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  1. #1
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    The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Here is an excellent piece featured on nasdaq.com on MLM. I'll post the link, and I'll paste the conclusions with this post:

    http://www.nasdaq.com/article/the-py...eting-cm340786

    What can we conclude from the data?
    • Representative of Entire Industry: Relying on national data provided by the Direct Selling Association and on the validity of data from Amway, a private company, the three companies, Herbalife, Amway and Nu Skin, combined, constitute 10% of the entire MLM industry in the USA, 1.4 million distributors (households).
    • Only the Top of 1% Receive Livelihood Income Levels : Of the 1.4 million Americans who were enrolled as distributors with these three companies in 2012, only about 5,500 received, on average, what might be considered a livelihood, that is, gross income above $60,000 per year. The incomes of sectors of the MLM sales forces of the three companies analyzed are disclosed in ranges. Distributors in the highest range, which includes those with incomes above $50-60,000 per year, earned mean average incomes above $120,000. Actual net income of this group is unknown since costs are not disclosed. It is generally understood that costs rise significantly as do time commitments for those at the highest ends of MLM sales chains, so most of these highest earning distributors earn rather modest incomes. This group constitutes just 0.39% of total distributors, or about 1 in 250.
    • Only 1% of the Upper Sector of the Chain - Seeking Income - Gain Livelihood Income/Average. All others, on Average Show Net Losses: The "leader" and "active" sector - as defined by the companies themselves - comprise the upper 37% of the combined USA sales forces of the three companies. From that upper group, the majority of which are manifestly seeking "income" as distributors, not just "discounted" consumer products, only about 1% earn "livelihood" incomes, before costs are deducted.
    • Purchases Exceed Incomes on Average: The mean average income for the bottom 99% of the "leaders" and "active" participants is less than the average purchases per distributor for the entire sales channel (total purchases divided by total number of distributors). Average purchases for all distributors of the combined groups is $1,578 per year while the mean average income for the lower 99% of "leaders" and "actives" is $1,164. Presumably, the upper sector purchases more than the overall average, but none of the companies reveal average purchase volumes per level.
    • Downline Purchases, which Serve as the Basis for Upline Incomes Are Incentivized: All three companies offer financial incentives for distributors to buy products and all have quotas and threshold incentives offering higher rewards based on total volume that includes personal purchases . Moreover, all commissions are based on the purchases , not sales, of the chain, including one's own purchases. Purchasing products is an integral aspect of the pay plan and cannot be divorced from the incentives, rewards and restrictions.
    • Concentrated Money Transfer: All three companies use complex, virtually indecipherable pay formulas that result in the transfer the majority of commission on all aggregate sales to the top 1%. In aggregate, 54% of all commissions paid on all sales were transferred to the top 1%, making average profit to the bottom 99% virtually impossible. In actual dollar figures for the top 37%, the "active/leader "sector, 99% of that group has a mean average gross income (before costs) of $22.38 a week in commissions. The top 1% tier of that sector averaged $128,643 per year.
    • No Retail Sales Profit: Based on average purchase levels, (total USA annual revenue divided by total number of USA salespeople) the maximum gross retail profit available to all distributors on average is about $13 a week, before all selling costs, and assuming that 100% products are sold at suggested retail prices, which is exceedingly unrealistic. This is estimated by assigning a projected 30% retail profit on purchases. The actual retail profits earned by distributors, if any, would be less, to allow for sales below suggested retail price, the use of products for samples or self-consumption. The data indicate there is no viable retail sales income opportunity .
    • No Evidence of Significant Retail Sales: No data is available that show any significant retail sales activity, indicating that the income of the top 1% is sourced primarily from the internal inventory purchases of the bottom 99% whom they recruited in a closed market without an external retail sales revenue source.
    • Churn/Attrition: The data does not reflect the attrition and recruitment of distributors during the course of the year. This data is not provided by any of these companies. Using typical MLM industry experience of 50-80% annual turnover among distributors, average incomes would be much lower.
    • Saturation: All three companies compete with each other for recruits and all sell beauty and diet products. Aggregate data on the total number of distributors for these three companies show only about 100 households per salesperson left in America to sell to or recruit (fewer households if attrition is taken into account).[ 35 ] Market saturation has been reached for the vast majority of existing distributors
    MLM's Mission Statement:

    "The primary product is opportunity. The strongest, most powerful motivational force today is false hope."

