Ponzinomics: The Untold Story of Multi-Level Marketing

by Robert L. Fitzpatrick

Ponzinomics by Robert L. FitzPatrick, author of False Profits, is the first comprehensive account of how "multi-level marketing" was created in America, escaped criminal and civil prosecution and spread all over the world. It is the first book to deeply investigate the multi-level marketing phenomenon and to fully explain how the legitimate business of "direct selling" was turned into deceptive pyramid recruiting. Ponzinomics dissects the elements that distinguish "multi-level marketing" from legitimate sales, and reveals how a "business" could become a delusional belief and a pyramid scheme a pseudo-business model. Ponzinomics reveals how multi-level marketing helped to lay a foundation on Main Street for the presidency of Donald Trump with a program of pervasive deception, financial self-destruction, authoritarian leader-worship and economic make-believe. Ponzinomics is a discomforting look at the threads of American culture, business and politics that were woven into what has become the largest scam on Main Street.

Genres: Nonfiction, Economics, Business, History, Politics, Cults, True Crime

375 pages, Paperback

Published November 30, 2020

Reviews

[Lucinda · Rating 5 out of 5]

A very thorough and well-written book. Fitzpatrick explains all aspects of the MLM fraud from its financial deception, cult-like behaviour, decades-long political influence, to its twisted version of American values and beliefs about wealth.

Though I had read his previous book and some other article on MLMs, the vast majority of what he explained was new and often shocking information to me. For example the political links with MLMs by both major Republican and major Democrat politicians.

[Paige · Rating 3 out of 5]

This was an excellent history of MLM and really emphasizes how inherently insidious it is. I did not know the history of the first MLM-disguised-pyramid-schemes or how deeply ingrained resistance to cracking down on it is in our political system. What I disliked about this book was it was poorly organized. It talked in circles and rambled a lot. The whole beginning of Nutrilite and eventual emergence of Amway is never fully explained. We get a lot of history of Rehnborg and a repeated statement that Nutrilite sales recruiters eventually spun off the concept to Amway but the actual history of how that happened is never provided. Overall Ponzinomics is super informative but probably could have benefited from a few more rounds of editing.

[Clay Robson · Rating 4 out of 5]

Repetitive and not well-crafted in terms of writing style, Ponzinomics is still a valuable source for grounding in understanding the phenomenon of MLM. You could argue that the repetition of events or figures hammers home Fitzpatrick's main points. I need stats, figures or data to be sold on an authors arguments. Again, I'm willing to give Fitzpatrick a pass on this, as the industry is so understudied and legislation and corruption have made it easy for MLM companies to hide smoking-gun evidence from the public. If the prose would have been better crafted I'd have given this book 5 stars. I'll give it 4, if for no other reason than it giving me a rich index of books, documentaries and articles to follow up with.

[Laurie · Rating 3 out of 5]

Very informative history of MLM companies in America. Pretty awful stuff all around with complicity of the US government in permitting this deceptive crime against ordinary Americans. Please read before getting yourself involved in these gimmicks which will leave you poorer than when you started but only after a period of illusory gains.

[Jessica · Rating 2 out of 5]

I struggled to finish this. It is littered with typos, grammatical errors, and self-aggrandizing statements. It is not well-organized and doesn’t “flow” well. I was hoping for a real page-turner and this wasn’t it.

[Kate · Rating 5 out of 5]

A very interesting study of the history and growth of Multi-Level Marketing companies and how they work, with no punches pulled. FitzPatrick’s prose is sometimes repetitive but the information is densely packed into 300 pages that leave you a bit breathless in awe that American politicians and agencies and culture are complicit in the power of companies and individuals who make their money on the backs of their “independent salespeople.” This is definitely a book that will make you feel feisty about the number of social media “friends” hosting virtual selling parties and your sense of obligation to support their iffy “small businesses.”

[Nora · Rating 4 out of 5]

Good historical account of Ponzi Schemes! I just goes to show there have always been and always will be crooks. As W.C Fields said a "sucker is born every minute and two to take him".

That holds true today....there are no get rich quick schemes that are ethical or legal. Hard honest work is what we must always strive for and be suspicious of people with ideas that are too good to be true, because they usually are!

