Pyramid Scheme Alert

2002 Archive

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NEWS ARCHIVE 2007

England Wants to Kick Amway(Quixtar) out of the Country
December, 2007

The largest and oldest of US-based MLMs, Amway/Quixtar, is on trial now in the UK for operating a deceptive fraud. A Michigan newspaper where Amway is based wrote that the UK fraud prosecution "could be felt globally" in Amway's business. Amway said it also is conducting a major review of its practices worldwide and has sped up a planned reorganization of its operations. The Times of London reported government findings that 71% of Amway's UK salespeople earned no commissions at all; of the 30% that earned some commission, 2/3rds of them earned on average just $27 (£13.53) a year. The government claims Amway's recruitment program is based on deception and should be shut down "in the public interest" More…

Canadian Pigeon Scheme Snares Hundreds of Farmers
December, 2007
Hundreds of family farmers in Canada and the USA, many of them in Amish and Mennonite religious communities, have made large investments in an income scheme based on breeding pigeons. The trouble is that nobody knows where the money would come from for the farmers to sell the pigeons they are breeding. More…

Veteran Insiders Charge Amway/Quixtar Is a Pyramid Recruitment Scam
August, 2007

A group of Amway/Quixtar's largest and most senior distributors have confirmed what whistle blowers, attorneys and some journalists and business analysts have been reporting for years -- that Amway is a fraud, a pyramid scheme, a worldwide scam.
The charges – which are effectively confessions – come from Amway's ultimate insiders, its "top guns", wealthy distributors with downlines that span the world and have worked with Amway's founders for decades. The distributors have filed a class action lawsuit. More…

Texas Attorney General Charges, MLM Mannatech, with Illegal Practice, Seeks Injunction
July, 2007

The Texas Attorney General claims that Mannatech, a multi-level marketing (MLM) company – very similar in type of product, company size, business model, and publicly traded status to Usana Health Science – is deceiving and misleading consumers with its product claims.
Like Usana, Mannatech sells products it says will improve health. However, the law strictly prohibits these companies from making claims of cures of any illnesses. Those who attend meetings report many blatant claims and testimonials about “cures.” More…

FTC Charges MLM, Burnlounge, Is an Illegal Pyramid Scheme, Goes to Court to Shut Down Operations
June, 2007

The United States Federal Trade Commission (FTC) has filed a complaint in the U.S. District Court for the Central District of California against BurnLounge, Inc. and is seeking a permanent halt to the illegal pyramid practices as well as other illegal practices alleged in the complaint. Thousands of consumers are affected, many in the music business. More…

Mary Kay Distributors Expose Abuses
February, 2007

After years of silence, Mary Kay distributors are now coming forward forcefully and openly to report abuses of inventory loading, pressure to recruit other MK salespeople, large financial losses and a company culture that blames its own victims. Several websites are now offered and they are attracting huge readerships. MK sales people now share experiences and get facts about the realities of the MK business. Anyone in Mary Kay or considering joining this business should visit these sites and carefully consider the facts and analysis offered in the Mary Kay-related consumer website. Here are their links and what the publishers say about their sites:

Pink Truth, -- Pink Truth is a consumer awareness and consumer information website. The purpose of this blog is to provide information, opinions, and support to those looking for information about Mary Kay Cosmetics and the business opportunity. Whether you are a current sales director or consultant, former independent sales force member, or potential Mary Kay recruit, we hope to help provide you with real information about Mary Kay Inc.

Pink Lighthouse - Searching For Information About MaryKay? Then you've come to the right place. We'll help you sort through the hype. We're here to educate and inform. We provide resources so you can make up your own mind.

The Pinking Shears - To those who feel they have been "stung by the bee!" The Pinking Shears is primarily dedicated to sharing credible insight and information about direct selling companies (in particular, Mary Kay, Inc.)

