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False Profits Blog Link

Economics, Politics, Legalities, Ethics and Sociology of Pyramid Schemes / Multi-level Marketing.
The False Profits Blog, published by PSA President, Robert FitzPatrick, is a sane, rational and fact-based forum. Read, get podcasts, make comments, subscribe.

PSA In The News

PSA President Public Radio in Charlotte, NC

On December, 4, 2006, Robert FitzPatrick, Co-author of the book, False Profits, and the founder of Pyramid Scheme Alert, was interviewed on public radio, WFAE, Charlotte, NC. The 55-minute interview covers many aspects of multi-level marketing. For consumers interested in an overview of the scams, tricks and myths surrounding multi-level marketing, this interview provides a good primer course. -- MP3 Recording

PSA in Ladies Home Journal

March, 2004

PSA President Robert FitzPatrick was interviewed in an article on pyramid schemes in this month's Ladies Home Journal.

PSA Featured on Fox News

In a recent segment on 2by2.net, Pyramid Scheme Alert was prominently featured.

PSA Featured on NBC Nightly News

Pyramid Scheme Alert's logo filled much of the screen on NBC Nightly News with Tom Brokaw, Jan. 8, 2002. The logo was featured in a "Fleecing of America" segment alerting women to a widespread pyramid scheme known as "Women Empowering Women." More. . .


PSA President on Radio Show

Robert Fitzpatrick recently appeared on WFAE, in Charlotte, NC, to discuss pyramid schemes.

MLM Travel Scheme May Be Finished Off by State Regulators
May, 2009

California state regulators are doing what the Federal Trade Commission (FTC) will not do – protect the public from pyramid selling scams, also called “business opportunity frauds.” The latest example is the scheme, Your Travel Biz.com, a classic pyramid in which consumers buy the right to become “travel agents” and then make money when they recruit other “agents.” California Attorney General, Jerry Brown, has struck a fatal blow against the scheme and provided a great benefit to hundreds of thousands of consumers. More…

Multi-Level Marketing Exploits Recession; Promises "Safe Haven" and Financial Rescue
May, 2009

Unemployment is rising. Loans are hard to get. Foreclosures are skyrocketing; small business owners are closing their doors. Into this sad situation comes multi-level marketing (MLM), claiming to offer consumers a "fall back" or rescue. They call it "direct selling" and they claim it is "recession-proof."

The problem is, the "income opportunity" peddled by most multi-level marketing companies is not direct selling. More…

Mannatech Pays Millions to Victims in State Prosecution of False Marketing
March, 2009

Mannatech Inc. will pay $6 million and its founder will pay $1 million to settle the Texas attorney general's allegations that the company made false claims about the health benefits of its vitamins and supplements. More…

Canadian MLM, Business in Motion, (BIM) Exposed in Television News Show
February, 2009

The award-winning Canadian Broadcasting Corporation (CBC) television news show, Marketplace, dedicated its February 6, 2009 show to a devastating exposé of the Canada-based multi-level marketing scheme, Business in Motion. PSA President Robert L. FitzPatrick was invited on the show to attend a BIM meeting in Toronto (undercover, with hidden cameras and microphones) and then to offer an expert analysis. More…

PSA Calls for Vigorous Regulation from SEC And FTC in Wake of Massive Wall Street Ponzi Fraud
December, 2008

In a letter to the chairmen of the FTC and SEC, Pyramid Scheme Alert charges that the lapse of government regulation of pyramid and Ponzis in the financial and home-business markets has led to an epidemic of pyramid frauds. The recent scandal involving the former chair of the NASDAQ, Bernard Madoff, is emblematic of a much wider and larger pattern. This pattern is likely to worsen as the Recession deepens and drives more people to economic desperation and to unconventional income-producing schemes. More…

ACN Phone Scheme Is Focus of Fox News (Los Angeles) Investigation
November, 2008

The MLM scheme, ACN, was featured in a news investigation by Fox News in Los Angeles, CA. As in other similar news reports on this scheme, the story focused on the obvious – ACN looks and behaves as a blatant pyramid scheme. In particular, the story asked why ACN recruits pay the company $499 for the right to sell the product and questioned the link of this payment to rewards for recruiting other ACN "sales" agents. More…

Pyramid Scheme in Nation of Columbia Causing Chaos – A Warning to Other Countries that Ignore Pyramids and Ponzis
November, 2008