[Lani · Rating 4 out of 5]

In my opinion;
Your job should have a guaranteed income,
Your job should never make you share your life story,
Your job should never change your personality,
Your job should never distance you from friends and/or family,
Your job shouldn’t require you to buy exclusively through them,
Your job should just be your job ❤️

I personally believe;
You are not a bad person,
You are loved,
You deserve better ❤️

[Indiana Brown · Rating 4 out of 5]

I'm really interested in MLMs in general so I was hyped to get this book. It's definitely got all you need to know about MLMs and more. I ordered this and was ready to read it cover to cover in a few days and give it a glowing review. Unfortunately, I think it's more of a 3.5 for poor editing, meandering prose, and disorienting organization. But I'll give my guy a break for being The Man on anti-MLM truth-telling and activism and probably not having the money or time for better editing

I'm going to note the most compelling sections here because if you're interested in MLMs too, you're gonna want to read this book. If you're only kind of interested or not sure what an MLM really is, please listen to The Dream(!!!) https://www.stitcher.com/show/the-dream and this bonus episode of Michael and Us where Luke Savage interviews the author of Ponzinomics himself https://pca.st/episode/e4719e99-23ad-...
I would recommend that Lularoe show as well but I saw the first episode and wasn't feeling inspired to push onward due to the reality TV heavily cut up and narrativized docuseries style (like, if I see any more stock footage of suburban white children playing in the front lawn in a documentary I'm going to scream. Don't have five cuts throughout a single person's statement. Do something different.)

Definitely read:
pg. 54-62 on the game-changing sales tactics used to sell cemetery plots esp. at Forest Lawn, relates to the sales background of two of the MLM founding fathers and is really interesting anyway

pg. 68 helpful graph showing the "double a penny for 30 days" trick and relates to the absurdity of the MLM down-line "you just need five recruits! surely you know five people who would like to make some extra money?"

pg. 78-86 background on ponzi schemes, banking, Madoff, the Canada pigeon scheme

pg. 104-115 definition of an MLM

pg. 129-138 1979 FTC decision that Amway's rules make it non-deceptive (they're just selling hope!) and a legitimate business model.

pg. 169-175 lying with statistics and how a common bogus stat is cited all over credible and popular news media, tacitly legitimizing the business model

pg. 224-256 shows just how deep the MLM money runs in politicians pocket. Earlier content illuminates the direct complicity of Reagan and Amway and other Republicans, but come on, are you surprised? You probably could have already guessed that they're all running in the same sick circles and throwing money at each other. But don't think that the Dems are here to save you! They're fully complicit as well. I really said "WOW" aloud at the Kamala Harris bit

pg. 283-292 cultism and MLM

[Jessica · Rating 5 out of 5]

Great expose of how MLM are a scam and just a tad bit cultish too. And how they’re also the perfect example of American capitalism

[Bill Ver Velde · Rating 4 out of 5]

The good: A rare deep dive into MLMs. FitzPatrick exposes how MLMs obscure their true scam nature through cultic tactics. What should be obvious to everyone is cloaked through the redefinition of words, motivational catchphrases, and lifestyle envy. Though it’s pretty obvious where FitzPatrick stands politically, he does a good job of indicting both parties for their complicity in protecting MLM. I did the audiobook version and I liked how FitzPatrick himself reads the book.

The bad: Way longer than it needs to be. I agree with the previous commenters who said the book craves editing.

[JC · Rating 4 out of 5]

This is a detailed view of the plague that are "MLMs".

What they are, how they came about, why they haven't been regulated out of existence.
The last chapter-ish is the key though and explains why it is so hard to fight against.

A bit depressing in places but it's honest in it's assesment.

Recommend? Yes.
Reread? Yes.

[Patrick · Rating 4 out of 5]

Fabulous information--could have used some editing/tightening up. Feel free to skip around a bit, but the final chapters summarizing the inherent dishonesty and theft of MLM's are the best parts.

The biography of the first flaky flim-flam artist who eventually started Nutrilite is long, but it is intended to rebut the fictionalized biography released via Amway. The guy scams around the US and China, burning through cash, until trying to cash in on the also unregulated vitamin and supplement craze. He is NOT an expert in anything, let alone nutrition or science, and still sucks at the vitamin business. This continues until the moment the pace and interest of the book accelerate--two of his employees, a sleazy ex-cemetery plot upseller and a sleazy psychologist team up to create the MLM sales model to guarantee their own wealth at the expense of their downline "independent contractors," independent of the quality of the product supposedly for sale. They freeze out the founder guy and make millions. Then two of their employees, including Betsy DeVos' father-in-law, defect with thousands of others and found Amway. Amway has published a specific book with a fake, glossy version of this supposed pull-yourself-up-by-the-bootstraps story.

