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CAI

Consumer Awareness Institute

MLM: ACTIONS you can take when you have experienced losses from MLM participation

On March 7, 2007, I started researching W__ M__ S__. I felt certain that it was a Pyramid Scheme so I started looking for web sites to see if I could learn more. I happened upon http://www.mlm-thetruth.com/ . . . By following the “13 Actions you can take” from www.mlm-the truth.com, I was able to recover about 84% of my money back. The key was to be assertive, file complaints to the necessary authorities, and research. I filed complaints with the Better Business Bureau, Federal Trade Commission and will file with the Attorney General Offices for Arizona and my state. When I called to get my money back, I had enough ammunition so there was very little argument on the company’s part. 

Contents of this page:

1. Get informed. > >

2. File a complaint with the FTC. > >

3. File a complaint with your state's Consumer Protection Agency. > >

4. File a complaint with the Better Business Bureau. 

5. File a Private Class Action Lawsuit 

6. File a Claim with the Small Claims Court in Your Area. 

7. Find a Better Income Option.

8. Support Good Legislation Against Product-based Pyramid Schemes – as Opposed to What the DSA is Promoting

9. E-mail friends and family with information about this web site 

10. Copy and E-mail a Bulletin about This Web Site to Your Favorite People.

11. Use Answer Cards to Warn 5 People, Ask Each of Them to Warn 5 More, and They Each 5 More, etc.

12. Publish Your Experience and Insights – in a Book, in the Press, and/or on the Web.

13. FOR THE TRULY BRAVE - Confront MLM promoters with some embarassing questions.

Here's a GREAT idea that could save you a lot of money and help you preserve your most precious relationships:
The next time 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. 

Readers' comments:

"One feels so duped when joining an MLM.  I had dreams of staying home with my child and those are all dashed. I appreciate that you wrote this. I really did not know what to look for, and now I do. I have been scammed 3 times. You have no idea how ashamed I am. I just thought that people were basically honest." —Sophia Golden

"Your reports were literally a lifesaver for our son, who was on the verge of sacrificing everything for his MLM dream." —Concerned Parents (who prefer to remain anonymous)

ANSWER CARDS FOR MLM RECRUITERS –  These messages, which you can  post or carry with you, assume you have read and agree with the guides in this report, and that you want to avoid almost certain losses from participating in a "recruiting MLM." Why not help warn others by resolving to pass out five cards each to five friends and family members today? Ask each of them to do the same. Start an endless chain of truth-telling.

Click here to see these great answer cards that you can print and copy on card stock to carry with you for those awkward moments when you are recruited by a well-meaning friend or relative.

MLM – the truth!

Why are MLM companies successful in defrauding millions of victims of tens of billions of dollars every year and in evading actions by law enforcement? A primary reason is the lack of determined action by participants and family members impoverished and confused by these schemes. To understand why MLM victims seldom file formal complaints, read "Top Ten Things I Learned from Ten Years' Research in MLM/Network Marketing."  However, with determined effort, you can often recover much if not all of your losses and in the process alert others and law enforcement of the ongoing fraud in MLM. So please –

1. Get Informed. You are off to a good start reading these materials. Most participants who lose money in MLM's drop out without knowing what went wrong. They typically blame themselves for not "working the system," or they may fear consequences to or from their upline or downline. So they don't file complaints. Also, they often believe that if the program were illegal, it would have been stopped by authorities – who simply don't have the resources to stop the abuses, and who won't act without a highly vocal group of complainants. So get informed by reading the MLM CONSUMER GUIDES and MLM RESEARCH posted on this web site. And 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." 

2. File a Complaint with the FTC.  If you want timely action, don't hold your breath waiting for the Federal Trade Commission to act – even though it has the primary responsibility for protecting fair trade on a national level. (See "REPORT OF VIOLATIONS" regarding Nu Skin's violations of the FTC's Order for it to stop its misrepresentations. Nu Skin did not comply with the Order, and the FTC did not act significantly.) Part of the problem is the 1979 FTC ruling that Amway was not a pyramid scheme, conditioned on certain "rules" which are almost impossible to police and are generally disregarded. So the FTC has egg on its face on this issue. But if enough people place pressure on the agency to demand action, they have been known to take some constructive steps, as they did in conjunction  with eight states to shut down Equinox. 
However, for every one product-based pyramid scheme (MLM) the FTC has acted against, there are at least 100 that escape FTC attention. The FTC has become corrupted by cross-fertilization between agency personnel and representatives of the DSA/MLM industry. The latter quickly offer lucrative positions to former FTC personnel to lobby their former agency. And the Bush administration has rewarded Amway for its generous political contributions by appointing MLM supporters to key posts at the FTC. Consequently, the FTC has done very little to prosecute product-based pyramid schemes in the past 5 years. Still, even though other avenues of redress are likely to be more effective than the FTC, official complaints need to be filed with them, so the FTC is denied the excuse that no one is complaining about MLM's. 

