Reporting Fraud / Legal
Trade Commission (FTC).
Submit a complaint about a company. The FTC protects consumers
against fraud and has an interest in stopping illegal pyramid
schemes. While the FTC does not resolve individual consumer
problems, your complaint helps them investigate fraud and
can lead to law enforcement action.
Business Bureau. Complaints against a company
can earn it an "unsatisfactory" rating in the locality
in which it was reported. Keep in mind that the main purpose
of the BBB is to facilitate resolving complaints
against businesses, not condemn them.
- File A Regulatory Tip. (FINRA used to be
NASD.) Perhaps you have knowledge of illegal practices by
a manager, or your commission checks have been withheld for
one reason or another. If you are aware of unfair practices
or specific instances of abusive conduct or rules violations
in the securities industry, FINRA wants to know about it.
(Securities & Exchange Commission) - File a Complaint.
Attorneys in the Division of Enforcement evaluate
information and tips concerning violations of the federal
- Report Tax Fraud.
If you believe a firm is misclassifying its employees as independent
contractors, you may file a tip. If you feel you've been misclassified
as an independent contractor to your detriment, submit form
The IRS can audit the firm and impose heavy fines on those
caught misclassifying employees as well as save you paying
taxes you aren't liable for to begin with.
STATE'S DEPT. OF REVENUE - Report Tax Fraud. As above.
Links to all are here.
STATE'S DEPT. OF INSURANCE - Report Insurance Fraud.
Links to all of them are here.
For insurance-related issues, contact your state's Department
of Insurance. Examples of insurance fraud that might be reported
would be inducing policyowners to lie on their applications
in order to influence rates, or even using private information
from those applications to recruit the policyowner as a rep
(yes, it's happened).
STATE'S UNEMPLOYMENT OFFICE - Obtain Unemployment Benefits.
for determination of employee classification (employee and
not independent contractor) so you may obtain unemployment
benefits. Each state sets its own standards for determination.
Links to all states are here.
STATE'S DEPARTMENT OF LABOR - Report Labor Violations.
List of them here.
Report possible misclassification of employee as independent
contractor, ask for a determination.
STATE'S ATTORNEY GENERAL - Report Legal Violations.
Links to all of them are here.
Report suspected fraud to your state's Attorney General, who
can investigate and prosecute possible illegal pyramid schemes
(those fall under CONSUMER PROTECTION).
AD MEDIA. IMPORTANT!
If you were recruited through a newspaper or online job search
site, report the exact nature of the deception occurring within
its media. Most media feel a public responsibility to remove
fraudulent job postings and will do so if enough complaints
are received. (See Monster.com's policy here.)
Many media guidelines state that a job advertiser must offer
bona fide employment, not an independent contractor or commission
gig (these must be posted under "business opportunities"
or "sales positions"). Remember, scammer
firms cannot remain solvent if they cannot recruit,
so your participation in this can aid in shutting them down
when other regulatory actions fail or take too long in catching
(Direct Selling Association). If your company
is a member
of DSA (for example, Primerica), then it must technically
abide DSA's "Code
of Ethics". File a "Code
Complaint". Note that although the DSA requires a
one-year pending membership period during which it examines
the potential member "to ensure compliance with all provisions
of DSA’s Code of Ethics" (*),
a number of their members have been found by courts and fined
by the FTC as engaging in pyramid schemes (Equinox, Omnitrition,
House of Representatives.
Find your local legislator. Write to him or her in support
of legislation that will protect consumers of jobs against
businesses that misrepresent opportunities.
Association of Attorney Generals.
Locate your state's attorney general. Write to him or her
in support of legislation that will protect consumers of
jobs against businesses that misrepresent opportunities.
Find out how to protect yourself against "Strategic
Lawsuits Against Public Participation." Includes list
of states with anti-SLAPP laws.
Article on "SLAPPs".
Interesting examination of Amway's
attempts to protect its image. Supports
argument that a company need only name or continue to
name critical website operators as defendants in unrelated
cases to drain their finances and force closure of their
sites. All cases were dismissed, but most site operators
were harrassed into closed their sites because of mounting
legal defense costs.
Anonymous Internet Foundation, Inc.
May be able to help SLAPP targets obtain legal representation,
even on a pro bono (for the public good) or reduced fee
basis. Update 2009: Site does not appear to be maintained
but is still active.
page for a list of message boards you may use to learn about your
firm as well.
Research Your Company
Criteria for Independent Contractors vs. Employees.
Make sure your firm has classified you correctly. Ask the IRS
to make determination by filling out Form
If you've got an inkling that the
firm could be crooked, don't miss this step. Call
the court in the firm's jurisdiction and ask the clerk to look
up cases in which the firm's name is mentioned. A large number
of cases could certainly indicate trouble. A case with a large
number of plaintiffs could be a class-action suit. Some courts
provide past court cases free online. For others, you can request
print copies for a reasonable fee. It's public record. (Unfortunately,
a firm can use a plaintiff's "independent contractor"
status to get out of being named in the lawsuit, so you still
might miss any signs of wrongdoing.)
