369: The Capitalist Cult: How MLMs and Pyramid Schemes Trap Average Americans
BiggerPockets Money Podcast
BiggerPockets
4.6 • 2.9K Ratings
🗓️ 4 January 2023
⏱️ 56 minutes
🧾️ Download transcript
Summary
Multi-level marketing companies (MLMs) operate in secrecy. They don’t want you to know where the products are coming from, how they’re being sold, who’s making a profit, and how the business works. They only want you to buy. Buy this starter kit, host that party, convince your friends and join the cult—sorry, the “club.” Operating in darkness is how these pyramid schemes build their membership count, branch into new cities, and keep average Americans in debtbut still chasing an empty dream.
So how did MLMs even come to be, and if they’re so blatantly nefarious, why hasn’t the government permanently shut them down? To answer these questions and many more, we brought on Jenner Furst, director of LuLaRich, the documentary that exposes the multi-billion dollar MLM empire, LuLaRoe. Jenner has worked tirelessly to uncover how these entities exist, what causes them to become so cult-like, and how unassuming Americans can fall prey to their money-making traps.
We also talk about the hierarchy of pyramid schemes, the culture inside of one, and the uneven pay structure that falsely tricks new members into believing they can strike it rich. You’ll learn about the history of MLMs, the so-called “Amway Rules,” and how snake oil salespeople have used social media to grow their empires to even greater heights.
In This Episode We Cover
The history of pyramid schemes and MLMs and how they become popularized in America
MLMs vs. pyramid schemes and the loose differences between these two types of businesses
The cult-like culture that exists inside an MLM and the blatant red flags that stick out
The false pay structure of MLMs and how they artificially promise returns that are impossible to achieve
How social media and live posts caused the MLM fire to grow even faster
How pyramid schemes play to people’s fears and desperations to get them to join
And So Much More!
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Transcript
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| 0:00.0 | Welcome to the Bigger Pockets Money Podcast. Today we have a very special show from our Money History series |
| 0:07.3 | that we are running in on Wednesdays in January. Today we are dissecting MLMs. |
| 0:14.3 | The American system proper has condoned multi-level marketing for decades now. |
| 0:20.6 | And so people like Mark and Dn knew that. They were aware of AMWAT. |
| 0:24.6 | They had been part of other multi-level marketing companies and as much as we want to call them scammers and fraudsters |
| 0:33.9 | the American government |
| 0:35.9 | condones this form of business despite the fact that it is predatory to everybody in a |
| 0:43.4 | Downline and that only the first members of a multi-level marketing company become wealthy. |
| 0:49.6 | Hello, hello, hello. My name is Mindy Jensen and with me as always is my |
| 0:53.2 | Non-legging's-wearing co-host Scott Chent. Thank you Mindy. Today's episode is bursting at the seams with information about |
| 1:00.7 | multi-level marketing companies. |
| 1:02.4 | Scott and I are here to make financial independence less scary less just for somebody else to introduce you to every money story |
| 1:09.8 | Because we truly believe financial freedom is attainable for everyone no matter when or where you're starting |
| 1:15.1 | That's right whether you want to retire early and travel the world going to make big-time investments in assets like real estate |
| 1:19.9 | Start your own business or build a pyramid will help you reach your financial goals and get money out of the way so you can launch yourself |
| 1:26.0 | Towards those dreams. We're not helping people build a pyramid Scott |
| 1:30.9 | Today's show is a bit different first of all we're releasing on a Wednesday and second |
| 1:35.6 | We have a bit of a history lesson about the beginning of MLMs |
| 1:40.5 | Red by our esteemed producer, Kaelin Bennett. This episode is diving deep into MLMs or |
| 1:46.3 | Multi-level marketing companies. Yeah first we don't give enough credit to Kaelin |
| 1:50.7 | Thank you for everything you do and we're really excited about these these new money series that we're going to be getting into |
| 1:56.1 | I think this was a fantastic episode |
... |
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