What is Multilevel Marketing (MLM)? Multilevel ...

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Topic: “Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)” D. Anthony Miles, Ph.D., MCP, CMA, RBA, MBC Texas A&M University-San Antonio School of Business

Texas A&M University - San Antonio Faculty Speaker Series

Agenda  What is Multilevel Marketing (MLM) (aka “Network Marketing”)?  How does MLM work?  What are the Top 10 MLM companies?  Can you make money doing MLM?  Conclusions and Critical Observations

Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Background of Speaker: Business Research Prior Experience and Research: 

Experience: (a) 20 years in the retail industry; (b) 10 years in the banking and financial services industry



Conducted research on (n = 201) small business enterprises (SMEs).



Conducted research on (n = 276) small business enterprises (SMEs).



Conducted research on (n = 259) femaleowned business enterprises (FOBs).



Conducted research on (n = 220) minorityowned small business enterprises. (MOBs).



Published two books on small business and entrepreneurship

Professional Certifications: 

Management Consultant Professional, (MCP) ™ Certification



Registered Business Analyst, (RBA)™ Certification



Chartered Certified Marketing Analyst, (CMA) ™ Certification



Master Business Consultant, (MBC) ™ Certification


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Background of Speaker: Books Published on Business Miles, D. (2011) Risk Factors and Business Models: Understanding the Five Forces of Entrepreneurial Risk and the Causes of Business Failure, Universal-Publishers Inc., pp.198 pages. ISBN - 978-15994423883

Available at: Amazon.com Barnes and Noble.com Borders.com Universal Publishers.com

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What is Multilevel Marketing (MLM)? Multilevel Marketing (MLM) is also called “Network Marketing (NWM)”, “Direct Selling”, “Personal Retailing” and/or “Consumer Direct Marketing” is: 1)

Network of distributors; that sell retail products through nontraditional distribution systems; is a productbased distribution system.

2)

Pyramid infrastructure based on recruiting individual distributors of goods and services.

3)

4)

Not sold through retail markets. Products that are sold through MLM networks most likely cannot be found in traditional retailing markets or sectors.

5)

Mostly beauty and health products. Products are mostly beauty and health related; (high-priced “potions and lotions”) lotions, skin care, vitamins and health drinks.

6)

MLM has expanded into service related industries (i.e. Prepaid Legal Services, ACN, Primerica Financial Services).

Recruitment-centered, rather than product-centered.

Source: Kuntze, 2001; FitzPatrick, 2004; Harris, 1992; Black, 1999 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Five Characteristics of MLMs 1) Constant Recruiting. Constant recruiting of participants is unlimited in an endless chain of empowered and motivated recruiters recruiting recruiters. 2) Hierarchy Advancement. Advancement in a hierarchy of multiple levels of “distributors” is achieved by recruitment rather than by appointment. 3) Ongoing purchases (products, sales “tools” and etc.) by distributors are encouraged in order for them to be eligible for commissions and to advance to the business (“pay to play”). Internal purchasing from participants. 4) Commissions. The company pays commissions and/or bonuses to more than five levels of “distributors.” 5) Upline. For each sale company payout for upline participant equals or exceeds that for the person actually selling the product creating an inadequate incentive to sell the products directly and an excessive incentive to recruit. Source: Taylor, 2007 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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The Structure of MLM Companies: Pyramid Structure

Profitability is made primarily at the top of the pyramid, but not after.

*This chart shows how

1

6

2

36

3 4

216 1,296

5

7,776

6

46,656

7

279,936

8

1,679,616

9

10,077,096

pyramid schemes can become impossible to sustain.

For example: 1 person recruits 6 people; then 6 people must recruit 6 individual each which is a total of 36 people; 36 must then recruit 216 and etc. However, the pyramid’s potential of increased growth collapses before any further growth. There is no profitability in recruiting. Profitability should be in the sale of the product, not in recruiting a downline. Source: Taylor, 2007 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Top 10 Multilevel Marketing (MLM) Companies Top 10 MLM Firms  ACN  Amway/Quixstar  Freelife International  Herbalife  Melaleuca  New Ways International  NuSkin  Outbound Voice, Inc.  LegalShield (formerly PrePaid Legal Services)  Tahitian Noni International (new)  USANA (new)  BurnLounge (new)

Other and Past MLM Firms  Arbone  Avon  Equinox International  Mary Kay  Nutralite  Rexall Showcase International (RSI)  Shaklee  Tupperware  Bioperformance Note: Out of several hundreds of MLM’s these are the most popular  Thousands of MLM’s have come and gone. 