Investment Advisor Public Disclosure site (FIRMS
ONLY). Do the "Investment Advisor Search" on your firm.
Note any marks on their "Disclosure Reporting Pages."
(Securities & Exchange Commission). Use the "search"
function to research your firm. Be sure to put the firm's name
in quotes. Note any regulatory actions. If you're interested in
a bit of background about the SEC, check out Reality
at the SEC (archived). Author Gary Goodenow worked
for the SEC as attorney and offers
opinions on why it is so difficult to shut down scammers.
Fascinating site from a former insider.
(used to be NASD; search Individuals & Firms). Look up your
firm or broker and make sure they are registered in your state
(use FINRA's Brokercheck).
If the broker offers securities and yet is not listed at all with
the NASD, BEWARE. If you will be paying for licensing, check FINRA's
rates for licenses you need and don't overpay for hidden training
Business Bureau. The Better Business Bureau is
not necessarily a good source for learning about a company's reputation
with employees, but you can learn how the business treats
its clients. Complaints stay active for a very short period of
time, however, and full individual complaints are not publicly
searchable. At worst, the company gets an "unsatisfactory"
rating, and then only in the locality in which it was reported.
BBBs are discrete localized entities, not a single national watchdog
entity. Keep in mind that the main purpose of the BBB is to resolve
complaints against businesses, not condemn them. (A negative
opinion of the BBB can be found in the red link text on this
RipOffReport.com page -- it alleges that BBB membership is
bought, not earned. However, the same can be said of RipOffReport,
businesses to pay to join their "Corporate
Advocacy Program", which then conveniently improves the
business's image on the site. For instance, much-maligned Primerica,
which appears to have over 600 complaints on RipOffReport, now
has text on each complaint page indicating that it is "approved"
by RipOffReport as a company that consumers may have confidence
Locate people you worked with at the firm to get their stories.
You may not be alone.
page for a list of message boards you may use for research as
check Section V. (Complaints Against Specific
Financial Services Companies) below to see if your company
has earned its own critical website(s). You may want to add your
own complaints there.
the Internet. Don't forget that you can target search
results better by including the company name in "quotes".
If you suspect the business is unethical, do a second search including
words such as 'scam', 'fraud', or 'lawsuit' after the quoted company
name. However, keep in mind that many websites are forced
to close by the companies they're complaining about (SLAPP
lawsuits), so the Internet can be a shaky way
to find complaints! Note that you can often find archives of a
website via www.archive.org.
MLMs (multi-level marketing organizations)
got a connection with the financial services industry (among others),
and in my opinion, it ain't good. While you should certainly visit
the sites below, I've compiled everything
you need to know about MLM into
a single article conveniently called "ALL
YOU NEED TO KNOW ABOUT MLM". I wrote this
opinion article to educate consumers on my beliefs on how MLM's
questionable legality was established, why it continues to flourish
despite defrauding millions of consumers, and how it's silently
spread to other industries (including financial services) to defraud
even more consumers. If you're in an MLM, you will learn how to
operate your business "legally" and avoid getting scammed
and inadvertently scamming others you care about. Seriously,
don't leave this site without reading it.
& Teller: Bullshit!, episode "Easy Money"
(Season 8, Episode 5). Penn and Teller are magicians who teach
the public about ways the mind can be fooled, and more indirectly
why applying skepticism and scientific reasoning is so important.
Be warned, however, that their Showtime show does generally use
profanity and nudity to make its points. Watch to learn their
conclusion on MLM. Ways to watch: 1) support Showtime by
subscribing (some cable stations make the show available On-Demand);
2) buy the season DVD or individual streaming episode when it
comes to Amazon.com;
or 3) look for the episode on Youtube
or other streaming video sites.
MLM or Network Marketing (MLM-TheTruth.com).
The Consumer Awareness Institute's Dr Jon Taylor runs this extensive
site dedicated to consumer education about MLMs. He and PSA's
Robert Fitzpatrick offer to help as they can with providing relevant
testimony in some MLM cases. The site does not currently have
a newsletter, but you may want to refer friends and family in
MLM to it so they can learn why the negative hype about MLM exists
and how they can protect themselves. For those wanting the answer
to the big question of "Can I Make Any Money in MLM?",
start by taking Dr Taylor's 5-Step
Do-It-Yourself MLM Evaluation. It's a very accurate eye-opener.
Scheme Alert (PyramidSchemeAlert.org).
