http://www.falseprofits.com/falseprofitsblog.htmlEconomics, Politics, Legalities, Ethics and Sociology of Pyramid Schemesenrfitzpatrick@falseprofits.comCopyright 2008 Robert FitzPatrick2010-07-14T10:16:50-04:00 hourly 1 2000-01-01T12:00+00:00 Tue, 27 Jul 2010 14:40:35 -0400Robert L. FitzPatrickFalse Profitsrfitzpatrick@falseprofits.comfraud, scam, pyramid scheme, mlm, multi-level marketing, network markeing, PonziEconomics, Politics, Legalities, Ethics and Sociology of Pyramid Schemesrfitzpatrick@falseprofits.comIndividual / Social Impact2010-07-14T10:16:50-04:00http://www.falseprofits.com/files/c4ed210aaece59cd2bb0a07df62c86a0-24.html#unique-entry-id-24http://www.falseprofits.com/files/c4ed210aaece59cd2bb0a07df62c86a0-24.html#unique-entry-id-24Since I published the book, False Profits, in 1998, I have been interviewed by scores of journalists, including CBS 60 Minutes, Wall Street Journal, London Times, BBC and many daily newspapers, each inquiring into my research and perspective on muilti-level marketing. Each media inquiry produced the journalists’/editors’ own take on the subject in subsequent news stories, feature articles or radio and television reports.

Yet, it was not a news reporter but a comedy/satire show on Cable TV that got it dead-on right. Aired July 8, 2010, on the Show-Time Network, the show was presented by world famous magicians, satirists and comedians, Penn and Teller, and is provocatively and aptly entitled, Bull_it! The segment on multi-level marketing is also aptly entitled, Easy Money.

The show’s producers taped an interview with me for much of an entire day. Their questions and approach indicated that they fully grasped the sad and disturbing realities of America’s greatest con and that Penn and Teller intended to puncture MLM’ false, manipulated and distorted image. MLM survives only due to the calculated dis-information about income opportunity. If truth were widely known, the MLM “industry” would disappear like the now extinct practice of “alchemy.”]]>rfitzpatrick@falseprofits.comEconomics/Financial2010-03-04T14:08:06-05:00http://www.falseprofits.com/files/18e1f89e7fcc0e146218a86d8f9ab0c0-23.html#unique-entry-id-23http://www.falseprofits.com/files/18e1f89e7fcc0e146218a86d8f9ab0c0-23.html#unique-entry-id-23Consumers often ask: Even if multi-level marketing companies are pseudo-businesses, pyramid schemes and financial traps, couldn’t they run legally if they just disclosed how they are structured and operate, the actual financial loss rates, the quitting/turnover rates, the costs, the absence of retailing, the endless chain recruiting requirements and the risks in joining?
In other words, like the tobacco industry that sells a lethal and addictive product, couldn’t MLMs, which promote an “endless chain” income plan that dooms nearly all to failure, be lawful if they just printed the whole truth on the package?

Click here to see the proposed disclosures that a MLM would have to provide to each new consumer prospect if it were to tell the truth.

Full disclosure means ending 10 Big Lies that MLMs routinely perpetrate and then spelling out the facts. These 10 areas of deception and cover-up include:]]>rfitzpatrick@falseprofits.comEconomics/Financial2010-02-24T14:27:25-05:00http://www.falseprofits.com/files/0e84fa53401abaf0461335365f0641a4-21.html#unique-entry-id-21http://www.falseprofits.com/files/0e84fa53401abaf0461335365f0641a4-21.html#unique-entry-id-21Until recent years, to “prove” that an endless chain income or sales scheme was a fraud only required explaining that it was in fact an endless chain. In other words, endless chain schemes were understood to be “inherent” frauds. They are not good businesses gone bad or good people doing wrong. They are, by definition, frauds, custom-designed scams that must deceive and will always cheat the majority who join them. The fraud of endless chains may be reduced to a simple fact: They make a false promise, much like a “bait and switch” proposition does. That endless chain promise is that everyone, always, has the opportunity to make unlimited money from an ever-expanding base of new investors.
On Wall Street, the losers are the latest investors, like those that got in at the end of Bernard Madoff’s Ponzi scheme. On Main Street, the losers are the latest to join at the bottom of the multi-level marketing schemes’ “downlines.” That group churns and turns over year after year. New people join each year filled with hope, just like the people that had joined last year, before they “failed” and quit.]]>rfitzpatrick@falseprofits.comNone2010-01-17T19:21:20-05:00http://www.falseprofits.com/files/9d4c14235cdb986259211ecebe370711-20.html#unique-entry-id-20http://www.falseprofits.com/files/9d4c14235cdb986259211ecebe370711-20.html#unique-entry-id-20As business has grown more complex, fraud has evolved and adapted accordingly. Multi-level marketing (MLM), the most common form of pyramid/ponzi fraud, is the product of years of evolutionary adaptation in the scam and swindle field, matching the adaptation of the legitimate marketplace. Public awareness and law enforcement always lag behind new forms of fraud. The success of MLMs and other financial Ponzis at duping millions of people, rich and poor, educated as well as illiterate, shows that public understanding has not caught up to this new mutation.

The Three Stages of Consumer Fraud:
(1) Product-based fraud in which consumers are tricked into buying defective or even non-existent products or to pay far more for a product than is worth
(2) Financial fraud in credit, banking, insurance, mortgages, stocks and bonds.
(3) Marketing fraud, in which consumers are induced to personally identify with the fraudulent company and to help it defraud others by becoming part of the marketing program themselves with their own purchases and personal promotions.

Pyramids and Ponzis – today’s most pervasive and insidious consumer fraud — achieve their fraudulent purposes with marketing. With marketing, they dupe people in the ways that the other stages of fraud do, i.e., to buy (usually overpriced) products or services or make investments that they would not have otherwise done and to lose money from finance fees, added costs, and hidden charges. But, with marketing, they go much further and deeper. They mislead the victims to believe that the schemes are their personal pathway to success and happiness and to recruit their closest friends and family into the fraud also. This is truly a new and more virulent form of fraud.

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