Source: Direct Selling Association (DSA), 2006; Taylor, 2007; FitzPatrick, 2004 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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The History of Multilevel Marketing (MLM) The History of Multilevel Marketing in the U.S. 1934 - Nutrilite Products Company, Inc. Carl Rehnborg started the California Vitamin Corporation selling what today are known as vitamin supplements. In 1939 the company changed its name to Nutrilite Products Company, Inc.

1956 - Shaklee Corporation. Dr. Forrest Shaklee developed a method of extracting minerals from vegetables and used MLM (Network Marketing) to distribute his products. He formed Shaklee Corporation

1945 - Nutrilite contracted with Mytinger & Casselberry to become the exclusive American distributor of Nutrilite products. Mytinger & Casselberry created the first documented MLM compensation plan.

1963 - Mary Kay Cosmetics. Mary Kay Ash creates Mary Kay Cosmetics. By 1996, company sales were in excess of 2 billion dollars.

1945 - Tupperware Party. Earl Tupper created a line of flexible, lightweight plastic containers with tight-sealing lids. He started selling his products through conventional retail outlets, but realized the products needed demonstration. Earl Tupper then teamed up with Brownie Wise (formerly with Stanley Home Products) and launched Tupperware Party Plan, now a world-wide billion-dollar company operating in 40 countries.

1975 - The FTC (Federal Trade Commission) filed suit against Amway corporation for operating a pyramid scheme.

1949 - Amway Corporation. Rich DeVos and Jay Van Andel returned from military service and became distributors for Nutrilite vitamin supplements in 1950. After a brief dilemma with Nutrilite in 1959, the two abandoned ship and formed the Amway Corporation.

1979 - An administrative law judge ruled that Amway’s multilevel-marketing program was a legitimate business opportunity, as opposed to a pyramid scheme.

Source: http://www.firstclassmlm.com/2007/12/11/the-history-of-mlm/ Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Industry Statistics Information on Multilevel Marketing (MLM) Sales Strategy PERCENT OF SALES BY SALES STRATEGY

2008

2009

2010

Individual/person-to-person

66.3

64.3

63.5

Party plan/group selling

25.7

25.4

27.9

Customer direct order & Autoship

7.4

9.8

7.5

Other

0.6

0.5

1.1

Source: Direct Selling Association (2010)


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Industry Statistics on Product Groups in Multilevel Marketing Companies PERCENT OF SALES BY MAJOR PRODUCT GROUP

2008

2009

2010

Home & family care/home durables

25.4

23.9

24.4

Wellness (i.e. weight loss products, vitamins, etc.)

22.7

22.8

23.0

Personal Care

21.5

21.3

19.4

Services (i.e. travel, real estate, group buying, utilities & financial services) & other

6.6

18.4

19.2

Clothing & accessories

10.4

10.3

11.0

Leisure/educational

3.4

3.3

3.0

Source: Direct Selling Association (2010) Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Statistics on How People Are Recruited in Multilevel Marketing (MLM) Companies. The Wirthlin Researchers (1998) asked individuals what was the relationship with the person that Text recruited them in MLM. The following statistics revealed the following: MLM Company Rep 28% Close Friend 23%

Acquaintance 20% Multilevel Marketing

Co-Worker 9%

Immediate Family Member 6%

Relative 7%

Notable statistics: (1) Over 60% of recruits drop out of MLM within a year; (2) 99% of individuals that join MLM suffer losses-after subtracting product purchases and necessary expenses. Source: Kuntze, 2001; Taylor, 2004; FitzPatrick, 2004

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Why Has MLM Continued to Prosper in the U.S.? 1)

Government inaction. Authorities rarely investigate MLM firms. • Many firms use the “Amway Defense” • Difficult to prosecute without proof and documentation.

