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Many years ago, a con man came to my church. I belonged to a small working-class congregation in rural Kentucky. Although most of the members had jobs, many folks were struggling, living paycheck to paycheck and desperate for some degree of financial security.
Enter the con man. He was starting a new multilevel-marketing plan featuring diet pills. MLMs are nothing new, and many of them operate quite legally across the country. Legal MLMs make their revenue primarily from their products. An illegal MLM, by contrast, is little more than a pyramid scheme, with participants earning money almost exclusively by recruiting new participants.
A pyramid scheme is inherently unstable. The instant its recruiting pool dries up (which can happen remarkably quickly), it runs out of cash. Most people lose money, but the founder of the scheme can often pocket extraordinary profits.
I knew the MLM at my church was a scam the moment I heard the pitch. “If you want to take the pills, fine, but don’t worry about selling them. Just bring in your friends, and let your friends bring in their friends, and you’ll start building your business, fast!”