Little Bosses Everywhere

A “legitimate” multilevel marketing company, the FTC declares, is not a pyramid scheme. However, some MLMs are illegal pyramid schemes. And some pyramid schemes, the FTC dutifully notes, can look “remarkably” like legitimate MLMs. (OneCoin, one of the world’s largest cryptocurrency frauds, shut down by the FBI in 2019, was promoted as an MLM, for example, as was NXIVM, the personal development cult led by Keith Raniere.) Differentiating between legitimate multilevel marketing and pyramid schemes requires a lengthy section on the commission’s website. “If the MLM is not a pyramid scheme,” it reads, in bold, “it will pay you based on your sales to retail customers, without having to recruit new distributors.” And yet these sales across the industry are fictions, self-regulated and self-reported. They are fantasies of accounting.

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Attempts to define legitimate multilevel marketing against the pyramid scheme only inspire more questions. What kind of “business” involves millions of people buying things with their own money, calls that “selling,” and calls those people “sellers”? What kind of business requires its own section on a government website explaining the difference between it and fraud—a website that warns people against it even when it isn’t fraud? What kind of business tells its participants signing up is a path to financial freedom when the vast majority who do it lose? How have some of the most powerful, wealthiest people in the world come from it, endorsed it, protected it? And how does it still enroll fresh recruits every single day?

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2021, I met the one person who has been asking these questions longer than probably anyone else in the world: a man named Robert FitzPatrick, who lives in the verdant Appalachian mountain town of Hot Springs, North Carolina. FitzPatrick has close-cropped white hair and inquisitive hazel eyes and speaks with the faintest trace of a Southern accent. In 1986, he was in his forties, divorced, living in South Florida, and working in what used to be called the graphic arts industry. FitzPatrick had an undergraduate degree in sociology and had trained in Saul Alinsky’s community-organizing methods in Chicago. In Florida, he became a kind of organizer for independent dealers in graphic arts, the many middleman companies that, back then, used to sell printing supplies like film plates, chemicals, and printers from large manufacturers to customers. He wasn’t rich, but he had a condo and a new car. One day he was approached by a friend about an opportunity. “I can’t tell you what it is,”

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FitzPatrick couldn’t believe he had been duped. Looking at it another way, though, of course he had. Though he was solidly middle class, he was always worried about paying his bills, because he was self-employed. The world the promoters conjured in their pitch was the opposite: “No more financial insecurity. No more credit card debt, no more mortgage fears, because the system is going to provide for you, for the rest of your life,” FitzPatrick remembered. “And it’s so remarkable that you’ve discovered this, and the people in it are wonderful and everybody’s happy. Everybody’s kind of in love.” Plus, the game’s pitch was not only financial stability, but freedom from worry and self-doubt. FitzPatrick, a onetime Catholic seminary student, was predisposed to soul searching. He had already turned to various offshoots of the Human Potential Movement, from which the Airplane Game had heavily borrowed its self-help style, and had taken “personal development” courses from various gurus. The game combined the excess and materialism of the 1980s with New Age mysticism about self-actualization (in other cities the game had names like “Infinity Process Workshop”).

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Yet almost nothing has changed since FitzPatrick was first invited to join that metaphysical plane of plenty in that Florida condo in 1987. “Legitimate multi-level marketing” remains legal, according to the FTC, even as the FTC also warns people against joining. The Direct Selling Association gathers on the Capitol steps for its group photo every year. Congress has never passed a law on pyramid schemes. Culturally, MLM mostly hums along in the background of American life in a twilight zone of weirdness and obscurity. No one knows exactly how many people are involved every year, because industry turnover is staggeringly high, exceeding 50 or even 75 percent for some companies. An AARP study conducted in 2018, one of few third-party surveys on MLM, concluded that 7.7 percent of American adults had tried multilevel marketing at some point, or 17 million people, only a few million behind the number who tried online sports betting, or who were recovering from a substance abuse disorder.