2)

Political influence. • Many MLM firms are big contributors to political campaigns. • Direct Selling Association (DSA) has also been successful in lobbying in favor of MLM firms.

3)

MLM victims seldom file complaints.  Fear of self-incrimination and consequences from or to their upline or downline.  Embarrassment and self-blame.  Led to believe MLM is legitimate.  Typically common victims MLM programs number in the1,000’s.

4)

Colleges and universities  Look the other way on researching MLM.  Very little independent academic research that is not funded by MLM.

Source: Kuntze, 2001; Harris, 992; FitzPatrick, 2005; Black,1999 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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What Are the Problems with Multilevel Marketing (MLM) as A Business Model? MLM has four major problems as a business model: 1) Market Saturation. Unprotected sales territory causes the market to become highly saturated by many reps; Often sell commodity-based products that can be found in retail stores. 2) Pyramid Infrastructure. Doomed by design; fundamentally flawed; Prone to eventual collapse. 3) Morality and Ethics. Uses deception with overzealous product claims; fabricates how much money can be made which are false. 4) Relationship Issues. Leveraging personal relationships is unethical; strains and jeopardizes personal relationships by malicious recruitment.

Source: Van Druff & Van Druff , 2004 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Why Do People Join Multilevel Marketing (MLM)? Why People Join MLM? •Low

barriers to entry

•No

territorial restrictions.

•Low

to start-up capital

•No

discrimination

•Home-based •No

•The

myth of achieving unlimited passive income

experience needed •Appeal

•Can’t •No

be fired or terminated.

to people’s greed and promise for making quick money.

franchise fees or royalties.

Source: Kuntze, 2001; Harris,1992; Black, 1999 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Multilevel Marketers (MLM) vs. Real Entrepreneurs Behavioral and personality differences between MLM’ers and real entrepreneurs are: • •

Lack of education;

•

Lack of business experience;

•

Lack of innovation skills;

•

Motivated by symbolic aspects of success such as money, lavish lifestyle and identity

Source: Kuntze, 2001

Willingness to take on high risk concerning questionable endeavors.

 Entrepreneurial businesses are product/service centered, not recruitment-centered.

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Common Behavior Characteristics of Individuals That Are Involved With Multilevel Marketing (MLM) • Prey on people’s fears during difficult economic times.

• Misrepresents past and potential earnings is common in recruiting.

• Use deceptive practices in recruiting individuals. Utilizes deception in recruiting participants- -

• Exploit personal and professional relationships: friends, family & business associates.

• Will not disclose the name of the business upfront. For example, refusal to disclose upfront the firm’s name and pyramidal nature of the scheme (e.g. Amway).

• Name change. Will change the name of the company if the old name has a bad reputation (e.g. Quixstar – “Amway”).

Sources: Harris, 1992; Black,1999; Berman, 2004; Miles, 2007; FitzPatrick & Reynolds,1997; Taylor, 2007 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Is Multilevel Marketing Unethical As A Business Model? Some researchers (Koehn & Bloch) believe that MLM is unethical because: 

Recruit family members. MLM companies encourage distributors to sell products and services to family members and friends and/or to recruit them into the MLM organization.



Abuses professional relationships. MLM is unethical because it tends to abuse the professionalclient relations and they recruit new sales associates socially.



High attrition rates. MLM is unethical because of the high attrition rates of distributors (Albaum & Peterson, 2011).


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Is Multilevel Marketing (MLM) Profitable? Utah County has the highest concentration of MLM firms in the U.S.; these studies conducted with CPA’s and tax preparers reveal the following: 1)

A principal of H&R Block tax preparer in Northern Utah whose group has prepared over 15,000 tax return stated, “All of his MLM clients lost money.”

2)

Telephone interviews conducted with 33 CPA’s and tax preparers that had a total of 864 clients that participated in MLM in counties where no MLM’s were headquartered could not recall one MLM client that made a profit.

3)

Telephone interviews conducted with 33 CPA’s and tax preparers (in Utah County with the highest concentration of MLM’s in the country) had a total of 2,070 MLM clients- there were only 43 who recorded a profit. Those who profited were positioned at or near the top of their respective pyramids.

