Wednesday, 19 July 2017

'MLM' amendment FY18 - Yet another piece of the overall pattern of ongoing major racketeering activity.

Statutory Warning

More than half a century of quantifiable evidence, proves beyond all reasonable doubt that:
  • what has become popularly-known as 'Multi-Level Marketing' is nothing more than an absurd, cultic, economic pseudo-science.

  • the impressive-sounding made-up term 'MLM,' is, therefore, part of an extensive, thought-stopping, non-traditional jargon which has been developed, and constantly-repeated, by the instigators, and associates, of various, copy-cat, major, and minor, ongoing organised crime groups (hiding behind labyrinths of legally-registered corporate structures) to shut-down the critical, and evaluative, faculties of victims, and of casual observers, in order to perpetrate, and dissimulate, a series of blame-the-victim rigged-market swindles or pyramid scams (dressed up as 'legitimate direct selling income opportunites'), and related advance-fee frauds (dressed up as 'legitimate training and motivation, self-betterment, programs, recruitment leads, lead generation systems,' etc.).

David Brear (copyright 2017)
Image result for william keep

Image result for the hill

Why multi-level marketing companies fear an honest conversation

There’s no fool like an old fool, or a young fool, or a rich fool, or a poor fool.
Unfortunately, the multi-level marketing industry and its trade association the Direct Selling Association hopes to limit regulators’ power to stop the kind of business foolishness that makes victims of adult consumers of any age.
By garnering member support for the amendment passed Thursday night by a voice vote to the House Financial Services and General Government Appropriations bill for FY18, the industry attempts to avoid what it dreads most, an honest public hearing on the risk of MLM companies operating as illegal pyramid schemes.
The amendment, sponsored by Rep. John Moolenaar (R-Mich.), my home state and the home of Amway, among other MLM companies, legitimizes endless chain selling to the detriment of consumers. The language mirrors that of last year’s H.R. 5230, a bill roundly criticized by consumer protection groups.
Since 1996 the Federal Trade Commission filed 26 pyramid scheme cases against MLM companies, each time emphasizing false earnings representations and other deceptive marketing.
How did the FTC do?
Of the few MLM companies willing to face FTC prosecutors in court, all lost. Of the remaining cases, each MLM settled, agreeing to FTC terms. The vast majority closed their doors.
As anyone with a Facebook account knows, MLM activity can have a virus-like movement through social media. Here is an industry that, according to industry data, engages with approximately eight percent of the U.S. adult population each year, yet generates less than one percent of total U.S. retail sales.
Subtract the products that MLM distributors buy for their own use and keep buying to remain “eligible” to earn income and you get the idea of just how small MLM sales are to consumers who are not also MLM distributors. Factor in the churn of the distributor base and ongoing recruitment becomes a major source of income for distributors and to sustain the overall business model.
The FTC’s successful track record illustrates not only the quality and consistency of its legal arguments but also the continuing egregious behavior of members of the industry, and the role of the trade group as dutiful apologist.
One need only look at the DSA members subject to prosecutions and class actions to wonder about the conversations that take place at trade association meetings.
Are they the kind that I or any other business dean would send our students to watch?
The type of fraud known as an “endless chain” dates back to at least 1900 in the United States. In the 1920s and 1930s two cases attracted national attention because the defendants sold a commonly used consumer product — women’s silk stockings.
In the former case, the Nation’s Business reported that the Supreme Court “dealt a blow” to endless chains by letting stand the lower court decision of a “fraud order.” Less than five years later a similar scheme grew quickly until it too was closed by prosecutors.
The schemes did not purport to sell products to consumers other than to those who became part of the endless chain and help grow the scheme.
If made into law, the amendment passed on Thursday ties the hands of federal regulators and further facilitates an already troubled industry that lacks transparency.
If the MLM industry and DSA truly believe in the various manifestations of the MLM business model then let them welcome a full congressional hearing on the matter.
After all, it was DSA President Joe Mariano who said, "There are a lot of pyramid schemes that like to disguise themselves as legitimate direct-selling companies. That creates an environment where there can be confusion" and “Pyramids are bad guys…Their mere existence confuses the marketplace and makes it more difficult for legitimate direct-selling companies to do business and to be understood.”
By the way, the FTC agreed with Mariano when it wrote in 2011: “Drawing on its law enforcement experience, the Commission acknowledged that some MLMs do engage in unfair or deceptive acts or practices, including operating pyramid schemes or making unsubstantiated earnings claims that cause consumer harm.”
As documented by the non-profit, evidence that mirrors FTC concerns six years ago continues to build, which may be what motivates the troubled industry to push an amendment that will tie the hands of regulators.
William W. Keep (copyright 2017)
William W. Keep is the dean of the School of Business at The College of New Jersey.