Two people are dead, 13 towns under police curfew and the country's top banking regulator has resigned. This is part of the fallout from the collapse of a large pyramid scheme that operated openly and "legally" in Colombia. The consequences are tragic. However, the more significant story from Colombia is one that is being repeated in many other countries. The authorities let it happen, even as the signs of a massive fraud were obvious. More…

DR. Earl Mendel and Freelife's "Goji Juice" Expose in CBC Marketplace Investigation
December, 2008

Pyramid Scheme Alert has previously reported on the financial slaughter of consumers who become "distributors" of the MLM scheme, FreeLife International. The data on FreeLife's payout is included in the report, "The Myth of MLM Income Opportunity," along with full data on 10 other MLMs. The analysis revealed that less than 1% (those at the top) of FreeLife's "active" distributors received over 75% of the total company payout; 70% of all Free Life distributors earned no commissions at all; and the mean average payment to of the bottom 99.08% of FreeLife Distributors who remained active for one full year was $4.86 per week (before expenses and taxes are deducted ).

On the product side, the well respected Canadian television news show, Marketplace, has aired a half-hour investigation of the FreeLife scheme's flagship product, Himalayan Goji Juice. The report is a devastating revelation of deception, exaggerations, false claims, fake credentials, and bogus studies promoted by FreeLife spokesman, Dr. Earl Mendel See the CBC Marketplace video.

"Gifting" Pyramid Schemes Sweeping North America, UK; Focus of New Website
October, 2008

As a sign of the economic crisis, "Cash Gifting" pyramid scams are springing up and spreading across Canada and the US. These same types of pyramid schemes were widely exposed and prosecuted more than six years ago. At that time, the most popular was aimed at women. It was called "Women Helping Women." Others have targeted Latinos, African-Americans, blue collar, and some religious communities. Most of the scams promise 800% returns on investments (called "gifts"). Some attach some form of product, and claim to be "sales" companies, but most deal in cash and maintain the pretense of "gifting.". A star from the UK's version of the TV show, "The Apprentice", was recently caught by a BBC television show running a gifting scam. Government prosecutions are slow and in some areas non-existent. Often, members of the police, sheriffs' departments or prominent politicians or their spouses are themselves involved in the scams, stifling law enforcement. The close resemblance of these schemes to multi-level marketing causes some regulators to tread lightly, fearing being pressured to apply the laws to those types of "endless chain" scams also.

Now a dedicated website has been published focused specifically on "cash gifting." The site, called "Cash Gifting Watchdog", offers factual information on the schemes' illegality, the financial traps, the mathematical odds, and the inevitable scenario of collapse. Reflecting the fact that hundreds of thousands of otherwise honest people are joining these illegal scams, the site does not judge or even make recommendations, but only offers factual information Visit the Cash Gifting Watchdog site.

Monavie Scheme Snaring "Failed" MLMers
October, 2008

The MLM scheme that is reaping the benefit of the increased vulnerability of consumers, who already lost at least once in another MLM, is Monavie, a MLM promoter of bottles of $40 fruit juice. Amway, Nuskin, Usana and other MLM victims are flocking to Monavie. Led not only by Mona Vie’s claims about “extraordinary” income and miracle fruit juice benefits, but are being personally guided by trusted upline leaders from other MLM schemes. Some of Amway’s top schemer’s and “tools” promoters, for example, are now guiding their followers over to Monavie. Are these MLM refugees finding their fabled "success" at MonaVie? More…

Financial Crisis: A Mirror Image of MLM
October, 2008

For those who are asking how our national economy fell into the current financial crisis or how the nation’s business leaders could not have seen it coming or how the federal government could have allowed it to happen, a study of multi-level marketing (MLM) – which attracts more than five million Americans each year with its “income opportunity” – can offer answers. MLM serves as a mirror image of the real estate/banking/Wall Street catastrophe. The basics are all the same. To understand Wall Street’s motives and tactics, therefore, we need only look into the MLM mirror More…

MLM Scheme, YTB, Sued by California Attorney General as "Gigantic Pyramid Scheme"
August, 2008

Your Travel Biz.com (YTB), one of the hottest MLMs, a member of the Direct Selling Association and a company that is publicly traded on the stock exchange, has just been sued by the Attorney General of California for operating a "gigantic pyramid scheme." YTB has a "sales force" of over 340,000 and drew nearly 20,000 participants to its annual meeting in St. Louis. In the last year, the number of YTB "agents" grew 67%..... More…

