Informational Main Page

 Concise 4 Points of Multi level marketing 

No Retail

The goal of MLMs is not to retail to outside customers but to recruit within the pyramid.

MLMs products are hugely overpriced due to endless chain "commission" obligations and convoluted pay structures. These MLM products can not and are not meant to compete with legitimate market demands in the a free market.

There is no money to be made in MLM through sales of products to non-participants, the primary way to make money is to recruit more distributors within. Mathematically, it does not make sense to sell but to recruit within for income.

What sense does it make to endlessly recruit your competitor? That just shows MLM is not primarily about sales to non participants. If recruits at the top of the pyramid get better "discounts" then recruits on bottom, why would customers buy from bottom pyramid recruits? 

Top Weighted 

The vast majority of the money distribution of MLMs goes to the top fraction of 1% of the pyramid. As per numerous studies, over 50% of money distribution goes to the 1%

In standard retail, the commission will not go over 4-5 levels. The majority of the commission percentage will go towards the front line sales and will diminish as the levels go up, for example from the initial sales associate to store manager, then to branch, finally to regional. This is completely contrasted in MLMs. The front line doesn't receive the majority of the commission, but the very few at the top of the pyramid which is a self defeating principle in regards to fair compensation. MLMs have an endless or ongoing commission chain which is doomed for saturation and demonstrates a scam

Pay to Play

Mandatory overpriced mass perpetual purchases are  incentivized. This keeps the money flow to the top of pyramid. It is a form of laundering 

Every MLM Recruit is required to pay to go to seminars, and pay for "education material". The speakers at MLM seminars or ceremonies are often at the very top of the pyramid and do not represent the vast majority of MLM participants. Not only are products laundered for top weighted money transfer but also "education material" purchases

Personal expenses are not reimbursed.

In order to receive the right to recruit as an MLM distributor and earn various incentives such as discounted price, ongoing payments would have to be made on a perpetual basis

Ongoing Recruiting

The promises of vast, perpetual income is based out of recruiting. It is promoted though MLMs through your recruits which are your downlines or legs, their efforts get distributed to you without you doing anything. (This is why people join, not selling to outside customers)

Recruitment is the main focus. It doesn't matter if different terms like mentorship or affiliate marketing is promoted, the principle is the same.

The recruiting of MLM is ongoing. In contrast to standard companies that don't keep hiring due to supply and demand. In contrast with standard retail, product cycles and market demand are always kept in mind, so why keep hiring beyond what is needed?

if you don't remember anything else, remember points above

 

Downloadables (Books, data, stats)

In this section you can download free books or data explaining the deception of Pyramid Schemes. This section also includes links to other book you can buy off Amazon.com. We make no money from this

 Books (FREe  download

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The Case For and Against Multi-Level Marketing

By Jon M Taylor

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In Defense of the Pyramid Scheme

by Dr. Lasdwun N. Luzes 

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The 5 Red Flags

By Jon M Taylor

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Download Full Books Here

Click the blue button below each book to download (PDF)

Read through your computer, phone, tablet or print them out 

Merchants of Deception

by Eric Scheibeler (Amway Whistleblower)

Comment: When reading works from the specific author Jon M Taylor,  please ignore his writings about a hypothetical MLM that doesn't cause harm to society. It doesn't exist. Robert L Fitzpatrick from Pyramid Scheme Alert concurs. The backstory is Jon M Taylor was devoutly in a religious cult so he wasn't aware of the cult indoctrination aspect of MLMs that parallel his own life. He was only attempting to reconcile MLMs as a business model, in doing so missing possible aspects of undue influence and thought stopping predispositions. Too bad he is no longer alive to defend himself.

 Books (Amazon.com)

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False Profits is an in-depth examination of the multi-level marketing industry and related illegal pyramid scheme phenomenon which have grown rapidly in the US and abroad in the last 15 years. The examination looks at the MLM field from the perspective of its social, personal and spiritual effects on those enrolled and solicited.

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Amway distributors tout their business as "the best business opportunity in the world." Yet of the five million or so Americans whove been involved over its 40 year history, fewer than 1% have made a profit, and fewer than one-tenth of one percent have established the large incomes that they claim are achievable by all.

