Multi level-marketing
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This document provides an overview of pyramid schemes and multi-level marketing (MLM). It notes that in a product-based pyramid scheme, 99.88% of participants never make any money due to the mathematical structure. The key differences between an MLM and fraudulent pyramid scheme are recruitment practices, marketed products, pricing, inventory loading, and inventory repurchasing policies. The document then gives a brief history of MLM, noting that Nutrilite Vitamin company created the MLM concept in 1945 and Amway was later formed in 1959 and purchased Nutrilite in 1972.
Multi level-marketing
- 5. In a product-based pyramid scheme, 99.88 per cent of participants never make any money. In any pyramid scheme, it's a mathematical fact that 88 per cent of participants will be on the bottom level.
- 7. What differentiates an MLM from a fraudulent pyramid scheme?
- 8. Recruitment The Marketed Good Price Inventory loading Inventory Repurchase
- 10. 10 Carl Rehnborg, Lee Mytinger and William Casselberry of Nutrilite Vitamin company created the MLM or Network Marketing concept in 1945.
- 11. 11 Rehnborg acted as scientific advisor telling distributors Nutrilite supplements contained a secret base of unusual therapeutic value. Nutrilite Products
- 13. 13 A how to get well and stay well booklet was the primary sales piece representing Nutrilite as effective against almost every disease known to man. Nutrilite Products
- 14. 14 The FDA executed many product seizures and ultimately issued a consent decree dated April 6,1951 against Nutrilite and the booklet was banned. Nutrilite Products
- 15. 15 1953 Top Nutrilite distributors began selling for Numanna Labs resulting in Nutrilite filing suit citing the 2-year non-compete as part of their distributor agreement. Nutrilite Products
- 16. 16 The FTC later ruled Nutrilites 2-year non-compete in violation of Fair Trade Acts. Nutrilite Products
- 17. 17 1950 Rich De Vos and Jay Van Andel began a Nutrilite distributorship that peaked at over 2,000 distributors. Nutrilite Products
- 18. 18 1959 Rich and Jay form American Way Association (Amway) selling household cleaning products while continuing their Nutrilite distributorship.
- 19. 19 1972 Amway purchases Nutrilite from Carl Rehnborgs estate.