    "Almost everyone is not going to learn the skills and use them consistently over time, you would be better off joining Costco" -Dank111

  2. #2
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Reposting these, churn rate and saturation, two things that pro-MLM try to minimize or explain away:

    • Churn/Attrition: The data does not reflect the attrition and recruitment of distributors during the course of the year. This data is not provided by any of these companies. Using typical MLM industry experience of 50-80% annual turnover among distributors, average incomes would be much lower.
    • Saturation: All three companies compete with each other for recruits and all sell beauty and diet products. Aggregate data on the total number of distributors for these three companies show only about 100 households per salesperson left in America to sell to or recruit (fewer households if attrition is taken into account).[ 35 ] Market saturation has been reached for the vast majority of existing distributors
    MLM's Mission Statement:

    "The primary product is opportunity. The strongest, most powerful motivational force today is false hope."

    "Almost everyone is not going to learn the skills and use them consistently over time, you would be better off joining Costco" -Dank111

  3. #3
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by BoxAlarm126 View Post
    Here is an excellent piece featured on nasdaq.com on MLM. I'll post the link, and I'll paste the conclusions with this post:

    http://www.nasdaq.com/article/the-py...eting-cm340786

    What can we conclude from the data?
    • Representative of Entire Industry: Relying on national data provided by the Direct Selling Association and on the validity of data from Amway, a private company, the three companies, Herbalife, Amway and Nu Skin, combined, constitute 10% of the entire MLM industry in the USA, 1.4 million distributors (households).
    • Only the Top of 1% Receive Livelihood Income Levels : Of the 1.4 million Americans who were enrolled as distributors with these three companies in 2012, only about 5,500 received, on average, what might be considered a livelihood, that is, gross income above $60,000 per year. The incomes of sectors of the MLM sales forces of the three companies analyzed are disclosed in ranges. Distributors in the highest range, which includes those with incomes above $50-60,000 per year, earned mean average incomes above $120,000. Actual net income of this group is unknown since costs are not disclosed. It is generally understood that costs rise significantly as do time commitments for those at the highest ends of MLM sales chains, so most of these highest earning distributors earn rather modest incomes. This group constitutes just 0.39% of total distributors, or about 1 in 250.
    • Only 1% of the Upper Sector of the Chain - Seeking Income - Gain Livelihood Income/Average. All others, on Average Show Net Losses: The "leader" and "active" sector - as defined by the companies themselves - comprise the upper 37% of the combined USA sales forces of the three companies. From that upper group, the majority of which are manifestly seeking "income" as distributors, not just "discounted" consumer products, only about 1% earn "livelihood" incomes, before costs are deducted.
    • Purchases Exceed Incomes on Average: The mean average income for the bottom 99% of the "leaders" and "active" participants is less than the average purchases per distributor for the entire sales channel (total purchases divided by total number of distributors). Average purchases for all distributors of the combined groups is $1,578 per year while the mean average income for the lower 99% of "leaders" and "actives" is $1,164. Presumably, the upper sector purchases more than the overall average, but none of the companies reveal average purchase volumes per level.
    • Downline Purchases, which Serve as the Basis for Upline Incomes Are Incentivized: All three companies offer financial incentives for distributors to buy products and all have quotas and threshold incentives offering higher rewards based on total volume that includes personal purchases . Moreover, all commissions are based on the purchases , not sales, of the chain, including one's own purchases. Purchasing products is an integral aspect of the pay plan and cannot be divorced from the incentives, rewards and restrictions.
    • Concentrated Money Transfer: All three companies use complex, virtually indecipherable pay formulas that result in the transfer the majority of commission on all aggregate sales to the top 1%. In aggregate, 54% of all commissions paid on all sales were transferred to the top 1%, making average profit to the bottom 99% virtually impossible. In actual dollar figures for the top 37%, the "active/leader "sector, 99% of that group has a mean average gross income (before costs) of $22.38 a week in commissions. The top 1% tier of that sector averaged $128,643 per year.
    • No Retail Sales Profit: Based on average purchase levels, (total USA annual revenue divided by total number of USA salespeople) the maximum gross retail profit available to all distributors on average is about $13 a week, before all selling costs, and assuming that 100% products are sold at suggested retail prices, which is exceedingly unrealistic. This is estimated by assigning a projected 30% retail profit on purchases. The actual retail profits earned by distributors, if any, would be less, to allow for sales below suggested retail price, the use of products for samples or self-consumption. The data indicate there is no viable retail sales income opportunity .
    • No Evidence of Significant Retail Sales: No data is available that show any significant retail sales activity, indicating that the income of the top 1% is sourced primarily from the internal inventory purchases of the bottom 99% whom they recruited in a closed market without an external retail sales revenue source.
    • Churn/Attrition: The data does not reflect the attrition and recruitment of distributors during the course of the year. This data is not provided by any of these companies. Using typical MLM industry experience of 50-80% annual turnover among distributors, average incomes would be much lower.
    • Saturation: All three companies compete with each other for recruits and all sell beauty and diet products. Aggregate data on the total number of distributors for these three companies show only about 100 households per salesperson left in America to sell to or recruit (fewer households if attrition is taken into account).[ 35 ] Market saturation has been reached for the vast majority of existing distributors