Ruth Carter has written a clear, concise account based on her 15 years of experience as a distributor and five years of insider information as the employee of a Diamond. The book attacks head-on the accusations of deception, cultism, and greed which are so often leveled at the Amway business. Here at last are the reasons why, clearly explained by a former insider.

Amway Motivational Organizations: Behind the Smoke and Mirrors takes a serious look at:
- a real Diamonds annual income and expenses
- what is the "system"?
- who makes money in the system?
- what is a cult?

- why is Amway accused of cultism?

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Leaving an MLM (multi-level marketing company) can be a difficult experience. This guided journal offers plenty of space for writing and also includes ten helpful prompts to encourage reflection and deeper understanding of the false beliefs and misconceptions that MLMs encourage.

Topics covered include

  • Shame and embarrassment over treatment of others

  • Losing friends and mentors after leaving MLM

  • Blaming self for "failure" at MLM

  • The pressure to keep buying inventory

  • Spiritual and religious manipulation

  • Lies about MLM earnings

  • Brainwashing and discouraging research into MLMs

  • Misrepresentation about ease of selling MLM products

 Statistics, Regulations, Other (free download)

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The  Myth of  "Income Opportunity"  in Multi-Level Marketing 2008 Update with Income Analysis of  Ten  Multi-level Marketing Schemes  and Income Analysis of  Amway/Quixtar  and its Secret "Tools" Business  by Robert L. FitzPatrick©2008 
 

 

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NU SKIN ENTERPRISES, INC. DISTRIBUTOR COMPENSATION SUMMARY

NuSkin Data

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A Statistical and Business Model Examination of the  Economic Legitimacy of Multi-Level Marketing 


 Robert L. FitzPatrick, Report Editor and Analyst Charlotte, NC Feb. 28, 2014 

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The Pyramid Scheme Legalization Act of 2017 

 


 By Douglas M. Brooks, Bruce Craig and Robert Fitzpatrick 

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MLM Chronology - by Douglas M. Brooks


This is a very helpful timeline to briefly explain the history of the MLM Pyramid Scheme by Douglas M. Brooks. This is a helpful for understanding chronologically. 

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10 Big Truths about Multi-Level Marketing: Hidden, Obscured and Denied…

This is a partial book. Truth #7 exposes the lack of regulation in the MLM (Mult-Level Marketing) industry. This is a truth that MLM recruiters would refrain to expose and try get around. 

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MLM List (Alphabetical Order)

Print or download this MLM list to use this as a reference on what to avoid. Bring this to career fairs to make your job search more time efficient. Share this list with others and contact us to update the list.

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Twelve Tests for Evaluating a Network Marketing (MLM) "Opportunity"

By Jon M. Taylor, Ph.D., Consumer Awareness Institute

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Multi-Page Slides by Pershing Square Capital Management exposing the MLM, Herbalife

See the documentary Betting on Zero

 Cult Information 

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Freedom of Mind: Undoing Undue Influence and the B.I.T.E Model 

Behavior Control 

Information Control

Thought Control

Emotional Control

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Influence Continuum

From The B.I.T.E Model 

 

Behavior, Information, Thought and Emotional Control

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Coercive Techniques in Business Opportunity Cults

By Douglas M. Brooks

Government Sources

In this section you can access external links of The Federal Trade Commission and different govt. sources in responds to multilevel marketing (product based pyramid schemes). You will notice very convoluted language on this matter. You will notice the condemnation of illegal pyramid schemes which are straight money based, and as they condemn illegal pyramid schemes they indirectly condemn multi-level marketing in principle (..if it looks like a duck, it quacks like a duck). To justify Multilevel marketing they bring up nonsensical points that conflict with the multi-level marketing platform. Such examples include condemning the infinite expansion of recruits of illegal pyramid schemes and at the same time mentioning legitimate MLMs don't focus on recruiting internally but the sale of products to outside recruits, which is far from the truth. These articles have mixed languages and some make valid points exposing the flaws of MLM. These articles show that the legal existence of product based pyramid schemes through extensive lobbing doesn't exist with rationality.

