2022 MLM Conference

This conference was on two days, Friday June 10th and Saturday June 11th, 2022. These are my personal notes: my bias is written all over my blog, so don't consider this be a accurate source for direct quotes...

Day 1: Friday June 10th, 2022

Part 1: Introduction

(I wasn't taking notes on who was saying what yet...)

1. The DSA enforcement wing mostly reports non-DSA MLMs to the FTC... LOL... DSA legalizes pyramid schemes state-by-state by getting "internal consumption" to count as retail sales. (For me this raises "company store" questions.)
2. Research shows risk factors for joining an MLM include materialism, "knowing it all," impulsivity, being not-good with numbers, financial illiteracy, and lack of access to accurate information (disclosures.)
3. FTC can only go after MLM case-by-case and their most effective tool is a $43k fine that the supreme court is probably not going to support drastic use of. SCOTUS shut down Koscot which now makes it very hard to get reimbursement for MLM victims. (Daffan much latter added that the FTC is more interested in shutting down an organization for making false business claims than it is trying to classify what exactly is wrong with the MLM business model.)
4. SEC cases are very difficult prove, and Pyramid Scheme accusations go to SEC, which is why RICO isn't invoked.
5. The problem with "internal consumption" is MLMs incentivise your own personal consumption, leading to you buying more than you can use or sell. For example "bonuses" are paid out in payments where  you have to keep moving the same amount of MLM product as when you got the bonus in the first place in order to get the payments. This leads to sunk cost fallacy for staying in the MLM.
6. MLMers can been seen as in 3 groups: Recruits (most people who fall for the scam,) Grinders (who try to make it their day job,) and the Profiteers at the very top (who make most of the money.) Grinders are the most abused victims who lose the most to the MLM. "Major events" (hype conferences) use a lot of prayer meeting style visualizations instead of sales training to keep the person focused on staying in the MLM. Real employers pay money and provide benefits to retain employees while grinders pay to retain themselves in the MLM.
7. MLM use unique vocabulary and constantly changing definitions to obscure what is going on. The DSA said "everyone has their own definition of what is MLM." The top MLM people actually exaggerate their lifestyles to recruit down-line, so they know the business practice is deceptive from the beginning!

Part 2: LuLaRich

1. LuLaRich producer Blye Pagon Faust mentioned that MLM is part of the "affinity fraud" problem in the The LDS Church. 
2. Faust recommended more mandatory transparency on income disclosure and how many distributors are already in your area, as well as regulation on how many distributors should be allowed to be recruited in one area. 
3. LuLaRoe has numerous spin off MLMs by LuLaRoe family members. Faust's advice to potential MLM recruits is "be educated and know what you are getting into." 
4. My question for her was first regarding weather or not the LuLaRoe founders believe in the MLM model, she answered "they are so performative it's hard to tell... they wanted to make a buck..." She also stated she believes LuLaRoe was a pyramid scheme.
5. In Q&A Jason Jones pointed out that there doesn't seem to be any such thing as a "good MLM" that doesn't manipulate. Douglas M. Brooks pointed out the FTC has maintained the legend of the "legitimate MLM." William Keep pointed out that MLMs claim to build entrepreneurs yet offer nothing to do that.

Part 3: Regulators

(Note the Q&A started with my question asking the FTC's Daffan if there was any such thing as an MLM that was not a Pyramid Scheme. When Professor/facilitator William Keep finally said "can any of us give an example of an well run model MLM?" everyone shook their head no... though Daffan mentioned Advocare went from being a Multi-Level company to just being a regular company. That said...)

