pyramid scheme alert

Are All Multi-Level Marketing Companies Pyramid Schemes?

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Recently Robert FitzPatrick of Pyramid Scheme Alert sent out a newsletter that included a discussion of the issue of whether all multi-level marketing companies are pyramid schemes. MLMs are frequently accused of being pyramid schemes, as we see has been the case with Mary Kay Cosmetics, BurnLounge, Herbalife, Medifast, Fortune Hi Tech Marketing, and Usana Health Sciences.

It is common for participants in multilevel marketing schemes to ask whether one MLM or another is also a pyramid scheme. Consumers are hoping that they have found the one legitimate or good multi-level marketing opportunity. The following information comes from Robert FitzPatrick’s newsletter article on the topic:

Read moreAre All Multi-Level Marketing Companies Pyramid Schemes?

Can MLM Be a Crime: Canadian Police Bring Criminal Fraud Charges Against Multi-Level Marketing Company Business in Motion

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By Robert FitzPatrick of Pyramid Scheme Alert

Royal Canadian Mounted Police (RCMP) in the province of Manitoba in central Canada have brought criminal fraud charges against a multi-level marketing company that had been large, very visible and quite popular in Canada. The target of the fraud charges also include 12 consumers who had been active recruiters. The company, called Business in Motion (BIM), sold a package of travel discounts, and it offered each new salesperson the right to recruit other salespeople.

Like most MLMs, no payments were offered directly for recruiting, but only when a recruit “purchased” a product or sold one. As in some other MLMs, the salespeople were also purchasers of the product they sold. As others joined and “purchases,” were made, rewards accrued to those on the upper levels of the recruiting chain. As in all other MLMs, the recruitment chain was said to be endless and the opportunity “unlimited.”

Read moreCan MLM Be a Crime: Canadian Police Bring Criminal Fraud Charges Against Multi-Level Marketing Company Business in Motion

FTC Staff Take Further Measures to Protect MLMs, Making Consumers Easy Prey for False “Business Opportunity” Solicitations

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From Pyramid Scheme Alert newsletter, by Robert FitzPatrick

The largest of all multi-level marketing companies, Amway, just agreed to pay $150 million in restitution and reform to settle consumer charges of fraud. The heart of the consumers’ complaints is that Amway uses false information to trick consumers into investing in its “business opportunity.” Among other reforms, Amway has agreed to change its “disclosure” of income averages. A similar lawsuit has been filed in Canada.

A front page story, USA Today on Oct. 15, 2010, entitled, “Fortune Hi-Tech: American dream or pyramid scheme?” documents widespread claims of deception, involving tens of thousands of US consumers, leveled against one of the newer and fastest growing MLMs. The MLM scheme has been prosecuted in two states and is under investigation by seven others states, according to the article. Misleading “disclosures” are at the heart of the charges and negative publicity.

Read moreFTC Staff Take Further Measures to Protect MLMs, Making Consumers Easy Prey for False “Business Opportunity” Solicitations

Criminal Charges Against Amway in India

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Guest post by Pyramid Scheme Alert

In a letter to a Director of  Pyramid Scheme Alert, the chief of police in one of India’s largest states, Andhra Pradesh, wrote that a criminal case has been booked by the government’s Criminal Investigation Division against Amway India for promoting a “Money Circulation Scheme” in the disguise of Direct Selling. He stated, “Now the case has been charge sheeted and it is proved that Amway is nothing but Money Circulation Scheme. Andhra Pradesh Government now has issued a G.O. against Amway under sections 8 of the Prize Chits & Money Circulation Schemes (Banning) Act, 1978.”

Read moreCriminal Charges Against Amway in India

Pyramid Scheme Alert Reflects on 2007

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Multi-level marketing will go down in history as one of the great frauds of our times. It deceptively wraps its harmful scam with the real needs and desires of people today – additional income, stay home with the family, independence, entrepreneurship, high income without high investment or training, and a group that will help you succeed. MLM is an Enron story, glossy and exciting to those who invest. But in the end, it causes massive harm, employs sophisticated deception, and it is corrupting our government.

MLM is an American-based “sales ” scam, and has spread to more than 70 other countries, just as Nigeria has spread its famous “bank account” scam worldwide.

Read morePyramid Scheme Alert Reflects on 2007

News on Amway class action suit from Pyramid Scheme Alert

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Robert FitzPatrick at Pyramid Scheme Alert reported in his recent newsletter on the class action suit that has been brought against Amway (Quixtar) by high-ranking distributors:

The lawsuit states:

* Quixtar’s (Amway and Quixtar are both part of the same company) products are so overpriced they cannot be profitably retailed.
* Only 3.4% of product sales are made to customers outside of the Quixtar distribution network.
* The sole way to make money is for a (distributor) to continually recruit new distributors who are also willing to buy and self-consume, or give away, the Quixtar products.
* Quixtar a classic recruitment pyramid scheme.

Read moreNews on Amway class action suit from Pyramid Scheme Alert

Press Release: Fraud Investigator and Former Mary Kay Salesperson Joins Pyramid Scheme Alert Board of Advisors

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Milwaukee, WI November 22, 2006 . Pyramid Scheme Alert announces that Tracy L. Coenen, CPA, MBA, CFE has been named to the organization.s Board of Advisors. Her consumer education website, PinkTruth.com, which exposes and analyzes the business and recruiting practices of Mary Kay and the plight of Mary Kay salespeople, has received over 4,000 visitors a day.

Pyramid Scheme Alert is one of the most widely recognized and highly respected organizations fighting against pyramid schemes and abusive multi-level marketing companies. The organization is led by Robert FitzPatrick, author of the book False Profits: Seeking Financial and Spiritual Deliverance in Multi-Level Marketing and Pyramid Schemes.

Read morePress Release: Fraud Investigator and Former Mary Kay Salesperson Joins Pyramid Scheme Alert Board of Advisors