Is Monat a Pyramid Scheme? [Complete Review]

Is Monat a pyramid scheme? Unless you avoid social media completely, there’s a high likelihood you’ve seen Monat littering your newsfeed. It’s currently one of the fastest-growing direct sales companies and it seems like everyone is signing up to become a market partner and showing off their “Monat shine.”

It almost makes you think you’re missing out and maybe you should follow the crowd… But as my mother always used to say to me – “if everyone else decided to jump off a cliff, would you?”

But is joining Monat THAT bad of an idea? Is Monat a pyramid scheme or is it a legitimate opportunity to ditch your day job and become a hashtag boss babe?

In this Monat review, I’m going to take an in-depth look into the Monat business opportunity and share my honest opinion on whether I think you should become a Monat market partner or save your money instead.

Monat Review Summary

Company Name: Monat

Product Type: Haircare (recently branched out into skincare & wellness products)

Founders: Luis Urdaneta and Rayner Urdaneta

Price: $99USD joining fee + $49.95USD annual renewal fee + additional sales requirements

Best For: The Founders of Monat & those who joined early and are at the top of the pyramid

Summary: Monat is a multi-level marketing company who are best known for their range of hair products. Monat recently added skincare and wellness products to its product line. The primary method of sales is through the recruitment of “VIPs” or “Market Partners” who make a commission on the products they sell. In addition, Market Partners make money on the sales of their recruits.

Rating: 10/100

Recommended: No

What is Monat?

Monat is a privately owned company founded in 2014 by Luis Urdaneta and Rayner Urdaneta. The company started off selling haircare products which rapidly gained popularity on social media. This can be primarily attributed to the fact that Monat’s method of sales – multi-level marketing – relies heavily on market partners promoting the company on various social media channels.

After experiencing such success with their haircare products, Monat branched out into skincare and wellness products.

Monat has been the subject of hundreds of complaints to the FDA and BBB (Better Business Bureau) regarding hair loss, hair damage, and scalp sores. In addition, the company has been hit with numerous lawsuits including a consumer class action after an FDA report of the companies Florida manufacturing facility found multiple products were “prepared, packed, or held under unsanitary conditions whereby (they) may have become contaminated with filth” (1).

What Does Monat Sell?

Monat sells a range of products for the hair, face, and body, including supplements.

Monat’s hair care line is their largest product range by far, consisting of various “systems” including:

  • Advanced Hydrating Haircare Collection
  • Volume System
  • Hydration System
  • Magnify System
  • Effortless Style System
  • Classic Confidence System
  • Monat Junior Line
  • Monat Super Nourish
  • Monat Studio One

Prices vary, but it appears that a bottle of shampoo costs around $35, and a bottle of conditioner costs around $47.

That sounds expensive to me, but I’ve been using Dove Daily Moisture shampoo for years. It’s about $5 a bottle and it’s never burned my scalp or caused my hair to fall out. Of course, like the vast majority of Monat market partners, I’m not a trichologist so take my shampoo recommendations with a grain of salt.

Complaints About Monat

Monat has been the subject of hundreds of consumer complaints which you can read on Better Business Bureau (2) and numerous lawsuits. The primary complaints seem to be hair breakage, balding, itching, and hair loss.

In this Reddit thread, a user asked if Monat hair loss was permanent.

And this Twitter user said that after she stopped using Monat, her hair got thicker and longer:

Of course, it’s not uncommon for companies to receive complaints about their products and/or services. However, at the time of writing this article, Monat currently has 792 complaints on Better Business Bureau and 10 class actions (3).

Monat Compensation Plan

Multi-level marketing compensation plans are my least favorite thing to research, but they’re what most people are interested in (obviously.)

I can’t stand them because they’re almost always confusing and convoluted, and Monat’s compensation plan is no different.

There are two ways to make money with Monat – making money through selling products and making money through recruiting people into the company.