1. Kathleen Daffan from the FTC... one reason why MLM is under reported is people blame themselves for why they didn't succeed in the MLM.  First contact is through social media (49%.) Cryptocurrency and payment apps are preferred over others. Crypto currency scams are a massive problem for the FTC right now, and many crypto scams ARE MLMs. "Bitcoin Funding Team" was about "paying it forward," claiming it would help people pay for college or get surgery, but it ended up being highly focused on getting others to recruit. 
2. Daffan mentioned Financial Education Services as a services based MLM. It was a credit repair "pyramid scheme." She encourages everyone to check out FTC.gov/Subscribe. Report suspicious MLM activities to the FTC, they use the reports every day! In the Q&A she said to mention what documents, videos, recordings, etc you have. She clarified that their MLM and Pyramids Scheme data is grouped together. The FTC encourages consumers in the case of MLMs to do careful business planning.
3. Irish regulator Paul Hanna mentioned there is a generally huge problem with consumer education. It has been evident this has been a problem with crypto scams, but some of those crypto scams some are heavily recruitment oriented (Pyramid Scheme.) They have searched property and pressed charges on wellness opportunity MLM in the last year (it's a 5 year prison offense in Ireland.) Witnesses seem reluctant to report MLM, victims go on to other MLMs. In Q&A he suggested all MLM have criminal conduct in the business model.
4. Marketing Professor (Munster Technological University) Maire O Sullivan notes that debt in general being marketed is a known problem. Lending Tree reported 1/3 females used credit card to get into MLM (1/10 actually got a loan!) 2/5 Americans report feeling pressure to buy MLM products in the last year. Microfinance has gone for profit raising questions to its efficacy to relieve poverty. Communities share credit pressuring individuals to repay. 
5. O Sullivan explained Grameen America focuses on micro loans to female entrepreneurs in the USA. Their CEO is an AVON LADY!!! 1/3 of the loans go to MLM! The other 2/3 of the loans "relieved hardship," but the MLM loans did not. 15-18% Grameen loans going to get women into more debt from MLM. Herbalife locations are clustered around Grameen offices. They include MLM distributorship as a business opportunity unlike most other lenders.
6. Economist Dr. Elizabeth Villagomez - mostly female MLM membership makes this a gender equality issue. Feminism is used to push their schemes. MLM are pitched as a way to reconcile work and family life. UNDP (United Nations Development Program) has funding from Mary Kay. The UN is being used to white-wash MLMs. Villagomez asks "is it just a platform to recurit Mary Kay members in the future?" Likewise Herbalife has joined the United Nations Global Compact, bragging that they are helping with world hunger, mentioning their 3rd World distributors. Amway is involved informally. She pointed out in the Q&A that there are probably human rights violations going on in MLM with the manipulation, etc.
7. Polish regulator Dariusz Lomowski: the core pyramid scheme is 3 Rs "Return Relies on Recruitment" (no promotion = no pyramid.) MMM was a pyramid scheme by a Russian who promoted it as a pyramid scheme. The pyramid promoters in Poland are called "Jumpers" as they go from scam to scam. The scams are called "Phoenix" or "Chameleon" because as soon as you shut it down, it reappears with a new appearance. One specifically recruits people with disabilities! In Q&A: he mentioned this is an unfair business to business practice issue in Polish government & law.

