The shocking statistics in Table 1 below are based on our carestatisticsful analysis of reports published by the MLM companies themselves. These extraordinary loss rates were derived by removing typical deceptions from the reporting of these MLMs1. Before forming your own conclusions, you are urged to perform your own research and calculations based on actual company data, which all MLM companies should provide for prospects.
The odds of profiting by investing in a clearly illegal no-product pyramid scheme2 (with all winners re-investing) is approximately –
  • 667 times as great as the odds of profiting after enrolling as an Amway/Quixtar “distributor”
  • 111 times as great as the odds of profiting after enrolling as a Nu Skin “distributor”
  • 69 times as great as the odds of profiting after enrolling as a Melaleuca “distributor”
The odds of winning from a single spin of the wheel in a game of roulette in Las Vegas*** is approximately – 
  • 286 times as great as the odds of profiting after enrolling as an Amway/Quixtar “distributor”
  • 48 times as great as the odds of profiting after enrolling as a Nu Skin “distributor”
  • 22 times as great as the odds of profiting after enrolling as a Melaleuca “distributroulette vs. MLMor”
Similarly, the odds of winning with a single bet on snake eyes in a game of craps in Las Vegas are far greater than the odds of profiting from any of these MLM programs. In fact, the odds of earning a comfortable “residual income” from virtually any MLM is no greater than the odds of throwing three sets of dice and getting snake eyas all three times! 
 dice-21 beats MLM

Conclusions from the above statistics:

Contrary to popular belief, the worst pyramid schemes are product-based – or MLMs*, such as the ones listed in the statistics cited above. One can do far better gambling in Las Vegas. We’re not promoting gambling – just fair trade practices, as manifested in legitimate business opportunities (as opposed to phony MLM chain selling schemes, or product-based pyramid schemes). The US Cult Expert, Steve Hassan, has seen many MLM participants require professional intervention.
Table 1
Approx. % of
Approx. %
who profit
after all
99.99% 0.01%
RTTP – defunct 99.98% 0.02%
NIKKEN 99.98% 0.02%
SYMMETRY 99.96% 0.04%
CYBERWIZE 99.94% 0.06%
NUSKIN 99.94% 0.06%
CO. – defunct
99.92% 0.08%
ARBONNE 99.92% 0.08%
RELIV 99.90% 0.10%
MELALEUCA 99.87% 0.13%
FREE LIFE 99.69% 0.31%
HERBALIFE 99.42% 0.58%

1 A “recruitment-driven MLM” is a typical multi-level marketing (MLM) program that uses a compensation plan that allocates the majority of its payout to participants to those who recruit a large downline of participants, rather than to front-line sales persons for sales to persons not participating in the scheme. I have analyzed the compensation plans of over 600 MLM’s, all of which were found to be recruiting MLM’s, in which participants must aggressively recruit a large downline to profit significantly. Based on more recent data from the companies themselves, the loss rate for recruiting MLM’s is approximately 99.7%; i.e., 99.7% of ALL participants lose money after subtracting all expenses, including purchases from the company. Read about the “5 Red Flags” in the compensation plan that signal it is a recruitment-driven MLM – as are virtually all MLMs.

2 The statistical odds of profiting from a classic 1-2-4-8 no-product pyramid scheme increases from 6.7% to 12.5% for those who drop out after completion of a pyramid cycle; i.e., without reinvesting in a new pyramid. For references and public records used as bases for these calculations, see the author’s research reports posted on this web site. 3 Gambling statistics were obtained from Caesar’s Palace in Las Vegas.

3 Last updated in approximately 2006, although the statistics tend to remain fairly constant over time because the compensation systems that produce these results rarely change.

4 The estimates are based on our careful analysis of reports published by the MLM companies themselves. These extraordinary loss rates were derived by removing three sources of deception from the reporting of these MLM’s:
(1) the practice of not counting ALL who signed on as distributors (agents, consultants, etc.) in the population of recruits who attempted to make the program work for them, but instead counting only those still “active;” i.e., deleting all dropouts in the calculation,
(2) not subtracting expenses, especially products and services purchased from the company to qualify for commissions, plus minimal operating expenses, and
(3) assuming legitimate sales of products (to customers not in the network) that did not occur.You may also want to read how Dr. Jon Taylor discovered the abysmal loss rate of MLM in chapter 1 of his new e-book titled Multi-level Marketing Unmasked.

9 Comments on “Shocking statistics – MLM vs. classic pyramid schemes & gambling”

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    1. JonMTaylor

      You should find everything you need on the pages of this web site. For an even more thorough collection of evidence of the unfairness and deceptive nature of MLM, download and read the eBook “Multi-level marketing Unmasked,” which is available from this web side.

  4. Peter Freeman

    I lost over £8000 Sterling in 1987/89 as a Herbalife distributor. One of its top distributors for many years, Alan Lorenz of London and Belgium, advised me, contrary to Herbalife’s own published rules of conduct, to buy enough stock to qualify me to attend a ten-day sales conference at the Los Angeles Biltmore Hotel. A year later his wife Christine advised me to buy a load more, to qualify me to attend a similar training event in England. I was not even in their line, however. I could not find anything like sufficient buyers or downline distributors, and the few of the latter I did enlist faced the same difficulties, drawing many complaints for having enlisted them. I ended up having to discard the perishable stock when it expired, including a number of costly water filters which Mrs Lorenz illegally misrepresented as being water purifiers. The whole two-year part-time effort proved a disaster. Apart from the filters, which were eventually discontinued, the products themselves were good, however. It is astonishing that it has taken so very long for the public to be made aware of the gross unfairness of this sales method.

    1. JonMTaylor

      It is unfortunate that you lost so much before coming to understand the deceptions and nherent unfairness in the system. It is even more astonishing that governments have allowed MLMs to continue defrauding millions of victims for decades.

  5. Peter Freeman

    I don’t know whether he is still involved in Herbalife, or retired on his ill-gotten millions, but I had a chance encounter with him a few years ago at an unconnected alumni event and when I mentioned how much I had lost thanks to his advice, he just shrugged it off as if unimportant and changed the subject with small talk. Thick-skinned or what?

  6. Mary

    I do agree with your statistical data to a certain point. Most MLM companies require very little money to start (Avon $10) so there are many people who don’t take that low risk seriously. Also with such a low cost,$10 to $400 or so that I have come across, can not compare to the 10’s or 100’s of thousand dollars to start an independent small business. Let’s not even consider owning small franchises. I understand the point that you are trying to make, but you are comparing Apple’s to oranges. I am a real small business owner and MLM companies take away a HUGE amount of costs associated with running a small business on your own. There is also the fact that humans will work a lot harder for something they invested $55,000 to start vs $10 to up to maybe $900. Lower costs to start in MLMs equal greater numbers of people starting where we independent business owners don’t have as many people able to take this risk.

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