What everyone knows, yet few will say, is that the greatest injury suffered by MLM victims is not dollar losses. It is the blow to the soul, an injury that may be carried unhealed throughout life. It is a shock to self-esteem, trust and social capital. MLM injury has its closest parallel in the stories emerging from the Me-Too movement from victims, for example, of Harvey Weinstein or people like him and the law enforcement and media people who ignore or protect the predatory abuses. Whether the blow leads to financial fraud or sexual abuse, what makes the injury so damaging is the misuse of trusted relationship. When workplace, collegiality, friendships and family become settings for calculated deception and abuse, the fundamentals of life are altered.
In the make-believe world in which MLM is treated as real business, the harm caused is typically calculated in accounting terms – dollars spent on purchases minus dollars received as “commissions.” Even as a crude measure of harm, this is a limited and flawed calculation. It is financially meaningless and useless as a regulatory device. The true and total financial costs to the public from all MLM frauds have never been empirically measured. They would include not only all induced purchases of un-retailed products but also all the wasted expenditures for “motivation” rallies, marketing, “leads”, fees, shipping, auto expenses, lost wages and opportunities for real work. These losses would be in the hundreds of billions, perhaps a trillion. In any event, the vast majority of MLM victims never “gain” any dollars at all before quitting. All, however, do pay money for “products” as start-up requirements and to meet eligibility quotas. Incredibly, In court settlements, those deceptively induced purchases count as “gain,” leaving the vast majority with nothing of value in restitution.
The consequences to MLM victims of soul-injuries, for which MLM promoters have never been held accountable, may include divorces, alienation from family, lost friendships, incapacity to work, disillusionment, bankruptcies, addictions and even suicides. From my work in many court cases and as publisher of the Pyramid Scheme Alert website for 20 years, I have had innumerable encounters with these soul-crushing outcomes. They are everywhere. Yet the aggressive disinformation and coverup by MLM promoters and the official denial of MLM-caused injury by regulators, along with failure of the media to acknowledge this pervasive harm, have produced a large-scale illusion. It is this type of mass illusion that the Me-Too movement has begun to explode.
For many years, the abuses of women in Hollywood and of children in the Catholic Church or the Boy Scouts were not widely perceived, as if they did not exist. The voices of victims were dismissed, suppressed or self-censored. To publicly assert the brutal reality was to be accused of bias, hysteria or some nefarious motive. This is orchestrated gaslighting carried out on a gigantic scale. Wikipedia’s definition of “gaslighting” captures the reality but only places it in the context of one-to-one or small group relationships, not as a mass phenomenon involving commercial propaganda and supported by government corruption.
“Gaslighting is a form of psychological manipulation in which a person or a group covertly sows seeds of doubt in a targeted individual, making them question their own memory, perception, or judgment, often evoking in them cognitive dissonance and other changes such as low self-esteem. Using denial, misdirection, contradiction, and misinformation, gaslighting involves attempts to destabilize the victim and delegitimize the victim’s beliefs.”
Right now, to point out the documented fact that the overall loss rate of MLM participants calculated over multiple years is virtually 100%, and therefore MLM is, definitively, financial entrapment is to incur condemnation or dismissal as misguided or misinformed, to be cast as anti-business, anti-MLM, to be called a radical, a vengeful loser, a dream-stealer. Meanwhile, no data is ever produced to dispute the fact.
In a remarkable little book written in 1906, Sin and Society, An Inquiry into Latter Day Iniquity, sociologist Edward A. Ross pondered the lack of accountability or prosecution of great industrial and financial wrongdoing in his time that harmed millions of people. Ross wrote,
The essence of the wrongs that infest our articulated society is betrayal rather than aggression… we see on all hands monstrous treacheries, — adulterators, peculators, boodlers, grafters, violating the trust others have placed in them.
MLM’s primary “sin”, indeed its defining characteristic, is the very same hallmark of the crimes that Edward Ross identified – betrayal of trust. MLM not only betrays the trust of its adherents but teaches and incentivizes them to betray their own friends and family, turning all social situations into zones of treachery. MLM’s crimes are without prejudice, absent of aggression, perpetrated by pious, patriotic and high-minded figures and always delivered with a smile. When the victims have been fleeced, the perpetrators can cheerfully say, “Didn’t they buy a product?”
The destruction of trust by MLM is carried out on such a scale and so pervasively that, when it is experienced privately, individually, the normal reactions to betrayal – shock, disbelief, anger and disappointment – are subverted. The portrayal of MLM treachery as “legitimate business” or as “social networking”, the façade of legality, and baffling array of smiles and positive testimonials prevent normal psychological reactions. The victims turn upon themselves as blameworthy “losers.” They doubt their own direct experiences and sensibilities. The lies, false promises, guileful introductions that led to loss and failure – the recognizable evidence of betrayal – are blunted. The righteous claims issued from the MLM stage, backed by endorsements by trusted celebrities and upheld by respected Wall Street institutions diminish the victims’ faith in their own grasp of what actually occurred.
A Distorted Mirror
The failure to see one’s own real life circumstances reflected in popular culture, acknowledged in the media or recognized by authorities – as, for example, gay and black people experienced for many decades in modern America – causes people to question their self-worth. The false narrative of their lives or the sheer absence of their own image and experience reflected back to them and validated in the cultural mirror, leads to questioning their own perceptions. In their own eyes, their very existence is diminished.
The national news and business media and the FTC perpetrate this false narrative and denial of experience on millions of MLM victims every day with proclamations – never backed by data or facts – about MLM “legitimacy” and depictions of MLM as a viable “income opportunity,” implying that losses do not occur or, if they do, they are normal.
