Our Mission Statement
Our primary focus is on seeking out the truth about endless chain or pyramid selling schemes,* as far as it lies in our power to do so, through research, analysis, and feedback from participants who do real-world market testing. Then, having obtained valid information, we seek to share the truth with consumers, law enforcement, legislators, the media, and other groups interested in the welfare of consumers.
The Founder – Jon M. Taylor, Ph.D.
The initial purpose of this non-profit corporation was to research and report on problems facing consumers, problems which neither government nor industry had adequately addressed. The founder, Dr. Jon M. Taylor, decided to begin with MLM (multi-level or network marketing), which he and close family members and friends had encountered personally and which had caused much pain and financial loss. After consulting with top experts in the field, he began researching and writing on the topic. The MLM phenomenon presented such a huge challenge that Taylor decided to focus his efforts on uncovering and exposing the many deceptions that seemed inherent in MLM, and was found from years of research to be a pseudo-business, if not an outright scam.
Dr. Taylor was recruited aggressively into the Nu Skin program in 1994. After saying "no" four times, he made a deliberate decision to join the program as a distributor and give it everything he had for at least a year. If the Nu Skin program was what recruiters were representing, he could become a Blue Diamond in only a couple of years of diligent effort. The average income of Blue Diamonds at the time was purportedly $750,000 a year, and Taylor figured he could live on that. If Nu Skin and MLM in general was not as represented, he would tell the world about it.
Taylor rose to the top 1% in the hierarchy of distributors within a year. However, with over $1,500 of expenses a month (including Nu Skin product purchases and promotions), he was only bringing in commissions of about $250 a month. But he still believed that by persisting for another year or two, he could conceivably reach the goal of becoming a Blue Diamond. Then, with the help of his perceptive wife, he could see that to achieve such a goal would require deceiving and taking advantage of friends and family, the vast majority of whom would lose money in order to enrich himself. Together, they concluded that this would be morally wrong.
Dr. Taylor published The Network Marketing Game: Gospel Perspectives in Network Marketing, a religious/ethical treatment of the subject. While speaking at a gathering about his book, a management-level tax accountant from H&R Block confronted him with this observation:
"In 15 years of tax work and tens of thousands of tax returns by our group, we have never seen a person in network marketing who reported an ongoing income as promised. Many sought deductions for losses suffered, but net gains were only reported by one person - who filed bankruptcy the following year."
This caught Taylor’s attention, and he began a relentless search for valid numbers on the success rate of a wide variety of the more popular network marketing programs. He even challenged the presidents of 60 of the largest MLM companies for data to disprove that they were not merely disguised pyramid schemes that enriched a few at the top of their respective pyramids at the expense of huge downlines of victims, almost all of whom lost money. The executives of some MLM firms initially offered to comply with his request, but none were finally able or willing to do so. So he scoured company recruitment materials, court records, SEC filings, and internal company sources until he got some numbers that could be trusted. His fascinating findings are reported on this web site.
Read Dr. Taylor's full vita, describing his extensive education, his unique experience related to MLM/chain selling/product-based pyramid schemes, and his consulting and expert witness experience.
We have sponsored full-day seminars on product-based pyramid schemes in Washington, D.C., for federal and law enforcement officials from the Federal Trade Commission, U.S. Postal Inspector General's office, and state offices of Attorney General and Consumer Protection Divisions. We have taught the same seminar for the National White Collar Crime Center in Richmond, Virginia. We have also given presentations to the 2004 Economic Crime Summit Conference in Dallas and the Senior Fraud Summit Conference in Helena, Montana. We have published a white paper on the "5 Red Flags of a Product-based Pyramid Scheme" for the 2002 Economic Crime Summit Conference and been quoted widely in consumer publications and web sites.
Our numerous research studies and reports are posted on the research pages of this web site, which has received visitors from over 140 countries and over 15 years of worldwide feedback. Our evaluations of over 400 MLM programs and of the profitability of endless chain or pyramid selling schemes has guided thousands of consumers to make better decisions regarding part and full-time income opportunities. As a group we have personally responded to thousands of inquiries from all parts of the world. We have also worked to discourage unwise legislation that would weaken laws against pyramid schemes – and to encourage 2nd and 3rd world nations to enact laws to protect consumers from the worst schemes coming from supposedly enlightened industrialized nations.
