This story appears in the December 2025 issue of Utah Business. Subscribe.
A collective shift happened in multilevel marketing (MLM) when Justin Serra launched his new business after leaving Modere in 2023. The shift was captured in a change of terminology: instead of “MLM,” companies began referring to the industry as “direct sales.”
This shift is intended as more than a linguistic or branding change; it reflects changes in the business model in response to stronger regulation and critical public views of MLM companies, as well as shifts in consumers’ buying habits. In recent years, social media changes, technological shifts and the fast-paced nature of selling have all made it easier for companies to reach millions of customers easily. Companies that formerly built their marketing around networks are taking advantage of these new tools.
Serra, now the co-founder and CEO of MAKE Wellness, says the paradigm shift was already taking place at Modere before he left two years ago.
“I think all of us kind of collectively came together with this feeling that there actually does need to be some change in the way network marketing or multilevel marketing was done or had been done,” Serra says. “You can already start to see that in the industry — a pivot toward a consumer-centric focus, less of a focus on recruiting. … Take the regulation out of it, take the negative stigma where some companies did the recruiting-focused type stuff, and companies had to make a pivot to a more modern approach just to survive because the economy was shifting,” he says.
The shift to sales-based compensation
The “direct sales” pitch aims to refocus away from recruitment and classic distributors altogether.
Many businesses operating in the space have shifted their models away from networking-based sales, for example, and more toward affiliate marketing, an increasingly popular sector in viral marketing overall that leverages well-known public figures and social media influencers who can earn commissions on products they promote.
In this new structure, affiliates are not distributors like the classic MLM company, where someone buys a large quantity of the product and attempts to sell it to people in their network. Instead, they simply get a commission on the sales they do make, which is meant to reduce the pressure to constantly recruit new distributors.
“I would say there’s some real positives from this shift,” says Tyler Whitehead, MAKE Wellness co-founder and COO. “The ubiquitous availability of products and information — like on Amazon, you can find anything and everything — but at the same time, information and personal testimonials are still … where consumers are buying products.”
One of the key drivers of this change is the ability to make sales through social media. Influencers, celebrities and even niche accounts can reach audiences and generate sales through commissions, rather than in-person purchasing and selling to their communities.
“They’re not trying to get other people to do what they do,” says Todd Bagley, former North America Director of Sales for Amare Global, pointing to previous arrangements he has seen with stars from Bravo’s “Real Housewives” series and Olympic athletes who have sold products this way. “They’re just representing brands on their platform.”
Surviving regulatory challenges
Serra says his startup is performing extremely well, which he credits in part to this shift.
“I think it is based on this new philosophy of, ‘Let’s be consumer-centric-focused, let’s have affiliate-style marketing,’ and then the last part of that puzzle is that, yes, there is a back-end where if you can refer other affiliates, you can earn an overwrite on their efforts, but it’s kind of the third part of that puzzle instead of being the whole puzzle,” Serra says.
As many know, MLM companies have been the target of critical regulation and scrutiny for decades. There are entire YouTube channels and HBO’s “Last Week Tonight” segments dedicated to arguing that the industry is a pyramid scheme, while lawsuits and federal investigations have publicly targeted companies perceived as predatory. The Federal Trade Commission website warns about overlaps between MLM companies and pyramid schemes. Netflix documentaries, such as “(Un)Well,” pit the subject front and center for investigation.
The core issue revolves around the recruitment process, which involves bringing in sellers who must purchase goods and then attempt to sell them to others. Federal investigations have revealed that many people who were recruited for this type of side hustle barely made any money at all, let alone enough to make it a full-time job.
In Utah, MLM companies have long been an integral part of the business landscape, with many performing well financially. Bagley says Utah’s unique culture has made it a strong performer for this type of network-based model, which he says performs well among religious and immigrant communities.
“The reality is, some of your biggest [MLM companies] are outside Utah,” Bagley says. “I mean, California probably has as many or more. Florida has quite a bit. But yeah, there is kind of this little hub in South Salt Lake Valley and Utah County.”
According to Bagley, the need to address the distribution side of the business has been building over time, with both sellers and companies needing to be careful — and vague — about the amount of money they claim participants can earn. He also says they’ve invested in their legal claims departments.
“‘I got a $20,000 bonus check from my company,’” Bagley says, paraphrasing how people used to talk about their work as distributors for MLM companies. “Back in the day, people would post that check, and they would say, ‘Check out this check from my side hustle.’ Well, today you can’t do that because it’s very misleading. It’s not a side hustle.”
The companies that are structured this way can’t survive in 2025, according to Serra’s assessment.
“I think the companies in the network marketing space that kind of buried their heads in the sand and said, ‘Oh, we’re still doing the belly to belly thing, we’re just going to invite your friends over to your house and give them the pitch,’ those were the companies that died first,” Serra says. “You also had to see this emergence of startup-type companies that could build it from the ground up with that consumer focus and affiliate-friendly approach.”