Mary Kay Unmasked - official site of a new book coming out about Mary Kay

Few People Lose Money in MLM, According to MLM Industry, Or, if They Do, They Don't Mind It!
February , 2007

The Direct Selling Association (DSA), the official voice of the MLM industry and many individual MLM companies, gave their versions of reality to the Federal Trade Commission recently. They wrote to object to FTC proposed rules that would require MLMs to provide more information about loss rates, failures and business costs when they solicit consumers to join MLM schemes.
Pyramid Scheme Alert will soon be releasing a report on the fantastic claims and amazing logic used by the DSA to cover up the massive losses inflicted on consumers by multi-level marketing schemes and the lack of any “direct selling” in most MLMs. More…

Amway Fails To Muzzle Whistle Blower:
Legal Defense Fund Aids Free Speech
February , 2007

A Pennsylvania, court has denied Quixtar (Amway) its claim that former Amway Emerald distributor and whistle-blower, Eric Scheibeler, must submit to Quixtar’s infamous “binding arbitration” process.
Scheibeler has written a widely read book, Merchants of Deception that details deception in the Quixtar recruitment program run by Quixtar “kingpins.” More…

Texas Attorney General Settles with MLM Pyramid Scheme that Markets “Fuel Pill”
February , 2007

The MLM scheme, BioPerformance, and its owners, Lowell Mims and Gustavo Romero were charged by the Texas AG as a Dallas-based pyramid scheme that marketed a pill that it claimed would increase fuel efficiency in automobiles. By the defendants' own admission, they recruited 50,000 participants within six months of their scheme's inception. The Texas AG said BioPerformance conducted large meetings around the country where, consumers paid fees to join the scheme. Resellers were then subsequently instructed to recruit additional resellers and thus create a "downline" from which they could derive commissions.
Attorney General Abbott called BioPerformance a "a cynical, brazen scheme to defraud consumers," and referred to the MLM product as “the tools of an elaborate pyramid scheme." More…

Amway Sued as Pyramid Scheme Fraud
January , 2007

In a crucial development that could rock the entire multi-level marketing business, a class action lawsuit has been filed this month against Quixtar (Amway) charging that the company is running an illegal pyramid scheme. (filed in US District court in the northern district of California on January 10, 2007, case number 3:07-cv-00201-EMC.)

The charges against Amway/Quixtar go to the very heart of the company's business practices and most other multi-level marketing (MLM) schemes', that there is no retail "direct selling" opportunity, only an endless chain recruitment program.

The charges are being brought by one of America's most prestigious law firms, Boies, Schiller and Flexner. David Boies of this firm represented Vice-President Al Gore in front of the US Supreme Court in the world famous case, Gore vs. Bush that contested the vote counting in Florida after the 2000 election. More…

NEWS ARCHIVE 2006

Mannatech Under Investigation for Deception
October , 2006

The Texas Attorney General is investigating the MLM company, Mannatech Inc., for violations of the state's "Deceptive Trade Practices Act "and "other related consumer protection statues."
Mannatech has been accsed in the past for making claims that its products could cure terminal and degenerative illnesses. Three Nobel Prize-winning scientists recently complained to New York Attorney General Eliot Spitzer that Web sites are falsely tying their research to the dietary supplements of Mannatech Inc. They wrote cease and desist letters to Mannatech.
Additionally, Mannatech is the target of class action suits charging stock manipulation.
And, the CEO of Mannatech, Sam Caster, was accused of making false product claims at another company previous to his employment at Mannatech. More…

Amway Offices Are Raided and Shut Down in Parts of India; Government Officials Label Amway a Fraud.
September , 2006

Offices of Amway (now called Quixtar in North America) were raided by police in nine different cities in the state of Andhra Pradesh, the largest in southern India. Police and government officials said that Amway violated laws against fraud and deception. More than 80,000 Amway distributors were affected in the region. Despite legal challenges from Amway, Indian officials tell Pyramid Scheme Alert that Amway offices in the state of Andhra Pradesh remain closed down. There has been widespread complaints against Amway in some parts of India. More. ..

FTC Asked to Halt "Business Opportunity" Fraud by MLM Companies
October , 2006

To stop the widespread "Business Opportunity" fraud of MLM pyramid recruitment schemes, PSA has asked the FTC to regulate multi-level marketing. PSA wrote the FTC that MLM is now the most widespread form of "business opportunity" fraud. You can support this effort by writing the FTC's Consumer Protection Division. The email address and phone number are listed at the link below.
PSA has asked the FTC to require MLMs to disclose basic facts to new recruits. The coverup of 99% failure rates and the lack of retail sales (the only people buying MLM goods are the 'sales' people) are among the main deceptions of MLM promoters. Pyramid Scheme Alert has made three key recommendations to the FTC. More. ..

