Calculating Loss and Failure Rates in Multi-Level Marketing Schemes

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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: Continue reading

Why Retailing Does Not Occur in Multi-Level Marketing Companies

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Multi-level marketing companies (MLMs) like to refer to themselves as “Direct Sales” companies, because this puts the focus on the sale of the product or service, and takes focus off the business of recruiting.

I’ve been researching MLMs for years, and I’ve found that companies use the product or services simply as bait and a cover. It is “bait” for recruiting because it looks legitimate to a potential recruit. (How many people would join MLMs if they were truthful and told you that what you really had to do was constantly recruit new people?)

It is a “cover,” since it is what makes the schemes legal under state and federal laws. Pyramid schemes (which are simply a transfer of money up a pyramid-like structure) are illegal. But if you use a legitimate product or service as your cover and your reason for transferring money up the pyramid, you can successfully claim that your company is not a pyramid scheme. Again, the product or service takes the focus off recruiting. Continue reading

Marketing Fraud: Why Multi-Level Marketing Pyramids and Financial Ponzis are Ignored By Law Enforcement

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pyramidDear Colleagues, Consumers and Pyramid Scheme Alert Supporters,

A new essay recently posted on the False Profits Blog addresses a question many of you  have raised.

Why are multi-level marketing pyramids and financial ponzis able to ensnare so many people today? What is the power behind this Main Street epidemic?

This question goes beyond the lack of law enforcement, the failure of the FTC and SEC, or the difficulty of grasping “exponential expansion.” Continue reading

The Lure of Multi-Level Marketing

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I constantly marvel at how multi-level marketing (MLM) can continue to lure in millions of people a year, who collectively pump billions of dollars into these losers. Time and again, industry experts calculate a failure rate of 99% (failure = losing money on the deal) … And still consumers line up to sign up for these things.

Even the COLD HARD FACT that they have almost no chance of turning a profit does not deter them. Stop and think about it. These people have less than a 1% chance of turning a profit in MLM, yet they still sign up and pay hundreds or thosands of dollars each into these recruiting schemes. (Schemes… because the name of the game is signing them up and getting their money via fees to join and/or inventory purchases.) Consumers have a better chance of coming out ahead if they simply put their money on a table in Vegas. Continue reading

Utah Woman a Star in Pink

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The Salt Lake Tribune
By Steven Oberbeck

In the world of Mary Kay cosmetics, Gladis Camargo of Riverton is a superstar. During the past 13 years, Camargo has built up a marketing organization of nearly 40 sales directors who in turn are responsible for leading, training and motivating more than 3,000 independent beauty consultants.

Later this summer, she will be recognized at Mary Kay Inc.’s annual seminar in Dallas for achieving the position of “independent national sales director” – a ranking only attained by about 500 women during the company’s 44-year history.

“I fell in love with Mary Kay the first time I came into contact with it,” Camargo said through her daughter Karen Borquez, who translated from Spanish. Camargo said her first experience with the company was in 1994 when she attended a skin-care class offered by an independent consultant.

As a result, she quickly embraced the business opportunity the company offered. Continue reading