John M. Taylor, M.B.A., Ph.D.

Comments on the FTC’s Proposed Business Opportunity Rule
July 1, 2006 by

Attn: Federal Trade Commission Office of the Secretary, Room H-135 (Annex W) 600 Pennsylvania Avenue, NW Washington, DC 20580 RE: Business Opportunity Rule, R511993 Dear Sir/Madam: I am writing in response to the proposed New Business Opportunity Rule R511993, which is sorely needed to protect consumers from deceptive pyramid marketing schemes and chain selling schemes (for which I shall use the acronym “MLM” for “multi-level marketing”) that have defrauded millions of consumers of tens of billions of dollars—far more than are represented by official complaints received by the Commission—because victims rarely file complaints due to self-blame and fear of self-incrimination or consequences from or to their upline. (See below). My background and research applies directly to this disclosure rule. Let me explain why my comments, …

How to Identify a Product-Based Pyramid Scheme (“Recruiting MLM”)
February 12, 2003 by

Multilevel companies that are based on profits from recruiting rather than retailing should be regarded as pyramid schemes or “recruiting MLMs.” This article describes five ways to distinguish them from “retail MLMs” in which the company pays generously for retailing products without recruiting a large downline. “Recruiting MLMs” typically display five features: 1. Recruiting of participants is unlimited in an endless chain of recruiters recruiting recruiters. Ask whether unlimited recruiting is allowed. When a given market is saturated, and the program must move on to another location or introduce new products or divisions to continue, the opportunity for each new person to make money becomes less and less as the programs expands. 2. Advancement in a hierarchy of multiple levels of “distributors” is achieved by …