Advisors and Experts Consulted
In conducting his research, Dr. Taylor did not act alone, but consulted with top experts from government, MLM firms and the direct sales industry, universities, financial consulting firms, churches, and non-profit consumer advocacy groups. These include, but are not limited to the following (some would not be listed by name due to their being in sensitive positions that would not allow them to be directly involved in such controversy):
– Robert Fitzpatrick – an expert on manufacturer/distributor relationships and president of Pyramid Scheme Alert, a prominent non-profit organization dedicated to exposing and preventing pyramid scheme fraud world-wide. He is co-author of the book on the pyramidal abuses of MLM in False Profits: Seeking Financial and Spiritual Deliverance in Multi-level Marketing and Pyramid Schemes. He has web sites at falseprofits.com and pyramidschemealert.org.
– Bruce Craig - Worked 30 years as an Assistant Attorney General in Wisconsin. Successfully litigated against a number of pyramids, including Amway. Successfully obtained tax returns of top Amway distributors in Wisconsin, demonstrating uneconomic nature of the scheme. (From actual tax returns, he learned that the top 1% of Amway Direct distributors were averaging a net income of minus $900.) PSA Advisor.
– Douglas M. Brooks, J.D., of Gilman & Pastor, a Boston firm. Mr. Brooks has litigated a wide variety of civil cases, including matters involving franchising, dealer and distribution, as well as securities actions. One of the most knowledgeable persons on legal issues related to multi-level marketing as disguised pyramid schemes.
– Eric Schiebeler, former federal auditor who became a top Amway distributor, finally quitting when he learned some disturbing inside information. He went public with the fascinating book Merchants of Deception, which carefully documents Amway's systematic deceptions and efforts to cover the truth. Eric was featured in a Dateline special exposing shocking revelations about Amway/Quixtar's operations.
– Stephen Barrett, M.D., is one of the most prolific independent investigators of health quackery and related fraud on the web. He has several useful sites, including one on MLM’s which offer questionable health products and questionable income opportunities. The site address is – www.mlmwatch.org
– Tracy L. Coenen, CPA, CFF, founded Sequence Inc. in 2000 after stints in the criminal justice system, at auditing firm Arthur Andersen, and at a small forensic accounting firm. She has validated the loss rates calculated by Dr. Taylor in his ebook The Case (for and) against Multi-level Marketing.
– John Ashby, a professional insurance actuary, is another expert who has validated the loss rates calculated by Dr. Taylor in his ebook The Case (for and) against Multi-level Marketing.
– Paul McKee has over 20 years experience as an applied statisticain and manager. He also has validated the loss rates calculated by Dr. Taylor in his ebook The Case (for and) against Multi-level Marketing.
– Susanna Perkins – a freelance writer and publisher who has had broad exposure to MLM participants world-wide. She is a director of Pyramid Scheme Alert and the author of the book, Amway Motivational Organizations: Behind the smoke and Mirrors. She also sponsors one of the most popular sites on the web for consumer protection – www.mlmsurvivor.com.
– Andrew Kneeter, President and Founder, A.S.K. Solutions, has over ten years experience at the highest levels of proprietary investment research. Before founding A.S.K. in early 2002, Andy honed his research skills with some of the most esteemed “Warren Buffett-style” investment firms in the world.
– Calvin Welling, CLU, ChFC, CFP, LUTCF, CFS. Investment Advisor Representative, Securian Financial Services, Inc., Securities Dealer, Member NASD/SIPC A Registered Investment Advisor and Certified Financial Planner. He specializes in Family and Business Planning as well as Estate and Financial Planning and is President of Heritage Financial Group.
– John P. Wunderli, corporate attorney who has participated in some of the largest corporate cases in U.S. history.
– Numerous officials and ex-officials in government and industry, including the chairperson of a pyramid scheme working group for the National Association of Attorneys General and a former assistant Attorney General for the state of Wisconsin
– Dr. Taylor also consulted and corresponded with officials and ex-officials from some of the largest companies in the MLM industry.