The first paycheck I ever received was from a multilevel marketing scheme.
The employer: my mom, who’d hired an 11-year-old me as a tax write-off, one of the “secrets to wealth” in the program she’d been sucked into, and that she now sold for a living.
Spoiler: She is not now, nor ever was, wealthy as a result of living by this program.
In the late 80s, when I was in elementary school, and my parents’ marriage was still amiable, they attended a seminar by the best-selling author and self-appointed wealth guru Charles Givens, a mustachioed Floridian who promised to share the many tax loopholes he’d discovered that could make an ordinary person into a millionaire if you paid several hundred dollars, and later a few thousand dollars, to attend his seminars and become a member of his organization. My parents found the information they learned compelling and motivating, and went home and made some changes to their finances and taxes as a result.
A few weeks later, they got a call from someone in the Charles Givens Organization who asked if they’d be interested in helping to spread the word about the program. “I wasn’t interested,” my dad told me recently. “It seemed a little bit like a multilevel marketing scheme.” (It was not “like” a multilevel marketing scheme. It was a multilevel marketing scheme.)
But, my dad later realized, there was what looked to him like a loophole in their system, and they didn’t prohibit piggybacking off the Organization’s own marketing. So my parents began their pyramid scheme journey by following where the seminars would be held, calling the TV stations in those markets to find out if the Organization was running ads, and then place their own ads that ran immediately after the official ads with their own phone number to call for more info about the seminar. They collected the names and turned them in, and if any of those people showed up to the seminar, my parents got the commission. My dad says he didn’t want to push the program, which he did not actually think “anyone” could do, but just wanted to get a cut of the fees paid by those already interested in attending. I can’t help but wonder if that “loophole” was deliberate, enticing people like my parents to put their own money into amplifying the Organization’s ads while also getting to feel clever.
Of course, at the same time, there was the heavy pressure to attend ever more seminars and buy every new program themselves, and our house gradually filled with slick cases full of VHS tapes of the wealth guru himself sharing his “secrets.” Though I was young, it quickly became clear to me that this felt like more than financial advice to them. Givens was clearly a motivational pitchman selling a whole lifestyle, promising that anyone could be their best and achieve it.
As my parents’ marriage went south, my mom took sole possession of the work, and she was thinking bigger: we’d spend evenings and weekends going to every bookstore in town, putting postage paid response cards into every book by Charles Givens, encouraging people to get in touch with my mom to learn more about the exciting opportunities available to them. And she began to do the actual multilevel part of it, recruiting others to work below her, so she’d get a portion of all of their sales. We’d attend Givens seminars all over the Midwest and set up a table outside of them, encouraging people to sign up to sell the program.
All of that work gave my parents and later my mom some modest but steady income, and my mom often ranked on the list of top performers the Organization posted quarterly, recognition she relished, and which was likely more motivating for her than the actual money. And it sent my mom and me on a free cruise, which we went on when I was in eighth grade, and on it I tasted my first alcohol, bought for me by a much older man, something that only felt a little creepy at the time, but which feels much worse in retrospect. That cruise was also when I played my first slot machine and won my first money gambling.
When we went to those seminars, and especially on the cruise, we were around all these people I now recognize as lost souls. Of course the easy money promise was enticing, but those who got in deep were clearly seeking something, and being a member of the Organization felt like belonging to something big and important. My dad insists they made enough off the Organization to justify the effort and expense, which is different from most participants in multilevel marketing schemes, who spend more than they earn and are continually pressured to buy things to get started or to move up. But of course I wonder how many others followed them down the path, especially after my mom took over, and ended up losing money. Some of the stories from people who later sued the Organization are heartbreaking: the woman whose husband died after cancelling his life insurance to save money at the behest of Givens, the people who ran up credit card debt to pay for courses and membership, the elderly folks who spent down their life savings on bad investments.
Because while a lot of the advice the program offered was harmless and even helpful to people, there was a lot of bad advice in there, too, beyond the constant pressure to spend more money on courses, money a lot of people didn’t have.
It had been snake oil all along.
Fortunately, it didn’t last long. We went on that cruise in late 1992, and by 1993, Charles Givens’ empire was beginning to collapse. There were lawsuits, fraud claims and eventually Chapter 11. One of the lawsuits accused him of fraud for claiming that he made his wealth by using his secrets, and not by selling the programs, which is what he’d actually done. He’d manufactured his origin story just to sell books, and when he got the approval of people like Larry King and the TODAY Show, he broadened his sights, selling seminars and memberships and creating a company built on bilking people who just wanted a better life for themselves or their families. He died in 1998, leaving little money behind to pay those he’d harmed.
For a long time after, I assumed that anyone giving financial advice was a scammer, and was rich from selling empty promises, not from actually practicing what they preached. It’s why I’m especially afraid of tax audits and never claimed deductions like home office that we were entitled to, but which would have increased our audit risk. I know it’s why I didn’t start this blog until we were only three years from early retirement, and not two or three years earlier, when we’d formalized our goal, because I didn’t want to be associated with people promising a magical path to wealth. It’s why I’ve never monetized the blog, and make only a few dollars a month (which all go to expenses) when people buy books I recommend. It’s why I refuse to make Cents Positive and other events I do about me, because the notion of holding people up as gurus feels so dangerous. And it’s absolutely why I’ve always made a point to tell the truth about the hard parts of the journey, the mistakes, the pitfalls of early retirement itself, and all the rest. I don’t want to lead anyone down a path that might make things worse for them.