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One 2018 analysis based on FTC data found that higher multilevel marketing participation can be found in counties where women are unable to find work in the traditional labor market. That same study found that Hispanic Americans are overrepresented among MLM participants, making up over 20 percent. Among largely white, Christian stay-at-home mothers and army wives, MLM is endemic. This company, I have heard more than once, took over my whole town. Others, however, are lucky to barely know what these companies are, having only heard of them as retro oddities or bizarro, cringe-inducing hobbies. They have seen them as the punch line on a television show or Saturday Night Live, watched documentary footage of stadiums full of chanting, sobbing participants, or, conversely, listened to former recruits posing among their never-sold inventory of leggings, makeup, or vitamins.

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One of the oldest and largest multilevel companies, Amway is the world’s most consequential MLM, the subject of a landmark FTC case in the late 1970s that has shaped the behavior of every single company to come after. But attention has tended to follow the money from the DeVos and Van Andel families to various right-wing causes, especially as their prominence has grown, not how the money gets to Amway in the first place. What Amway actually does is usually a secondary concern, if at all. Very few people seem to have paused to ask how it is possible that one of the wealthiest, most influential dynasties in American politics has a family business almost nobody can describe.

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Even would-be critics often mischaracterize how MLM operates. A negative op-ed on the industry in The New York Times in 2021, for example, explains that “independent contractors who sell the product are paid commissions from their own sales of the product, but they also can receive income based on the sales or purchases of the sellers they have recruited.” This sounds right, but it isn’t—to speak of commissions based on “sales” at all is to gesture to a category of transaction that the industry has never had to prove exists. Even to use the term “industry” seems imprecise when applied to a kind of retail business that doesn’t actually keep track of what it produces. It is something else entirely, something stranger.

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There is a common, nebulous understanding among Americans that MLM is odd and exploitative. But a shrug goes along with it, too, as one does with Scientology, or other factions of this country’s colorful fringe. It is one of our many freaky sideshows, falling somewhere between a cult, a crime, and a joke. Something to gawk at, pity, or ignore.

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What is the difference between the Airplane Game, a type of Ponzi scheme, and MLM, a legal American business? FitzPatrick does not believe there is one. In his eyes, the thing called multilevel marketing—along with its proselytizing believers, celebrity spokespeople, and trade association suits—is fraud and always has been. This position directly contravenes that of the Federal Trade Commission and other experts and would-be allies who continue to accept that legitimate MLM exists, even while acknowledging it is a world full of bad actors and charlatans. “It’s like saying, let’s find the good Mafia and the bad Mafia,” FitzPatrick scoffs.

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His views have accordingly earned him professional alienation and lawsuits of his own, accusations of being a crank, a heretic, a communist. To FitzPatrick, only he and a group of others on a small island are willing to say the truth; the rest turn away from what MLM actually is, repeating the industry’s cover story in the process. “They operate on the basis that it’s a business. That it’s direct selling, that it’s an actual income opportunity, or that it’s been around forever,” FitzPatrick said. “Journalists too,” he said. “I’ve probably talked to more journalists than anybody on Earth about MLM. And what I often found was that, in the who, what, when, where, and why, the what would always get lost. They don’t know it has a beginning. So it lives in myth and legend and propaganda. It is an artifact of disinformation. It’s sort of like going to church. The preacher doesn’t have to go back and prove that there was a resurrection. You already believe it. “And if they ever did delve into the subject that it could be a fraud,” he continued, “the subject is almost unspeakable. It’s an absurd subject for a journalist to take on—because they’ve taken on the whole world.”

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understood this reaction, having emerged from our first conversation with a sense of vertigo: If FitzPatrick’s argument was correct—that multilevel marketing is a con that has been running in plain sight for the better part of a century, with the imprimatur of the federal government—it would amount to one of the most significant scandals in history. It would mean that, at the very least, Americans have ignored a grievously harmful scam that has been exported to every corner of the world. An even more…

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This book sets out to look directly at multilevel marketing—not at what it resembles, what it says about itself, or what has been assumed about its origins and operations—and to decide what it actually is, to tell the true story of MLM. If multilevel marketing is a little virus, what follows is its pathology: a chronicle of where it came from, how it spread, and why it endures, taking up not just one company or figure but tracing its major players as…

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