3. File a Complaint with Your State's Consumer Protection Agency. Regulators in only a few states have the resources and the will to take action, but typically will do so only when a large number of complaints come in. Fraud inherent in a compensation plan seldom draws attention by itself. However, by all means, file a complaint with your state's Consumer Protection Agency and/or Attorney General, even if only for the benefit of victims who are likely to be affected later. Feel free to use any of the reports on this site to help you in filing your complaint. Many state regulators are new or may lack fundamental information on the fraud inherent in the compensation plans of "recruiting MLM's."

4. File a Complaint with the Better Business Bureau. Remember that many if not most MLM's are members of the BBB. And their bulletin on "multi-level marketing" reads as though it had been written by the DSA (Direct Selling Association, which has become the MLM industry's lobbying arm). But all companies who recruit aggressively are not going to be happy with a record of unresolved complaints against them. So at the very least get on their list of complaints against an MLM you feel has defrauded you.

5. Pursue a Private Class Action Lawsuit. This is a long process, but it sometimes gets better results in actions against MLM's than filing complaints with consumer protection agencies. Contact Dr. Jon Taylor  (jonmtaylor@juno.com) if you need to find an attorney who can help you. Or contact Robert Fitzpatrick of Pyramid Scheme Alert. Both have been contracted by law firms handling MLM/pyramid scheme cases – to assist as consultants and expert witnesses.

6. File a Claim with the Small Claims Court in Your Area. I do not know of this having been tried with recruiting MLM's, but it could be effective in cases of blatant misrepresentation – which is common with  all types of pyramid schemes, including MLM's. For this type of action, you do not need to hire a lawyer or go through a long and costly trial proceeding. Just state your case before the judge in your nearest Small Claims Court and include as much documentation as you can – promises made and broken, etc. You may be awarded up to $7,500 to recoup losses you can prove. Feel free to use any of the reports on this site to help you make your case.

7. Find a better income option. Chain selling is inherently unprofitable except for those at the top of a pyramid or at the beginning of an endless chain of participants. Almost any income opportunity is better. Read 1,357 Ways to Make More Money than in MLM/Network Marketing.

8. Support Good Legislation Against Product-based Pyramid Schemes – as Opposed to What the DSA (Direct Selling Association) is Promoting. Be aware that most statutes are adequate as they stand, assuming they are understood and applied. Even when product-based pyramid schemes manage to avoid prosecution as  pyramid schemes (for reasons cited on the LAW ENFORCEMENT page), they routinely engage in deceptive marketing practices, which may be easier to prosecute. In any event, you would be doing yourself and other consumers a favor by resisting any moves by unwitting legislators to sponsor DSA legislation to "improve" laws against pyramid schemes, which in any way exempt MLM's that have legitimate products to offer. Remember, product-based pyramid schemes have been found to have the highest lost rates and to do the most aggregate damage of all the types of pyramid schemes. (See MLM CONSUMER GUIDES, THE NUMBERS, and  MLM, DIRECT SALES, and the DSA.)

9. 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.

10. 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 do the same. Click here for "Pass-it-on Bulletin from Someone Who Cares."

11. 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 other 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 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. If you or your family are besieged with MLM offers, you might try posting a notice on your doorway and/or on your car's license plate holder, such as: "We don’t do drugs, porn, or MLM."  

12. Publish Your Experience and Insights – in a Book, in the Press, and/or on the Web. People have written articles or books about their experience with MLM, and some have gotten considerable attention in articles or on investigative TV news programs. Dozens of anti-MLM web sites are now available to the sincere seeker of truthful information to counter the deceptions in sites sponsored by MLM promoters. These anti-MLM sites, combined with the bad aftertaste of MLM participation by ex-distributors, may have had more effect on discouraging MLM abuse than has all of law enforcement put together. This is an excellent example of the benefits stemming from the free flow of information on the web. As an example of a whistleblower's efforts, read read "NUSKIN ATTEMPTS TO DISCREDIT ITS WHISTLEBLOWER," which refutes charges Nu Skin circulated to news organizations about Dr. Jon Taylor. It includes Taylor's rigorous one-year test of the Nu Skin program before reporting his experiences.

13. FOR THE TRULY BRAVE - Confront MLM promoters with some embarassing questions.  Attend an MLM opportunity meeting and/or interrupt someone who attempts to recruit you or someone you care about. Pose some of these embarassing questions guaranteed to make MLM promoters squirm.

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.