Part of getting on solid financial footing is having a good offense and defense. We will start with the defense.

Spotting Predatory Pitfalls: MLMs and Payday Loans

Financial “opportunities” that promise quick cash or flexible side-income often carry hidden, long-term costs. Two of the most common traps are multi-level marketing schemes (MLMs) and payday loans. Below is an evidence-based overview you can share directly with learners.

Key Risk Indicator	Latest Data
Chance of profit	At least 99 % of U.S. MLM recruits lose money or earn nothing. (Investopedia)
Typical earnings	FTC analysis of 70 income-disclosure statements found most distributors made under $1,000 per year, before expenses. (Federal Trade Commission)
Zero-income companies	In 17 of those 70 MLMs, a majority of participants earned $0. (Federal Trade Commission)
Out-of-pocket costs	Start-up kits, ongoing “autoship” inventory, travel, and event fees are rarely disclosed in income tables, masking net losses. (Federal Trade Commission)

MLM companies prey on emotions. They often target stay at home moms by telling them they can contribute to the family income, while staying home with their kids. They encourage people to be their own bosses and avoid the 9-5 trap. I come from Utah, the MLM capital, of the United States.

Why the odds are stacked against people in MLMs

1. Recruitment over retail: Compensation pivots on bringing in new sellers, so markets saturate quickly and later recruits struggle to find buyers.
2. Inventory loading: Many plans reward bulk purchases rather than real consumer demand, leaving distributors with unsold stock.
3. Social pressure: Participants often tap friends and family, risking strained relationships when sales or recruitment pitches fail.
4. Regulatory scrutiny: MLMs rank high in FTC complaints; misleading earnings claims can trigger enforcement or class-action suits.

Educational takeaway: Emphasize due diligence, request official income disclosure statements, calculate expenses, and remember that genuine businesses pay employees for labor, not for buying in. Based on the statistics, most people would be better off working a minimum wage job than they would be doing an MLM.

Payday Loans

How they work
Payday lenders offer small, two-to-four-week loans (typically $300–$500) secured by access to the borrower’s bank account. Fees look modest—$15–$30 per $100 borrowed—but translate into triple-digit APRs. (annual percentage rates)

Key Risk Indicator	Latest Data
Typical APR	A $15 fee per $100 on a two-week loan = 391 % APR. Consumer Advice
Borrower pool	~12 million Americans use payday loans each year. CoinLaw
Repeat borrowing	80 % of payday loans are renewed or re-borrowed within 14 days, showing reliance on rollovers. Pew Charitable Trusts
Annual fees drained	Lenders extracted $2.4 billion in fees in 2024 across 30 states that still allow payday lending. Center for Responsible Lending
Consumer complaints	CFPB logged 2,400 payday-loan complaints in 2024. Consumer Financial Protection Bureau
State spotlight – Utah	No rate cap; average APR is 650 %+, among the nation’s highest.

Many people work with payday lenders who cannot qualify for traditional lending. These people can often get trapped with endless debt that negatively impacts their lives. The owners of these payday lending companies lobby aggressively to keep laws in place that benefit them. This is especially the case in states like Utah.

Let’s analyze policy implications when it comes to collective bargaining

States where teachers are able to collectively bargain are able to on average make more money. There is a clear reason why some individuals are against collective bargaining. They don’t want to pay more in taxes to provide these salaries.