4)

Comments made on MLM by CPA’s with Counties that had no MLM Headquarters: • “I would never advise a friend to do MLM - unless he needs a tax write-off.” • “It’s a scam.” • “It’s a pyramid scheme.” • “There’s money to be made in MLM – at the top.”

Source: Taylor (2001) from http://www.mlm-thetruth.com Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Is Multilevel Marketing Profitable As A Business Model? The researchers are in conflicted discussing the profitability of MLM: 

Earn poor financial returns. MLM distributors typically earn poor financial returns from their distributorships (Bhattacharya & Mehra, 2000; Biggart, 1998).



Often inflates income. Distributors often brag about “earning six or seven figures.” (Sparks and Schenk, 2011).



High attrition rates. MLM is hard to make a profit because of the high attrition rates of distributors (Albaum & Peterson, 2011).


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What Does the SBA and SBDC Think of MLM? Small Business Development Center (SBDC) counselors and Small Business Administration (SBA) characterized participants of MLM as: •Somewhat gullible, socially unable. •Not very educated about business.

•SBDC refuses to counsel anyone involved with MLM

•SBA refuses to finance any enterprise characterized as MLM (SBA 2006).

•High-risk dreamers. In search of the entrepreneurial “golden fleece.” Source: Kuntze, 2001; Harris,1992; Black, 1999 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Why MLM Does Not Work? Multilevel Marketing Theory “Everyone’s a customer” Market fraud and deception. Notorious for refusing to tell people what their product or business is upfront

Lack of product differentiation. The products are undifferentiated. Tend to be commodity-type products.

Market Saturation

Damages personal relationships by trying to recruit personal family, friends and colleagues.

Traditional Marketing Theory Everyone is not a customer. There are different customer segments and niches. You can’t be all things to all people. You want the customer to know to your product upfront and build the brand and brand equity. •Product s needs to have differentiation. Differentiate or die (Ries & Trout). Similar or even identical products are available for purchase from other retailers in stores or over the Internet. •In the is age of Walmart, that is not a good strategy. Attempting to sell a common product to a saturated market. Today mass marketing has completely changed. Now you need to target niche your market. If everyone can get into MLM with no protected sales territory then the market becomes highly saturated. Marketing is about building relationships with customers (“relationship marketing); not damaging personal family, friends and colleagues by trying to recruit them into a business.

Source: Miles, 2012; Miles, 2009 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Why People Should Not Join Multilevel Marketing? Why A Person Should Not Join Multilevel Market Highly difficult to make a profit (less than 1% make a profit).

Constant meetings ad nausea.

Image problems with public.

Lack of management control systems with sales territory.

Time and labor intensive.

Enormous strain on resources: time and money travel (fuel costs)

Market saturation of products/services; products are commodity-based. Attrition Rate. Extremely high attrition rate.

Strains personal relationships; leverages personal relationships recruitment. Pyramid structure: does not work.

Deception. Often use deceptive practices to recruit individuals (exaggerated income; profit and symbols of success).

Source: FitzPatrick, 2004; FitzPatrick, 2005; Kuntze, 2001; Harris, 1992; Black, 1999 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Legal Issues with Multilevel Marketing (MLM) LEGAL ISSUES WITH MULTILEVEL MARKETING FIRMS •Amway Corporation is the most investigated MLM company.

The Federal Trade Commission (FTC) cautions people about MLM. The DSA has been successful in promoting similar pro-MLM legislation in Idaho, Utah, North Dakota, and several other states. STATE LAWS: The State of Texas has had the worst laws on anti-pyramid statutes in the nation-crafted by the DSA to exempt MLM’s from pyramid scheme prosecution.

•FEDERAL LAW: Overall, the U.S. has relaxed statutes against MLM due to political lobbying by MLM associations and organizations. •Laws tend to target no-product pyramid schemes more than MLM firms. In 2007, USANA was investigated by the Securities and Exchange Commission (SEC )for fraud.

INTERNATIONAL: In 2005, China prohibited pyramid selling; has strong anti-pyramid laws.

Source: Van Druff & Van Druff , 2004; FitzPatrick, 2004; Taylor, 2007


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Critical Observations on Multilevel Marketing (MLM) •

Highly labor and time intensive;

•

Too recruitment-centered, not product-centered.