    Oh dear, oh dear....same old crap regurgitated again and again. This is written by an anti MLMr from seekingalpha and if you have spent any time there you'll see its full of people who know little about the subject of MLM.
    "People are not interested in your product or your business; they are interested in solving their own problems." -- James Dillehay, Entrepreneur and Author

  4. #4
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by ChrisDoyle View Post
    Oh dear, oh dear....same old crap regurgitated again and again. This is written by an anti MLMr from seekingalpha and if you have spent any time there you'll see its full of people who know little about the subject of MLM.
    I noticed you are unable to refute even one of the points.
    Originally Posted by nomaxim
    Sorry there ''ohein56', but it appears that 'Joecool44' does not have the position that you envision on this topic.

    'Joecool44' has, as a matter of routine, refuted most of your accusations
    Quote Originally Posted by Jax74 View Post
    Some people have the ability to think critically, some do not. ohein obviously doesn't.

  5. #5
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by Joecool44 View Post
    I noticed you are unable to refute even one of the points.
    Done it a million times on here over the years....same points over and over and over and over again.
    "People are not interested in your product or your business; they are interested in solving their own problems." -- James Dillehay, Entrepreneur and Author

  6. #6
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by ChrisDoyle View Post
    Oh dear, oh dear....same old crap regurgitated again and again. This is written by an anti MLMr from seekingalpha and if you have spent any time there you'll see its full of people who know little about the subject of MLM.
    nasdaq.com saw fit to feature it, and I see that you lack the ability to counter the conclusions with real data of your own.

    The ball's in your court
    MLM's Mission Statement:

    "The primary product is opportunity. The strongest, most powerful motivational force today is false hope."

    "Almost everyone is not going to learn the skills and use them consistently over time, you would be better off joining Costco" -Dank111

  7. #7
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by ChrisDoyle View Post
    Done it a million times on here over the years....same points over and over and over and over again.
    Some hard data, not generalizations and personal anecotes
    MLM's Mission Statement:

    "The primary product is opportunity. The strongest, most powerful motivational force today is false hope."