Consumers are on their own for evaluating MLMs. At best, government sources would only display a half truth and not give the full picture. There's no consumer protection from the financial harm of MLMs. Unlike franchises MLMs are not required to disclose any financial information that would make it obvious of being a financial trap with the loss rates, average incomes or operating cost. 

 Federal Trade Commission 

- This article struggles to make a solid distinction between a multi-level marketing and pyramid schemes (because in principle there is no distinction). The points that try to validate MLMs don't exist, or hardly at all because the MLMs platform is contradictory to promote outside retail sales.This article is evidence that MLM existence from aggressive lobbying don't exist with logic and sound reasoning.

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- See list of various articles. Articles include various companies and the predatory targeting practices of Latinos

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 New York Attorney general 

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- Highlighted Quote: "A legitimate multi-level marketing company emphasizes reliable products or services. A pyramid scheme uses products or services to disguise its quest for collecting money from the investors on the bottom levels to pay other investors further up the pyramid."

-(PSTC Comment) MLMs ARE pyramid schemes that launder products to recruit investors at bottom levels to pay upper levels. 

 California Attorney General 

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Highlighted Quote:

"If an opportunity has one or more of the following, it could be a pyramid scheme:

  • You make money mainly based on how many people you recruit and the money they pay to join, instead of through sales of products to the public. This is the number one sign of a pyramid scheme."

 Florida Attorney General 

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- This article states 5 points on how to choose a multilevel marketing company. Those points are valid questions to ask, however with further research of those questions beyond the article, you will find out MLM is a flawed model. In the link those reasons to support MLM are nonsensical. This article avoids the fact ALL MLMs are about recruiting rather than selling as well as avoiding the fact it is inevitable market saturation will happen from MLM. 

 Illinious Attorney general 

MULTILEVEL MARKETING    

Things You Should Know About..

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- This article represents 7 valid problems of multi-level marketing and the IL attorney general seems not as pro-MLM as some others.

 

There is no registration requirement for MLMs unlike franchises. Why are MLMs are not obligated to disclose certain financial data, unlike franchises. MLMs can keep certain information to themselves away from the public. For example, average earnings per distributor and loss rates.

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 INdiana Attorney general 

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- This article fails to mention that in principle MLMs are pyramid schemes however makes a valid point that "Multi-level marketing plans paying commissions based on sales by lower level distributors may eventually result in a financial loss due to a reduction of new distributors joining at lower levels."  The may needs to be crossed out in the article since the lost rates are close to 99.9 percent.

 Washington Attorney general 

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Highlighted Quote: No. This office does not endorse or approve any marketing program. Anyone who says that their program is approved by the Attorney General is engaging in a deceptive act.

Ask why would this article even mention the quote above, unless MLMs or pyramid schemes actually made those false claims on a frequent enough basis

 

 FBI (Federal Bureau of Investigation 

The Corporate Psychopath

By Paul Babiak, Ph.D., and Mary Ellen O’Toole, Ph.D.
(Click for Link)
Summarizing Comments

Highlighted Quote: "There also is the risk for economic crimes to be committed. For the corporate executive and the criminal justice professional, the issue is the possibility of fraud. Today’s corporate psychopath may be highly educated—several with Ph.D., M.D., and J.D. degrees have been studied—and capable of circumventing financial controls and successfully passing corporate audits."

Media

This section are links of communication channels that disseminate news. These are links to media articles relating to pyramid schemes or mult-level marketing. This section is helpful if for students or any professional to save time researching this specific subject from a media perspective. Notice the media sources are often more aggressive in calling out these schemes since there is no obligation to balance legality of the psuedo-business of MLMs.  This section is not an endorsement of different media organizations but a guide for MLM news and info. Articles will be updated or added as time goes by

 New York Post 

- See list of various articles. The latest news are Bernie Madoff victims getting another $378.5 million dollar payout

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Highlighted Quote: Checks are in the mail for nearly 350,000 people who said they lost money trying to run an Herbalife business, the Federal Trade Commission said Tuesday.