PSA President Robert Fitzpatrick publishes "Action Alerts"
for consumers to join. Sign
up for the newsletter so these alerts can be sent to you via
email. As of this writing, PSA was sponsoring a petition
you may sign which will be used to lobby for better consumer protection
against "Pyramid Selling Schemes, multilevel Marketing Scams,
Ponzi Investment Frauds, Bogus 'Business Opportunity' and 'Work
from Home' Schemes." And remember that Mr Fitzpatrick is
one man and can't possibly keep abreast of everything, so if you
learn of a pending law in your state that consumers need to fight,
the FTC Lets MLM Run Wild in America (2007). Anti-MLM.
Wrong With Multi-Level Marketing? Anti-MLM. Note
the section on "market saturation."
10 Big Lies of Multi-Level Marketing. Anti-MLM. Attempts
to debunk pro-MLM arguments.
From The Pyramids: Why Nearly Everyone Loses Money in MLM, but
So Many Keep Trying. Anti-MLM. Demonstrates the saturation
argument against MLMs.
Lessons for Consumers from the Equinox Case.
Anti-MLM. Equinox International was shut down by the FTC in 2001
as an illegal pyramid scheme. Topics covered include why illegal
MLMs (pyramid schemes) can appear so legitimate, and why they're
so hard to shut down.
Watch.org. Anti-MLM. Medical doctor and skeptic Stephen
Barrett has compiled a very good resource base of articles on
the MLM industry. Includes investigative reports.
Multi-Level Marketing (MLM). Anti-MLM. Includes a
brief history of MLM and why it can be argued to be obsolete.
In 1996, after ten years of "pointing out the fallacies and
falsehoods of MLM and its hucksters", LawDawg moved on to
other pursuits and his blog went offline. This link is to the
archives. I found it necessary to click anywhere on text and highlight
all text (CTRL+A) to read much of it, but it's all worthwhile
reading. Note in particular his "Introduction
to Pyramid Scheme Math". He didn't find it necessary
to prove that within so many levels the MLM's participants would
exceed the population of the world. Instead, he simply noted that
after a very few number of levels, most pyramid schemes characteristically
maintained that the bottom level would always be a certain percentage
of participants (in his case a 1x6 matrix after only 3 levels
yielded 83.3% ad infinitum), and if that bottom level
cannot make retail sales to people OUTSIDE the scheme because
of market saturation, it will ALWAYS lose money. MLM by its very
structure contains no controls for market saturation.
MLM File. Anti-MLM. One Ex-MLMer's 35-year experience.
His motivation for creating the site: for "the hundreds of
people I have personally known who have 'failed' in MLM, many
of whom I directly caused to be recruited." Also includes
the author's answer to the question "Is
There Really 'Outstanding Growth Potential for MLM?";
you might guess his answer is "no, the rich just get richer".
Today: Don't Get Taken By Multi-Level Marketing.
Anti-MLM. Author advises: "Never, and I mean never, sign
up for a multilevel marketing (MLM) program"; lists why.
Saturation in MLM. Anti-MLM. Product saturation versus
business opportunity saturation -- what is really being sold?
Why recruit your own competition?
Millenium Project's Section on MLMs.
Anti-MLM. Author Peter Bowditch's entertaining opinions on and
experiences with MLMs. Many comments on individual MLMs.
Lies of MLM.
Pro-MLM, believe it or not. Warns MLMers against perpetuating
some lies that less scrupulous MLMers made up, such as "MLM
is the wave of the future" and "20 percent of all millionaires
in America were created through Network Marketing".
vs Traditional Business. Pro-MLM. MLMer attempts
to dissect the differences.
Pro-MLM. MLM attorney Jeffery Babener, an active spokesman for
the MLM industry who assists the DSA in compliance issues and
who has counseled MLMs like Melaleuca and NuSkin, provides an
excellent site detailing many issues relevant to the industry
as well as a pretty detailed history of MLM regulation.
Zealots: Do They Have A Point?
Pro-MLM. 10+ year MLMer Leonard Clements offers pro-MLM rebuttals
against some popular anti-MLM websites.
Directory of MLM Companies. Find out if the company
that contacted you is an MLM using this searchable alphabetical
Pro-MLMer Rod Cook attacks pyramid schemes and abusive MLMs. Fascinating
site including many legal cases.
Selling Association (DSA). Pro-MLM. Members include
multi-level sellers such as Amway and Primerica; single level
direct sellers such as Mary Kay & Tupperware - which are curiously
no longer listed in DSA's
public directory (note historical capture as of Dec.
12, 2005) as being single-level. Note also that there
is now a "Public" DSA Member Directory available to
the general public, and a "Private" DSA Member Directory,
available only to DSA Members; the change occurred around Dec.
Books on the Financial Industry
Just a few, feel free to suggest some. If you're really on a budget,
you can try getting them from ebay.
Links below go to Amazon.com,
which has used books for sale as well.
a link or correction / Report a dead link
DON'T MISS THE NEXT
PAGE ON MLMs!
there is now a new "MAIL
FROM READERS" page to peruse.