International Heritage– Harbinger of Future MLM Prosecutions?
May , 2006

Recent prison sentences handed out to former executives of one MLM, International Heritage Inc., may offer a glimpse of the future in which MLM’s brief era of scamming will end.

The great harm that pyramid sales scams cause to so many people will ultimately catch up with them. The flaw and the deception in the business model continue to be exposed by whistle blowers and consumer groups. Also, federal court ruling precedents haunt the entire MLM industry. More. ..

Pyramid Scheme Alert Report Aids in FBI Investigation of Auto-Surfing Scheme,12Daily Pro
Feb. 14, 2006

Pyramid Scheme Alert president, Robert FitzPatrick was recently contracted by the Fraud Discovery Institute of San Diego, California. to evaluate a large "auto-surfing" scheme known as 12Daily Pro. The scheme, which is based in Charlotte, North Carolina, had enrolled 300,000 people and claimed to pay 12% for 12 consecutive business days on investments from $6 to $6,000. More

New Consumer Website Warns of Ponzi Schemes
Feb. 14, 2006

A new website has been launched to aid consumers in recognizing a new form of Ponzi scheme on the internet, known as "autosurfing." Launched by Curt Crowley, an internet service provider in Missouri, the site is described as a "crusade against the Paid to AutoSurf Ponzi Schemes."
These types of schemes are common on the internet now and claim to offer exorbitant payments for just passively viewing other websites. Many are disguised pyramid schemes or bogus multi-level marketing scams. The claim of paying for viewing sites is a disguise for just transferring money from the newest investors to earlier ones.

Utah's Reputation as America's Scam Capital Grows
February , 2006

Utah has the highest concentration of multi-level marketing scheme headquarters per capita of any state in America. Now, the Utah state legislature has legislated a "safe harbor" amendment to its anti-pyramid scheme statute that legalizes the types of schemes that have been prosecuted by the FTC and other states over the last 30 years. Pyramid Scheme Alert has sent letters to Attorneys General in all other states warning them to be vigilant regarding any chain selling schemes that are headquartered in Utah. More. ..

NEWS ARCHIVE 2005

China Outlaws MLM as It Is Practiced in the USA
September , 2005

In a stunning and unexpected blow against MLM schemes and promoters, the government of China has passed a law that outlaws the payments of commissions on purchases made by "downline" recruits in the scheme. Legitimate direct selling has been approved in the country.

PSA worked diligently with Chinese authorities in providing information about the harm caused by MLM recruitment-based schemes, as Amway operates in the US. More. ..

Pyramid Scheme Alert President Speaks in Sri Lanka
July 1, 2005

Pyramid Scheme Alert was recently called upon by Asian countries to assist them in understanding and regulating pyramid sales schemes. PSA President, Robert FitzPatrick delivered a highly publicized speech in Sri Lanka on June 2 and facilitated an international seminar in Sri Lanka's capital of Colombo on June 3, 2005. More. . .

DSA Pyramid Scheme Bill Stopped in Florida
May 1, 2005

In a victory for consumers, the Florida 2005 legislative session ended without a vote on this bill. Stay tuned next year. . .
The DSA (Direct Selling Association), which has been promoting HR 1220, a federal bill that would essentially legalize all product-based pyramid schemes, is backing an amendment that would legalize MLM-style pyramid schemes in Florida. Currently the bill is before the More. . .

PSA Alerts Congress
March 25, 2005

Pyramid Scheme Alert sent a special report to all members of the House Subcommittee of Commerce, Trade and Consumer Protection. The report statistically documents the devastating financial results of MLM recruitment schemes. More. . .

Pyramid Scheme Alert Files "Friend of the Court" Brief to Defend Consumer
November 29, 2005

Pyramid Scheme Alert President, Robert FitzPatrick, wrote an "Amicus Curiae" brief filed in the United States District Court for the Northern District of Ohio Eastern District in support of a "Motion to Dismiss" by Defendant, Douglas Konkol, a consumer who has been sued by the MLM scheme, International Galleries, Inc., based in Texas. . More. .

