How did you first become involved in your research of multi-level
marketing?
My research began when I was recruited aggressively by an MLM program and
agreed to give it a one-year trial. Though I was successful climbing the
hierarchy of participants, I was still losing money after a year. My wife
threatened to leave me if I continued participating – not because of the
money, but because of the changes she saw in me that she did not like, which
resulted from MLM recruiting. This caused me to examine the ethics of
exploiting important relationships for profit. I decided it was not ethical
and wrote the book The Network Marketing Game. It was while on a speaking
tour promoting the book that I began to get feedback from tax accountants
that in spite of all their promises, almost no one was reporting profits on
their income taxes. This led to extensive research to determine success
rates and the legality of all forms of chain selling.
Given the large number of MLMs in existence, there must be huge
advantages for someone to start a MLM structured business versus a
traditional business. Can you tell us what some of those advantages are?
The apparent advantages include the ability to work from home, to establish
an ongoing residual income, to promote good products, etc. But I learned
later that these are all illusions masking the real problems that result
from an inherently fraudulent compensation plan that rewards a few at the
top of their respective pyramids at the expense of a downline of victims who
are duped into making a losing investment.
People who leave MLMs are frequently told by those still in the business
that they were not successful because they didn't work hard enough or didn't
want it enough. Would you like to comment on this?
This is one of the reasons victims of MLM programs don’t file complaints
with law enforcement, which in turn leads law enforcement officials to fail
to perceive a problem.
From my experience as an entrepreneur who has been involved in over 40
business startups, I can say that generally with a legitimate business, the
more you invest in time, money, and effort, the more you are likely to
succeed or profit. But with multi-level or chain selling programs, the more
you invest, the more you lose – with the notable exception of those at or
near the top of their respective pyramids.
More on this can be found in the article entitled “Top Ten Things I
Learned from Ten Years’ Research on MLM/Network Marketing.” Go to
http://www.mlm-thetruth.com/Top10thingsIlearned.htm
But what about those large commission checks? Those people must be making
pretty good money, right?
The same could be said of the lottery. Just because a few make millions,
this does not make the lottery a good investment. In fact, we now have
evidence from financial reports of MLM companies and from tax returns that
only a tiny percentage profit in any pyramid marketing scheme and that the
vast majority will always be in a losing position at the bottom. With
“recruiting MLMs” (those with compensation plans that reward recruiting more
than selling), the percentage of participants who lose money is at least
99%. One’s odds of success are much better at many of the gambling tables in
Las Vegas.
I know women who feel a lot of shame for getting involved with an MLM and
the things they did while they were in. Some even mention feeling somewhat
brainwashed. Is this something you hear from others as well?
I get letters from all over the world, and this feeling is fairly common,
except that most victims don’t understand that they have been duped by a
very clever con game. In fact, it may be the most clever con game of all
time because the very people who are out promoting the scheme are often
victims themselves. They continue recruiting until they run out of money and
drop off the vine. But they don’t file complaints with law enforcement,
blaming themselves or fearing consequences from or to close friends or
family members still in the chain. So the game goes on.
You have a wonderful list on your site entitled "1,357 Ways to Make a LOT
More Money than in MLM/Network Marketing." Why do you think so many people
join MLMs in the first place rather than choosing some of the income
opportunities on your list?
They are recruited. Few people are resourceful enough to do the necessary
research to find a legitimate income opportunity. True opportunity does not
come knocking – you must go out and find it and thoroughly research it
before investing in it.
What final comments or advice do you have for our visitors?
Educate yourself by reading “The 5 Red Flags of a Product-based Pyramid
Scheme” and numerous reports on my site and those of others that are
recommended on the links page of my site. Go to the home page at
www.mlm-thetruth.com.
BIOGRAPHY:
Jon M. Taylor, MBA, Ph.D., began uncovering pyramid fraud with his
decision to put network marketing to a one-year experiential test in 1994.
What he discovered led him to perform twelve years’ research on over 200
MLMs (multi-level marketing programs), to perform participant surveys, to
prepare numerous analytical reports on the harm from all types of pyramid
schemes, and to develop tools for evaluating MLMs and no-product pyramid
schemes. He researched and authored The Network Marketing Game (a book on
the ethics of multi- level marketing), Network Marketing Payout Distribution
Study, PRODUCT- BASED PYRAMID SCHEMES: When Should an MLM Program Be
Considered an Exploitive Pyramid Scheme?, 12 Tests for Evaluating a Network
Marketing “Opportunity” (consumer guide), and “The 5 Red Flags of a
Recruiting MLM, or Product-based Pyramid Scheme.” (report for regulators,
consumers, and consumer advocates)
Dr. Taylor’s Do-it-Yourself Evaluation of MLM Programs and Suspected Pyramid
Schemes is an interactive program for visitors to the web site
www.pyramidschemealert.org. He has a similar program on his own web
site,
www.-mlm-thetruth.com which gets visitors from over 120 nations. He
serves as an Advisor of Pyramid Scheme Alert (PSA) and has served as
consultant and expert witness in several cases involving MLM’s.
Dr. Taylor’s research was featured in the February 2002 (cover story) and
November 2001 issues of The Informant, published by the NW3C (National White
Collar Crime Center). His report on Product-based Pyramid Schemes was
included as a white paper for the May 2002 NW3C Economic Crime Summit
Conference – and presented at the 2004 conference. A summary was featured in
the June issue of White Collar Crime Fighter.
Dr. Taylor received an MBA degree from BYU and a Ph.D. in Applied Psychology
from the University of Utah. He has over 30 years of sales, marketing, and
entrepreneurial experience. He has worked on the administrative staff of two
universities and has taught classes in management, finance,
entrepreneurship, and ethics. Dr. Taylor has been involved in over 40
business startups and done mid-career consulting for corporate and
self-employed executives. He has also taught seminars, sponsored income
opportunity trade shows, and written on career and business topics.
