Sinema’s raking in cash from MLMs. They want to kill her party’s labor bill. - Politico
They've been derided as spruced up pyramid schemes: Companies that incentivize their own customers to become salespeople for products. Now, these so-called multilevel marketing businesses are flexing their political muscle. And they're turning to one lawmaker in particular to protect their agenda: Sen. Kyrsten Sinema.
The political action committee associated with Alticor, the parent entity of the health, home and beauty company Amway, gave $2,500 to the Arizona Democrat in late June, as did the PAC for Isagenix, an Arizona-based business that sells nutrition, wellness and personal care products. Nu Skin Enterprises, another personal care and beauty company, gave $2,500 that month, as did USANA Health Sciences, which sells similar products. In April, Richard Raymond Rogers, the executive chair of Mary Kay, a Texas-based cosmetics company, gave $2,500 to Sinema. Herbalife, which also sells nutritional supplements, gave $2,500 in July. All are affiliated with the Direct Selling Association, a trade group that promotes multilevel marketing.
The donations don't track usual political alliances. Alticor is owned by the DeVos family, one of the biggest funders of Republicans and conservative causes. And, on some occasions, they appear to be rare forays into national politics for the donor entities. Sinema is the only federal lawmaker that the Isagenix and Nu Skin PACs have given to this year. Utah-based USANA Health Sciences has only given to home state Sen. Mike Lee (R-Utah), home state Rep. Burgess Owens (R-Utah), a Republican PAC and Sinema.
When asked about the industry's support nearly exclusively for Sinema, a spokesperson for the Direct Selling Association offered little explanation: "Contributions to candidates from DSA's political action committee are based on a variety of factors."
Sinema does have a personal connection to the industry: Her own mother was a direct seller. But the bigger incentive for multilevel marketers to give to Sinema appears to be her position on labor organizing. The companies face an existential threat from the pro-union Protecting the Right to Organize (PRO) Act, which would make it more difficult to classify workers as independent contractors. According to one industry source, the bill has become the driving issue since Democrats took control of the White House and both chambers of Congress. And Sinema is one of — if not the only — Democratic allies in the Senate.
Unions have pushed for some of the Democrats' priorities in the PRO Act to be inserted into the reconciliation bill, but for the most part, the marquee labor bill has languished before Congress since passing the House in March. Sinema's fellow Senate moderate, Joe Manchin (D-W.V.), has already signed onto the legislation, leaving just three Senate Democrats who have yet to co-sponsor the bill — Sinema, Mark Warner of Virginia and Mark Kelly of Arizona. Warner signaled his support for the PRO Act at a rally in Virginia on Monday. And Kelly has said he supports the bill broadly speaking, though he wants to see some changes, including the provision related to independent contractors, according to a Democratic Hill aide.
That leaves Sinema as the chamber's chief Democratic opponent to the bill (Sinema's office did not respond to a request for comment for this story). And as with other issues, including drug pricing and tax policy, her willingness to buck her party's mainstream has earned her support from a variety of private industries. Sinema raised more than $1.1 million in the third quarter, with significant giving from the finance and pharmaceutical industries.
Multilevel-marketing is hardly a Washington, D.C., player on the scale of the pharmaceutical industry. Known for their "Hey girl" direct messages and often sold as get rich quick schemes, its companies lean on participants to sell their products through person-to-person sales. Those participants often receive commissions based on recruiting new distributors. But according to the Federal Trade Commission, most who join make little or no profits; some even lose money.
Multilevel marketers aren't the only ones adamantly opposed to the PRO Act. Nor are they the only ones looking to curry favor with lawmakers in D.C. Uber, Lyft and a host of other so-called "gig worker" companies are also threatened by the bill's independent contractor provisions. Rover, known as one of the Ubers of dog-walking, just recently enlisted its first K Street firm, Mercury Public Affairs, to lobby on labor classification and taxes. The group of MLMs that have donated to Sinema collectively spent more than half a million dollars on lobbying last quarter, including on the PRO Act.
According to a recent six-month report on its government affairs, the Direct Selling Association has held 55 meetings with congressional offices, and it is working with allies to develop a language to protect direct sellers in the PRO Act.
In May 2020, not long after the onset of the coronavirus, the Direct Selling Association and one its member companies, Isagenix, hosted Sinema for a virtual town hall. According to the association, she assured the industry that she would help them "succeed through these difficult circumstances." On its website, the association lists Sinema among its contribution recipients during the 2020-2021 period, saying she is "One of the few Democratic Senators who supports direct selling."
Direct-selling companies have had a presence in Washington that dates back decades. A co-founder of Amway, Richard DeVos, was a major force in the Republican party; his daughter-in-law, Betsy DeVos, herself a big GOP donor, served as the Education secretary under former President Donald Trump. In fact, the small industry's outsized influence on D.C. politics is notable, said William Keep, a professor at the College of New Jersey who has written about multilevel marketing and pyramid schemes. The industry has its own caucus of House lawmakers, known as the Direct Selling Caucus, that lists 40 members as of February and boasts its own super PAC.
The Direct Selling Association, Keep said, has already secured protections in state legislatures across the country. In fact, lawmakers recently passed legislation in Arkansas and West Virginia that defined direct sellers as independent contractors. Kentucky also passed a similar law in 2020 that excluded direct sellers from the definition of employee.
The threat of a crackdown from the federal government, however, has become more acute in recent years. There's been renewed criticism of the industry in pop culture, like a recent and heavily critical docu-series on the fashion company LuLaRoe. In 2016, Herbalife — one of the Sinema donors — agreed to a $200 million settlement with the Federal Trade Commission for deceiving customers about their ability to make a profit from their business. Biden's Consumer Financial Protection Bureau Director Rohit Chopra advocated for "restitution and penalties against multilevel marketers" when he previously served as an FTC commissioner.
The industry knows that it can only survive through its relationships in Washington, D.C., Keep noted.
"An industry that is literally built on contract employees — which is what the MLM is — would never want to be considered to be, to entertain the notion of having those independent representatives as employees," he said. Of the industry's support for Sinema, he added: "I think that she's demonstrated a flexibility that they think they can capitalize on."
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