  1. David --

    Glad to see that Dean Keep is still providing research and content! He is a great ally to the battle against MLM.

    I could imagine the conversation between Congress and the MLM industry. Congress would say, "So, we know you have an illegal business model that harms millions of Americans, and we also know that you have billions of dollars. We have campaigns that need funding so -- we'll take 5% of all proceeds from MLM -- and we'll continue to look the other way." MLM would come back and say, "How about 3%?", and Congress would agree.

    The landscape of Ada, Michigan tells all. Over half of the major buildings are named DeVos or Van Andel. It is completely disgusting.

    1. Thanks John Doe - I re-published this article because it explains the latest infiltration of the US democratic process by 'MLM' racketeers and their agents at the so-called 'DSA'. Unfortunately, Bill Keep still doesn't publicly acknowledge that what is laughably referred to as 'MLM,' isn't an 'industry,' but fraud on an industrial scale.

      Furthermore, Bill Keep doesn't yet seem to understand that every move which 'MLM' bosses have made over the past 70 years, fits into an overall pattern of ongoing major racketeering activity.

      That said, Bill Keep is neither expert in racketeering nor cultism, and therefore, he clings to the inaccurate vocabulary of his own academic 'business' training to describe the 'MLM' phenomenon.

      This is the equivalent of someone trying to describe the Trojan Horse, but who only uses an 'equestrian' vocabulary.

    2. Couldn’t agree more. Excellent analogy by the way re: Trojan Horse

    3. Many Thanks Anonymous - Another excellent analogy has been produced by Robert FitzPatrick who described the adoption of the 'Direct Selling' disguise by 'MLM' racketeers, to be a form of identity-theft.

      History shows that from the late 1940s through to the present day, the 'Direct Selling' identity was progressively stolen from the body of a dying, and now dead, industry.

      Today, traditional door-to-door direct selling of cheap and cheerful products to the general public (based on value and demand) does not exist in the USA and elsewhere. It was gradually killed off by supermarkets, discount stores and lately the Internet.

      Decades of evidence proves that what is now laughably labelled 'MLM direct selling' (even by critics such as Bill Keep) is one of the longest of 'Long Cons.'


      For the benefit of anyone reading this reply who doesn't know what a 'Long Con' is:

      A 'Long Con' is a form of fraud maliciously designed to exploit victims' existing beliefs and instinctual desires and make them falsely-believe that they are exercising a completely free-choice. 'Long Cons' comprise an enticing structured scenario of control that is acted out as reality over an extended period. Like theatrical plays, 'Long Cons' are written, directed and produced. They involve leading players and supporting players as well as props, sets, extras, costumes, script, etc. The hidden objective of 'Long Cons' is to convince unwary persons that fiction is fact and fact is fiction, progressively cutting them off from external reality. In this way, victims begin unconsciously to play along with the controlling-scenario and (in the false-expectation of future reward) large sums of money or valuables can be stolen from them. Classically, the victims of 'Long Cons' can become deluded to such an extent that they will empty their bank accounts, and/or borrow from: friends, family members, etc.