Posted by Guest article by Darren Mudd
As the USA increasingly resembles a mafia-inspired family-run business, we examine how one famous scam “industry” peddled its neo- liberalist idea of the American Dream to economic destruction.
The FTC’s mandate is simple: “Protecting the public from deceptive or unfair business practices and from unfair methods of communication through law enforcement, advocacy, research, and education.”
Why, then, are multi-level marketing (MLM) “opportunities” – pyramid schemes thinly veiled by overpriced products – still allowed to suck in, chew up, and spit out around 20 million Americans each year? With a 99% loss rate, and despite the Direct Selling Association’s bragging, it’s hard to fathom how the overall churn rate has not destroyed any and all credibility the “direct selling” market claims to have.
The question has been asked many times and the answer lies in a pivotal 1979 Federal Trade Commission (FTC) ruling that gave Amway and the entire MLM model a legal lifeline.
How the FTC’s Blunder Let MLMs Hijack the American Dream
In the Matter of Amway Corporation, Inc., et al. it was decided that Amway (the first big, well-known MLM that drew serious criticism and raised concerns over participants’ financial losses) did not fit the strict definition of a pyramid scheme.
The FTC’s definition of a “pyramid scheme” assumed it to be like a Ponzi scheme, operating in the manner Bernie Madoff’s “hedge fund” did, where money is taken from low-level investors and passed to the investors at the higher levels. The FTC’s definition of “pyramid scheme” made a clear distinction between pyramid selling and multilevel marketing (MLM). MLM, according to the FTC, is legal and therefore legitimate.
To its credit, the FTC did impose the “70% rule” on Amway, meaning at least 70% of sales were supposed to be made to customers outside the network, but in practice, was ignored. When I was recruited in 2006, it was made clear retailing was optional, since the real agenda was to get me to “buy from yourself” and have others do the same.
The FTC’s 1979 ruling acted as a rubber stamp. The distributors – whipped into a frenzy by high-level distributors revered as rock stars and making money hand over first via their cult seminars – descended upon every nook and cranny of society with a renewed sense of purpose. Their intention? To recruit huge downlines in the rhythmic march towards “financial freedom”.
From the viewpoint of the layperson, the American Dream was for sale. Amway had the methods to obtain it, and all those with a stake in the success of the company (and the “industry” of MLM) wore the 1979 FTC ruling like a loaded pistol on their belt.
Extortion and Money Laundering
The compensation schemes talked in terms of “bonuses” and “earnings” which were in fact “payments” with the product purchases wrapped in a proprietary currency system of points acting as a mask. The cash-points exchange rates could be fixed. Those who could sell to anyone outside the organisation could reasonably claim they were making legitimate sales, which back in the 50s and 60s, was the way of doorstep salespeople. Today, free-market retail competition is savage.
What anyone at the FTC fails to understand is that the products produced by Amway and peddled by so-called Independent Business Owners (IBOs) is a front for extortion. The products are overpriced, with the high margins on those products existing only so money can be converted to points, flow up the pyramid, and be converted back into cash in the pockets of the 1%. Those 1% are the original investors in their Ponzi organisation. The product could be anything. Soap powder. Buttons. Bottlecaps.
Add to the equation the separate – but very much interwoven – “training” organisations.
Corporate CULTure: How MLM “Training” Infiltrated Society
These organisations were never officially endorsed by Amway corporate in their marketing literature, but, behind closed doors, were acknowledged to be essential as part of motivating the IBO workforce. The high-level distributors (with titles such as Emerald and Diamond) sold functions and motivational seminars to aggressively maintain what is in fact a slave economy not so different from a feudal system. In feudal systems, peasants work the land, but rarely do they become lords, despite dreaming of a reality in which this is the case.
The unofficial motivational “tools” organisations had names like International Business Systems and Network 21, and, at least for Amway, had sprung up all over the world in a rather twee but equally-dangerous fashion. Amway later cracked down on the tools organisations and brought the motivation over to the corporate side – for a fee.
I distinctly remember attending a Sunday afternoon seminar in 2006. The upline Diamond was there to show The Plan. The excitement in the room was palpable, even giddy, and when the portly, balding, smiling Diamond finally strode onto the stage in an expensive suit, there was thunderous applause approaching Beatlemania levels. Surely there was more than an old FTC ruling at play here?
The Longer Con: Deregulation and the American Political Machine
The connection between Amway and Republican power circles stretches back to President Gerald Ford. From that point onward, the company’s founders cultivated deep ties with successive conservative administrations.
In January 1984, Amway co-founder Jay Van Andel took to the stage and introduced president Ronald Reagan for the “Spirit of America” rally in Atlanta, Georgia, who, addressing an adoring crowd, made remarks such as, “It’s people like you who show us the heart of America is good, the spirit of America is strong, and the future of America is great.”
