Monat is an MLM company that recently launched a skincare line, and the company claims that is has amazing benefits. In the last few years, however, they have come under fire for customer complaints. Customers claim that the shampoo has burned people’s scalps and caused hair loss. Nevertheless, despite consumer pushback against questionable sales tactics, Monat continues to push forward.
What’s the truth behind this line and their high prices? Does the skincare actually work, and what do you need to know?
Firstly, Monat has a lot of secrets and a very pyramid-like structure. They describe their purpose as “helping women feel empowered by their beauty and bringing nature to the everyday women.” However, the brand was actually created by a man named Ray Erdenetta in Venezuela. Ray founded Monat with his brother Luis, and together they founded the Alcora group which eventually led to Monat. These men are not haircare experts. They’re not skincare experts. They are simply businessmen who have acumen in direct selling and pyramid schemes. Today, Ray Erdanetta is the CEO, and he is basically the guy at the top of the pyramid. Erdenetta has built the work environment of Monat around the following ideology: Anyone can achieve their dreams through hard work and dedication despite their situation.
Conversely, this mentality also enables him to disregard people, their situations, and even how his actions impact others. Monat uses this ideology to make salespeople feel like they’re not working hard enough if they aren’t selling enough products. Before we get into whether or not Monat is actually any good, let’s talk about how the company conveys itself through marketing.
Apparently, Monat stands for modern nature. Monat states that their mission is "to help people everywhere enjoy beautiful, healthy, and fulfilling lives through exceptional, natural-based products." They offer people interested in being Monat saleswomen “a fun and rewarding business opportunity, and a culture of family, service, and gratitude.” However, when you actually look at how a pyramid scheme is set up, you start to wonder how a culture like this could exist within the company.
In an MLM, there’s a person at the top who makes the money, and most of their profit is made by creating a downline or recruiting other salesmen below them. They earn a commission from that downline. MLMs are not illegal, but pyramid schemes are. However, there is little distinction between MLMs and pyramid schemes. Pyramid schemes solely make money by getting others to buy in or to “invest” into the company whereas MLMs sell "real" and "lucrative" products.
Multi-level Marketing (MLM) or network marketing, is when individuals sell products to the public most often by “direct sales” or “word of mouth.” The primary difference between a pyramid scheme and a lawful MLM program is that there is no real product that is sold in a pyramid scheme. In a pyramid scheme, money is mostly made by recruiting others.
“For example, in April 2010, the owners of the Big Co-op Inc, an internet shopping website were found guilty of operating a pyramid scheme in California. In this scheme, participants purchased a “license,” entitling them to commissions when they sold Big Co-op products to others, including licenses to new participants. Big Co-op claimed that profits were generated by sales of Big Co-op products and not from selling licenses to new participants. However, almost all profits made by the company came from selling licenses and from monthly dues paid by existing participants. The scheme cost over 1,000 California residents $8.2 million, and the founders each face up to 20 years in jail. Big Co-op Inc. This is an example of a pyramid scheme” (Class Law Group, 2021)
The problem with pyramid schemes is that eventually, there won't be enough recruits at the bottom of the pyramid to support the level above it. That's when the pyramid topples and everyone at the bottom loses their investment.
Monat, an MLM company, claims that it is not a pyramid scheme because it offers consumers real products with intrinsic value. But in reality, you cannot make a decent living at Monat by solely selling products. You truly make money by recruiting other people under you so they can sell products. And in turn, you receive a portion of their commission. So, the bigger downline you have, the more commission or money you make. Moreover, to even start selling Monat, you have to purchase a starter kit from your recruiter. So, in order to make a living, it’s essential that the people in your downline stay around. To make them stay, you end up having to make false promises. You have to pressure them into lying about the products so that they can make their commission and likewise your commission.
The people at the top of Monat make around $80,000 a year which is a good amount of money, but exploiting others is an inevitable part of how they make money. The new recruits have to pay sign-up fees, and on top of that, they have to sell a certain amount of products every single month. If they can’t sell that to their friends and family, they have to buy that product on their own. They buy their way into being a Monat salesperson, so these individuals often have a hard time selling the products. There isn’t a process that thoroughly assesses candidates’ knowledge or qualifications to sell the products so you kind of just have random people selling the products. Much like the CEOs, many of them have no background information or technical knowledge to really be successful at selling haircare and skincare products.
These salespeople are taken on by Monat as independent contractors, and Monat paints this as a “business opportunity” and a door to entrepreneurship. However, many of these people pay $50 to $90 just to join this “opportunity.” This isn’t necessarily entrepreneurship. An entrepreneur is someone who innovates, creates a valuable product, or adds value to their respective industry. Conversely, people in MLMs practice direct sales or pop up in your DMS saying “Hey, Hun!” They are independent contractors who simply resell or distribute. At the same time, since they are not employees of Monat, Monat cannot be legally held accountable for any false claims that these pressured resellers make. That’s also how Monat gets away with false claims about the products being made and how they avoid getting in trouble with the FDA.
Not surprisingly, there was a federal report filed by the FDA showing that Monat had unsanitary conditions in their Florida manufacturing plant. Essentially, the products were adulterated. The contents of the bottle didn’t match the ingredients list. In the report, the FDA described how “the sanitation, the quality, and the circumstances around the creation of these skincare products were not up to sellable standards. They specifically quoted that the products were “prepared, packed, and held in unsanitary, conditions whereby they may have become contaminated with filth. We don’t know what that means but it’s not worth rubbing and massaging into your scalp or skin. This turned into a class-action lawsuit where the judge ruled that the products were contaminated and that Monat could not continue operating under these circumstances.
Despite legal battles, Business Insider states that predatory companies like Monat and Mary Kay continue to use coronavirus anxiety to target millions of newly unemployed Americans. Previous members and distributors of Monat have literally called it “a cult-like environment.” People have called it brainwashing, and if you look at some of the videos that have surfaced from the meeting, you can hear the manipulative language meant to keep people in the MLM. You’re their income stream so they’ll do what they can to keep you there. Even if you are unsuccessful at selling products, you can still make money for the people above you by paying fees. The website states that for just for a fee of "$99 USD/ $125 CAD (with an annual $49.99 US / $64.99 CAN renewal fee), you will open the next chapter in your life!”
Fees are an important income stream because what makes the products even more difficult to sell is that they’re very expensive. They have a $120 age control rewind serum that is composed of water, glycerin, and mango pulp, and bergamot oil. Meanwhile, people are calling this Botox in a bottle. They also have a Berry Refined scrub for $60 which is canola oil, glycerin, sunflower oil, and glycolic acid. Many of the other products include sensitizing ingredients like lime, lemon, and ginger.
You do get half off on some of these products if you become a member, but then that calls into question these products’ cost of production. How cheap must the base formulas be for Monat to mark it down like that?
If you do sell the product, you only get a percentage of it. A Redditor said that they made a 15% commission. They said, “A distributor would need 200 orders of $100 each every month to make $3000. Unfortunately, the products last 3 to 4 months so you can’t go back to these people and sell again every month.”
So, whether or not Monat truly is a pyramid scheme is up to you. But one thing is for sure - you should be able to make a livable salary without making unscrupulous use of others.
For a video review of Monat, click here.