Though there are now glimpses of MLM reality in the popular culture, such as on the John Oliver Show, the Showtime series, or the recent Yahoo Finance podcast, the overwhelming and official portrayal of MLM is still as a “legitimate” business, backed by (paid) celebrity endorsements and FTC pronouncements. Despite the emergence of new voices on whistle-blower websites, Facebook, Twitter and Reddit, MLM victim reactions remain, on the whole, those of banished losers and injured souls, prevented from grasping or protesting that they were systematically betrayed in a calculated fraud, disguised as “direct selling”, and perpetrated on an industrial scale with government collusion.
Today’s MLM victims are much like cigarette smokers of not many years ago who were authoritatively and officially informed that it was not proven that their cancer and heart disease were in any way related to their smoking, and those who claimed any connection were “anti-smoking” zealots. As they suffered and died by the millions, alluring cigarette ads filled the airwaves and blanketed trusted publications and highway billboards. Reports of the scientific evidence linking tobacco use to lethal illness were rare or absent. A massive disinformation campaign was conducted by the Tobacco Institute, whose mission was “to put out good news about tobacco, especially economic news. It also attacked scientific studies… It also lobbied Congress.” Cartons of the carcinogens were dispensed to soldiers and smoking was endorsed by many doctors. Cigarette smoking was universally presented in movies and on TV as a pleasurable, harmless, sexy activity. Those who were sickened and died were expected to accept their fate as a private failing or a natural occurrence.
As we all have since learned, the terrible truth about smoking was fully known during those years. Extensive, unconscionable efforts were carried out, including those by corrupted or intimidated government and health officials, to suppress the horrific facts and create a mass illusion of smoking as harmless and cigarette companies as blameless.
Similarly, the reality of MLM’s rigged pyramid scheme and money-transfer plan, the massive attrition, the near 100% loss rates, the pervasive false income promises, the absence of retail selling and the cult persuasion techniques are well known, documented, proven, and factually unchallenged. The reality that all MLMs are part of an overall phenomenon, without significant distinctions among them – one MLM is just like any other – is also obvious just as there were never any significant differences among cigarette brands.
Nevertheless, at this point, MLM victims, like the millions who were stricken by smoking-related illness and death in years past, are led to accept their fates as unfortunate but normal consequences of business, the market, their own bad judgment or character flaw. Millions are also recruited into other brands of MLMs after having suffered loss and failure in one or more, in the misguided belief that some MLMs are significantly different from others.
Defense of the Soul
Souls do not surrender without struggle even against near total suppression of truth. As the reality of MLM is gradually recognized – yet still officially and prevalently denied – many victims have erected one particular coping mechanism that allows some truth but defends against the larger terrible truth of the betrayal that had disrupted their lives. I hear this soulf-defense regularly from victims at the Pyramid Scheme Alert website. It begins with a remorseful new awareness that MLM is harmful and an experience not to be repeated, but then moves to an assertion that it was also a source of valuable “lessons”, which in some way are compensation.
After describing harm done to her children, marriage, finances and her own emotional state, one respondent recently wrote,
“I am not angry about my (MLM) experience, but grateful for it. It taught me so many lessons and although I will never consider getting involved with another MLM company… It was a complete loss. But again… great lessons learned.”
Some report learning “lessons” about the false lure of easy money, the harm of commercializing family and friendships, or the costs of neglecting children and spouses. Many others claim they gained useful information or experience in sales, public speaking, social networking, branding, marketing or how to “relate” to people.
These “lessons” ring hollow and scripted. Like everyone else, MLM victims know long before they are lured into MLM that something that sounds too good to be true is just that. They are already aware of the negative consequences of neglecting family, chasing easy money and commercializing friendships.
As for business-related lessons, the tools and tactics taught in MLM to proposition friends and family to join an “endless chain”, to deceive people about “income potential”, demean real jobs, instill fear of the future and foist overpriced products are not usable in real business or any other area of civic and social life. These are tools useful only to fraudsters and charlatans.
Missing from these strangely similar responses about “lessons” are normal anger and justifiable calls for restitution and accountability over the losses that were suffered. Those that claim MLM provided valuable lessons seldom display civic outrage that a fraud of this scale, harming millions of people, could run rampant and be treated as “legal.”
The normal and necessary expressions that enable us to heal after being unfairly, deliberately harmed are absent. Can anyone imagine a person who was beaten and robbed right where they shop or live describing the experience as one in which they “learned valuable lessons”? Could any other form of fraud, deception, embezzlement, swindle, larceny or loss from corruption that involved betrayal and financial harm be experienced without anger and calls for accountability?
These MLM “lessons” serve less as life-instruction than as thin defenses of the soul, a shield against the bitter truth and disillusioning experience of having been deliberately, systematically deceived and cheated and of having that loss denied and dismissed not only by the perpetrators but also by government and media.
Facing that truth requires acknowledging that the portrayal of MLM as “legitimate” by respected institutions, celebrities, and by trusted recruiters is a betrayal. Such a recognition also involves placing responsibility for this lie with corrupted legislators and regulators, a negligent news media, and predatory Wall Street figures who have gaslighted millions with blame-the-victim rationalizations. It even includes recognizing our own vulnerability to MLM’s twisting of cherished values of entrepreneurship, freedom social relations into a seductive trap.
Learning the true lesson from an MLM experience is necessarily and naturally accompanied by calls for accountability. No one is swindled in MLM individually, but collectively, en masse. There is a civic, not a personal, lesson to learn, and it calls for a civic response. When that civic lesson gains a footing, as it has in the Me-Too movement regarding pervasive and protected sexual abuse, outraged calls for MLM accountability and restitution will become unstoppable, and the souls of MLM victims can be healed.