how pyramid schemes work

Multi-Level Marketing Scams

Have you ever been approached to learn about a great “business opportunity”? I have been. Over and over again. For more than forty years! The names of the groups change but they are all pretty much the same. I have also been asked to help a family member or friend caught up in a Multi-Level Marketing (MLM) scam. MLMs are pyramid schemes that focus on recruiting others to recruit others and statistics show that 99% of people involved lose money. Warning, you can’t make millions of dollars part-time. Common sense, yes? However, recruiters are very convincing. They use deception in all its forms (withholding vital information, distorting information and outright lying) to ensnare people who have not learned about cult mind control techniques.

H.R. 3409: Anti-Pyramid Promotional Scheme Act of 2017

Enter the latest scam. U.S. government bill H.R. 3409: Anti-Pyramid Promotional Scheme Act of 2017 which sounds like it is against MLMs, right? Wrong! It actually seeks to legalize them. Confused? I would be, too, except I had an expert explain it to me. Indeed, we do live in an age of such deception, greed, and crime and legislation, meant to help citizens, can be presented in such a way that it harms them instead. Ever hear of the Direct Selling Association? They are the lobbying organization for MLMs. They are promoting this bill. The main sponsor of H.R. 3409 was Representative Marsha Blackburn and she was just elected to be one of Tennessee’s Senators. This raises the concern that even if H.R. 3409 dies in the current Congress, Blackburn will introduce a similar bill in the Senate next year.

How do I know that H.R. 3409 is a scam? I interviewed attorney Douglas Brooks who is an expert on MLMs and has represented victims for many decades. In the included video, Doug explains how things are not how they appear to be. He recommends that everyone go to the “Pyramid Legalization Act” at https://www.govtrack.us/congress/bills/115/hr3409 to see if one of their Representatives sponsors this bill. If their name is there, one might surmise they have been the recipient of donations (at least to their election campaigns). There are 48 cosponsors (34 Republican, 14 Democratic)  and we ask you to contact them and urge them to withdraw their support for the bill!

The House subcommittee where the bill has been assigned: https://www.govtrack.us/congress/committees/HSIF/17.  Please contact your representative and urge them to vote against the bill!

Together with Bruce Craig (retired Assistant Attorney General from Wisconsin) and Robert Fitzpatrick (expert on pyramid schemes and MLM), Brooks has drafted a white paper explaining why H.R. 3409 would help pyramid schemes and harm consumers. He would be happy to send a copy of the white paper to anyone who is interested. Brook’s email is dmbrooks@brooks-law.net

Podcasts: The Dream and Uncover: Escaping NXIVM

The Dream podcast is taking a deep dive into MLM, including interviews with current and former MLM distributors, experts on MLM (including Robert Fitzpatrick), former FTC and state regulators, and economists. New episodes come out every Monday. Brooks has assisted the producers and was even interviewed for several episodes.

Brooks represented victims of Consumers Buyline–a now-defunct MLM started by NXIVM founder Keith Raniere currently sitting in jail on charges of sex trafficking and forced labor. Twenty Attorneys General shut down the group and forbade Raniere from ever operating again. However, he created a MLM-style group that recruited people to be coaches.  If you wish to know more check out the podcast entitled Uncover: Escaping NXIVM.  It delves into the “DOS” group within NXIVM. The core of the podcast is a series of interviews with Sarah Edmondson, a former high-level NXIVM and DOS recruiter who became a whistleblower. Brooks helped the producers with background information on Raniere and his MLM, Consumers Buyline.

Additional Reading

www.pyramidschemealert.org (Robert Fitzpatrick’s website)
www.mlm-thetruth.com (the late Jon Taylor’s website)
Video interview I did in 2014 with MLM experts Robert Fitzpatrick and Douglas Brooks
A book by former Amway MLM insider, which is online for free as a pdf

Video Interview:

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Steven Hassan

About the Author: 

Steven Hassan M.Ed. LMHC, NCC has helped thousands of individuals and families recover from undue influence (mind control). With over 40 years of experience, he is sought after as one of the foremost authorities on undue influence and controlling groups and individuals. Steve understands the subject from a unique perspective as both a former cult member and as a clinical professional.

Steven is the Founding Director of the Freedom of Mind Resource Center, a coaching, consulting, and training organization dedicated to supporting individuals to have the freedom to think clearly and to freely consider how they want to live their lives.  Steven pioneered a breakthrough method called the Strategic Interactive Approach (SIA), an effective and legal alternative for families to help cult members.  The SIA teaches family and friends how to strategically influence the individual involved in the cult.

Contact Freedom of Mind to schedule a consultation or to learn about offered services.

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