Pyramid Schemes

     Hello. I hope to provide a public service to preserve people's money, time, relationships, money, and integrity that are inevitably lost while involved in PYRAMID SCHEMES. If I dissuade you or a loved one from participating in this industry then I will have the warm satisfaction of knowing I just saved someone from a lot of heartache, pain, embarrassment, and frustration. I will also have saved you some money. See the 11 Plain Truths below.

What are Pyramid Schemes?

• Network Marketing, Multi-Level Marketing, "Direct Selling," etc.. essentially any business that requires one to recruit as a primary means to make money. What's legal? see here
• Amway/Quixtar, Market America, Mary Kay, PartyLite, Primerica Financial  for list of  companies, see List

Pyramid Schemes are based largely upon:

1) MISREPRESENTATIONS  

2) SYSTEMATIC FRAUD             

3) SECRECY & CULT-LIKE BEHAVIORS  

4) MIND MANIPULATION    

5) EXPLOITATION

    My research is extremely recent and draws much upon the sworn affadavits of the "big shots" in the industry. I hope that you find the research to be as "jaw dropping" as I found it to be.  

    I was introduced to this sordid business through members of my church who were sincerely duped at the time. The business I became associated with was Quixtar (Amway) and TEAM (the secretive marketing leg to Quixtar). But all Pyramid Schemes use a similar business model! They differ only in the products they sell and the way in which they try and disguise the pyramid. They also typically make fun of "real jobs" and those who actually earn an honest living.

11 Plain Truths

1. INCOME  99% of all people who join Amway/Quixtar or other multi-level marketing schemes never earn a profit. The odds of making money are worse than a chain letter or a single bet on a number on a roulette wheel. (linked) Nearly 96% of recruits quit (linked) within 5 yrs. The losses are so large that these schemes cannot be called a legitimate "business opportunity."

2. DECEPTION  To get people to join a MLM scheme in which nearly all will lose requires deception. The promoters do not tell the truth with assertions like:

• "You will be financially independent; you will be able to quit your job"  Consider only .001 % of Quixtar(Amway) distributors make greater than 80,000 dollars. 99% make nothing.
• "We are led by strong Christian men; we have led people to the lord" True Christian men would not run a business based on systematic deception. I question the authenticity of being "saved" at an Amway meeting. Sadly, they will twist scripture to justify their thievery. 
• "We wrap ourselves around the flag; we represent true American opportunity" These network marketing companies represent no more of the American dream than the mafia does. It is well disguised fraud.
• "You will have more time to spend with friends and family"  These MLM companies are a time and money vacuum. Friends, work, and family relationships suffer. Jobs and marriages have been lost due to these scams.  Pastors have lost their reputations.
• "Pres Bush supports us... Pastor Chas Stanley is a distributor..."  Money talks. Quixtar(Amway) has aggressively solicited political support and have "wooed" those from the pulpit. Anything to add an ethical veneer; an air of legitimacy. In addition, most who "support" these businesses have not taken the time to cut through all the deception and subterfuge. I'd be shocked if they'd still support this industry after reviewing this site.
• "We have reduced the number of middlemen which makes are business model so great." This makes no sense because the prices are so astronomical. I argue that the # of middleman actually increases due to all of the commissions paid out to all those in the "up line." 

3. CONCEALMENT  The people at the top hide basic facts from recruits such as average income, actual costs of doing business, drop out rates, and how much of the total bonus money they receive. They also do not reveal the source of their money, most of which comes from selling "training" materials ( I call these "hype the scam" materials because they hype a business nobody can win at). The upline depends on this "sucker revenue" for its continued existence.

4. EXPLOITATION  Often, when the well dries up, they try to earn income from recruits in other countries. They exploit the most naive and poor among us for personal gain. Haiti has been targeted by my former sponsor. He has bragged that thousands have shown up for meetings. This is Sick. They don't stand a chance. Amway has been shut down in many countries as a result of their predatory behavior.