NEWS ARCHIVE 2004

Herbalife Organization Pleads Guilty in Canada
November 23, 2004

According to the Industry Canada website, one of the motivational organizations associated with Herbalife, Global Online Systems, Inc., has pleaded guilty and paid a $150,000 fine. More. . .

Former Amway Emerald Releases Whistle-Blowing Book
Free Downloads Available.
October 29, 2004

Former Amway Emerald Eric Scheibeler has just released his new book, Merchants of Deception. This definitely qualifies as one of the books they don't want you to read, and it's available for a limited time as a free download in Adobe Acrobat (pdf). Visit the Merchants of Deception website for information which Mr. Scheibeler, a former Federal auditor, has gathered about Amway/Quixtar and its kingpin diamonds, and take advantage of his free download offer.

Pyramid Scheme Alert Petitions NC Attorney General to Investigate Britt World Wide
August, 2004

Pyramid Scheme Alert, a Charlotte, NC-based consumer advocacy group has formally asked Roy Cooper, the North Carolina Attorney General, to investigate the business practices of the North Carolina-based company, Britt World Wide, owned by the Amway/Quixtar kingpin, Mr. Bill Britt, a resident of Chapel Hill, North Carolina. More. . .

Herbalife Class Action Settlement Reveals "Secret" Business, Similar to Amway/Quixtar's Exposed on NBC Dateline
July 14, 2004

A $6 million settlement reached by attorneys for victims of Herbalife and its recruiting organization, The Newest Way to Wealth, reveals the same type of "secret" business that was exposed at Amway/Quixtar in the May 7, 2004 NBC Dateline. Both Amway/Quixtar and Herbalife are members of the Direct Selling Association. More. . .

NEWS ARCHIVE 2003

Skybiz Settles with FTC: $20 Million for Consumer Redress
April 18, 2003

Skybiz.com, Inc. (also known as Skybiz 2000) has settled a two-year-long suit brought by the Federal Trade Commission. In May, 2001, the FTC charged that Skybiz, based in Tulsa, OK, was operating as an illegal pyramid scheme. The company recruited participants into an "internet mall" type MLM scheme. More. . .

Direct Selling Association Attempts to Legalize Product-Based Pyramid Schemes
March, 2003

The Direct Selling Association (DSA) is the trade group of the MLM industry. Past DSA members have included a number of MLMs, including Omnitrition and Equinox International, which were determined to be pyramid schemes. Now the DSA has submitted a proposed piece of legislation which would effectively legalize any product-based pyramid scheme. Under its provisions, Omnitrition, Equinox International, Heritage International, and many other product-based schemes would have continued harming consumers, and it would all have been legal. More. . .

Vizion One, Inc. Ordered to Stop Operating
Pyramid Scheme

Hawaii's Securities Commissioner has ordered Vizion One, Inc to stop operating a pyramid investment scheme. Vizion is based in California.

Vizion claims to sell internet service, but, according to the Commissioner, the real emphasis is on recruiting. The company's investments are not properly registered with the State of Hawaii.

Amway/Quixtar/Alticor Accused of Antitrust Violations
August 20, 2003

Businesses owned by Amway Diamonds Schmitz and Hart, and Crown Ken Stewart, have filed a new lawsuit, this time naming Alticor, Inc., Quixtar, and Amway as defendants. Businesses owned by the three had previously filed suit against other high-level distributors and their businesses, but had not named Amway itself. More. . .

NEWS ARCHIVE 2002

Owner of Independence 2000 America and TeleCom 2000 Network has Assets Frozen, Disappears
June 10, 2002

Al Petty, self-proclaimed reverend, musician and financial guru, has disappeared from his home in Overton, TX. More. . .

ACN Canada Charged
November 25, 2002

Canada's Competition Bureau charged ACN Canada with eight violations of deceptive marketing. ACN Canada is a spinoff of ACN, headquartered in Michigan. The Canadian headquarters are in Halifax, NS. More. . .

BBB Warns About Telecom 2000 Network
May 6, 2002

The Better Business Bureau of Central East Texas, Inc., has issued a warning about a company called Telecom 2000 Network. This is a cellular phone and long distance company which relies on a multi-level marketing promotional plan. The company is owned by Al Petty. More. . .