•

99% of all people involved in MLM firms never earn a profit.

•

Unethically exploits and strains personal relationships;

High attrition rate: more than 60% who join MLM quit within 1 year;

•

Products are very difficult in terms of brand loyalty;

SBDC counselors refuse to assist any client involved in MLM;

•

Suffers from bad public image; people have strong distrust of MLM.

SBA refuses to finance any individual or business that is MLM.

•

MLMer’s are typically: “subcontractors”, “salesmen” not entrepreneurs.

•

MLM, aka “Personal Retailing”, does not work in this “Wal-Mart Era.”

•

•

•

•

Often sell commodity-based products; that can purchased much cheaper through traditional supply chains.


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How Do You Know If You Are Dealing with a Multilevel Marketing (MLM) Company? 5-Way Test The 5-Way Test For Detecting a Multilevel Marketing Company 1)

Did the person who approached you give the name of the business upfront?

Many MLM recruiters s used deceptive practices such as not disclosing the name of the business.

2)

Did the person that approached you discuss having a business meeting on a Tuesday, Wednesday or Thursday evening at a hotel?

Many MLM recruiters often tell new recruits to meet them at a big hotel with others that have been recruited to the same meeting (e.g. Amway, USANA and etc).

3)

Did the person that approached you discuss how quickly you will become rich become doing the business?

Many MLM recruiters discuss getting rich fast and entice gullible individual with that type of talk.

4)

Do you have to do heavy recruiting of new distributors for the business?

Recruiting of participants is unlimited in an endless chain of empowered and motivated recruiters recruiting recruiters.

5)

Is advancement in the MLM based on a hierarchy of multiple levels of “distributors” ?

Advancement in a hierarchy of multiple levels of “distributors” is achieved by recruitment, rather than by appointment.

Source: Taylor, 2012; Miles, 2010; FitzPatrick, 2005 Presentation: ““Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

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Topic: “Psst Let Me Tell You About a Great Business Opportunity: What You Need to Know About Multilevel Marketing (aka Network Marketing)”

QUESTIONS? Texas A&M University - San Antonio Faculty Speaker Series

References Anonymous. (Oct 2005). China's Milestone Direct Selling Regulations A Victory for Single-level Selling over Multi-level Selling. China Law & Practice, pg. 1 Anonymous. (2002). Multilevel marketing: Hardly a highway to riches. Medical Economics, 74(13), p.85. Anonymous. (1996). Would-be pharaohs beware: People are wising up. Management Today, 21(1), p.76. Anonymous. (1997). Is it a legitimate MLM or a pyramid scheme? Kiplinger's Personal Finance Magazine, 51(3), p.102. Arndorfer, J., (2005, Nov 7). Amway knocking on agency doors. Advertising (Midwest region edition). Age.,76(45), pg. 8. Barkacs, C. (1997). Multilevel marketing and antifraud statutes: Legal enterprises or pyramid schemes?. Academy of Marketing Science. Journal, 25(2), 176-178. Berman, P., (2004, Oct 11). If You Believe. Forbes.,174(7), pg. 89.

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References Biggart, N. (1989). Charismatic Capitalism: Direct Selling Organizations in America (1st ed., Vol. 2). Chicago: The University of Chicago Press. Black, D. (1999), Pyramid Power: Network Marketer’s Accounts Profession Development and Success. Published Doctoral Dissertation, University of Toronto, Canada, 3-320. Bloch, B. (1996). Multilevel marketing: What's the catch?.Asia Pacific Journal of Marketing and Logistics, 8(1), 21-31. Bonoma, T. (1991, Feb 18). This Snake Rises in Bad Times. Marketing News, 25(4), p.16. Brodsky, N. (1998) Multilevel mischief, Inc. 20(8), p.41-43 Carter, R. (1999). Amway Motivational Organizations: Behind the Smoke and Mirrors (1st ed.).Winter Park, FL: Backstreet Publishing, Inc. Cava, A., Sacasas, R. & DiMatteo, L. (1996). Multi-Leveling Marketing and Antifraud Statutes: Legal Enterprises or Pyramid Schemes? Journal of The Academy of Marketing Science, 25(1), p.176-179.