The information, both specific and general, is excellent. The author occasionally strays into the melodramatic with some first person warnings about the industry coming to get you, but he has been sued by MLM's previously and feels very frustrated that the government will not step in and regulate/criminalize the inherent scam of the pyramid scheme in the MLM "business model." He documents the back and forth of lawyers and executives becoming government regulators, but after fighting rules to make MLM's more honest or accountable, many score high-paying consultant jobs for the very MLM's they had previously dealt with.

He addresses the cult-like mind training of the MLM's that both milk even more money from their contractor/victims through motivational products and events, and keep them insulated from the financial facts shown to them by concerned friends and loved ones who just become "haters," "losers," or "FUD spreaders." He unfortunately takes a couple sidehand swipes at the "Mormon Church"along with this because so many sleazy, highly profitable MLM's thrive in Utah.

Bottom line: there is no real market for MLM products. That should be even more obvious in modern times with Costco, Wal-Mart, Amazon, etc. offering equal or better versions of every single MLM product at 25% of the price. The vast majority of MLM "sales" are to other contractors so they can meet their quotas to maintain their spot in the pyramid. By design, over half of the distributors who pay an entry fee and buy initial product do not even make one sale. Those who make some sales average a few hundred dollars of commission, NOT counting the hundreds of dollars they spend to get in along with the time and annoyance to their acquaintances as they are recruited. Under 5% make a "living" equivalent to a low-paying job, and a fraction of 1%, and the SAME tiny fraction who have been there from the beginning, make the fabulous riches they promise. But the riches are NOT from selling whatever product the MLM hypes, but from the entry fees, forced quota purchases, and motivational materials sold to their own distributors. They literally steal from all those who trust them. This scam hits all walks of life, but poor people desperate for a leg-up, including immigrants and minorities, get hit disproportionately hard by the salesmanship. The US MLM's have hit some limits to the scam here and are now scamming all seven continents. Local NuSkin is included in these egregious scams.

For a shorter version, I liked this interview which led me to the author and this book: https://www.youtube.com/watch?v=X-p0G...

[Kimberly · Rating 5 out of 5]

This is the #1 book I would recommend to those looking for resources in this realm.

I started keeping up with r/anti-MLM probably around 2016-17. Seeing how awareness has taken off about them in the time since is great! I've reviewed a couple other books about this in some capacity as well as an MLM themed domestic thriller that I absolutely loved.
I think there's still much more coverage of this issue in video/documentary and podcast formats, and the depth of the work in all these varies.
Most recently, I reviewed the book Hey, Hun from a former MLM participant. While that was interesting as an inside look at the scam, a lot of it was more memoir/personal drama and I wouldn't it consider it an important resource like I would this book.

Ponzinomics. It doesn't have the sleek cover design (no offense to whoever picked it, but it could really stand replacing the odd 16th century art. I have no idea what it is supposed to depict.) or an ounce of the marketing push that Hey Hun enjoyed. Frankly, it is kind of riddled with typos and makes a few small errors like mixing up who was in which recent election cycle.
But it seems to have nailed what matters here.
I was pulled in by the bizarre story of Carl Rehnborg and Nutrilite. I really, really want a dark comedy biopic about this guy. I would buy tickets to that in a heartbeat.
I'm also intrigued, since numerous other works I've read in this arena peg the earliest MLMs as being usually Avon or some soap company I can't recall the name of right now. I'm sure slightly different distinctions were used, but I've never heard this insane tale before in all the many hours of listening, watching, and reading about pyramid schemes.
I was kept in by the appalling corruption and pyramid scheme protections I learned about not just from Republicans, but most Democrats as well. Most of us know about that scum Betsy and her stolen fortune she got from Amway, but I did NOT know about the revolving door administrators appointed during the Obama administration. It's still clear which party is all about these scams (spoiler, it is republicans) but it was infuriating and disheartening to learn how deep the payoffs go on both sides of the aisle.
I'm also glad to see that the author took time to cover the cult aspect of MLMs. Granted, it's usually touched on whenever these are covered; it's hard to leave on the table if you're trying to write or produce an interesting piece. But, more seriously, it's probably the most terrifying thing about them.

A side note, I appreciate that the author included a lot of seemingly random or obscure texts that spoke to him in some way about this. Is the novel Elmer Gantry by Upton Sinclair probably a crucial reference for a book about pyramid schemes? No. But, I'd never heard about it, I do think it's relevant, and I just checked out the audiobook from my local library. These small personal influences can do a lot to remind you a real person with a real life was the one typing up what you're reading, and it can lead to the most interesting new discoveries for the reader.

