Home MLM Evaluations Frequently Asked Questions MLM Products Non-MLM Income Actions You Can Take MLM Research MLM Statistics MLM Regulation Direct Selling/DSA Worldwide Warnings Utah LDS Foreign LanguageTranslations MLM History Short Articles MLM Humor/Satire Sponsor Credentials Recommended Links Contact
CAI
Consumer Awareness Institute
Non-profit Corporation
MLM - Network Marketing CONSUMER GUIDES – to Protect Against Losses in MLM Programs
"Your information. . . had a HUGE impact." — "I have downloaded many of your reports and I thoroughly agree with all of your findings. . . . —Suzanne Viggiano
I
was extremely impressed with your article (the
5 Red Flags) and felt compelled to write to you. . . Like
yourself, I have completed a Ph.D. in Psychology (Organisational), and
also have a business background in management consulting. . . .
Out of all the internet sites and reading I did on the subject, your
article was by far the most informative and well researched, and it really
helped me understand the dangers of MLMs. Thank you!!
–Amantha Imber,
Melbourne, Australia
Here's a
GREAT idea that could save you a lot of money and help you preserve your most
precious relationships:
When someone invites you to an MLM meeting or otherwise attempts to recruit you
into an MLM, hand them a $20 bill and tell them that is your payment for him/her
leaving you alone. This idea came from Karl Heinz Krieter, who suggested paying
a one-time tribute to MLM recruiters. His analysis of worldwide
losses from MLM is enlightening.
Other helpful web sites:
Check our the many resources
posted on the web site of Pyramid Scheme Alert
(PSA),
A
non-profit organization that works to study, expose, and prevent illegal pyramid
schemes worldwide. Also included on the site are news items related to MLM's and
no-product pyramid schemes, action alerts, and resources. And check out
other recommended web sites on
MLM/network marketing.
More readers' comments:
"If every [person] interested in joining recruiting MLM's would just take the time to read your [reports] and educate themselves, they could save a lot of grief." —Michael Rawlings
" You sure saved me from future trouble (lost time, money, relationships). Your inputs are invaluable." —Julius Vargas
"Jon Taylor has shared his experiences with such honesty and insight that it should help others avoid many of the common problems with their network marketing and other money-making endeavors." –Mary Carpenter
PLEASE HELP! I believe this site presents information about MLM/network marketing that is as close to the truth as can be found. It can save you much time, money, and grief, as it has done for many others. And since law enforcement has essentially looked the other way on this type of consumer abuse, it is left to informed consumers to inform and warn their friends and relatives about the potential losses they could suffer from participation in a “recruiting MLM.” So please print and distribute at least 5 copies of the answer cards to those you care about – and ask each of them to share answer cards with 5 people, and each of them with 5 more, etc., etc. . . . In this way, you can influence many people for good – through an endless chain of truth-telling. Click here to see these handy answer cards (4 to choose from) that you can print and distribute now – as well as carry with you for those awkward moments when you are recruited by a well-meaning friend or relative. For more information, click on the appropriate links above.
1. Watch for the "5 Red Flags" of a product-based pyramid scheme, or "recruiting MLM" (MLM's which reward the recruitment of a downline more than sales to non-participants in the scheme). Read the brief consumer-friendly summary report: "The 5 RED FLAGS for Identifying Exploitive Product-based Pyramid Schemes, or Recruiting MLM’s" The full 43-page report, entitled "The 5 Red Flags: Five Causal and Defining Characteristics of Product-based Pyramid Schemes, or Recruiting MLM's." [PDF] is recommended for serious consumer inquirers and investigators – same report as on research page. You might also want to read about "30 Typical MLM Misrepresentations" used in MLM recruitment.
2. Evaluations of over 250 specific MLM companies, based on the "5 Red Flags" are found after completing your own 5-step Do-it-Yourself Evaluation. Where data was available, the rate of success for recruiting MLM's (MLM's with the 5 Red Flags in their compensation plans) is abysmal. In fact, MLM makes gambling in Las Vegas look like a safe bet in comparison. Even clearly illegal no-product pyramid schemes do far better. See "Which Does the Greater Harm?" [PDF]
3.
