illegal pyramid scheme

Does This Describe Your MLM?

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Kevin Thompson hires himself out to multi-level marketing companies to give them legal counsel. Supposedly he knows his way around the legality of MLMs, just like my buddy Gerry Nehra supposedly does.

So I was perusing Kevin’s website and came across this interesting diatribe about what separates “legitimate” MLMs from illegal pyramid schemes. I’ve written a lot about Mary Kay Cosmetics, Usana, Herbalife, Prepaid Legal, and the like. And guess what? All of them seem to violate the most basic rule Kevin sets forth… to be legitimate you have to sell mostly to people not affiliate with the scheme, but these companies have distributors who purchase the bulk of the products! Continue reading

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. Continue reading