    "Almost everyone is not going to learn the skills and use them consistently over time, you would be better off joining Costco" -Dank111

  8. #8

    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by ChrisDoyle View Post
    Oh dear, oh dear....same old crap regurgitated again and again. This is written by an anti MLMr from seekingalpha and if you have spent any time there you'll see its full of people who know little about the subject of MLM.
    If you notice at the bottom one of the co-authors is Robert Fitzpatrick. The anti-mlm crowd really need to get some new sources. If all they can do is trot out Taylor and Fitzpatrick they won't be making any headway.

  9. #9
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by noagenda View Post
    If you notice at the bottom one of the co-authors is Robert Fitzpatrick. The anti-mlm crowd really need to get some new sources. If all they can do is trot out Taylor and Fitzpatrick they won't be making any headway.
    Its the same stuff from him and his cohorts that's been doing the rounds for years and years.......no one of any worth, such as in court, has ever taken any notice of it.
    "People are not interested in your product or your business; they are interested in solving their own problems." -- James Dillehay, Entrepreneur and Author

  10. #10
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by noagenda View Post
    If you notice at the bottom one of the co-authors is Robert Fitzpatrick. The anti-mlm crowd really need to get some new sources. If all they can do is trot out Taylor and Fitzpatrick they won't be making any headway.
    But the pro MLM crowd has yet to refute the data with actual data of their own.
    Originally Posted by nomaxim
    Sorry there ''ohein56', but it appears that 'Joecool44' does not have the position that you envision on this topic.

    'Joecool44' has, as a matter of routine, refuted most of your accusations
    Quote Originally Posted by Jax74 View Post
    Some people have the ability to think critically, some do not. ohein obviously doesn't.

  11. #11
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by BoxAlarm126 View Post
    Here is an excellent piece featured on nasdaq.com on MLM. I'll post the link, and I'll paste the conclusions with this post:
    Mmm, sourced from the cesspool of misinformation otherwise known as Seeking Alpha.

    Brooks article is full of so much BS I don't know where to begin. I'll just start with some of what you quoted.

    [*] [I]Only the Top of 1% Receive Livelihood Income Levels : Of the 1.4 million Americans who were enrolled as distributors with these three companies in 2012, only about 5,500 received, on average, what might be considered a livelihood, that is, gross income above $60,000 per year.
    (1) This is a part-time business. Brooks is comparing a part-time income earned on top of a households normal full-time incomes - in other words, it's additive, not a replacement.

    (2) The median household income in the US in 2013 was $51,939. Brooks arbitrarily picks a figure of $60,000, more than 15% higher than the household median income. More than 60% of American household earn *less* than what Brooks considers a "livelihood income". Why did he pick $60K?

    (3) If we take Amway's IDS and data from the Pokorny lawsuit, Amway North America alone has around 4000 people qualifying at Q-12 Platinum or higher. Q-12 Platinums average over $57000/year from Amway income alone, significantly higher than the US average median income. We now have some insight in to why Brooks picked $60,000 - he likely wanted to arbitrarily exclude thousands of people earning significant incomes.

    Brooks is clearly being, at best, misleading.

    The incomes of sectors of the MLM sales forces of the three companies analyzed are disclosed in ranges. Distributors in the highest range, which includes those with incomes above $50-60,000 per year, earned mean average incomes above $120,000. Actual net income of this group is unknown since costs are not disclosed.
    I've been looking at IDS's for years. There's no way to do these calculations without an awful lot of guesswork.

    It is generally understood that costs rise significantly as do time commitments for those at the highest ends of MLM sales chains
    No, it's generally claimed by anti-mlmers, without any evidence.

    Purchases Exceed Incomes on Average:
    So what?

    Downline Purchases, which Serve as the Basis for Upline Incomes Are Incentivized:
    Yes, you get volume discounts. Whoopee.