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References Elkind, P., (2000, Mar 6). Shhhhh! Amway's on the Web . Forbes, 141(5), pg. 76. Farnham. A., (2004, Nov 1). Not taught at Harvard: Multilevel marketing . Forbes, 174(9), pg. 080. Farnham, A., (2004, Nov 1). The Party That Crashed Retailing. Forbes.,174(9), pg. 80. FitzPatrick, R. (2005) The "American" Scam. Retrieved on 11/15/2006, from False Profits Business Web site: http://www.falseprofits.com/Americanscam.html FitzPatrick, R. (2004). The Myth of “Income Opportunity” in MultiLevel Marketing. Pyramid Scheme Alert Report, 21(1), 1-43. FitzPatrick, R. & Reynolds, J. (1997) False Profits: Seeking Financial and Spritual Deliverance in Multi-Level Marketing and Pyramid Schemes (1st ed) Charlotte , NC Herald Press, Inc. Harris, D. (1992), Pyramid Power: Of Profits and Prophecy: A Study of the Amway Worldwide. Published Doctoral Dissertation, Harvard University, MA, 3-655. 9/20/2013

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References Harris, W. (2004) Network marketing or pyramid scheme?, Black Enterprise. 35(4), p.102-107 Johnson, R. (1999, Sept 27). Do You Want to Be a Millionaire? `Multilevel' marketing lures many with hopes of riches; Reality can be quite different. Wall Street Journal, pp. 16. Koehn, D. (2001). Would-be pharaohs beware: Ethical issues connected with multi-level marketing schemes. Journal of Business Ethics, 29(1/2), p.153-161. Kuntze, R. (2001), Pyramid Power: The Dark Side of Multi-Level Marketing: Appeals to the Symbolically Incomplete. Published Doctoral Dissertation, Arizona State University, AZ, 3-168. Mehta, S., (1995, Dec 19). Not taught at Harvard: Multilevel marketing . Wall Street Journal, pg. B1. Miles, D. (Author/Interviewer). (2007). Telephone Interview with Dr. Jon Taylor. San Antonio, TX: Dated October 3, 2007. Offen, N. (2004, April 5). The Avon army is primed to start calling but Hanoi is wary of. Financial Times, p. 1. 9/20/2013

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References Sparks, J. & Schenk., J (2001) Explaining the effects of transformational leadership: An investigation of the effects of higher-order motives in multilevel marketing organizations, Journal of Organizational Behavior. 22(8), p.849 Taylor J. M. (1997). The Network Marketing Game (1st ed.). Salt Lake City, UT: King Alfred Press Inc. Taylor J. M. (2004). Who profits from Multi-level Marketing (MLM)? Preparers of Utah tax returns have the answer, Retrieved on 11/15/2006, from Truth on MLM Web site: http://www.mlm-thetruth.com/ Taylor J. M. (2006). The 5 Red Flags: five causal and defining characteristics of product-based pyramid schemes or recruiting MLM’s, Retrieved on 10/3/2007, from Truth on MLM Web site: http://www.mlm-hetruth.com/5RedFlags2column40pages2Color3-6.pdf Vander Nat, P & Keep,W. (2002) Marketing fraud: An approach for differentiating multilevel marketing from pyramid schemes, Journal of Public Policy & Marketing. 21(1), p.139-152 9/20/2013

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References Van Druff, D. & Van Druff L. (2004) What's Wrong With Multi-Level Marketing? (Vol. 1) (2004). (Original work published 2001) Retrieved on 6/2/07 from http://www.vandruff.com/mlm.html Vander Nat, P & Keep, W. (2002) Marketing fraud: An approach for differentiating multilevel marketing from pyramid schemes, Journal of Public Policy & Marketing. 21(1), p.139-152 Walsh, J. (1998). You Can't Cheat an Honest Man: How Ponzi Schemes and Pyramid Frauds Work and Why They're More Common Than Ever (1st ed., Vol. 1). Los Angeles: Silver Lake Publishing. (Original work published 1998)

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Contact Information

D. Anthony Miles, Ph.D., MCP, RBA, CMA, MCB,

Texas A&M University – San Antonio

Email: [email protected] or [email protected]


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