Regan’s successful election in 1980 had ushered in a new age of right-wing conservatism and the anti-Communist rhetoric was often repeated in Amway motivational seminars.
Lobbying the President
Amway donated $2.5 million to the GOP in 1994. At the time, this was the largest corporate contribution to a political party on record. In 1996 Amway gave the San Diego tourist bureau $1.3 million [paywall] to help with coverage of the August Republican National Convention, and in 1997, Richard DeVos made an individual contribution of $1 million – the largest on record from a person.
George W. Bush called the posthumous Richard DeVos “an extraordinary American” and a “compassionate capitalist.” DeVos died in 2018, but as a lifelong Republican had shared many common beliefs with the former president. A 2013 article in The Hill revealed lobbyists, corporations and trade associations had made contributions totalling at least $7.5 million to George W. Bush’s post-presidential projects, among them being Amway’s parent company Alticor, reported to have given $5 million to the George W. Bush Foundation.
In 2024, the DeVos family gave $2 million to Elon Musk’s pro-Trump political action committee, among them, Betsy and Dick.
Trump Tower, Trump Pyramid
Trump’s MLM ties began with his tenure as spokesperson for ACN between 2005 and 2015 in an $8.8 million lifeline deal that saved him from financial ruin [paywall]. Sensing a cash cow, he began looking for an “opportunity” that he could merge with the Trump brand. He found one.
Ideal Health was founded in 1997 by two brothers and a friend who, in a moment of dollar-eyed clarity, had seen the money-making potential of a different MLM – Nu Skin. However, by 2004, and following an FTC investigation around complaints from Ideal Health distributors over false product claims, the company began looking for a way to improve its image through a partnership. That deal came to fruition at Trump Tower in 2008 with the now-president recalling, “We hit it off. I checked into their past, and they were solid people.”
The Art of the Fraud
Although the product line remained the same, Ideal Health rebranded as Trump Network and launched in 2009 with packaging adorned in the Trump family crest. The adopted marketing angle centred around “rescue and recovery” for those who had suffered the effects of the 2007–2009 recession. For people who had lost everything and needed a beacon of hope, it was strange that an MLM scheme touted by a real estate developer and television personality was positioned as the answer. Trump was peddling his scammy version of the New Deal before he ever became president.
Beyond tariffs, today’s nepotism doesn’t even feign subtlety. Power is handed to loyalists, like Betsy DeVos – wife of Dick DeVos – who, despite zero relevant experience, was appointed Secretary of Education during the first Trump administration. Elon Musk funded the Trump campaign and then theatrically slashed government regulations, clearing paths for unchecked and possibly illegal profiteering under the guise of “efficiency”. So, with MLM firmly under the skin of American politics, where does that leave those who are sucked in and shaken down?
The Business of Belief: Too Powerful for the Rule of Law
As one Reddit user puts it: Suing giant corporations is scary and expensive. Individuals are most likely to see success in reclaiming lost money through class action lawsuits. For example, the 2013 Dana Bostick v. Herbalife International of America Inc., et al. case resulted in a $17.5 million settlement, although the plaintiffs were apparently disappointed with the sum.
Encouragingly, in 2016, the FTC sued Herbalife but the case was settled out of court in exchange for business restructuring and consumer compensation of $200 million. This outcome was eerily similar to the UK’s Department of Trade and Industry (DTI) ruling in 2007 that forced Amway, among other things, to rename it’s long-held “IBO” distributor title to “ABO” (Amway Business Owner).
In 2019 the Trump brand once again found itself in disrepute when the 2018 federal class-action lawsuit Doe et al. v. The Trump Corporation et al., accused the president and his children of fraud, false advertising and unfair competition in three MLMS: the Trump Network, the Trump Institution, and the American Communications Network (ACN). In 2024, the case was thrown out by a federal judge who suggested it be refiled in state courts. Nothing has happened so far.
MLM Police Force Participation
It seems the MLM phenomenon has infiltrated police forces. The stressful reality of modern policing, combined with the low public regard, has driven many officers toward the same kinds of fraud that sometimes tempts teachers and other public servants.
With no easy way to replace their salary and a quiet desperation for something different, junior officers (or even those seeking early retirement) are often driven into the arms of any number of multi-level “businesses”. Besides annoying their own colleagues with clumsy recruitment pitches, they slowly drain their own finances while voluntarily ceding their critical thinking. It’s like watching all the episodes of Columbo you’d find uncomfortable if they actually existed – the episodes where our hero failed to spot the crime and actually ended up working for the villain.
David Brear’s long-established blog – dedicated to revealing the ugly truth lurking behind the Big “MLM Direct Selling” Lie – took aim at Utility Warehouse and one particular recruit who made a Freedom of Information request to the UK’s West Yorkshire police. The rabbit hole of correspondence confirmed what was already known: many serving police officers believed they had found a way to make additional income. “When I was still trying to explain to my mother that Amway was a cult and a fraud, she laughed at me and boasted that this was nonsense.” says David, recalling a conservation from the 1990s.