Day 2: June 11th, 2022

Part 4: how we got were we are today

1. Robert L. Fitzpatrcik (author of Ponzinomics) - no documentary has been made on MLM over all, and education is lacking on MLM. He has a new podcast for educators and parents and educators called Ponzinomics 101. MLM destroys lives all the way to divorce and suicide. MLM has gotten much worse, MLMs globally now do 1 trillion dollars in business, and historically law enforcement has avoid it. "MLM is a financially lethal virus with no vaccine." India has accused Amway as being a 7 billion dollar ponzi scheme, but no news organization in the USA is reporting it. Economic anxiety is the environment in which MLM thrives. Mothers is the fastest growing MLM demographic. Another issue is "mind control" and how effective this has been at manipulating the general public. Governmental corruption and collusion is another problem. MLM has expanded massively since it was first exposed. Law enforcement and government has failed on this, as they continue to imply MLM is legit, without so much as one example of a "good" MLM. Politics "not questions of fact" that account for lack of government action. There is no way that our government doesn't know, but government officials go into a revolving door for working for MLM. MLM is able to claim legitimacy. MLM tells the voters that all their problems are on them so government's role in their problems can be ignored. Walter Mondale in the 70's proposed law to outlaw MLM, but in the late 70's congress allowed Amway to legitimize endless chain schemes. It takes a lot of effort to legitimize MLMs. "We have seen enough evidence... politicians are influenced by money... while public opinion is a malleable thing... they are dancing to the tune of their donors... congress does not reflect us..." The MLM cartel threatens small countries to keep them from outlawing MLM outright, and the WTO is compliant in this. MLMs do not compete with each other, they are part of the same cartel that only compete with each other for MLM victims. 
2. Stephen Barrett, M.D. (creator of Quack Watch) - quack medical devices used by MLM would be simple for government to regulate but they don't. He has tried to get a distributorship in all medical MLMs, and all of the medical devices were useless. This creates medical harm when people do not get medical treatment they need. He knows a woman who recently died 4 years early because of reliance on one of these devices. Psychological, social, family and political harm also a results. Zyto is a quack device that scans your hand on your computer to get product recommendations using "galvanic skin response." Zyto got clearance from the FDA without the FDA knowing what the software actually does. "Healy" is another problematic MLM-related device. When it comes to quack devices MLM regulation, "case by case does not work." He wishes the FTC would revoke the rules that allow quack devices, and the FTC should force the franchise transparency rules on MLMs. On activism "you do the best you can, you push the buttons you can... you just have to realize there are many more competing messages... the internet is probably our best hope."
3. Jason Jones (private practice and now government lawyer) - we are in a bad situation with MLM. Finding solutions is complicated and not his area. Lack of enforcement vs lack of regulation. MLM companies are doing things that could be enforced criminally. Enforcement is very expensive/labor intensive. Every state and also federal laws have anti-fraud laws. The FTC gets 100,000 complaints a day and they don't have enough lawyers to go after the 1,000 MLMs out there, but FTC is very effective when they act. The FTC needs hundreds of more people to do their work better. This is comparable to the IRS being understaffed. Decreased mobility in USA culture creates conditions that the MLMs make the MLM anti-having-a-job pitch resonate. Pay inequality in corporate structures are part of those conditions. In the press it's hard to get anti-MLM posts through editors. There are pro-MLM in the media, often paid for by MLM money, then MLM refers to this to legitimize themselves to the MLM recruits. Related advertising is fraudulent, appearing on legit websites who don't screen their ads. Distributors use social media, which shows the "pestering" to the general public, but make it easier to target vulnerable populations. Since the beginning big powerful law firms have been willing to defend MLM. Lower level firms even bring defamation cases against MLM victims. MLMs put most of the liability on the distributors themselves. MLM uses cult techniques to sell fraudulent products to form a cartel of multiple MLMs, and they share information on how to manipulate effectively with each other. Self-help "tools industry" has spun off of MLM. "Blame congress... the enforcers are on our side... I hope we can do more lobbying... so much international MLM is exported from the United States... If congress doesn't act it will get worse." He wishes the leaders of Amway criminally prosecuted. Arbitration requirements should be removed from contracts. "There is not a lot of popular support for MLMs... call your congressman twice a week... they respond to pressure..." 
4. D. Anthony Miles - the business model is flawed. They dismiss negativity, avoid feedback and make fake friendships with victims. Just because you have a relationship with someone doesn't mean you should be in business with them. He has a classification of 6 MLMs victim types: follower, unemployed, ambitious, uneducated, intelligent, gullible, cult member, junkie, wannabe entrepreneur, church member and humanitarian. He has found Freud's "gullibility" model helpful. MLMs exploit family, friend and professional relationships. MLMs appeal to greed. The Small Business Association will not give money to people involved in MLM and see MLM as problem of people not having good business education. Relationships are permanently damaged by MLM, and there have been related suicides and murders.

