Is Monat a pyramid scheme? This company’s business model doesn’t fit the definition of a pyramid scheme based on our findings. However, it is a multi-level marketing company (MLM) that you may find success with, depending on your commitment level.
In this special guide, I have gathered some of the most informative answers from trusted sources. My goal is to help you determine if this popular income idea is right for you.
Table of Contents
My Personal Experience
I first heard about Monat while browsing my Instagram feed. I saw Karissa Pukas, a Canadian style influencer, unbox their products in her Instagram story in 2019.
Many people touted Monat products as being free from sulfates and animal-derived ingredients. I was unaware of the company’s business model at the time. So I maintained only a passing interest in trying their hair care products.
I learned more about the company in 2020 after one of my friends showed me their products. She then introduced me to their cousin, who attempted to recruit me as one of Monat’s market partners. She claimed it was a great way to earn income while promoting eco-friendly products, so I gave it a go.
My experience with the company and its products lasted six months before I opted out. I’m hesitant to call Monat a scam or a pyramid scheme. However, I believe you may or may not find success under their current business model, depending on your level of commitment.
I’ve chosen to write about my experience and offer a deep dive into the company and its practices. I would like to help you make a more informed decision about signing up with the company.
What is Monat
Monat Global Corp, or “Monat” as it is more commonly known, is a multi-level marketing company based in Doral, Florida. It is a subsidiary of Alcora Corp, which owns another premium beauty and wellness products company called L’EUDINE Global.
Monat is an amalgamation of “Modern” and “Nature”. These are two characteristics the company associates with its haircare and skincare products.
Monat’s roots originate in South America where its founder, Luis Urdaneta, grew up. Urdaneta joined a sales company at the age of 18. He spent many years selling Tupperware on the streets of Venezuela.
Luis pursued his own business venture in his 30s, but it failed to take off. The entrepreneur was not discouraged by this setback. He then chose to set up a direct sales company in 2001. He did this with the help of his son, Ray Urdaneta, who was living in the United States at the time.
The father-son duo spent the next fourteen years building up a business in Latin America. Unfortunately, certain challenges prevented this business from achieving the success they had envisioned. However, the experience brought the Urdaneta family together. They chose to channel what they had learned into creating something better.
They then set their sights on setting up a business in North America and beyond. Luis and Ray then met Stuart Macmillan. Macmillan was an American businessman with many years of business management experience. Together they built up the company we know today as Monat.
Monat Global opened its doors in the United States in 2014. They then expanded to Canada and a range of new products and programs in 2015. The company has also begun operating in parts of Europe and Australia. They pulled in over $800 million in revenue in 2022.
You can learn more about Monat’s history in the following company promo video:
CEO and Staff
The company’s current CEO is Luis Urdaneta’s son, Ray. Monat also hired Alan J. Meyers as their Chief Science Officer. Meyers has previous experience working for leading beauty and cosmetics brands. This included brands such as L’Oreal, Revlon, Avon, and Elizabeth Arden. This addition lent credibility to Monat’s claims about their product quality.
According to its LinkedIn profile, the company officially has between 201 and 500 employees. However, this figure does not include the company’s market partners, which likely number in the thousands globally. These partners are spread across the United States, Canada, parts of Europe, and Australia.
Is Monat a Pyramid Scheme?
You might be wondering if Monat is actually a pyramid scheme. The Securities and Exchange Commission defines a pyramid scheme as “an investment fraud in which new participants’ fees are typically used to pay money to existing participants for recruiting new members.”
They define the following characteristics of a pyramid scheme:
- No genuine products or services are sold;
- Members are promised high returns in a short period of time
- Members are told the business model allows them to make easy money or passive income
- There is no demonstrable revenue generated from retail sales
- Members must make a purchase to sign-up
- The business has a complex commission structure
- The business model places a high emphasis on recruiting
Why Monat Isn’t a Pyramid Scheme?