5. CONSCIENCES are a liability in this business. A healthy conscience is a recipe for failure - as most moral people don't like to dupe their family, friends... or even strangers. Research from Dr Jon Taylor (linked) states that those who are successful in MLM must not only work hard, but they must also:

1. First, be deceived
2. Maintain a high level of deception
3. Go about aggressively deceiving others
4. Be in denial about the harm they are doing.

   And who is the author of deception? You know who. It is easy to see here how these businesses can become cults (linked) when you have a number of energized, ambitious individuals targeting others while in denial about the harm they are doing. I would differ from Dr. Taylor's findings only in that I believe there are a number of people who know they are doing harm - but continue to do so anyway.

6. INCESTUOUS BUYING  Few MLM products are ever actually sold to outside consumers (Quixtar reports 3.4%). The people who buy these products do so as part of investing in a "business opportunity." The self consumption within the pyramid "artificially respirates" the business. The cost of these internal purchases represent another "hidden expense" to the business - something you won't see reported. Market America has what amounts to a $ 3,600 per year "pay to play" policy where one is forced to pay exagerated prices on items one may not have otherwise purchased. One starts in a hole. 

7. DISILLUSIONMENT Most people who join these schemes quit in the first year. Trying to make money from recruiting is therefore a long and costly effort. When a person starts out to build a "downline" they are already at the bottom of someone else's very large downline. Only a tiny few can ever be at the top. The few at the top make much of their "sucker money" off of the losses suffered by those at the bottom. 

8. BRAINWASHING   The training and motivation seminars, books and tapes are a secret business run by the top promoters of the scheme. They serve as mind manipulation tools. As much as 75% of income comes from this business - yet only about 1% partake in it. Buying tapes and books does not increase a person's chances for success. It only adds to one's losses. These losses (expenses) funnel up to the top as revenue for the bigwigs. I call these motivational materials "hype the scam" tools... similar to me selling you motivational tapes while sending you to buy a lottery ticket.

9. RULES of the CULT   A network of unwritten rules are in place so that the boat's not rocked. Adherence to these rules keeps people "behaved" and from knowing too much.

• You CANNOT ask anyone about their income for fear you'd find out how low it may be.
• You CANNOT talk to someone not in your "upline" for fear you'd compare notes. This includes e mails and phone calls.
• You CANNOT criticize anyone for fear the "negative truth" about the company get out. Some of the criticism may actually be honest.
• You CANNOT ask questions at a meeting for fear that it may actually be a good question and may have to be answered.
• You CANNOT deviate from the "system" for fear that free thought might arise and that the row of "barking seals" (in red ties) might actually realize they're being manipulated.
• You CANNOT tell those you are recruiting that you are associated with Amway/Quixtar for fear they will run! Instead you're instructed to trick them by answering their questions with questions yourself!

10. POLITICS  (See LINK) The main reason the government of the United States does not investigate these schemes for deception and unfair practices or for running pyramid schemes is that leaders of these schemes contribute huge amounts of money to the politicians' political campaigns. Consumers, therefore, must look out for themselves. Just because a particular MLM such as Amway/Quixtar is not prosecuted by the government does not mean it is legitimate or that you will ever make any money from it. The industry has also selected at a euphemistic word for their craft. They call it "DIRECT SELLING" and it has its own lobbying organization.

11. BUSINESS RETARDATION   One does not need an advanced degree to figure out that that if you were selling a great product, you would not market it under a pyramid scheme. You would want the market all to yourself.

• You also wouldn't force your sales team (your downline) to pay for all their own marketing and motivational materials and certifications.
• You wouldn't cannibalize yourself - splitting up the territory into a thousand parts thus minimizing the potential of each sales person.
• You would sell a product with viability, not some untested island "jungle juice" or another "me-too" vitamin or protein mix from the "pills, potions, notions, and lotions" category.
• You wouldn't send a bunch of untrained amateurs out to peddle the product with no expertise in the field... risking unsubstantiated claims and consumer anger - even lawsuits.
• You would allow the product to stand for itself and you'd allow it to sell on its own merits. You would not have its success depend upon forcing it upon family, friends, church members etc. - thus risking their alienation.
• You would seek to cut out middlemen so a competitive price can be set. You wouldn't add layers of middlemen (distributors) so that you are forced to sell at obscenely high prices.