“All because there were several local police officers in my brother’s group. At the same time, I was told by someone who had briefly been a ‘distributor,’ about an entire Amway group in Leeds that comprised 15 officers from one sub-police station. When these ‘Ambot’ coppers were pointed out at a meeting, they all rose out of their seats and acknowledged the applause and cheers from the Ambot crowd.”
The Cult Next Door
The few organisations with real clout (Federal Trade Commission, US Securities and Exchange Commission, Consumer Financial Protecion Bureau) are not willing to seriously dismantle the “not a pyramid scheme” script that has snaked its way around the ankles of politicians, regulators, participants and the indifferent. The Trump administration’s agenda of deregulation threatens to unleash yet more chaos, with the judiciary itself a target. The road to DOGE was paved with pyramid schemes in the pursuit of impunity beloved by the MAGA movement.
The MLM phenomenon is so well established and so well performed (think folksy housewives and the “Avon calling” catchphrase) that pointing out the economic nonsense of the business model will be met either with a maddeningly-obtuse overly-patient nice guy Ned Flanders shtick, or a low-class culture war barrage of insults. Whether your sparring partner is nice or nasty, you’ll be thought a “dream stealer”, “jealous”, a “loser” and so on. Besides, Amway would go on to buy the Orlando Magic basketball franchise in 1991 and, in 2008, as part of a 4-year $1.5 million deal, renamed the stadium “Amway Center”. It was a flex. A talking point. The average Joe had been normalised into accepting a pyramid scheme as part of the fabric of life.
The Cult on Campus
MLM has infiltrated every part of society. As a naïve 20-year-old recruit living in a student city, I met people from all walks of life, and once signed up and attending seminars designed to motivate Amway IBOs, saw a surprising number of people my age receiving recognition for reaching the 21% level. Apparently, that represented good earnings, but no one ever showed proof of income. And what about their profit versus revenue? As was the cult’s etiquette, it would have been rude to ask.
The Amway pyramid scheme of 2006/07 looks a lot different to today’s incarnation, yet the same types of people are involved: those at some kind of crossroads, untethered and possibly feeling reckless. Certainly, the British contingent saw less bragging and Stratton Oakmont-style chest beating and a more reserved display of quiet confidence, false modesty and self-respect … yet always underscored by self-delusion.
My own upline contained teachers, doctors and architects. To me, and on that basis, it was inconceivable that this could be fraud. At the motivational functions, I’d be introduced to people from high society who’d decided their career was not good enough and that this home shopping business was the only way forward. Gainfully employed surgeons, lawyers and dentists had been brainwashed into believing that a J.O.B. (“just over broke” – a common refrain) was unacceptable.
The Cult in Schools, Law Enforcement, Hospitals, Homes and Government
Let’s time travel. It’s 2020. I’m wearing a mask. I’m at a skin clinic trying to get rid of red acne marks. The clinic is one run by private aestheticians (not doctors) wearing white coats, talking in medical terms and trying to sell me eye-wateringly-priced products of dubious origin without proof of efficacy.
In the lobby of one clinic, I see Forever Living leaflets scattered on a table. Each leaflet somehow looks like a loaded gun in what should be a safe space. My skin laser tech, playing the role of trusted adviser, cannot resist firing off passive aggressive sales pitches I’d heard many times. It gets to the point where she is literally shouting at me. She is insisting that laser will not help me. Only her topical products will.
Like a virus, MLM has spread unchecked. It is enriching elite influencers and burrowing deep into public and private institutions. It uses Big Brother-style propaganda and old-school copywriting tactics – Pain, Agitation, Solution (PAS) or Fear, Uncertainty, Doubt (FUD) – to promote itself with vending machine-style religiosity.
At another clinic, I fill out questionnaires ham-fistedly asking “how bad” I feel about my skin.
The Legal Scam Exploiting Millions Worldwide
This is a new age religion. It took a few hundred years, but a late-capitalist theology has arrived and is somehow barking up the wrong tree. As pointed out on the PonziNomics 101 podcast, Catholic indulgences were a form of religious fraud that told believers, “When a penny in the coffer rings, a soul from Purgatory springs.” In other words: salvation – like MLM membership – is for sale.
So, we now know the MLM Big Lie stakeholders include members of the police, the education system, the health system and the White House. Millions of MLM-programmed Manchurian Candidates home and abroad have been activated and are obfuscating the truth through inaccurate jargon handed to them by the FTC. They are happily committing Lemming-like financial suicide for the benefit of their feudal lords while uttering self-motivating platitudes to justify their decision in doing so.
Whether they accrue great wealth or bleed out, they all believe the show must go on. They believe “success” is just around the corner… even when that corner is a cliff edge.