Monat isn’t a pyramid scheme because it doesn’t display each of the characteristics described above. This includes
#1. No Genuine Products or Services are Sold.
Monat sells dozens of haircare, skincare, and wellness products. These are actual products that have thousands of reviews online.
#2. Members are Promised High Returns in a Short Period of Time.
Monat does not make promises regarding how much you can earn from selling their products. The company lists the commission percentage you can earn, but they do not make any promises regarding actual earnings.
#4. There No Demonstrable Revenue Generated from Retail Sales.
Monat generates millions of dollars in revenue from product sales annually. This is based on the information given in its public financial disclosures.
Does Monat Pass the 70/30 Rule?
You might have heard that the Federal Trade Commission (FTC) uses a special 70/30 rule. This rule classifies specific multi-level marketing companies as pyramid schemes.
It states that companies that generate less than 70% of their revenue from product sales are pyramid schemes. However, this “70/30 rule” does not actually exist.
This misconception is based on an investigation the FTC conducted into the retailer Amway in 1979. The company had set a requirement for its distributors to sell 70% of its products each month if they wished to receive a special monthly bonus.
The FTC believed Amway was using this contract term to cover up the possibility that they were a pyramid scheme. However, this was a decision the FTC had made independently, and it was not considered a rule, law, or regulation. Therefore, it cannot be used to determine if a company is actually a pyramid scheme.
How Much Money Can You Earn from Monat?
Monat does not make any promises regarding how much you can actually earn from them. They specify sales commission percentages and bonuses for achieving certain goals.
The company, therefore, portrays its business model as a mechanism for making money. They do this without actually telling you how much you will likely make.
You can consult the company’s Annual Income by Rank chart above to learn how much you are actually likely to make as a Monat market partner.
The above figure reveals some striking revelations about the members’ earnings. You can see that 93% of the company’s members never rise beyond the Market Partner rank. These members earn between $0 and $21,889 per year, with average annual earnings of only $144.
Only 3.2% of members stay with the company for between 3 to 5 months and rise to the Managing Market Partner rank. These members earn between $127 and $32,415 per year, with average annual earnings of $1,963.
Only 0.63% of recruits ever make it to Associate Market Mentor rank and beyond. This rank is significant because its members earn an average of $19,841 per year. This is close to the amount you would earn if you were working minimum wage in the United States.
This means only 0.32% of members ever make it to a rank where they can earn above minimum wage.
How to Earn Income Through Monat?
Monat allows you to earn money in numerous ways. This includes
- Earnings from selling products
- Earnings from recruiting new members
- Earnings from your recruited members’ sales
- Bonuses for advancing in rank
- Bonuses for signing customers up for the VIP program
The image below describes the compensation that Monat offers you once you join them:
Method #1. Earnings from Selling Products.
Monat offers a wide range of products for hair care, skincare, and wellness. The company has also recently begun offering products for pets under their Monat Pet lineup. These products range from $22 to $278 in price.
Monat does not count the total number of products you sell. Instead, it assigns a “personal volume” (PV) value to each product and then counts the total PV you have sold each week and each month.
The company pays you a 30% commission on retail sales and a 15% commission on products you sell to VIP Customers. They also offer the bonuses if you manage to sell the volume range shown in the table below:
|Total Personal Volume (PV) Sales Per Month||Commission Bonus|
|1,000 to 1,999||3%|
|2,000 to 3,499||5%|
|3,500 or more||10%|
The above bonuses give you an incentive to sell high volumes of Monat’s products.
Method #2. Bonuses from Recruiting New Members.
Monat offers you bonuses for recruiting or “sponsoring” new members. This bonus amount varies based on the value of the product pack your sponsor signed up with.
Product pack values and their corresponding bonus amounts are shown in the following table:
|Product Pack Value||Bonus Amount|
|$199 (200 PV)||$50|
|$349 (250 PV)||$120|
|$599 (450 PV)||$250|
|$799 (600 PV)||$350|
Method #3. Earnings from Your Recruited Members’ Sales.
