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Jon M. Taylor  

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  • An Open Letter To Managing Editor, Fortune Magazine Re: Herbalife [View article]
    "It needed to be said. Most of the press gets wrapped around the axle with legal mumbo jumbo, just like judge Timony did in '79. If the rapist was pleading with the parole board for early release, and promising he would use a prophylactic next time, people would laugh him out of court. But in Amway '79 a rookie Administrative Law Judge bought it [the phony protection of the "retail rules"] hook line and sinker, and then the full FTC under Chairman Robert Pitofsky committed that foolishness into law."

    Beautiful analogy, Rogier.
    Sep 10, 2015. 01:27 PM | 7 Likes Like |Link to Comment
  • The FTC And Herbalife: An Alternative View [View article]
    The notion of HLF converting from MLM to legitimate direct selling, to conventional retailing, or to online sales is naive. MLM companies are built on endless chains of recruitment of participants as primary customers. They are top-weighted with upside-down commission structures that reward those at the top at the expense of a rapid churning of duped recruits at the bottom, 99.7% of whom lose money. My analysis of average income figures of 50 MLMs and comp plans of over 600 MLMs supports this conclusion. (
    If HLF or any major MLM attempted to convert to a legitimate retail or online sales operation, they would soon be overwhelmed with lawsuits from TOPPs (top-of-the-pyramid promoters) who are dependent on commissions from the purchases of a revolving door of new recruits who "pay to play" the game.
    Jul 17, 2015. 01:09 AM | 4 Likes Like |Link to Comment
  • Is Nu Skin The Next Avon? [View article]
    Great article - followed by insightful comments by Rogier.
    After 20 research projects over a period of 20 years and analysis of the compensation plans of over 600 MLMs (multi-level marketing programs), I can say with confidence that all MLMs have the same fundamental flaws. They ignore normal laws of supply and demand and assume infinite markets, which don't exist in the real world. So they depend on unlimited recruitment of endless chains of participants as primary customers - with no stable or significant retail base. They also depend for their growth on a top-weighted, upside-down commission structure - rewarding a few TOPPs (top-of-the-pyramid promoters) and founders at the expense of a churning supply of new recruits at the bottom who purchase products to qualify for commissions and advancement in the scheme.
    Based on average income data gathered from 50 MLMs like Nu Skin, 99.7% of recruits lose money. New recruits are being sold a ticket on a flight that has already left the ground.
    It is good to see China take action against these product-based pyramid schemes. If the FTC had acted appropriately in the 1979 Amway decision, these MLMs would have been labelled illegal pyramid schemes, and MLMs would not have proliferated. At least they would not have existed legally. And you would not be reading this today. So congratulations to China in this field for taking the lead in protecting consumers and investors.
    Jul 15, 2015. 11:44 AM | 3 Likes Like |Link to Comment
  • Primerica And Pyramid Schemes In Regulated Industries [View article]
    Asking if an MLM is a pyramid scheme is like asking if a Toyota Prius is a car. The Prius may have some advanced features, but it is still a car.
    MLMs, or product-based pyramid schemes (PPS) are structured exactly the same as classic, no-product pyramid schemes (NPS). With unlimited endless-chain recruitment, they both assume an infinite market, which does not exist in the real world. The only way to advance in rank in either one is to recruit a "downline." There is a 'pay-to-play" feature for both, with the purchases more ongoing and substantial over time for NPS (MLMs). And commission structures for both are top-weighted, meaning the bulk of the rewards go to those at the top of the pyramid; almost everyone else (at least 99%) loses money.
    The primary difference between the two (NPS and PPS) is that investments made to participate in an NPS are made in cash, whereas in an MLM (or PPS), the investments are in the form of purchases of products through a company infrastructure, meaning a lower percentage of payout or rebates goes back to the network of participants. Also, the downline networks for MLM are far more elaborate. Where a classic 1-2-4-8 NPS has 15 participants with 100% of the money going to the top person, with MLM less than 50% goes to the distributor network, which may include thousands of participants. So the loss rate for NPS schemes is approx. 99%, where it is only about 90% for NPs (87.7% to 93.3% depending on amount of re-investment - or "re-pyramiding"- by those at the top). MLMs are far worse than no-product pyramid schemes by any measure - loss rate, aggregate losses, and number of victims. For details, go to and download free of charge my latest book "Multi-level Marketing Unmasked'. Cheers.
    Jan 16, 2015. 05:09 PM | 9 Likes Like |Link to Comment
  • The Absurdity Of 'Direct Selling Industry' Data [View article]
    Well said, Bob.
    Dec 26, 2014. 08:13 PM | 3 Likes Like |Link to Comment
  • Is Avon Different From Herbalife? [View article]
    Great job, Bob. The evidence you have compiled for this article makes a strong case for investors to pay close attention to the issues you raised.
    Sep 30, 2014. 02:11 PM | 4 Likes Like |Link to Comment
  • Top 10 Potential Legal Counts Facing Herbalife [View article]
    Not to detract from your outstanding article, Matt, but most pro-MLM folks and even many regulators and media folks can’t seem to wrap their minds around the charge that Herbalife – and similar MLMs - are product-based pyramid schemes in disguise. But it really doesn’t matter. The reason the FTC considers pyramid schemes illegal is that they are unfair and deceptive. This places them in violation of FTC Act Section 5, which mandates against unfair and deceptive practices in the marketplace.

