The Face of Multi-level Marketing

Multi-level Marketing (MLM) has been a significant force in America since 1980. And in most of that time, it never had an iconic human face — a Jack Welch, Bill Gates, Ray Krock, or a Lee Iacocca. Usually, when a MLM executive was seen on TV it was due to a lawsuit or a government prosecution.
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But, now MLM does have its own live personality. A human face has been put on the “unique” business model. It is the face of Donald Trump. Trump has launched his own MLM scheme, Trump Network, which claims to sell health products. Before announcing his new company, Trump had been pitching for the MLM, ACN, but many MLMers took his endorsement of that scheme as an endorsement of the industry.

Now, the MLM world is electrified by Trump’s launching of his own MLM company. The MLM blogosphere pulses with pride. They point to Trump as proof of their system’s legitimacy. If Donald Trump says its legit, surely it must be! Right?

Sadly for the believers, no. In fact, Trump’s involvement is only more obvious evidence — if consumer loss rates of 99% need any more — of just how bogus recruitment-MLMs are as a “business model.” To those not caught up in MLM’s delusions and entrapments, Trump’s association with MLM is a red flag of flim-flam. A guy known for extravagant consumption, an overbearing braggart, a figment of PR spin, a regular on the covers of celebrity scandal magazines, a promoter of professional wrestling, a bankrupt executive in the gambling industry, a schemer notorious for skipping out on debts, a man famous for win-lose “deals.” This is the spokesman for a business based on person-to-person selling to friends and relatives?

Actually, MLM almost got its own human face back in the 1990s. A fast growing MLM at that time, called NSA, signed a multi-year six-figure contract with O. J. Simpson to be the official celebrity endorser of its product, Juice Plus. The MLM world was electrified then too. The greatest sports star in history is in MLM! Surely that is proof that MLM is legit!

In March 1994, just before the murder of his wife and her friend, Simpson was videotaped telling 4,000 Juice Plus distributors that NSA’s miracle product had cured his arthritis, and freed him from using anti-arthritic drugs. Then, during his murder trial, Simpson told jurors he could not have committed the crime because his arthritis was so crippling and that he had been taking drugs for the pain and inflammation. Simpson, once MLM’s biggest pitchman, was aquitted on the murder charges, but is currently in prison for kidnapping and theft. MLM does not mention his endorsements of the business or his “product testimony” any more.

Well, now, MLM finally does have a proper front man. Donald Trump is the most visible promoter of MLM, the Pied Piper. Before launching his MLM, Trump served as chief spokesman ACN. ACN claims to sell phones and phone service. It also sells a “business opportunity” for $500 based on recruiting other salespeople who recruit others in an “endless chain.” ACN was prosecuted in Canada and Australia for running a pyramid scheme. It escaped being shut down by those governments due to rulings by judges. This year, Fox News in Los Angeles tried to get into one of ACN’s big recruitment meetings, to find out what the $500 actually bought, and what Donald Trump was telling consumers. But the press was barred and the reporters were cursed outside on camera.
The Fox news show took hidden cameras into an ACN meeting and heard the usual — not much about phones, but all kinds of promises of big income, and lots of talk about recruiting. ACN does not release distributor income averages, costs, dropout rates, or how the commissions are apportioned by level. (nearly all MLMs send 50-80% of all commissions to the top 1% on the pyramid). Instead, ACN tells consumers to rely on Donald Trump’s word that it is not a pyramid scheme and is a good business opportunity to invest in.

Now, Trump is starting his own MLM, Trump Network. So, what about Donald Trump? Should Donald Trump’s business history, business practices and reputation inspire confidence and trust in MLM?

  • Is Trump as wealthy as he claims? No one knows. He was born wealthy. His current real estate holdings are mostly commercial and commercial real estate is sliding deeply in value. As far as his debts, nobody knows about that either, but there are suspicions. An example of Trumps slippery and illusory claims of worth is his bankrupt luxury condo project in Baja California. Owners were led to believe it was a Trump project. His name and reputation were spread all over the promotions. Consumers put down 30% and ended up getting nothing. The project was never built. Now they are suing Trump. His defense? It was not his project. Only his name was being used for promotions, he claims.
  • In the late 1980s and early 1990s Trump was heralded as financial magician, a real estate wizard, a genius. Then, bankruptcy was declared and it turned out he had less net worth than the average American. It was smoke and mirrors.
  • In 1992, the Trump Plaza Hotel filed Chapter 11 Bankruptcy after failing to make debt payments.
  • In 1995, Trump consolidated his casino holdings into a publicly traded company and with hype and publicity pushed the stock to $35 within a year. Thousands of consumers believed the pitch and bought the stock. Two years later, the company had amassed $3 billion in debt, earned no profits and the stock dropped more than 75%.
  • In May 2005 the casino-based company re-emerged under the new name of Trump Entertainment Resorts Holdings. Today this company is again in bankruptcy. The stock went over $20 a share in 2006. Again thousands believed in Trump’s great financial abilities and bought in. Today the stock is valued at 17 cents ($.17) a share. Trump now says he is going to buy the company and take it private.
  • Trump was caught like everybody else in the 2008 financial crisis. He was no genius in foreseeing the collapse. While he is famous for “firing” incompetent people, he does not apply such standards to his own business. He failed to pay a $40 million loan related to his Trump International Hotel and Towers in Chicago, which were reportedly lagging in sales. As a defense for not paying his bills, Trump argued that his misfortunes in the economic downturn were not his fault. The Recession was an “Act of God” he argued. The bank that he owed the money to reminded the court that “Trump is no stranger to overdue debt” and that he had filed for bankruptcy twice before in his casino operations.

So MLM’s new spokesman, following O. J. Simpson who is indisposed right now, is a failed tycoon from the gambling industry. To be sure, he is a successful pitchman and PR figure. He reportedly is paid millions for his TV show. Though he is known for not paying his bills, repeated bankruptcies and stock collapses, he is now held up as the model for young people to join MLM. Considering that MLMs operate on the impossible proposition of each new recruit building his own “endless chain” of new recruits, and that this model produces a 99% loss rate, while hyped as the “greatest opportunity in the world” Donald Trump may indeed be the perfect face of MLM.