In addition to receiving recruitment bonuses, you can earn a commission from the sales the members you recruited make. This is known as a “Uni-Level Bonus”.
Method #4. Bonuses from Advancing in Rank
Monat also offers market you special bonuses when you advance in rank. This varies between $100 and a whopping $20,000, depending on the rank you have advanced to. These have been summarized below.
|Initial Rank||New Rank||Rank Advancement Bonus|
|Market Partner (MP)||Managing Market Partner (MMP)||$100|
|Managing Market Partner (MMP)||Associate Market Builder (AMB)||$100|
|Associate Market Builder (AMB||Market Builder (MB)||$150|
|Market Builder (MB)||Managing Market Builder (MMB)||$500|
|Managing Market Builder (MMB)||Associate Market Mentor (AMM)||$500|
|Associate Market Mentor (AMM)||Market Mentor (MM)||$1,000|
|Market Mentor (MM)||Managing Market Mentor (MMM)||$2,500|
|Managing Market Mentor (MMM)||Associate Executive Director (AED)||$5,000|
|Associate Executive Director (AED)||Executive Director (ED)||$10,000|
|Executive Director (ED)||Senior Executive Director (SED)||$20,000|
Method #5. Bonuses for Signing Up VIP Customers
Monat offers a special VIP program that gives specific customers extra perks. They can sign up for a $19.99 fee plus payments for three automated orders.
This program offers customers a 15% discount on Monat products and free shipping for orders exceeding a specific value. They also get access to limited edition products and the freedom to choose different products in product packages.
If you manage to get four customers to sign up for the VIP program within a month, you will receive a $60 bonus. You can earn this bonus unlimited times.
So if you get eight customers to sign up in a month, you will receive a $120 bonus. If you get twelve customers to sign up in a month, you will receive a $180 dollar bonus, and so on.
You can learn more about Monat’s compensation schemes for members in the following Youtube video:
3 Key Advantages of Becoming a Monat Member.
Pro #1. Many Ways To Earn Income.
Monat offers you numerous ways to earn income. If you aren’t interested in selling products directly, you can focus your efforts on recruiting other members. This allows you to make significant returns through their sales.
You’re skilled enough; you may be able to assemble a team of market partners. You can then scale back on your own product sales activities and still earn a fair amount of income.
Pro #2. Selling Naturally Based Products.
Monat’s business model may not be suited for everyone, but their products at least live up to their “naturally-based” label. Monats shampoos and skincare products aren’t “all-natural” as they do contain preservatives.
The company uses a blend of less than 1% preservative formulation. This makes it more “natural” than other shampoo and skincare cosmetic brands that are loaded with preservatives.
If you’re passionate about selling naturally-based products, you may enjoy promoting and selling Monat’s products.
Pro #3. No Inactivity Fee If You Decide to Quit.
Monat does not charge you an inactivity fee if you decide to quit. You can simply stop ordering products from the company. You won’t have to worry about incurring additional charges when you do this.
3 Key Disadvantages of Becoming a Monat Member.
Con #1. Making Money Isn’t Easy.
As mentioned above, only a tiny percentage of market partners actually end up making a large quantity of income from Monat. You will need to be skilled at selling products and recruiting others to make any significant amount of income. These tasks are definitely easier said than done, and you are more likely to fail than to ever sell enough products to advance in the company’s ranks.
This makes Monat a poor choice if you intend to use it as a side hustle. You must be prepared to devote a large amount of time towards sales and recruitment once you sign up.
Con #2. You Might Make a Big Loss.
Monat may not lock in partners with a contract. However, you will likely make a loss if you can’t sell the products you ordered. So consider testing the water with a small order before committing to a larger one.
Con #3. The Company Might Not Exist in the Future.
