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Is Arbonne a Pyramid Scheme?

Introduction

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:

1. Skincare: Facial cleansers, moisturizers, serums, and treatments
2. Cosmetics: Foundations, concealers, eyeshadows, and lipsticks
3. Nutrition: Protein powders, energy bars, and supplements
4. 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:

1. The main source of income comes from recruiting new members
2. Little or no emphasis on selling products
3. 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:

1. 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.
2. Income Source: In MLMs, income is generated through product sales, while pyramid schemes rely on recruitment fees and investments from new members.
3. 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

1. 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.
2. 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.
3. 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

1. Sales skills and effort: A consultant’s income is largely dependent on their ability to sell products and recruit new members.
2. Market saturation: In areas with a high concentration of Arbonne consultants, competition for customers and recruits can make it more challenging to succeed.
3. 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

Pros:

1. Flexible work hours and the ability to work from home
2. Potential for unlimited income, depending on individual effort and success in sales and recruitment
3. Personal development and entrepreneurial experience

Cons:

1. High failure rate and low average income for most participants
2. Pressure to recruit friends and family, which can strain relationships
3. Potential for unethical or aggressive sales and recruitment tactics

How Arbonne’s MLM structure works

1. Levels of distributorship: Arbonne has various ranks for its consultants, with each rank having specific qualifications and offering different commission rates and bonuses.
2. 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.
3. 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

1. Retail Commissions: Consultants earn a 35% commission based on their personal sales of Arbonne products. 15% commission on preferred client sales.
2. Overrides: Consultants can earn a percentage of their team’s sales, based on the number of levels deep within the organization.
3. 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

Pros:

1. High-quality, diverse product range
2. Comprehensive training and support
3. Opportunities for personal and professional growth
4. Potential to earn income from multiple sources

Cons:

1. Initial investment (a small registration fee)
2. Market saturation may make it difficult to find new customers
3. Income potential varies greatly among consultants
4. Time and effort required to build a successful business

2. How much does it cost to join Arbonne?

Country	Cost of Starter Kit
United States	$49
Canada	$59
United Kingdom	£30
Australia	$79 AUD
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 

So sign up risk free!

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.

 

Conclusion

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!

 

Related Posts:

Arbonne Reviews

Affiliate Marketing vs Network Marketing

Arbonne Affiliate Program

Muz

 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.