[Rogier · Rating 5 out of 5]

This book is a bit of an analytical history of that very slithery scam, network marketing or multi-level marketing, where the only way you make money is because of the statistical certainty that 99.5% of people lose money. It is like the greasy pole at the carnival, nobody gets to the top, but the guy who collects the quarters makes out like a bandit.

The sad part of the story is that the law has had such a difficult time of dealing with this phenomenon, and mostly has tied itself in knots, as most recently when Herbalife was found to be not not-a-pyramid scheme, because it was apparently judged to be too expensive to prosecute them as a pyramid scheme. Therefore, MLM continues to spread its message of false hope to millions and only increasing knowledge by the public and put an end to this. Fortunately there are increasing signs that a younger generation sees through the hype. This book can provide the in-depth historical insight into how things got so far out of hand.

If it weren't so painful, it would be fun, but as it is, it is merely ridiculous.

[Scott · Rating 5 out of 5]

Excellent and disturbing about how awful MLMs are. How they are designed - on purpose - so that 99% of people never earn a penny, while the 1% at the very top rake in millions. It’s mathematically impossible for virtually everyone involved (except the 1%) to make a living doing MLM. It’s a complete scam. All of them.

It’s also disgusting the corruption is in government to protect MLMs and let them keep scamming people, because MLM bosses are very generous campaign donors to some very influential people in congress and state houses.

The FTC is basically asleep at the wheel, and basically nobody in the media or in power wants to deal with talking about these scams as scams, for fear of getting dragged through court.

The last section on the parallels between MLMs and cults was pretty funny. I’d noticed how weird MLM people acted, but it finally clicked when the author compared them to cults like “oh of course, yeah, that’s why MLM recruiters always seem so fake and weird”

[Siobhan · Rating 4 out of 5]

3.5 rounded up. I would not recommend this book as an introductory text; if you're looking for an introduction to the hazards of multilevel marketing schemes, start with the segment on Last Week Tonight or the first season of The Dream podcast. I would also not recommend reading this straight through. This book was dry as dust and needed an editor to save FitzPatrick from his tangents. I am actively interested in the subject and I found this book dry. Even though it's very clear that FitzPatrick is an expert on the financial implications of multilevel marketing schemes running rampant, it's as equally clear that he doesn't necessarily understand the communication skills required to alert the public to the scammy nature of multilevel marketing schemes (he takes a couple seemingly uncalled for shots at journalists as a class, which comes off very badly because I heard about his work FROM JOURNALISM). tldr: at least 200 level, not casual reading

[David W. Cofer · Rating 5 out of 5]

Fitzpatrick has written an extremely detailed book about the MLM (Multi-Level Marketing) industry. Unfortunately, the book is extremely detailed and a little dry. It also moves slowly and took me a while to read it, but it was worth the time.

How people fall for these schemes is unbelievable to me. But as someone once told me, people want to believe. They want to believe there is an easy way to riches. They want to believe there is a pot of gold at the end of the rainbow. But this book tells a different story.

The unfortunate story is that almost 100% of people who join MLM businesses (Amway, Herbalife, etc.) will not only never make any money, but they will lose money. And lose money in a big way. Almost no one buys the MLM products. Most "sales" are to new recruits who must by a "sample kit" or something along that line and keep buying products that they will never be able to sale in order to move up the ladder to higher rungs. Then they try to recruit others to do the same. As the book points out, it is not long before total saturation happens and there are no more people to recruit.

IF anyone approaches you to join a MLM, say no and run. And then get this book and open your eyes to the truth of the MLM industry.

[Delta · Rating 4 out of 5]

Really interesting book that was filled with good information. I learnt lots! I can't rate it higher though, because the writing just, wasn't quite there. Compared to books like Vitamania by Catherine Price, Ponzinomics just isn't written as well or as engaging. I found it fascinating because I am already super interested in Multi Level Marketing schemes, but I don't think its a good introductory text because of that lack of engagement. Highly recommend to people already interested in MLMs, but I can't recommend for people just wanting to learn about them from a beginning standpoint, id suggest other materials, such as the podcast "The Dream" or John Olivers episode on MLMs as introductory material.

[Sara (onourshelves) · Rating 4 out of 5]

This is one of those books that is all at once incredibly interesting and wildly boring. This is a great resource for two specific aspects of multi-level marketing--the history (honestly further back than we probably need) and the systems in place in the United States that are either structured or manipulated through political leaders and appointees to be favorable to MLMs. Where I would have liked to see more of is the personal aspect--not success stories, or necessarily stories of people losing everything, but a story of why besides the American Dream.

