trade comission would have long shut it down, just like they did with BurnLounge
A. Comparison of Arbonne’s MLM business model to pyramid scheme characteristics
The chart below shows compares a Pyramid Schemes and MLM (Multi-Level Marketing) businesses, highlighting their key differences.
While both have hierarchical structures, multi level markeing companies model is generally considered more ethical and legitimate due to their focus on product sales, legal status, and sustainable business models.
Pyramid schemes rely heavily on recruitment and new member investments, with little to no focus on actual products or services.
This makes them unsustainable and illegal in most countries. Participants in pyramid schemes often lose money, and only a select few at the top benefit. Public perception of pyramid schemes is generally negative, as they are widely viewed as scams.
|Feature||Pyramid Scheme||ARBONNE (MLM Marketing Business)|
|Structure||Hierarchical, with an emphasis on recruiting new members||Hierarchical, but focuses on both recruiting new members and selling products|
|Legality||Illegal in most countries||Legal, provided it follows specific regulations|
|Revenue source||Mainly from new member investments||Primarily from product sales, with additional income from recruitment|
|Sustainability||Unsustainable, as it relies on a constant influx of new members||Can be sustainable if based on a legitimate product and ethical business practices|
|Product focus||Little to no focus on real products or services||Sells actual products or services, with varying levels of quality and value|
|Earnings potential||Exaggerated and unrealistic claims of wealth||Varies, but generally requires hard work and dedication for success|
|Dependency on recruitment||Earnings heavily dependent on recruitment||Earnings based on a combination of product sales and recruitment|
|Potential for financial exploitation||High, as participants often lose their investments||Lower, but can still occur if the MLM relies too heavily on recruitment fees|
|Participant outcomes||Majority lose money; few at the top benefit||Outcomes vary, but many still struggle to earn a significant income|
|Public perception||Generally viewed as scams||Mixed, with some MLMs being reputable and others being controversial|
- Recruitment incentives: While Arbonne does offer financial incentives for recruiting new members, it also emphasizes the sale of products as a primary source of income for consultants.
- Focus on product sales vs. recruitment: Arbonne’s business model is centered on the sale of products, with consultants earning commissions on their personal sales and the sales made by their recruits.
- Sustainability and profitability: Arbonne has been in operation for over four decades, suggesting that its business model is more sustainable than that of a typical pyramid scheme.
B. Legal rulings and regulatory actions related to Arbonne
Arbonne has not faced any recent significant legal action or regulatory penalties related to its business model.
There was a class-action lawsuit filed against Arbonne in 2017, alleging that the company operated as an illegal pyramid scheme.
The lawsuit was later dismissed, with the judge concluding that the plaintiffs had not provided sufficient evidence to support their claims.
This is further validation that Arbonne is not a pyramid scheme.
C. Public opinion and controversy
Although Arbonne has faced some controversy and criticism, particularly from former consultants who did not achieve financial success, this does not necessarily indicate that the company is a pyramid scheme. As success does require hard work and effort, along with being consistent to grow your business.
D. Factors influencing income potential
- Sales skills and effort: A consultant’s income is largely dependent on their ability to sell products and recruit new members.
- Market saturation: In areas with a high concentration of Arbonne consultants, competition for customers and recruits can make it more challenging to succeed.
- Personal network: Consultants with larger personal networks may have an easier time finding customers and recruits.
Understanding Arbonne’s Business Model and Structure
Arbonne International is a well-known MLM company that offers a wide range of health and beauty products, including skincare, cosmetics, and nutrition supplements.
As an MLM, Arbonne relies on a network of independent consultants to sell its products directly to consumers or consumers can go to Arbonnes Official Website and purchase directly from Arbonne!.
What is Multi-Level Marketing (MLM) and How Does It Work?
MLM, also known as network marketing, is a business model where companies rely on a network of independent distributors or salespeople to sell their products.
These distributors or consultants (like myself) not only earn commissions from sales but also from the sales of the people we recruit into the business.
This creates a hierarchical structure, with multiple levels of distributors earning income from those below them.
Pros and Cons of MLMs
- Flexible work hours and the ability to work from home
- Potential for unlimited income, depending on individual effort and success in sales and recruitment
- Personal development and entrepreneurial experience
- High failure rate and low average income for most participants
- Pressure to recruit friends and family, which can strain relationships
- Potential for unethical or aggressive sales and recruitment tactics
How Arbonne’s MLM structure works
- Levels of distributorship: Arbonne has various ranks for its consultants, with each rank having specific qualifications and offering different commission rates and bonuses.
- Compensation plan: Arbonne’s compensation plan includes retail commissions, overrides (commissions earned from recruits’ sales), and various bonuses tied to sales volume and rank advancement.
- Sales and recruitment requirements: Consultants are required to meet certain sales quotas and may also need to recruit new members to advance in rank and maximize their earning potential.
Arbonne’s Compensation Plan and Income Potential
Arbonne’s compensation plan includes various ranks and bonuses, rewarding consultants for both their personal sales and the sales of their team members.
The focus on product sales is an important distinction from pyramid schemes, which emphasize recruitment over sales.
Arbonne offers a compensation plan that allows independent consultants to earn income in various ways:
The Arbonne Compensation Plan Explained
- Retail Commissions: Consultants earn a 35% commission based on their personal sales of Arbonne products. 15% commission on preferred client sales.
- Overrides: Consultants can earn a percentage of their team’s sales, based on the number of levels deep within the organization.
- Bonuses: Arbonne offers several bonuses, including cash incentives and trips, to high-performing consultants.
Arbonne Income Disclosure Statement: What It Reveals
According to Arbonne’s Income Disclosure Statement, the average annual income for active consultants in 2021 was just $407 for about 88% of active consultants., with only top 4% earning a full-time income, which is the Regional Vice Presidents and above.