Forbes Magazine Reports that Former Top Gun Amway Recruiter Now Running Same Scheme at Monavie
July, 2008

Orrin Woodward, a former top level distributor at Amway/Quixtar made millions recruiting consumers into Amway, 99% of whom lost money. He told them if they bought his special “marketing tools” they could make money in Amway, and they could earn additional money by selling these tools to other recruits. The tools scheme was called “Team.” 99% of those who bought into the “Team” income scheme lost money. So, 99% of Woodward’s recruits never earned a profit in Amway/Quixtar. And of those who invested in his separate "Team" marketing business, 99% of them never earned profit from that scheme either, compounding their losses on top of their losses in the Amway scam. Now, Woodward is running exactly the same scheme at the MLM scheme called Monavie. A recent Forbes magazine article details the scheme and documents that 99% of the consumers who are buying into Woodward's Team income plan never earn a profit selling Team "tools"... More…

England's Case against Amway and Efforts to Throw It out of the Country Continue
July, 2008

After a judge's ruling that severely restricted Amway's operation in England, the English government has appealed the ruling and renewed its case to close Amway down and kick it out of the country. The Department for Business Enterprise and Regulatory Reform in England charges that Amway is "inherently objectionable" and must be "wound down" (closed down in USA-English). The government claims that Amway violates England's Fair Trading Act 1973 among other laws. More…

What's the Matter with Canada?
July, 2008

For pyramid and Ponzi schemes, Canada is emerging as a "global scam capital." The schemes range from the "Women Helping Women" that began there and spread worldwide to Treasure Traders International which also began in Canada and was shut down in England, only to re-emerge in Canada under a new name, and, most recently a Canadian-based ponzi scam that ruined farmers. Canada appear to spawn and protect Ponzis. Canadian anti-pyramid and fraud laws are not being enforced. Private citizens are even sued by schemes if they dare question their legality. Are Ponzi's and pyramid schemes legal in Canada? More…

Are Ponzi Schemes Legal in Canada?
July, 2008

Failure to enforce anti-pyramid scheme and fraud laws in Canada and recent statements from Canadian officials have raised the question of whether Ponzi schemes are, in fact, legal in Canada. Has Canada narrowed its interpretation of pyramid scams so much that many can now operate openly and "legally" in Canada and then spread worldwide? More…

Canadian Ponzi Fraud Collapses; Farmers Ruined; Regulators in USA and Canada Stand by and Watch
June, 2008

The Ponzi scheme disguised as a pigeon breeding business, called Pigeon King International, is now finished, bankrupt and closed. As many as 1,000 family farmers in Canada and the USA were lured in. Many are financially ruined. Hundreds of thousands of pigeons are at risk of neglect, and the Canadian government has still not taken action. More…

PSA Research Reveals 99% Consumer Loss Rates among Major MLMs
A Special Consumer Report: PDF Download Available
May, 2008

Data supplied by MLM companies reveal that tens of billions in consumer losses are caused annually by MLM Recruitment Schemes as 99+% of all participants "fail" each year in these "business opportunity" scams.
* Before you join an MLM, read this document.
* If you have a question about an MLM you are already in, read this document.
* If you are concerned about a friend or relative who has joined an MLM, read this document. More. . .

Evidence on Herbalife Shows Fraudulent Marketing, Phony Lead Scheme, Health Risks and Massive Consumer Losses (Update: Herbalife President Resigns over Deception)
April, 2008

Herbalife, one of the largest America-based multi-level marketing schemes, shows multiple signs of deception and consumer harm. The president of Herbalife resigned when it was revealed he had falsified his own resumé.
Other evidence reveals a deceptive, pyramid business model, misleading recruitment practices, potential health risks of its products and massive losses from consumers who sign up for the "business opportunity. Herbalife promotes weight loss herbs and markets its products by selling "distributorships" in a multi-level marketing model. More…

MML Scheme, Pre-Paid Legal, Charged with Operating a Pyramid Scheme and Selling Worthless "Insurance."
April, 2008

The MLM scheme, Pre-Paid Legal, is the target of a new investigative report that reveals the scheme's pyramid recruitment is declining as the scheme moves toward an eventual collapse. Additionally the Pre-Paid Legal product – a form of insurance – is being labelled worthless and misleadingly represented to consumers. More…

Banned in Sri Lanka, Indonesia and the Philippines, MLM Scheme, Gold Quest (Alias Quest Net) Is Now Prosecuted in India; Thousands Lose their Savings
May, 2008