Part 5: social media creator panel (Q&A opened my question about is business education [example market saturation] being used to prevent MLM participation.)

1. Tailor Leigh (the Antibot) - anti-MLM content should be entertainment, advocacy, education and activist. Stories of MLM victims are powerful. Education is the main goal of MLM content. Reaction to individuals has become more popular. She has addressed Gurus who provide motivation to keep people in MLM so the MLM victims will keep buying this kind of training. Gurus serve as ring leaders in the MLM community. Deep dives need to make sure things in the deep dives applies to all MLMs. Content creators should have calls to action in their content. "Not all my goals are anti-MLM related... I want to get more viewers to report to the FTC more often." Educating people on business will be effective. The public perception has shifted, 5 years ago few people knew MLMs existed, now young people understand that MLMs are scams. She uses "commercial cult" to describe MLM.
2. Dave Vaughan (on Twitter and Instagram) - agrees with Tailor, and it also therapeutic and empowerment. "It's silly to say your are anti-MLM... it's silly to say you are against crime..." Stages of grief applies to MLM participation. Should we critique individual behavior at all? This strategy is now more educational than it was a few years ago. International downlines need to be covered more. We need to look more at the DSA... for the consumers themselves who ARE the distributors. We need to look at residual problems called by the deceptions of MLMs. MLMs are not businesses themselves. Design free courses on manipulation and small business. Educators are starting to focus more on financial literacy. A later question brought up:  https://www.foolproofme.org/
3. Savvy (Savvy Writes Books) - it is all 4 (education, activism, advocacy and entertainment.) She tries to focus on the intersection of small business vs MLM scams. She is not just anti-MLM but pro small business. Critiquing individual behavior can show the lack of work life balance in MLM, and it's important to recognize that all MLMers are victims. It's also good to use deep dives to show how MLM is able to get away with their antics. We need to provide more information on how to work from home that is not MLM, more information on how a small business should operate. She will continue to work to keep MLM out of craft fairs, but also focusing on bad advice books the ultimately result in MLM participation. Educating public about differences between real business vs MLM is effective to prevent MLM. "Savvy Business Owner" is a related book she wrote. "An MLM won't do what it's doing if people don't sign up." The main thing we need to focus on is the core structure/flawed business model.
4. Monica Hayworth - it is a mix of all of these things. With reaction videos only get legal threats from individuals, but with deep dives you are more likely to get decease and desist orders. Reaction videos reveal MLM tactics. "Ad Hominem attacks to not help the cause at all." We need to find more solutions... come up with solutions for new moms... I want to spread more education... help new moms figure out what they can do instead of MLM.
5. Michelle Carpenter (mlmchange.org) - she got out of an MLM less than a year ago. Timing, platform and creators has a lot to do with entertainment vs. advocacy vs. education vs. actvism. There are different niches in this entertainment market. For critiquing individual MLM behavior, it is mostly entertainment. Deep dives are less polarizing and more helpful to people thinking about joining MLMs. We need content on how to prevent fraud and vocabulary often used by anti-MLM but aren't well understood (affinity fraud, love bombing, etc.) I want to make it easier to get involved and be self advocates. She is hopeful in that that MLM movement is accelerating quickly. She was recruited to MLM as a teenager.
6. Elaine Linga (Invested Lifestyle [Tagalog and English]) - it's mainly education and entertainment. She focuses on deep dives and goes for emotional reactions. Deep dives keep getting views, and the search engine delivers years later. She is harassed by MLMs outside of the USA that get dismissed because she's a USA citizen. There are more voices for MLM than against. More content need to use MLM tools against MLM... provide inspiration to speak up... if you are educated by someone you trust it will have more impact... educate the educators... one teacher she knows teaches her kids about MLMs... She wants to apply what she is learning about business and government professionally to anti-MLM... she may be going to law school... She made a video to encourage people to use their own safe business practices (like giving a 7 day break before making a commitment,) before starting any business, especially an MLM. In the Philippines it is the "Wild West" of MLM with no regulations. Greed is causing the MLMs to ask for $10,000 starter kits, so that public opinion may be turning on MLM there. MLMs know they are scamming people. Asking questions about MLM can get you terminated, and it results in them joining anti-MLM.