However, if you look at the National Vice President, their average earnings were over $187,000. The Regional Vice Presidents made on average $44,000 (which is like a descent part time gig salary), followed by Area Managers making on average $10,000.
This indicates that achieving financial success as an Arbonne consultant can be challenging.
The higher ranks in Arbonne’s compensation plan can be difficult to attain, with most consultants remaining at the lower levels.
This pattern is typical for MLM companies, with many people joining but only a few reaching the top tiers.
What you have to remember is it definitely is possible to make a good earnings with Arbonne, but it does require hard work, a committment to staying consistent, and of course selling the products and or getting other consutlants to sign up and making money from their sales efforts.
Look at the time it took for a National Vice President to get to their level, about 5 years, it didn’t happen overnight.
Basically the average income for Arbonne consultants is relatively low, with a majority earning less than a few thousand dollars per year.
However, there are also top performers who earn significantly more.
Evaluating Arbonne’s Legitimacy: Products & Reviews
Arbonne’s Product Range and Quality
Arbonne offers a diverse range of products, including skincare, cosmetics, and nutrition supplements.
The company prides itself on using high-quality ingredients and adhering to strict manufacturing standards.
This focus on product quality suggests that Arbonne is a legitimate business, rather than a pyramid scheme.
Arbonne Reviews: Success Stories and Failures
As with any MLM, Arbonne has its share of both success stories and failures.
Some consultants have built successful businesses, while others have struggled to make a profit.
It’s essential to consider these varying experiences when evaluating Arbonne’s legitimacy.
Generally, the mixed reviews can be attributed to factors like individual work ethic, sales skills, and market saturation.
Pros and Cons of Joining Arbonne as an Independent Consultant
- High-quality, diverse product range
- Comprehensive training and support
- Opportunities for personal and professional growth
- Potential to earn income from multiple sources
- Initial investment (a small registration fee)
- Market saturation may make it difficult to find new customers
- Income potential varies greatly among consultants
- Time and effort required to build a successful business
There are several reasons you might consider joining Arbonne as an independent consultant:
- High-quality products: Arbonne offers a diverse range of health and beauty products, including skincare, cosmetics, and nutrition supplements. The company focuses on using high-quality ingredients and adhering to strict manufacturing standards, which can make it easier to promote and sell the products.
- Flexible work schedule: As an independent consultant, you have the freedom to set your own schedule and work at your own pace. This flexibility can be appealing for those seeking a work-life balance or looking for a side income.
- Earning potential: Arbonne’s compensation plan offers multiple income streams, including retail commissions, overrides on team sales, and various bonuses. While income potential varies greatly among consultants, those who excel at sales and team building can potentially earn a significant income.
- Personal and professional growth: Arbonne provides training and support to help consultants develop their sales, marketing, and leadership skills. This can lead to personal and professional growth, as well as increased confidence and self-improvement.
- Community and networking: Joining Arbonne can connect you with a community of like-minded individuals who share similar goals and values. This can provide networking opportunities and create lasting friendships and business connections.
- Discounts on products: As an Arbonne consultant, you can enjoy discounts on the company’s products, allowing you to purchase your favorite items at a reduced cost.
- Incentives and rewards: Arbonne offers various incentives and rewards, such as cash bonuses, trips, and recognition, for high-performing consultants. These incentives can motivate and inspire you to work towards your goals.
It’s essential to weigh these reasons against potential challenges, such as initial investment, market saturation, and the time and effort required to build a successful business, before deciding to join Arbonne.
1. How do I join Arbonne MLM?
Start Building Your Own Business (Arbonne USA) >> ‘
2. How much does it cost to join Arbonne?
|Country||Cost of Starter Kit|
|New Zealand||$109 NZD|
3. Can I cancel my Arbonne membership after I join?
*USA >> If you change your mind within 3 business days of after signing up as an arbonne consultant and decide its not for you, you can call Arbonne at 1-800-Arbonne for a 100% refund. Here is Arbonne USA’s Consultant Cancellation Policy
4. Are there any monthly sales quotas for Arbonne consultants?
Arbonne does not have a minimum monthly sales requirement to remain active and but you may need to meet minimum criteria to qualify for commissions. However, these requirements are generally considered achievable, especially if you’re actively working on growing your business.
In conclusion, without doubt Arbonne is not a pyramid. It’s a legitimate MLM company thats been around for over 40 years, with a genuine focus on product sales of plant based vegan nutrition & skincare products.
That said, success as an Arbonne consultant is not guaranteed and depends on individual effort, sales skills, and market conditions.
Before joining Arbonne or any MLM, it’s essential to weigh the pros and cons, understand the risks involved, and be prepared to put in the time and effort required to build a successful business.
If you’re looking to embark on this network marketing journey, I highly recommend giving Arbonne a try as its affiliate marketing on steroids for in demand products that focus on healthy living!
Affiliate Marketing vs Network Marketing
Arbonne makes no promises or guarantees that any Independent Consultant will be financially successful, as each Independent Consultant’s results are dependent on their own skill and effort. You should not rely on the results of other Arbonne Independent Consultants as an indication of what you should expect to earn. The annual typical earning statement is contained in the Arbonne Independent Consultant Compensation Summary (ICCS) available at iccs.arbonne.com.
This is a very informative and fair article on Arbonne and whether it is a pyramid scheme or MLM.
I am not a huge fan of MLM as I have been scammed in the past, but that was my fault for investing in something that I didn’t do enough research in. Hence, I didn’t read articles like yours.
I agree with your conclusion that Arbonne is MLM and not pyramid and I hope others feel the same way. If they are looking to invest in Arbonne, then they should come to you first.
Thank you for sharing and keep up the great work.
All the best,