Monat has been embroiled in many legal disputes from clients claiming their products damaged their hair. The beauty products company has been sued multiple times for misleading customers about the safety of its products.
Courts have generally ruled in Monat’s favor in these cases. However, the company has been ordered to give scores of customers refunds in the past.
Given this information, it is possible that Monat may eventually stop offering Monat products in the future. However, this may occur only if they receive enough backlash from their customers.
Major Monat Controversy.
So what is so controversial about Monat? As briefly mentioned above, many customers claim the company’s shampoo damaged their hair. Others have also filed complaints about the company to the Better Business Bureau. The company also battled an investigation into whether it violated the Trade Practices Act.
Hair Damage Controversy
The first set of lawsuits against Monat appeared in 2015. Each one targeted the company for selling products that harmed its users in some way. This included claims of hair loss, bald spots, burning sensations, and scalp inflammation.
These lawsuits were eventually combined into a single one. It went after Monat for not warning customers about the aforementioned adverse effects. This lawsuit also alleged that Monat deflected customer concerns about side effects.
This was following Monat’s claims that the hair loss associated with their shampoos was part of the body’s natural “detoxing”process. They stated this would occur before the shampoo’s regenerative properties took effect.
The Better Business Bureau (BBB) also received approximately 900 complaints regarding Monat’s products. The BBB’s job is to help resolve disputes between consumers and companies. However, Monat has offered mostly unsatisfactory responses through the bureau.
In fact, Monat made such complaints worse with their response. The company framed the problems their products caused as personal health issues that they weren’t responsible for. You should note that Monat is not currently BBB-accredited.
The Food and Drug Administration (FDA) investigated over 300 complaints regarding Monat’s products in 2018. The Monat products most commonly cited in consumer complaints were:
- Rejuvenique Oil Intensive Treatment
- Intense Repair Treatment Leave-In Conditioner
- Intense Repair Treatment Shampoo
Trade Practices Investigation
Florida’s Attorney General began investigating Monat in June 2014. They completed their investigation in September 2020 after reaching an agreement with Monat.
The Attorney General conducted this investigation based on complaints the company had allegedly violated the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). This included complaints such as:
- Monat was offering customers discounts without notifying them about the conditions surrounding them. This included additional purchases that were required to avail the said discount.
- Monat falsely stating their products were free from chemicals. This included compounds such as petrochemicals, glycol, polyethylene, sulfates, and gluten.
- Monat falsely stating their products were 100% vegan.
- Monat falsely stating their products would offer specific results that were clinically backed.
- Monat falsely stating their products had been certified by “government entities”
- Monat unfairly charging customers for products they did not receive.
- Monat unfairly charging customers for products they never ordered.
- Monat charging customers without possessing written authorization to do so.
Many customers reported that Monat did not respond to inquiries into such issues. The company also failed to cancel customer accounts, issue refunds, and accept returns.
Monat remained quiet about such issues until customers retaliated by canceling over a thousand orders in 2018. The company’s spokesperson then publicly responded with the following statement:
“There is not a constitutional right to complain about a company. A company has a right to respond any way it wants to.”
Despite this lackluster response, Monat did work with the Florida AG during their investigation. Monat did not admit to violating any law but still chose to enter into a special Assurance of Voluntary Compliance agreement.
This agreement included the following terms:
- Operate a customer support telephone number with call wait times that do not exceed 10 minutes.
- Set up and operate an email address for customer complaints.
- Ensure each complaint receives a response within 3 days.
- Disclose its refund and cancellation policies more clearly.
- Provide data related to clinical tests or studies relating to their products.
- Obtain written authorization from customers before initiating electronic fund transfers.
- Disclose VIP program terms and conditions. This included the minimum purchase requirements prior to accepting payments from customers.
- Stop stating their products are “100% vegan” or “gluten-free”.
- Stop using stock photos to market its products.
- Always honor advertised prices.
