Through the years, multi-level marketing companies and MLM distributors have played a clever game of changing the wording to hide the truth. MLM activities have been referred to as direct sales, dual marketing, network marketing, multilevel marketing, consumer direct marketing, affiliate marketing, seller assisted marketing scams, home-based business franchising, and referral marketing. (Skeptics refer to this “business model” as pyramid selling, pyramid schemes, pyramid scams, endless chain recruiting, and Ponzi schemes.)

Why all the names? To confuse potential customers and recruits. These companies know negative impressions are associated with multi-level recruiting and sales. So if they can change the name, maybe they will get to people who would otherwise be turned off by the name MLM.

Last week the Salt Lake Tribune published a fantastic article about the reality in multi-level marketing, entitled Utah Juice Companies Offer Few Prospects. MLMs like Mary Kay, Amway, MonaVie, and Herbalife have been claiming that the great recession has increased the number of distributors because people are looking for ways to make money during this time of high unemployment. The problem with this claim is that while more people are signing up for these bogus business opportunities, almost no one is actually profiting from their activities.

Multilevel marketing companies like to refer to themselves as “direct sales” companies. They want to keep the focus off recruiting and onto selling of the products directly to customers. The problem is that little actual retail sales occur for a number of reasons:

I’ve written previously about Fortune Hi Tech Marketing (FHTM), a multi-level marketing company that is all about recruiting more people into your pyramid, rather than actually selling products.

Fortune Hi-Tech Marketing has previously been the target of legal action by the Attorney General of North Dakota, and has been a target of the North Carolina Attorney General, cracking down on “business opportunities”:

Robert FitzPatrick, an internationally recognized authority on multi-level marketing and pyramid schemes and a court certified expert witness on MLMs and pyramids, details the lies told in MLM in this article, A Disguised Pyramid Scheme: The Non-Retail “Direct Selling” Company:

Instead, the non-retail direct selling schemes present a compelling and very alluring picture to potential recruits that diverts attention from the flawed structure and its disastrous outcome. Virtually all companies of this type in every country they operate in make the same alluring and misleading promises to recruits:

Fox News in Los Angeles did an exposé on multi-level marketing company Fortune Hi Tech Marketing. This video exposes the truth behind the company: operating like a pyramid scheme, dismal failure rates, false earnings representations, few making any money, broken promises, FHTM lying about its relationship with big name companies.

Fox interviewed me for their story, but you should note that the comments they used in this video were comments I made about MLM in general, not specifically FHTM.

I thought it was a hoax. Surely this couldn’t be true? An actual college, offering a curriculum in “network marketing”????

You know – - network marketing – - as in multi-level marketing, as in legalized pyramid schemes. Yes, folks, it’s true. Bethany College in Kansas is going to be offering a curriculum in professional scamming!

But if a college is going to be teaching this network marketing, multi-level marketing stuff to students, then it has to be legit, right? Wrong.

I have no idea what would possess any educator to think that they ought to spend valuable classroom time teaching this type of legalized scam to students as if it was a legitimate business pursuit. I can only assume that the powers that be, namely one Robert Carlson, M.B.A., professor and chair of business, has done no research on MLM and has no idea how these scams operate. He says about the new network marketing stuff:

Hundreds of thousands of Americans get sucked into Multi-Level Marketing (MLM) companies each year. From Mary Kay to Amway to Herbalife to PrePaid Legal, the list is seemingly endless. Each offers its own special spin on the products it sells, but the main focus of an MLM is on recruiting new members.

MLMs live and die by the recruitment of new members, who make the bulk of the product purchases from the company. Little of the product is resold to an actual end user, but the MLM company doesn’t care. The sale has been made to the distributor (or associate or representative or member or consultant or whatever term you like).

In Chapter 7 of Dr. Jon Taylor’s book, The Case (For and) Against Multi-Level Marketing, he details the failure rates of participants in multi-lievel marketing companies. In order to analyze the true failure rates and to calculate actual profits or losses from participation in these (improperly termed) “business opportunities,” it is necessary to wade through confusing and incomplete disclosures and to estimate figures that are critical but not provided by the companies.

Dr. Taylor completes a thorough analysis of the numbers. Of the hundreds of multi-level marketing companies active in the United States, Dr. Taylor could find income disclosure statements for only 30 of them. What are the others hiding?

The analysis of these 30 income disclosure statements was completed through the following process:

In a follow-up to her original article about whether Isagenix is a scam, Harriet Hall, M.D. prints some of the criticism she got and her responses. This article was originally published at the Skeptical Inquirer website.

Defending Isagenix: A Case Study in Flawed Thinking
Volume 35.1, January/February 2011

Do those who comment on blogs even read the articles they are responding to? Here is a case study in emotional thinking, ad hominem arguments, logical fallacies, irrationality, and misinformation.

The Internet is a wonderful medium for communicating ideas and information in a rapid, interactive way. Many online articles are followed by a section for comments. Like so many things in this imperfect world, comments are a mixed blessing. They can enhance the article by correcting errors, adding further information, or contributing useful thoughts to a productive discussion. But all too often the comments section consists of emotional outbursts, unwarranted personal attacks on the author, logical fallacies, and misinformation. It provides irrational and ignorant people with a soapbox from which to promote prejudices and false information.

Multi-level marketing company Isagenix offers a cleansing product which it claims helps people lose weight. Is this MLM scheme offering a bogus product, or is this a legitimate weight loss program?

Let’s start off by clarifying that in general, multilevel marketing companies are legal scams in the United States. The government allows them to exist and multiply. They offer products which are little more than a “front” for the schemes, since without a legitimate looking product or service, the companies would be at risk of appearing to be illegal pyramid schemes.

In this article, we are not focusing on the MLM method of selling an opportunity or product. We are looking at the product itself.  Isagenix has its roots in colon cleansing products. These are detoxification products which they claim help people lose weight. The company also offers vitamins, supplements, and anti-aging products for the skin.