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Highlighted QuoteThe FTC disagrees. “Rather than focusing on selling products, Vemma uses false promises of high income potential to convince consumers to pay money to join their organization,”

Summarizing Comments
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 Highlighted Quote  “There’s no question this guy was a con man,” 

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 Washington Post 

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Highlighted Quote: Federal regulators raided the Tempe, Ariz., headquarters of Vemma, halting the operation of the energy drink distributor that used college kids to peddle the beverage, sold under the name Verve.

Females read here, don't waste your life

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Highlighted Quote: "Trump is being sued by four people who say they were duped into joining the multilevel marketing company ACN years ago because of his endorsement. The suit characterizes ACN as a pyramid scheme and accuses Trump of having made misleading claims as a paid pitchman prior to his presidency."

 Forbes 

Highlighted Quote: Herbalife, the nutritional shakes and multi-level marketing company, entered into a deferred prosecution agreement with the US Department of Justice on Friday and agreed to pay $123 million to settle charges it bribed Chinese officials, the third time in 4 years it's been slapped with penalties by the US Government 

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Highlighted Quote: "60% of participants sold less than $500 over the past five years."

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Highlighted Quote: "MLMs typically require participants, referred to as “distributors,” to pay startup fees to join along with incidental costs down the line, such as purchasing products and event tickets, and traveling to large-scale, conference-type events."

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 Vice 

Highlighted Quote: "If Beau’s story sounds familiar, it probably is. In 2017, more than 18.6 million people in the U.S. were “employed” by a multi-level marketing (MLM) company. According to the FTC, two recent and unrelated studies both found more than 99 percent of people who join MLMs ultimately lose money."

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 YAHOo 

A WONDERFUL PRECENDANT THAT WAS SET. 

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Separate Organizational sources

See pyramid scheme information from different sources or organizations. See the continuality

Freedom of Mind

This organization specializes in cult recuperation. Steve Hassan has counseled individuals involved with MLMs. Their articles are informative. See link below for their website. 

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- Explanation of loaded language MLMs use to promote financial trap 

- Referencing Betting on Zero Documentary

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- See Reference to Dream podcast

- Read about flawed legislation of HR 3409

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- See BITE Model as a helpful reference for pyramid scheme methods and manipulation 

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See explanation of money transfer scheme

See Reference to Amway lawsuit settlement

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Steven Hassan’s BITE Model

November 6th, 2018

- See BITE Model as a helpful reference for pyramid scheme methods and manipulation 

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- The legal system should be updated to reflect the current understanding of bioethics and to help diverse individuals and groups affected by undue influence. Destructive cults include Multi Level Marketing

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Resources from PSA (Pyramid Scheme Alert)

This is a separate organization, the first of its kind to inform about the treachery of MLMs.  PSA (Pyramid Scheme Alert) aids legal cases and provides MLM or pyramid scheme info to shows and documentaries. These articles provide deep insight. Our organization is distinctive from the PSA due to our 501c3 status, which is useful to start a collective movement against MLMs.

 About Multi Level Marketing 

- Intro to pyramid schemes and MLMs 

- obscurity and non transparency

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- Notice common themes of MLMs through example

- Question BBB rating system

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Highlighted Quote: As an unintended consequence, this criminal prosecution provides yet more evidence that it is not possible to tell the difference between illegal MLMs and what the government  calls “legitimate” MLMs.

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- Notice the flaws of endless chain commission and endless chain recruiting

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- SEC sues MLM Company for being a pyramid scheme. (compliant attached)

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- During US 2008 recession, it is despicable that MLMs used that time to target the vulnerable into financial traps.

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- Learn from example 

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Highlighted Quote: The bottom 99% (99.24%) of all Herbalife sales representatives earn a mean average income of $1.65 p. wk. before all business expenses and inventory purchases are deducted.

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See Link

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Highlighted Quote: The analysis also showed that less than 2% at the top of the Stream/Ignite sales pyramid received 55% of all commissions.

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Highlighted Quote: Update: The MLM scheme, Fortune High Tech Marketing, was ordered in ’09 to stop doing business in the state of North Dakota by state regulators. FHTM is one of fastest growing new versions of “endless chain” recruitment schemes based in the USA.

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Highlighted Quote: This icon of “direct selling” just announced that it has agreed to pay restitution to consumers and reform costs estimated at over $150 million.