Network marketing responsible for 20% of the world's millionaires?
Filed under: Ripoffs and Scams, Wealth, Fraud
On his website totalwellnessnetwork.com, Dr. Ladd McNamara extols the benefits of network marketing: "20% of all millionaires in the world made their fortune through the Network Marketing system," he writes.But if 20% of the world's millionaires got that way through multi-level marketing, they also apparently go that way through tax evasion. In a paper titled Who Profits from Multi-Level Marketing? Prepares of Utah Tax Returns Have the Answer, Consumer Awareness Institute President Dr. Jon M. Taylor wrote about his interviews with tax preparers about multi-level marketing:
A manager of H&R Block in northern Utah, told me that during his 25 years of doing over 12,000 tax returns a year between he and his group, they could not remember a single client who had reported a significant profit over any appreciable period of time in MLM! ... And a tax software developer, who dealt with thousands of tax preparers across the country, said he had asked about 100 of them if they had ever seen a profit reported from MLM participation. None had. This was out of a total of over a million tax returns ...
He goes on to suggest that his investigation demonstrated that the only people making money in multi-level marketing seem to be those who live in cities where the companies are headquartered: founders, executives and others who got into the system early.
Dr. McNamara gives no citation for the 20% figure and while I can find plenty of similar claims on other recruiting websites, I can't find any reference to any study of any kind demonstrating the methodology behind that figure! Where does it come from? I have no idea. Even network marketing guru John Milton Fogg says the claim is bogus: "Twenty percent of all the millionaires in America were not created through network marketing. By most accounts, as many as 90 percent of them were created through real estate, 90 plus 20 equals 110, and that kind of math would get an F in any school ..."
Oh, another quick thing about Dr. McNamara: Back in May of 2007, the Fraud Discovery Institute reported that his medical license was revoked in Ohio for "fraud, deception and misrepresentation."
Recent Posts
- Animals & Money: Palin's fiscal weakness for hunters (8/30/2008)
- Ask the Dolans: Should I re-address my estate planning documents when I move? (8/29/2008)
- Urgent safety matter: popular bassinet kills two infants (8/29/2008)
- Smithsonian's Museum Day - hundreds of local museums to offer free admission Sept 27th (8/29/2008)
- Are you ready for pay as you go car insurance? (8/29/2008)
Reader Comments (Page 1 of 1)
3-23-2008 @ 9:22PM
TerminatedRamp said...
The majority of those who made a lot of money in multilevel marketing did so by developing their own training material in which they sell to new recruits. They also make their money by recruiting hundreds of distributors and did so selling the belief that they can all make a lot of money. Virtually nobody in multilevel marketing gets rich by selling product alone. Sadly enough, 99% of those that join end up losing money.
As for the 20% figure you mention, Ladd McNamara has it all wrong. It is suggested that the IRS shows in 1984 that 20% of NEW millionaires did it through network marketing. It is also suggested that in 1994, 50% of NEW millionaires did it through network marketing. If this is true, would anyone like to guess at how many BILLIONS of dollars were lost by the 99.9% of distributors who lost money because they were defrauded by a pyramid scheme. Seems the FTC needs to get their act together..
Speaking of FTC, the new REVISED business opportunity rule received 17000 comments opposing the original rule. 17,000 accounts for about 0.1% of distributors in 2006 when the comments were submitted. This being the case, it may be that only those making any money felt they needed to defend their scheme. So out of 15,200,000 distributors, only 17,000 comments opposing. The FTC should have looked at it this way especially when most of those comments were Form letters and Template letters.
Not only that, but how could those that lost money and quit ever know about the original proposal and the comment period???
Anyway, you can bet that those supposed millionaires who are in multilevel marketing sure sent comments to protect themselves. Honest disclosure would collapse the majority of all MLMs. Deception is their only tool.
BTW, Ladd McNamara still refers to himself as DR. Ladd McNamara when he sends letters to USANA distributors. I guess once a doctor, always a doctor...
Reply
3-25-2008 @ 11:33AM
EmilyG said...
Ugh, I did a MLM business -- Pure Romance -- toward the end of college to make some extra money before graduating. It was awful. I had to spend so much money on the set-up kit, inventory, credit card processing, money management tools, shipping, etc., I'm pretty sure I actually lost money in the endeavor. The shipping was a total outrage -- they'd only use UPS ground, so even if you were only ordering one product for a customer at $8, you still had to pay a minimum of $15 for shipping, but the most you were supposed to charge the customer for shipping was $4. The woman who recruited me does it full-time and says she makes a nice living, but I have trouble believing her.
http://blogs.creditcards.com/emilyg.php
Reply
3-29-2008 @ 6:40PM
Jt said...
Some one should tell all the poor Keller Williams Real Estate Agents about this!
Reply
4-13-2008 @ 8:50PM
SDB said...
For starters - there are people making money in MLM and by selling products or services. Also, those who are making good money (over $100,000 a year) do not use
H & R Block to do their returns. I am an administrative assistant to a successful independent associate in Pre-Paid Legal and know what can be made in that business.
Reply