One was a system of overrides in which upline persons would receive as much in commissions from sales as the front-line distributors making the sales. This appeared to result in extremely large payouts to top distributors, while those beneath them received little or no remuneration from the company. And retail prices were too high to sell at retail. So the emphasis was naturally on recruiting—if any money were to be made.

Taking a frontal approach, I wrote a letter to the presidents of 60 of the most prominent MLM companies and shared my conclusions in a report and request for information. I called it “The Network Marketing Payout Distribution Study.”¹

The report began with a challenge to each president to prove me wrong by revealing the breakdown of payout by percentiles to distributors in his/her company that could be used for comparison—and to reveal (if such were present) the extreme horizontal inequality that would characterize a pyramid scheme. If they desired to prove my conclusions wrong they had an opportunity and a format for doing so.

I even gave these executives a choice between a simple and a more comprehensive report option, depending on how definitive they wanted to be. A data base consultant assured me that my request could be satisfied by a good programmer in only one or two days of effort, using the existing data base of most any modern MLM company.

While a few promised to cooperate, none of the presidents ever finally released the requested data, even with the promise that it be kept confidential. It seemed that none were able or willing to demonstrate that they were not a pyramid scheme by revealing percentile breakdowns of payouts to distributors that could be used for comparison and analysis.

I informed these MLM executives that if they were unwilling to supply the needed data, I would publish the information that I had, with the report’s conclusions asserted by default, since the companies themselves were the only ones who could furnish the data to adequately refute them.

I also issued the same challenge to MLM industry representatives and pro-industry “experts,” but none were able or willing to comply with my request.

At least I have obtained useful insights through the back door by asking questions about net income of people who handle the money of MLM distributors. While their recollections were revealing and probably correct, valid conclusions cannot be drawn from them exclusively.

It would be extremely helpful for consumers and researchers to secure release of valid data from MLM company executives on payout distribution. I can’t force compliance—though enforcement agencies could, and I believe should—considering the large amounts of money which are at stake for consumers.

1. Mailed in the spring of 1999.