Part 6: Leaving an MLM

1. Talented Ladies Club: entertains people with educational business content, and her anti-MLM message is just part of that. She presented a great video presentation that I will be posted on YouTube, but ultimately encourages someone currently in MLM to make a simple profit & loss statement and to leave if they aren't making money.
2. Alanda Carter (Recovering Hunbot,) & Roberta Blevins (featured in LuLaRich,)- People need to know they not alone when they are leaving MLM. 79% of people felt shame in leaving their MLM, 98% would not do it again. 59% saw MLM as a scam they couldn't involve anyone else in.   42% said the thing that helped them the most was true stories of others in MLM.  82% said they had been given a step by step plan that could be exactly copied to become rich. People still in the MLM often feel bullied. Contracts have been cancelled for speaking out against others in the MLM being mistreated. Sam from LuLaRich has a court date coming up this summer. MLM leaves people psychologically damaged. We need to be patients with ourselves when we get out of MLM. All MLMs are basically authority cults. To get the FTC to look into a specific MLM, the squeaky wheel gets the grease.
3. Steve Hassan (creator of BITE model) - It is important to keep the door open to people within MLM. Possibility: get a financial advisor to "help" them in the MLM. "Identity interruption" is in the DSM 5. There can be negative psychological impacts after leaving a cult. He has an "influence continuum." Leaving cults is hard because of family and friends in the cults. We should respect that we are all a unique expression of God. Being too empathetic can lead to burnout.

(Note: there was a lot of problematic association of Trump supporters and LDS being in cults in this session. The day before Blye Pagon Faust tried to explain LDS beliefs about paying more tithing in order to get a higher rank in the LDS church* as making them feel like they had to "be successful," using the first use of the phrase "affinity fraud" in the conference. It seems like we LDS have a PR problem from hell here if we don't distance ourselves formally and specifically from MLM.)

My immediate take away from this conference:

Pyramid Schemes (PS) have a 90% chance of you losing money, while MLM have a 99% chance. PS don't fit the BITE model, but MLMs do. The FTC wants to pursue MLM for deceptive practices rather than for being a PS. PS rip you of one time, while MLM tries get you to be a "grinder" causing much more financial and social damage over your lifetime. PS don't use the UN and WTO to force their way into developing economies like MLMs do. Are the MLM Gurus right about MLMs not being Pyramid Schemes? Are MLMs instead something far worse than Pyramid Schemes?

*Fausts take on LDS tithing had good intentions, but from an insider POV doesn't hold water for the following reasons:

1. It's an all volunteer organization and it doesn't make much sense to want more responsibility in it. People who want to be promoted in the Church for social status are called things like "aspirerers" and are generally considered by most other members to not have a life.
2.  What does get you promoted within The Church is higher ranking church members feeling that you can be relied upon because you have: a stable and happy home life, a devout spouse, tolerance for giving up your free time for serving The Church, a love for people, popularity, good personal ethics, and good people skills. Income does play a factor in having a happy home life, so Faust is indirectly not-wrong here. This is why self-depreciating humor is so common with LDS is because we are NOT trying to get volunteered for greater responsibility within the organization. 
3. True story: when I was in the Skyway Ward of the Kent stake, I would play single-player Poker on my Linux netbook in the church lobby when waiting for others to get done with meetings. I successfully avoided any official church duties this way for years. Unfortunately they discovered that my gambling problem was fake AF and I ended up serving a year or two in the Elder's Quorum Presidency (a non-trivial time commitment.)