Monday, March 7, 2011

Do You Know the 3 Stages of Fraud?

According to Robert L. Fitzpatrick, expert on MLM, there are 3 stages of fraud

1) Product fraud -- stuff that breaks immediately, stuff that is not as represented

2) Financial fraud -- usurious interest rates and other finance-related fraud

3) Marketing fraud -- consumers are enticed to identify with the scam and scam yet more victims

And MLM, according to Fitzpatrick, falls into the 3rd category: marketing fraud. However, I believe that MLM can be done ethically, he doesn't. But his analysis is still worth reading.

Keep in mind that most jurisdictions cannot distinguish between a bad MLM vs. a pyramid scheme. It takes quite a bit of time to establish the facts, and even then the organization is only served with a 'cease and desist'. The "leaders" are rarely jailed. If the leaders are out of the country, even worse.

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