Of course, like almost all multi-level marketing companies, recruiting team members is much more lucrative which is why it’s common to be aggressively pitched by current Monat market partners.

Making Money Selling Monat

Market partners with Monat make a 30% commission on each product they sell. If they sell to someone who is a “VIP” then they make a 15% commission (which makes sense, given that VIPs receive a 15% discount on the products they purchase.)

VIPs are essentially Monat customers who want to save some money. To become a VIP, you need to pay a $19.99 enrollment fee, have two flex ship orders and an initial enrollment order. In other words, you need to really love the Monat line.

Market partners make a $60 bonus for every 4 VIPs they sign up in a calendar month, which is supposed to make up for the 15% drop in commission.

Like many multi-level marketing companies, market partners are able to raise their commission rate by selling more products:

  • 1000 PV/month = 3% bonus
  • 2000 PV/month = 5% bonus
  • 3500 PV/month = 10% bonus

To reach that 10% bonus and make a 25% commission on your VIPs will require a lot of hustling – 3500 PV/month, to be exact.

If 1PV equals 1 dollar, then you would need to sell $3500 worth of products every month to people you’ve convinced to join as a VIP in order to make $875/month.

In addition, to stay active as a market partner, you must have at least 200PV every month. In other words, if want the privilege of selling Monat, you must first pay $99 to sign up and then you must either purchase or sell at least 200PV every month.

Making Money Recruiting People to Monat

Making money recruiting others to join Monat as a market partner is more profitable than simply selling the products, which is true for the majority of multi-level marketing companies.

And like most MLM’s, the Monat recruitment compensation details are confusing, convoluted, and quite honestly, gives me a headache.

There are 11 ranks to progress through with Monat, and each rank has a different bonus structure.

Here’s a screenshot:

As you can see above, there are 6 types of bonuses:

  • Uni-level bonus
  • Group volume bonus
  • Rank advancement bonus
  • Rank advancement matching bonus
  • Motor club bonus
  • Generation bonus

For two of these bonuses, the “uni-level bonus” and the “generation bonus” there are different levels or generations within the bonus.

While the compensation plan is confusing, it’s clear that the more people you recruit and the bigger your team is, the more money you’re going to make.

The question is – are you comfortable attempting to recruit your friends, family members, colleagues, acquaintances, and complete strangers?

Are you ok with potentially losing friendships and burning bridges? That’s something only you can answer.

Does Monat Really Give You a Cadillac?

Ah, the elusive Cadillac that Monat “influencers” love to parade around in on Instagram. So is it true? Does Monat really give you a Cadillac?

No, Monat does not “give” you a Cadillac. Monat has a motor club program that is similar to a number of multi-level marketing companies.

Essentially, once you reach a certain rank in the company – in Monat’s case, “Market Mentor” you are eligible to receive a payment that is to be used on the purchase or lease of a white Cadillac. In addition to the monthly payment, you will also receive a one-time $1500USD payment to be used for your down payment.

The monthly payment varies depending on your rank, and is as follows:

  • Market Mentor – $500USD/month
  • Managing Market Mentor – $500USD/month
  • Associate Executive Director – $750USD/month
  • Executive Director – $750USD/month
  • Senior Executive Director – $1,000USD/month

There are some important caveats to note regarding Monat’s “Motor Club Rewards” program.

First – YOU (not Monat) are ultimately responsible for making your car payments.

To continue receiving payments, you must maintain the rank of Market Mentor.

You are given two months of “grace” per calendar year, where Monat will continue to pay you if you fall below the rank of Market Mentor.

However, note that these two months cannot be consecutive. This means that if, for example, you fall below the rank of Market Mentor in March, you must regain your rank in April or you will not receive a second grace payment.

What happens if you don’t make Market Mentor for a second (or subsequent) consecutive month? It means that you are on the hook for your car payment, and you won’t receive a dime for it from Monat.