    My book "The Case against Multi-level Marketing – an Unfair and Deceptive Practice" provides plenty of evidence that the MLM business model employed by purported “business opportunities” like Herbalife are inherently unfair and deceptive practices – as well as widespread and extremely viral and predatory. If the FTC were not so heavily influenced by the DSA (Direct Selling Assn.) lobby - and if it had the staff with the skill, the will, and the resources - these companies would be prosecuted and shut down.

    My book is based on 20 years research and analysis of 500 MLM programs, including Herbalife. It can be downloaded free of charge from my web site at A special report titled “Regulatory Capture – the FTC’s Flawed Business Opportunity Rule” can also be downloaded free of charge from the same web site. It gives a detailed history of how the DSA/MLM lobby gained powerful influence over the FTC - the very agency that should be regulating MLMs like Herbalife.

    -Jon M. Taylor, MBA, Ph.D. President, Consumer Awareness Institute
    Nov 29, 2013. 01:36 PM | 9 Likes Like |Link to Comment
  • Noose Starts To Tighten Around Herbalife's Neck [View article]
    Matt –

    As usual, your article is a fine piece of writing and analysis. You are to be congratulated for your bravery in challenging the culture of deception that is common in HLF – and indeed in virtually all MLMs (multi-level marketing programs). Based on a flawed business model, they must deceive in order to survive and grow.

    After 20 years of research on over 500 MLMs, I wrote a 420-page industry-wide analysis titled THE CASE AGAINST MULTI-LEVEL MARKETING AS AN UNFAIR AND DECEPTIVE PRACTICE, which can be downloaded free of charge from my website – From my research, I can tell you that all of the 500 MLMs I have examined assume an infinite market, which does not exist in the real world. They also assume a virgin market, which cannot exist for long. That is why the more successful ones “re-pyramid” (my term) from market to market – a phenomenon Ackman calls “pop and drop.” Their expansion from one country to another and from one program to another is not real growth, but an effort to continue churning new recruits through their program to keep it from collapsing from market saturation. Older MLMs like HLF, NUS, and Amway (no longer publicly traded) can eventually begin recruiting a whole new generation, which is how they last so long without market saturation bringing them down.

    Just a couple of comments seem in order:

    1. Your analysis of the place of “internal consumption” in the Herbalife recruitment-driven compensation plan is right on the mark.

    2. Your critics are correct in saying that no commission goes to the upline from the original sign-up fee. But it soon becomes apparent that to get anywhere in the program in terms of commissions or rank advancement, one must satisfy certain purchase quotas – supposedly for resale. But to meet those quotas, participants soon learn that it’s easier to buy than to sell. So they purchase quantities of products to move to the next level and/or to qualify for commissions at ever increasing rates as they climb the pyramid. The upline and the company profits primarily from their purchases. This is typical in the compensation plans of 500 MLMs I have analyzed.

    3. You suggested NuSkin (NUS) as an example of a more legitimate MLM. If you read the information on my web site, you would soon find yourself retracting that. They are one of the most exploitive, highly leveraged (degree twhich those at the top profit at the expense of those at the bottom) of MLMs. From my research, I would have to say that a “good MLM” is an oxymoron.

    But overall, I greatly admire you for supporting Ackman in his efforts to bring down Herbalife. I just wish he were not specific in his targeting one MLM. If Herbalife falls flat, there are hundreds of MLMs ready and willing to fill the void.

    Jon M. Taylor, MBA, Ph.D.
    Consumer Awareness Institute
    Research-based web site –
    Oct 18, 2013. 01:58 PM | 1 Like Like |Link to Comment
  • One Of Herbalife's Greatest Risks [View article]
    Re dhuddle comments: These are easy arguments to rebut:

    Let’s be specific. HLF may not be a classic no-product pyramid scheme. But it meets all the causative and defining characteristics of a recruitment-driven MLM, or product-based pyramid scheme, even by weak legal standards.