    Concentrated Money Transfer: All three companies use complex, virtually indecipherable pay formulas that result in the transfer the majority of commission on all aggregate sales to the top 1%.
    Utterly false. In Amway, for example, Platinums and above (the 1%ers) share less than a third of the total bonus pool (less than 10% of base wholesale price). Below platinums share in the other two thirds, plus retail sales profit.

    had enough, can't even be bothered with the rest, which just gets more and more absurd.

    New to scam.com? This is what you can expect from MLM critics in support of their claims ....


    Why the f-u-c-k do you need evidence all the time? - Zapticon
    You know that I don't provide proof of my claims - Once Upon A Time
    I have the information but I'm not posting it - Joecool


  12. #12
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by Joecool44 View Post
    But the pro MLM crowd has yet to refute the data with actual data of their own.
    So you'd be fine if we just make up data to refute their made up data?

    New to scam.com? This is what you can expect from MLM critics in support of their claims ....


    Why the f-u-c-k do you need evidence all the time? - Zapticon
    You know that I don't provide proof of my claims - Once Upon A Time
    I have the information but I'm not posting it - Joecool


  13. #13
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by IBOFightBack View Post
    So you'd be fine if we just make up data to refute their made up data?
    You make up a lot of stuff. But you've yet to refute things with actual data.
    Originally Posted by nomaxim
    Sorry there ''ohein56', but it appears that 'Joecool44' does not have the position that you envision on this topic.

    'Joecool44' has, as a matter of routine, refuted most of your accusations
    Quote Originally Posted by Jax74 View Post
    Some people have the ability to think critically, some do not. ohein obviously doesn't.

  14. #14
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by Joecool44 View Post
    You make up a lot of stuff. But you've yet to refute things with actual data.
    I just did.

    New to scam.com? This is what you can expect from MLM critics in support of their claims ....


    Why the f-u-c-k do you need evidence all the time? - Zapticon
    You know that I don't provide proof of my claims - Once Upon A Time
    I have the information but I'm not posting it - Joecool


  15. #15
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by IBOFightBack View Post
    (3) If we take Amway's IDS and data from the Pokorny lawsuit, Amway North America alone has around 4000 people qualifying at Q-12 Platinum or higher. Q-12 Platinums average over $57000/year from Amway income alone, significantly higher than the US average median income. We now have some insight in to why Brooks picked $60,000 - he likely wanted to arbitrarily exclude thousands of people earning significant incomes.

    Brooks is clearly being, at best, misleading.



    I've been looking at IDS's for years. There's no way to do these calculations without an awful lot of guesswork.



    No, it's generally claimed by anti-mlmers, without any evidence.



    So what?



    Yes, you get volume discounts. Whoopee.



    Utterly false. In Amway, for example, Platinums and above (the 1%ers) share less than a third of the total bonus pool (less than 10% of base wholesale price). Below platinums share in the other two thirds, plus retail sales profit.

    had enough, can't even be bothered with the rest, which just gets more and more absurd.
    Looks like you're confirming that about 1% of IBOs make a decent income in Amway.
    Originally Posted by nomaxim
    Sorry there ''ohein56', but it appears that 'Joecool44' does not have the position that you envision on this topic.

    'Joecool44' has, as a matter of routine, refuted most of your accusations
    Quote Originally Posted by Jax74 View Post
    Some people have the ability to think critically, some do not. ohein obviously doesn't.

  16. #16
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    Re: The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing

    Quote Originally Posted by noagenda View Post
    If you notice at the bottom one of the co-authors is Robert Fitzpatrick. The anti-mlm crowd really need to get some new sources. If all they can do is trot out Taylor and Fitzpatrick they won't be making any headway.
    Data, figures, not a feeble attempt at discrediting the source.

    Data to oppose their findings please
    MLM's Mission Statement:

    "The primary product is opportunity. The strongest, most powerful motivational force today is false hope."

    "Almost everyone is not going to learn the skills and use them consistently over time, you would be better off joining Costco" -Dank111

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