The next thing to note is that Monat does not pay for all of the incidental costs of owning a vehicle, including registration, insurance, gas, etc. Generally speaking, the more expensive a vehicle is, the more it costs to run.

Do you Have to Get a White Cadillac With Monat?

Finally – what happens if you don’t want a white Cadillac? What happens if you prefer a grey Cadillac? Perhaps red is more your color?

Heck, maybe you don’t even want a Cadillac at all. Maybe a Range Rover is more your style…

Well, despite you being legally and personally responsible for your car repayments, you’re not given the option to choose the car you wish to lease or purchase. And beyond that – you’re not even given the option to choose your car’s color.

Is Monat a Pyramid Scheme?

Monat has several characteristics similar to pyramid schemes, however, it technically falls under the banner of “multi-level marketing”, which is a legal business practice as it involves the sale of tangible goods (4).

However, don’t confuse “not a pyramid scheme” with “profitable business opportunity.”

How Much Money Can You Make With Monat?

Since we’re on the topic of money, let me come at you with some hard numbers. The vast majority of people who join multi-level marketing companies make zero dollars.

Even more sobering is the fact that 99% of people actually lose money.

The Federal Trade Commission published a study on MLM companies. Here are some direct quotes from the study:

“…MLM as a business model – with its endless chain of recruitment of participants as primary customers – is flawed, unfair, and deceptive.”

“…the vast majority of commissions paid by MLM companies go to a tiny percentage of TOPPs (top-of-the-pyramid promoters) at the expense of a revolving door of recruits, 99% of whom lose money.” (5)

If you have a massive network or a huge social media following that loves buying expensive beauty products, then there may be an opportunity for you to make money with Monat.

However, I’d caution you to think about whether you would feel comfortable making money from people who, statistically, are likely to lose money if they join your Monat team.

For the rest of us, the answer to “how much money can you make with Monat?” is, probably nothing.

Should I Become a Monat Market Partner?

If you’re still asking yourself that question, then I’m happy to give my opinion. In my opinion, it’s a hard no – you should not join Monat unless you want a 99% chance of losing money. (And if that’s the case, heading to your local casino for a night out is probably more fun and you’re less likely to lose friendships over it.)

Final Thoughts

I completely understand the draw to join a multi-level marketing company like Monat, especially when you see shiny new cars and designer purses splashed all over social media.

But the reality is, Monat is no different from other multi-level marketing companies like Pomifera or Modere.

The predatory business practices promote a dream that is flat-out unattainable for the vast majority of people, and if you don’t succeed, you’re frequently told it’s because you “didn’t work hard enough” or you “weren’t truly committed.”

References:

1. FDA Inspection Finds “Insanitary Conditions” at Monat Manufacturing Facility. Aug 20, 2018. Darcy Spears. Retrieved from https://www.ktnv.com/news/contact-13/fda-inspection-finds-insanitary-conditions-at-monat-manufacturing-facility

2. Monat Global Corp. Better Business Bureau. Retrieved from https://www.bbb.org/us/fl/doral/profile/hair-care/monat-global-corp-0633-90137286/complaints

3. Hundreds Complain That Hair Products Cause Balding, Sores and Itching. Ron Hurtibise. Sep 20, 2020. Retrieved from https://www.sun-sentinel.com/business/fl-bz-challenges-remain-for-multi-level-marketing-company-monat-20200920-yykg3urfkveojmwa6xtkigil2e-story.html

4. Andrew Bloomenthal. What is a Pyramid Scheme? May 07, 2020. Retrieved from https://www.investopedia.com/insights/what-is-a-pyramid-scheme/

5. Jon M. Taylor, MBA, Ph.D. (nd.) MLM’s Abysmal Numbers. Retrieved from https://www.ftc.gov/sites/default/files/documents/public_comments/trade-regulation-rule-disclosure-requirements-and-prohibitions-concerning-business-opportunities-ftc.r511993-00008%C2%A0/00008-57281.pdf

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