The villain is not the people or the products. It's the Compensation Plan. The
key to identifying the potential harm of a multi-level marketing program is to
look for elements (similar to the "5 Red Flags" above) in the
compensation system that create extremely high leverage for the top persons in
the hierarchy of participants. MLM
leverage refers to the concentration of payments from the company to founding
and other top-level distributors, who profit hugely from the efforts and
purchases of a multitude of "distributors" beneath them, the vast
majority of whom lose both time and money. By performing the 5-step
Do-it-Yourself Eva
luation, you can
decide for yourself whether or not a program should be avoided. As you
answer each question, you will be given information that will enable you to make
a more informed decision. You will also be both entertained and informed by
reading "The Parable of the Missing
Children."
4. Your questions should be answered in "Frequently Asked Questions and Straight Answers about MLM." Be prepared for some surprises.
5. Are there more fair network marketing or "retail MLM" programs that reward direct selling more than recruiting? Fair and equitable distribution of income in compensation plans would be extremely rare if such existed at all in MLM/network marketing, as MLM is built on a flawed concept of an infinitely expanding program in a finite marketplace. Were such MLM programs to exist, I would call them "retail MLM's". In a retail MLM, every participant could earn a decent income selling products without recruiting a downline. Out of hundreds of MLM's I have reviewed, I have been hard pressed to find MLM/network marketing programs that might be classified as "Retail MLM's", which avoid the worst abuses of the "5 Red Flags" discussed above. The closest to fair and equitable systems are some of the party plans, such as Pampered Chef.
6. "The Twelve Tests" can prevent a lot of trouble. For those needing an additional guide beyond the "5 Red Flags," read "Twelve Tests for Evaluation of a Network Marketing 'Opportunity' ", an earlier article widely quoted by activists and participants alike. This handout provides a much more objective and helpful resource for consumers who are considering an MLM program than those provided by the Better Business Bureau or the Direct Selling Education Foundation (DSA sponsored). The latter two are widely distributed, but are written by persons financed or strongly influenced by the network marketing industry. Incidentally, to date only one company out of hundreds of MLM's has passed the 12 tests. [Click here to download "The Twelve Tests" in Word 6.0 format to print on two sides and fold to get a handy 3-fold flyer. You may have to exit the site and come back in.]
7. Top Ten Things I
Learned. After 
ten
years of investigating MLM's, Jon Taylor wrote down
the major conclusions he can support from the research in these reports. If you
haven't read this already, you may find it enlightening. Read "Top
Ten Things I Learned from Ten Years' Research on MLM/Network Marketing."
[Click
here
for PDF format.]
8. ASIANS – take heed! Consumers in ASIA and other markets outside the U.S.A. should heed this WARNING (click here) about aggressive expansion into vulnerable overseas markets by "recruiting MLM"companies, most of which are based in the U.S.
9. Warning for LDS members and members of other churches. Some churches are hard hit by MLM. One group that is particularly vulnerable to MLM abuse is members of the Church of Jesus Christ of Latter-day Saints (LDS). See the page " Guidelines and Warnings for LDS members"
10. There are many satisfactory income alternatives (aside from the standard job market) and MLM that don't involve an endless chain of recruitment. Almost any of them are superior to recruiting MLM's. Read "1,357 Ways to Make a LOT More Money than in MLM/Network Marketing."
11. E-mail friends and family with information about this web site and the many research reports and MLM consumer guides and evaluations that can help them with their decisions.
12. Copy and E-mail a Descriptive Bulletin about This Web Site to Your Favorite People. Another way you can help prevent losses by friends and family members is to share an important bulletin with them about this site – anyone who may at some time be confronted with a "once in a lifetime" MLM "opportunity." Copy and paste the bulletin into a message from you, and send it to everyone on your e-mail list of favorite people. Please be sure to add your personal recommendation that they likewise pass it on to friends and family on their e-mail lists - and that they each in turn do the same. Click here for "Pass-it-on Bulletin from Someone Who Cares."
13. Print and Use "Answer
Cards"
to Warn 5 People, Ask Them Each to Warn 5 More, and They Each 5 More, etc. When
someone attempts to recruit you or those you care about, refer each of them to
this site and to oth
er
recommended links. Aggressively
promote an endless chain of truth-telling – as opposed to
an MLM's endless chain of recruitment for gain. You can print and
distribute copies of the suggested Answer Cards to distribute when people
attempt to recruit you into any endless chain "recruiting MLM" program
– or whenever the topic comes up.
14. If you know an MLM victim who is wondering why MLM has not worked for him/her, see if you can't get them to go through our "12-step Program for Deprogramming MLM Victims."
Return to Home Page for a starting index to reports explaining the truth about all aspects of MLM – based on 12 years of solid independent research. Check out recommended links to other sites with excellent reports to be further informed on the topic.