As you can see, Monat does offer a legitimate business opportunity for generating income. However, if you intend to get rich from selling Monat products and member recruitment, you will likely face an uphill battle.
As mentioned earlier, only 0.32% of Monat’s market partners make the minimum wage in the United States.
If you intend to sign up with Monat, you need to be prepared to brush up on your marketing and sales skills. You will also need to devote dozens of hours to promoting their products and recruiting members each week.
If you’re looking to earn a livable wage from selling beauty and makeup products, Monat is not the right fit for you. You may have an easier experience working in sales for a beauty and makeup retail outlet. However, working for Monat allows you to be your own boss, so you may enjoy the flexibility associated with selling products at your own pace.
So who would Monat be a good fit for? I would say beauty and makeup influencers with a significant following stand the best chance of making good money off Monat.
Such influencers can promote the company’s products to a sizable audience using their existing platform. They can also use these promotions to expand their influencer brand. If you are new to the sales game, you should avoid believing Monat will make you rich.
Monat may not be a pyramid scheme, but it includes many of the challenges associated with working for other multi-level marketing companies. I hope the above guide is useful in helping you make an informed decision about signing up as a Monat partner.
Frequently Asked Questions
Are Monat’s Products All-Natural?
Monat’s products are not all-natural. Instead, they are “naturally based”. This means many of the ingredients are similar to the ones found in nature or “close to the source”, as the company’s website states.
Monat blends natural ingredients with some artificial compounds to achieve specific desired effects. For example, they add surfactants to their cleansing products and emulsifiers to their lotions and creams. They also add preservatives to boost their products’ shelf-life.
Are Monat’s Products FDA Approved?
Monat’s products are not FDA-approved. Some of the ingredients such as the colorants Monat uses are FDA-approved. However, the agency has not approved the finished products the company sells.
Monat has exploited this misconception by discussing the FDA approval of specific ingredients. This obscures the fact that their finished products aren’t FDA-approved.
Can You Lose Money from Being a Monat Partner?
You may incur losses if you are unable to sell all the products you ordered from the company. You can attempt to return these unsold products to the company. However, this process can be difficult.
In addition to this, Monat offers a 90% refund on products. This means you will still likely incur some losses even if you manage to successfully return unsold products.
- Monat Launch: The Alcora Group Launches MONAT(R) Global
- Monat Products: Monat
- Company History: Monat Founding
- Interview with Luis Urdaneta on the Company’s History: Story behind MONAT with Sr. Luis Urdaneta and ¡Despiérta America!
- Company Founders and CEO: Monat Meet the Team
- Company Size: Monat LinkedIn Profile
- List of Countries With Monat Market Partners: Recognition
- Securities and Exchanges Commission Pyramid Scheme Definition: Pyramid Schemes
- Federal Trade Commission’s 70% Rule: The “70% Rule.”
- Signing Up to Become a Monat Partner: The Monat Opportunity
- Monat Compensation Rates: USA Compensation Plan at a Glance
- Monat Average Annual Earnings: 2021 USA Annual Income by Rank
- Monat’s Products Are Naturally Based: Monat Reviews: The Good, The Bad, And The Ugly Truth About Monat Products
- Returning Unsold Monat Products: Reddit Thread i got sucked into monat, but now i want out. and my money back bc i barely even started yet. pls help
- Monat Shampoo Hair Damage: Can Monat shampoo cause hair loss? Safety of MLM’s products called into question
- Hair Loss Lawsuit: Monat Hair Care Products Cause Scalp Irritation, ‘Extreme’ Hair Loss, Class Action Suit Claims
- Better Business Bureau Complaints: People Say This Hair-Care Product Causes Balding And Scalp Sores
- Unfair Trade Practices Controversy: Monat’s marketing practices slammed by Florida AG
- Assurance of Voluntary Compliance Terms: Is Monat a Pyramid Scheme?
- What Naturally Based Means: What does “naturally-based” mean?