    As for your 3 common sense guidelines:
    1. The BBB guideline is meaningless, since the BBB allowed the Direct Selling Assn and leading MLMs to be “corporate sponsors” of the BBB. Now the BBB gives a rating of A+ to Amway – which says more about the BBB than it says about Amway.
    2. Successful product-based pyramid schemes, like Herablife and Nu Skin, have learned to overcome the seemingly inevitable saturation and collapse of a classic pyramid by “re-pyramiding from market to market. Ackman calls this “pop and drop” and presents excellent evidence of this phenomena. It is not true growth, but a necessary strategy to prevent collapse of the pyramid.
    3. The small entry fee is a ruse to foil regulators. To get anywhere in Herbalife - that is to earn significant commissions or rank advancement where the money is made - one must buy a significant amount of products every month. This is usually done by subscription, and results in hundreds, and often thousands of dollars every month.

    Great article, Doug. This aspect of the Ackman v. Herbalife saga needed to be told.
    Mar 13, 2013. 01:29 PM | 1 Like Like |Link to Comment
  • Herbalife Is An Endless Chain [View article]
    Sometimes what Peter says about Paul says more about Peter than it says about Paul.
    Mar 3, 2013. 06:49 PM | 2 Likes Like |Link to Comment
  • Herbalife Is An Endless Chain [View article]
    Matt - Bulls -eye! Your analysis confirms what my research on the MLM business model has proven over a period of 18 years - and not just for Herbalife, but for the 500 MLMs I have analyzed. If you haven't already done so, you might want to read chapters 2 and 3 of my eBook "The Case (for and) against Multi-level Marketing," which can be downloaded free of charge from my web site at
    Mar 1, 2013. 05:40 PM | 1 Like Like |Link to Comment
  • Reply To Bill Ackman's Questions On My Herbalife Analysis (Part 1) [View article]
    The author treats the term Ponzi schemes as interchageable with pyramid schemes. While both depend on recruitment of new investors to survive, the originator of the offerings in a Ponzi is the same entity. But in a pyramid scheme, the fundamental flaw is the endless chain of recruiters recruiting recruiters, ad infinitum. Jack recruits Joe, who recruits Bill, who recruits Sam, etc. etc. - without end. Both assume infinite markets, which don't exist.

    There is a lot of confusion about what constitutes a pyramid scheme, and the distinction, if any between pyramid schemes and "legitimate" multi-level marketing, if such exists. I know that readers who are just beginning to study this issue will wonder what I am talking about. Please get informed by reading Chapter 2 of my e-book "The Case for and against Multi-level Marketing," which is based on analyses of approximately 500 MLM programs and research and feedback over a period of 18 years. The book can be downloaded free of charge from -
    Feb 26, 2013. 11:48 AM | 2 Likes Like |Link to Comment
  • Herbalife: Shattering The Personal Consumption Myth [View article]
    Brilliant analysis, Matt. The whole Herbalife/MLM culture of deception (and some of the comments here) remind me of the FTC ruling in the 1974 Holiday Magic case, in which it found in the very structure of "multi-leveling" or "pyramid selling" "an intolerable potential to deceive." Boy , was that prophetic!
    Feb 18, 2013. 09:38 AM | 1 Like Like |Link to Comment
  • Pay-Per-View Bet-At-Home Billionaire Smackdown 2013 [View article]
    Zeus 2012 wrote:
    "After all, 99.9999% of the people who play the lottery loses money. The only consistent winner is the governmental entity that sponsors such events. You don't see them being accuse of running some kind of scheme used to target vulnerable poor people of this country."

    The lottery is not promoted as a "business opportunity" that offers anyone the opportunity for a lifetime of residual income if they will work hard (at Herbalife or any other MLM) for only a few hours a week, when in fact approximately 99.9% lose money after expenses. (See bases for stats at But I will grant you that people with a lottery mentality are often attracted to a product-based pyramid scheme like Herbalife.
    Feb 15, 2013. 05:49 PM | Likes Like |Link to Comment
  • Might Other Companies Be Liable If Herbalife Is A Pyramid? [View article]
    Thank you, Daniel Ravicher, for providing those of us who are advocating for consumers with some powerful new tools for discouraging the proliferation and survival of inherently fraudulent product-based pyramid schemes, such as Herbalife. My research leads to the conclusion that such MLM programs in the aggregate cause tens of millions of victims to lose tens of billions of dollars every year. I will be including some of your ideas and tools on my research-based web site - If you have any other ideas to help our cause, I would certainly welcome them.
    Feb 5, 2013. 02:20 PM | 2 Likes Like |Link to Comment