Police in India have arrested leaders of the Hong Kong-based multi-level marketing scheme, Gold Quest. Consumer complaints and reports of life savings lost pour in More…

Update: Pyramid Scheme Class Action Lawsuit Against World's Largest MLM Scheme, Amway/Quixtar to Go Forward
April, 2008

Amway has lost its legal effort to stop the largest and potentially most damaging class action lawsuit ever brought against the multi-level marketing scheme from going forward. A federal judge has ruled that Amway's rules for settling disputes are "unconscionable" and unenforceable. He denied Amway's defense. The case will now proceed. More…

Travel Agents Say MLM Travel Scheme – YTB – and others like it, Are Corrupting their Profession, Cheating Vendors and Tricking Consumers
May, 2008

According to the MLM company, YTB (Your Travel Business), anyone can become a real travel agent just by paying the company about $500 up front and then $50 a month. You don't need training and you don't even need customers. At YTB, you can make "unlimited" income by just recruiting other "travel agents."
However, 2,300 actual travel agents – the ones that are trained and have real customers – are petitioning travel vendors to stop honoring the YTB "card." The American Society of Travel Agents (ASTA), the main Trade association of real travel agents, has published a consumer warning about YTB and other similar schemes. An analysis of YTB reveals that it gets nearly all its money from fees paid by the reps, not from selling travel. Additionally, almost no YTB reps ever earn a profit. More…

Update on Canadian Pigeon Scheme: Canadian Regulators Fail to Investigate; Two US Attorneys General Take Actions
March, 2008

Consumer demands for an investigation of an apparent ponzi scheme aimed at family farms are growing in urgency. Family farm magazines have researched the scheme, called Pigeon King International (PKI), and have sounded the fraud alarm. An inside whistle blower has provided damning evidence that PKI is perpetrating an investment scam – paying earlier breeder/investors with funds gained from later ones. Now , two state Attorneys General the USA – Iowa and Washington – have warned consumers of the Ponzi and have prevented the scheme from operating in those states. More…

England Wants to Kick Amway(Quixtar) out of the Country
December, 2007

The largest and oldest of US-based MLMs, Amway/Quixtar, is on trial now in the UK for operating a deceptive fraud. A Michigan newspaper where Amway is based wrote that the UK fraud prosecution "could be felt globally" in Amway's business. Amway said it also is conducting a major review of its practices worldwide and has sped up a planned reorganization of its operations. The Times of London reported government findings that 71% of Amway's UK salespeople earned no commissions at all; of the 30% that earned some commission, 2/3rds of them earned on average just $27 (£13.53) a year. The government claims Amway's recruitment program is based on deception and should be shut down "in the public interest" More…

Canadian Pigeon Scheme Snares Hundreds of Farmer
December, 2007
Hundreds of family farmers in Canada and the USA, many of them in Amish and Mennonite religious communities, have made large investments in an income scheme based on breeding pigeons. The trouble is that nobody knows where the money would come from for the farmers to sell the pigeons they are breeding. More…

Veteran Insiders Charge Amway/Quixtar Is a Pyramid Recruitment Scam
August, 2007

A group of Amway/Quixtar's largest and most senior distributors have confirmed what whistle blowers, attorneys and some journalists and business analysts have been reporting for years -- that Amway is a fraud, a pyramid scheme, a worldwide scam.
The charges – which are effectively confessions – come from Amway's ultimate insiders, its "top guns", wealthy distributors with downlines that span the world and have worked with Amway's founders for decades. The distributors have filed a class action lawsuit. More…

Texas Attorney General Charges, MLM Mannatech, with Illegal Practice, Seeks Injunction
July, 2007

The Texas Attorney General claims that Mannatech, a multi-level marketing (MLM) company – very similar in type of product, company size, business model, and publicly traded status to Usana Health Science – is deceiving and misleading consumers with its product claims.
Like Usana, Mannatech sells products it says will improve health. However, the law strictly prohibits these companies from making claims of cures of any illnesses. Those who attend meetings report many blatant claims and testimonials about “cures.” More…

FTC Charges MLM, Burnlounge, Is an Illegal Pyramid Scheme, Goes to Court to Shut Down Operations
June, 2007

The United States Federal Trade Commission (FTC) has filed a complaint in the U.S. District Court for the Central District of California against BurnLounge, Inc. and is seeking a permanent halt to the illegal pyramid practices as well as other illegal practices alleged in the complaint. Thousands of consumers are affected, many in the music business. More…