by Robert L. FitzPatrick

#1: MLM Is Not “Business”; MLM Is Not “Direct Selling”

MLM contracts are never voluntary. Necessary information is always withheld. A fair exchange of value does not occur. The MLM financial proposition is inherently deceptive and harmful. Sustained, profitable retailing – direct selling – is non-existent and impossible under “MLM.”

#2: The Use of Business Terminology for MLMs Is Inappropriate and Misleading

Using conventional business terms is misleading, inaccurate, and reinforces MLM’s “business” disguise. “Sales, distributor, profit, direct selling, compensation, bonus,” etc., do not apply in describing endless chain/money transfer scams. “Manager, Executive, Coach, and Director,” etc., misleadingly indicate managerial or decision-making roles in a real business, when they refer only to levels of pyramid recruiting.

#3: MLMs Are Essentially Identical; MLM Product-Transactions Launder Money-Transfers and Disguise MLM as Direct Selling

MLMs are distinct, recognizable, essentially identical. All exhibit an endless-chain structure, payment and recruiting mandates, and extreme money-transfers from later to earlier participants. All produce the same devastating loss rates. MLM product-transactions at fixed pricing are not market-based, not driven by consumer demand, but are induced costs for securing recruiting-chain positions and transferring money from later to earlier recruits.

#4: Multi-Level Marketing Is a Destructive Cult

To enroll, gain money from, control, and silence victims, MLMs use undue influence and coercive control, resulting in financial loss, damaged relationships and psychological harm. They lure victims with utopian false promises and claims of mystifying knowledge for gaining financial success and fulfillment. Recruits are indoctrinated to accept the “infinite” endless-chain as a financial model, that “belief” shapes reality, to shun family and friends who question MLM, to reject critical thinking, and to unquestioningly believe and strictly obey MLM leaders – while paying fees, purchasing products and recruiting.

#5: US Law Enforcement Policy toward Multi-Level Marketing Is Unfounded; Perpetuates Harm; Must Be Changed.

Evidence does not support US law enforcement’s presumption of MLM legitimacy and neglect of investigation and prosecution. Decades of evidence irrefutably show:

  • Absence of profitable and sustainable retail selling – invalidating the MLM identity of “direct selling” and revealing a closed, rigged financial scam.
  • Annual loss rates among MLM participants in excess of 99% – invalidating MLM claims of “income opportunity” and revealing enormous harm to millions each year.
  • Pervasive and deliberate falsehoods regarding “direct selling” identity, costs, health claims, failure rates, business opportunity, and recruiting requirements – revealing systematic deception and intentional harm.

The Federal Trade Commission (FTC), Consumer Financial Protection Bureau (CFPB) and Securities & Exchange Commission (SEC) should:

  • end the current policy of neglect and presumption of MLM “legitimacy”
  • initiate investigations of MLM structure, methods and consequences
  • refer findings to the US Dept. of Justice.