Class Action Lawsuit Against Pre-Paid Legal Services
March 20, 2002

Lieff, Cabraser, Heimann & Bernstein, LLP and Dunn, Swan & Cunningham, P.C. announced today that a class action was commenced on March 1, 2002 in the United States District Court for the Western District of Oklahoma on behalf of all purchasers who at any time (the "Class Period"), purchased an "opportunity" from Pre-Paid Legal Services, Inc. to sell memberships for "legal insurance plans" (the "Class"). More. . .

Pennsylvania Attorney General Investigates "World Of Giving" Pyramid Scheme
February 1, 2002

Mike Fisher, Pennsylvania's Attorney General, has taken legal action against promoters and participants in the "World of Giving" pyramid scheme, also known as "Guidelines to Giving." More. . .

Wyoming Settles with Pre-Paid Legal Services
November 30, 2001

Pre-Paid Legal Services (PPLS) has agreed to cease using prohibited income statements, to pay fines and legal costs, and to reimburse consumers who had been misled by the false earnings claims. More. . .

Skybiz Must Give Up Foreign Assets
January 18, 2002

Skybiz, charged by the Federal Trade Commission last May with promoting an illegal pyramid scheme, has been ordered to repatriate millions of dollars held in offshore accounts. The money will be held for consumer redress. More. . .

State of Michigan Reaches Settlement with KM.Net
January 18, 2002

Michigan's Attorney General, Jennifer Granholm, has announced a settlement with internet-mall scheme KM.Net. It should result in about $6 million in compensation for Michigan consumers. More. . .

ARCHIVE 2001

SEC Files Complaint Against Internet Company NuEworld

The Securities and Exchange Commission ("SEC") announced that on October 3, 2001, it filed a civil complaint against NuEworld.com Commerce, Inc. ("NuEworld") and its co-founder and Chief Information Officer, Timothy C. Ringgenberg. . . more

Federal Judge Dismisses Amway's Case Against Procter & Gamble; "No Conspiracy," Says Court
September 20, 2001

U.S. District Judge Robert Holmes Bell has thrown out Amway's case against rival Procter & Gamble and its attornies. More

Pre-Paid Legal Services
Stockholder and Member Class Action Lawsuits

Stockholders accuse company of securities fraud in several class action lawsuits, while Sales Associates sue, citing deception, breached contracts, and other violations. More. . .

Skybiz.com Shut Down by Federal Trade Commission

June 18, 2001

In an action announced today, the Federal Trade Commission has received a temporary injunction against Skybiz.com, sometimes known as Skybiz 2000, and the company's assets have been frozen. More. . .

Bigsmart Loses Against Texas, FTC

March 27, 2001.

The internet-mall Bigsmart.com has settled with the Federal Trade Commission in a suit brought by the FTC. The company has agreed to a $5 million restitution fund for dissatisfied customers. more. . .

Permanent Injunction Against 2Extreme

2Extreme, described by the Federal Trade Commission (FTC) as "a pyramid scheme disguised as a legitimate multi-level marketing business," has been permanently shut down, and settlements reached with its promoters. . . more

Federal Trade Commission Sues Streamline International, Inc.

June 20, 2001

The Federal Trade Commission is suing Streamline International, Inc., an internet-based money-making scheme, in the Southern District Court of Florida. The FTC charges that the multi-level marketing scheme is actually an illegal pyramid scheme. More. . .

ARCHIVE 2000

Missouri Judge Declares "Original Dinner Party" a Pyramid Scheme, December 18, 2000

PRSI Declared Illegal Pyramid In Florida, December 23, 2000

First Fiscal Year: Quixtar Sold $518 million: IBOs earned $23 per month, October 27, 2000

Equinox International Prepares to Compensate Victims, October 19, 2000

Skybiz2000 Under Scrutiny in Five Countries, September, 2000

Texas Sues Double Eagle Marketing, September 22, 2000

Pre-Paid Legal Services Stockholder and Member Class Action Lawsuits

Skybiz.com Shut Down by Federal Trade Commission

Bigsmart Loses Against Texas, FTC

Permanent Injunction Against 2Extreme

Pre-Paid Legal Services
Stockholder and Member Class Action Lawsuits