Multi-Level Marketing

Dear Dr. Per Cap:

A friend sent me a Zoom invite for a meeting advertised as a “financial opportunity.” What unfolded was something that appeared to be a pitch to get me to sign on as a financial services agent. Everyone in the meeting was Native and many said they’ve made a lot of money helping other Native people realize their financial dreams using indexed accounts. It felt really sketch. Is this a scam?


Tired of Zoom

Dear Tired of Zoom,

I don’t know offhand, but it sounds as shady as an oak tree. What you experienced was most likely a solicitation from a multi-level marketing business (MLM).

MLMs have been around for years. You’re probably familiar with companies like Avon, Mary Kay, Amway, Scentsy, and Herbalife that sell their products directly to consumers through sales agents or associates. Usually, the associate relies on a personal network of friends, relatives, and acquaintances as customers. Often the products are legit, but nothing special. Like cosmetics, household products, and vitamins that you can just as easily buy in a store or online, often at a lower price.

However, what makes an MLM very different from a traditional distributor or retail business is the sales model. MLMs make most of their profits by recruiting as many sales associates as possible.

There’s always a push for MLM associates to not only sell products, but also sign up other people to become associates. That’s why MLMs have a reputation for being pushy to the point of being predatory. For every new associate that signs up, the associate who signed them up and everyone else up the chain gets a cut of the newbie’s sales.

Think of a pyramid with a bunch of salespeople at different levels. Those on top can make money, but sadly, many people who join an MLM don’t make much money for the work required. Or worse, they lose money on all the products they might have to buy upfront, as well as fees and expenses.

Financial services are sometimes sold using an MLM model. One product they might offer is something called a variable life annuity, which can be referred to as an indexed account. What they are is a type of life insurance that can also be used to save for retirement. Unfortunately, how variable annuities work is often difficult to understand. They can also be very expensive and not well-suited for an average person’s insurance or investing needs.

Adding to the confusion is the fact that it’s very easy in many states to become licensed to sell life insurance. In New Mexico, for example, a person just needs to pass a test, submit fingerprints, and pay some pretty light fees. That’s it – no actual experience working with insurance required.

I would stay far away from this company who found you on Zoom because I can’t think of a worse option than an MLM to purchase life insurance or get into the insurance business. What I will endorse, though, is the idea of Natives supporting other Natives.

Let’s all just try a little harder to engage with each other without taking advantage.

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email