|
Home Frequently Asked Questions MLM Products MLM Evaluations MLM Consumer Guides Non-MLM Income Actions You Can Take MLM Research MLM Statistics MLM Regulation Direct Selling/DSA Worldwide Warnings LDS Foreign LanguageTranslations MLM History Short Articles MLM Humor/Satire Sponsor Credentials Recommended Links Contact |
|
|
CAI Consumer Awareness Institute Non-profit Corporation |
UTAH a Hotbed of Recruiting MLM's, or Chain Selling Schemes |
|
"I
completed extensive research of his [Dr. Taylor's] claims to validate
their accuracy before proceeding with a formal complaint.
I concur with his
research. On this page: 1. Utah leads the nation in number of MLM companies per capita. >> 2. Product-based pyramid schemes are now legal in Utah. >> 3. Officials in Utah (and most other states) lack the resources and the will to cope with MLM. >> 4. Utah tax professionals know who is and who is not making money in MLM/network marketing. 5. Typical misrepresentation in Utah-based recruiting MLM's. 6. Fascinating Case Study Nu Skin Enterprises, Inc. of Provo, Utah. 7. The FTC targets Nu Skin for misrepresentations.
Here's
a GREAT idea that could save you a lot of money and help you preserve your
most precious relationships:
PLEASE HELP! We 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. 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.
MLM the truth! |
Because Dr. Jon Taylor of the Consumer Awareness Institute has spent most of his life in Utah, he has become intimately familiar with MLM activity and regulation (or the lack thereof) in his home state. His reports and observations have application to consumers and law enforcement officials in other states who may not wish to repeat the same mistakes. 1. Utah leads the nation in number of MLM companies per capita. Although Utah is Dr. Taylor's home state, he is forced to admit that Utah leads the nation in density of MLM companies headquartered in the state; i.e., there are more companies based in Utah per capita than in any other state in the country. And there is not a county in the U.S. that holds a close second place to Utah County. Almost all of these can be classified as "recruiting MLM's" which are explained on the MLM CONSUMER GUIDES page. For a recent listing of Utah-based MLM's with at least four of the "5 Red Flags of a recruiting MLM" in their compensation plans, click here. Read about curious parallels between MLM and genealogy which is emphasized by Latter-day Saints, especially in Utah, which has the largest genealogical facilities in the world.. 2. Product-based pyramid schemes are now legal in Utah. Utah narrowly escaped efforts by the DSA (Direct Selling Association) to legalize product-base pyramid schemes in its 2005 legislative session. But in 2006, using an array of deceptive legislative maneuvers, and with the complicity of top law enforcement officials, the DSA manipulated the 2006 legislature into passing a cleverly worded bill (SB182) essentially nullifying Utah's Pyramid Scheme Act. Read the article "Product-based pyramid schemes now legal in Utah." A lot of insights can be learned from the genesis of this travesty of legislation, resulting in a bill that could have costly consequences for consumers world wide as these chain selling schemes quickly spread across borders into other states and countries. 3. Officials in Utah (and most other states)
lack the resources and the will to cope with MLM. Jon
Taylor spent several years trying to get
the attention of law enforcement in Utah on the issue of growing MLM fraud
to no avail. For reasons for such laxity of enforcement of statutes against
pyramid schemes and deceptive sales practices, read his "Top
Ten Things I Learned from Ten Years' Research on MLM/Network Marketing." 4. Utah tax professionals know who is and who is not making money in MLM/network marketing. It's not the new recruits that are buying up products and sales tools to "play the game." Conclusions from this survey of tax preparers are strengthened by household surveys on MLM participation in Utah. See "Who Profits from Multi-Level Marketing? Preparers of Utah Tax Returns Have the Answer."[Click here for shorter PDF print format.] 5. Typical misrepresentation in Utah-based recruiting MLM's. If you have ever attended any of the hundreds of MLM "opportunity meetings in Utah (or anywhere), read "30 Typical MLM Misrepresentations," and see if they don't sound familiar. If you have not attended these meetings, you are in for a surprise at the extent of the misrepresentations upon which recruitment and sales of products to unwitting recruits are based. 6. Fascinating Case
Study Nu Skin Enterprises, Inc. of Provo, Utah. The most famous Utah-based MLM is Nu Skin
Enterprises, Inc., of Provo in Utah County. While Nu Skin has the respect of
many in the community and even in the Utah press, Dr. Taylor has tested and
studied its compensation plan and extensive misrepresentations for several years
and reported the same to law enforcement at both the state and federal levels.
But Nu Skin has demonstrated great facility in dodging all legal challenges.
Company officials simply settle legal claims and write them off as a cost of
doing business. But the damage to victims world wide has never been
satisfactorily resolved. 7.
The FTC targets Nu Skin for misrepresentations.
The Federal Trade Commission is considering a new rule requiring disclosure of
earnings of participants and other information crucial to a decision on whether
or not to participate in any business opportunity, especially an MLM. Anyone
involved in this issue can learn a lot by this case study of the FTC efforts to
enforce honest disclosure by one MLM company. Read the
full 70-page "REPORT
OF VIOLATIONS" (PDF)
by Nu Skin of the FTC's 1994 Order for Nu Skin to stop its misrepresentations,
which illustrates the
mega-pyramid structure of Nu Skin's breakaway compensation plan, which enriches
Blue Diamond distributors at the expense of huge downlines of
victim-participants. It also illustrates the
mega-pyramid structure of Nu Skin's breakaway compensation plan. 8. Utah's Division of Consumer Protection was later provided the same information as the FTC, but did virtually nothing. The aforementioned "Report of Violations" includes much of the strong evidence of violations of Utah statutes against pyramid schemes and deceptive sales practices, based on the same evidence and arguments in the complaint filed with the FTC. This compelling evidence was presented to Utah's Division of Consumer Protection (DCP), along with 17 complainants as signatories, but no general action was taken against Nu Skin only a settlement on a complaint filed by one brave ex-distributor with a small claim. One major claim filed with DCP was forwarded to Nu Skin, but with very little effort expended by DCP to resolve on behalf of the complainant. So based on a loss rate exceeding 99%, literally millions of victims suffered losses totaling several billion dollars without either the FTC or Utah's DCP doing anything concrete about it. |