Overall, this is a really great resource, if dense and not wonderfully crafted.

[Weronika B · Rating 4 out of 5]

Very in-depth analysis of the origins and development of multi-level marketing. I enjoyed reading the book and the arguments presented by the author to support his claims. For sure, the book taught me a lot about the world of MLMs. However, what I did not like was the constant jumping back and forth, ie frequent interruptions in the storyline, which made it chaotic and at times hard to read. Further, I did not like the many irritating quotation marks on words such as “plan”, “marketing”, “opportunity” and many many others that I suppose were meant to emphasise the absurdity of the business model as seen by the author. To me, that seemed unnecessary, radical and made the book hard to read.

[Kaisu Koskelin · Rating 4 out of 5]

A deep dive into the world of multilevel-marketing's roots: present, future and and the problemacy: ethical for sure but also political, cultural and social, surrounding the topic.

I've been following the authors commentaries and articles for quite a while now and highly value his professionality and devotion in general.

The book is a through look into the immoral but human world (I guess) of multilevel marketing. Mr. Fitzpatrick's research and devotion for the subject is admirable. Also, the approach isn't provocative in any means but due to the facts of the topic itself.

[Alexa · Rating 3 out of 5]

I have clicked in between 3 and 4 stars a few times.
Thorough and detailed, this was also dry, boring reading.

I really feel like we could have been so much more concise. And I think the clincher for me choosing 3 stars was the masterfully crafted summarizing pages that I would come across. We could have just had those pages and chopped the rest! You would have lost about 1/3 of the book... possibly even whittled it down to half and kept the core message and information.

I feel like I probably missed important things in the monotony.

I would recommend podcasts over the book every day.

[Tom · Rating 4 out of 5]

Strong overview of multi-level marketing, a constant hole in the pockets of the poor (and tragically overlooked by the media). One crucial ingredient is missing: Stories of the lives of the people affected. Fitzpatrick is a good scholar, but not much of a journalist. Occasionally suffers from a few of the usual problems of self-published books – long, repetitive, unwieldy – but overall a good primer.

[Dahlia MacEachern-Author · Rating 5 out of 5]

Great book about the understanding and history of MLM's. It names different MLM's, what they do, how they started off, and tones of history around each MLM. The book talks about tactics used on people to get them to join. The manipulation, lawsuits, and indoctrination among the long of list things they do. Great book if you want to learn more about MLM's or start your healing journey from your past experiences being part of an MLM.

[CLeibel · Rating 4 out of 5]

Excellent expose with super well researched and fact based book. Audio book 1.5 times speed. Honestly, could have been a third less and been equally good. My favourite chapter was the last one and how he spoke to his publishers/agents wanted him to particular composition but he bucked it. It is only a matter of time before people realize that any network marketing /multilevel marketing "business" is a life sucking, financially sucking scam that it is.

[Ana-Maria Bujor · Rating 4 out of 5]

I consume a lot of anti-MLM content and I was not sure what this book could bring that I did not know. It seems like a lot. Without dedicating many pages to individual stories or what each MLM does, it rather tells the macro story. A very messy one involving high level corruption, many, many failures, and countless victims. And it's all allowed to continue in spite of... common sense among other things. Fascinating and highly readable analysis of a phenomenon that won't go away.

[Aurora Meier · Rating 4 out of 5]

This was extremely interesting.

I appreciated how this topic was approached- compassion for victims in MLM’s and contempt for those that ensnare.

I think most people blame victims, telling them they should have known better, but they are desperate people.

It definitely reads like a textbook, and by the end I was more than ready to be finished.

[Jeremy · Rating 4 out of 5]

Important stuff.

Where are the other works on MLMs? It's concerning that Fitzpatrick's works and John Oliver's segments on MLMs seem to be some of the few works we have unveiling how these "businesses" work.

The history of MLMs and their impact on the U.S. (or really, the world) needs to be unpacked!

[Jayasankar Peethambaran · Rating 3 out of 5]

A detailed, if repetitive expose into the crazy cult of MLM ponzi schemes of Amyway, Nutrilite etc. Fitzpatrick is clearly an authority on the subject but not the best writer about it. He seems to be still shocked by the 'success' of this defrauding cults and seems to be jaded by the constant fights with them. A good read for anyone interested in the subject.