Pyramid Schemes
Shocking Stats
- FACTS TO KNOW
- 95% of people who get involved in a multi-level marketing business will drop out within 6 months.
- 99% lose money or make absolutely nothing.
- < 1 % earn approx $2,000 per Yr before exp's
- < $170 per month = Avg IBO Revenue (before expenses)
- Amazingly, the TEAM CEO himself asked Quixtar why only 6 out of 600,000 who signed up in 1999 and 2000 achieved founder's emerald (about $ 80 k per yr).
- Orrin Woodward (CEO of TEAM) put this shocking statistic in his affidavit and this fact was not refuted by Quixtar.
Pyramid Scheme Alert (Link) is a web site offering information about the deception and harm of multi-level marketing (MLM) pyramid schemes. They enable consumers to identify, avoid or escape pyramid scams. Hundreds of MLM scams operate openly. 99% of all consumers who join the schemes never earn a profit. Many suffer devastating financial losses. Only the top perpetrators make money -- off the losses of all the others.
The Motivational/Marketing Tools Business
Stinging comments regarding the "Tools" (motivational tapes) business from the author of a popular anti MLM book called "Merchants of Deception"... see this Link for entire book!!
"I was horrified to discover and later document that the Amway business is used in a "bait and switch" fraud of global proportions. As much as 94% of some Diamonds’ income is derived not from Amway but from another, secretive, source altogether (the 'tools" business; the "marketing aspect). As a result of this, nearly all of the thousands of people we brought into the Amway business lost money. Some lost tens of thousands of dollars.
All claims, promises, and testimonials about these MLMs as "income opportunities" are false, misleading and harmful. People lose in these schemes because they were lured into a money trap, not because they "failed" or "quit."Any scheme in which less than 1% make a net profit is not an "opportunity." People are also hesitant to blow the whistle because often - by the time they realize it's a scam - they realized that they too have duped their family and friends. Thus they awkwardly back out.
The massive loss rates in MLM would be the same even if every participant had the talents and ambitions of Donald Trump and Warren Buffet!
We were unknowingly used to extract millions of dollars of good people’s hard-earned money for our upline Diamonds’ covert business. Amway’s owners and management have known of this deception for twenty years and have failed to stop it. Looking the other way has made them wealthy beyond belief.
SEE... http://www.mlm-thetruth.com/ for the following...
· MLM STATISTICS – the odds of MLM success, compared with gambling and clearly illegal no-product pyramid schemes. The numbers are shocking.
Consider... one MLM - one of the largest in the world - sends 84% of all commissions to the top 1% of its distributor chain. What chance would the newest recruits - at the bottom - have to earn a profit?
All claims, promises, and testimonials about these MLMs as "income opportunities" are false, misleading and harmful. People lose in these schemes because they were lured into a money trap, not because they "failed" or "quit."Any scheme in which less than 1% make a net profit is not an "opportunity." People are also hesitant to blow the whistle because often - by the time they realize it's a scam - they realized that they too have duped their family and friends. Thus they awkwardly back out.
The massive loss rates in MLM would be the same even if every participant had the talents and ambitions of Donald Trump and Warren Buffet!
The loss rates are pre-determined by the
scheme's design and operation!!
The recruiters at the top know all this even as they falsely hype the scheme as the "greatest opportunity in the world."
MLM's make promises - they do not deliver on them.
Like Enron’s fraud, MLM's business practices are not a matter of a corruption of an otherwise legitimate business.
The Fraud is inherent, pervasive and fundamental.
Both Enron's and MLM's scams are based not saying who they really are - on a false identity, a bogus business model, and claims of uniqueness. Its chairman, Ken Lay who later was convicted of fraud but died before serving his sentence, served as the company’s prophet and evangelist. These priestly roles served the company well since Enron’s real product was faith, not energy. Like Enron, MLM businesses sell false hope, not products. In the end, they are both confidence schemes.
30 Misrepresentations of Network Marketing See this Link
99% FAIL!! Massive Failure Rates debunk MLM Income Claims January, 2006
An extensive statistical study by PSA (Pyramid Scheme Alert; see this Link) has revealed that 99% of all sales representatives each year in a sample of major MLM companies suffered a significant financial loss. Additionally, the report shows that on average no net income is earned by MLM distributors from door to door "retail" sales.
MLM companies seek to obscure their devastating failure rates by disclosing the number only of "active" participants and limiting the income figures to a one-year or even shorter time frames, thus concealing the factor of the ongoing and mounting losses of new participants. If all the participants over a five-year period are included in the calculations, the failure rate rises even further.
Less than one in 1,000 will be shown to
have gained any profit at all.
The so-called successes in MLM are in the same small group positioned, year after year, at the top of the recruitment organization. The business model and business practices of most multi-level marketing companies cause the financial losses, not:
- normal competitive factors
- the levels of efforts
- the talents of the participants