For many years, I never thought about Charles Givens or how the first dollars I made were in service of promoting his fraud. It didn’t occur to me that it had been a pyramid scheme and a scam, it was just a thing my parents did that gave me a little spending money. It had all seemed a little odd – my parents weren’t big wealth chasers, so it felt like a mismatch – but I didn’t question it. The whole experience made me wary of financial gurus in particular and scammers in general, but I filed it away in my memory. Then, listening to The Dream podcast last year, it hit me: I’d been a part of a multilevel marketing scheme, and the very worst kind: a fraudulent one that sold empty or dangerous promises to trusting people.
I’ve been thinking about all of it more lately, especially as Work Optional was coming out. I wondered if the book did well, if my publisher would want to put my face on the cover of the next one, to me a deep and incontrovertible signifier of the author being a huckster. I wondered if Charles Givens was always a fraud, or if he started out with sound ideas, and then enough people around him told him how wonderful he was that he gradually lost his grounding, and it barely felt like a lie when he wrote his fake origin story. I thought a lot about blogs that make money by convincing you that you should start a blog, a practice that feels only slightly less bad to me than multilevel marketing.
I’m telling this story today not because it has anything to do with early retirement – and certainly not for April Fools (this is not a joke) – but because I’m finally processing all these years later how that experience colored the ways I think about money and those who give financial advice, and perhaps my world view overall. I’m coming to understand that a big part of achieving financial independence was reducing my own susceptibility to tantalizing promises like the ones that first drew my parents in. If you’re vulnerable financially, there are a lot of people ready to exploit you.
It’s not always pleasant, but it’s absolutely worthwhile to do a little digging into your own past to figure out how your upbringing and past experiences have shaped your money mindset today, and whether there’s anything in there that you want to address or change. I’m certainly glad that I have.
As always, I love reading your comments, but no pressure to respond to this one. But if you have any MLM stories you feel comfortable sharing, I’m sure seeing them would bring comfort to others who’ve been victimized by schemes and scams.
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Categories: we've learned
An excellent post. I have good friends here in the UK who have been caught up in several of these MLM scams. As much as I enjoy their company I don’t see them often because I don’t like hearing their sales pitch, which they can’t help but do. What has never occurred to me before I read your post is how all of this would effect the extended family. Given that I believe everything is interconnected – of course this would be the case.
I have been writing a blog for thirteen years and if anyone following me starts to market anything for monetary gain, I un follow them…
Thank you – Janet
There are a couple of interiors bloggers I have been following who both recently started multiple MLM schemes and are selling them through their blogs. One will easily make money because of their blog reach and one will likely lose, both money and time. One I have already stopped following and the other m thinking about. Neither of them are properly identifying the #ad aspects in posts.
I know a lot of my financial and emotional issues stem from childhood and some are easier than others to deal with and improve!
When I was in University, my mom got caught up in a pyramid scheme and lost at least $5000 (which for a single mother, was a lot of money). It was so weird scam where you invested your money and then somehow made money off of the other people’s money in the pool? Honestly, it was so messed up I don’t know how my mom didn’t realize she was going to lose all of her money. What makes me ill us that these schemes/scams prey on people who genuinely want to make their lives better but don’t know how to start or have limited means to do so. Thanks for sharing your story!
This is an excellent post that highlights how experiences with money in our childhood is a huge factor in how we look at money as adults. It’s easy to think that dealing with money is just math and everyone should be able to calculate their way to retirement at some point. But in reality it’s a lot messier than that.
“The Dream” podcast by Stitcher just did a whole season on MLMs. It’s riveting and eye-opening. Your story immediately reminded me of much mentioned on the podcast.
Yes! I was going to make “The Dream” suggestion if someone hadn’t already.
I just started listening to this series and I’m hooked! Thanks for the recommendation.
I went to one of those free Givens seminars many years ago. Fortunately I did not drink the kool aid on most of his questionable strategies, but I did take away three bits of advice from him:
1. Put away 10 percent of your income in a savings account and never spend it. (This was before the idea of building an emergency fund was common financial knowledge.) This advice prompted me to start saving back then, although at a more modest 4 percent rate. Gradually I increased my saving rate to more than 50 percent.
2. Don’t mix investing with insurance. This advice has made me wary of guaranteed income investments and variable annuities, so I’ve steered clear of them.
3. Don’t take advice from people who are asking you for money. This is generally good advice. Ironically, it made me wary of buying any of his expensive courses and programs.
And I remember getting his books out of the library (early 1990s) and there was a lot of sound information in them about auto insurance, savings and other generic financial topics. Maybe he wrote them before he got too big for his britches and caused all that trouble to himself and others?
I was part of a MLM organization for about 8 years. It sold an actual product, and you made commissions when people bought product from you, in addition to selling under you. But, I also felt pressure to buy products and racked up thousands of dollars of debt in the company. I earned what amounted to several thousand dollars’ profit plus four trips during my tenure with the company, but I definitely wish I’d never joined, because I wasted so much time, effort, and money in the endeavor.
Oh gosh, I read many of the articles you linked to and this sounds terrifying.
I feel like some early retirement blogs come across as MLMs and I love that yours doesn’t, but I hate that this is where it comes from. It’s been really rewarding over the last few years reshaping my money mindset from what I learned growing up.
When I was 19, I went on a road trip with some friends. The guy driving had just gotten into a new online Amway endeavor (this was back when the internet was first starting to gain traction) and was highly motivated recruit others. He forced us to listen to CDs about the program for HOURS. It was awful but probably played a big role in my serious aversion to MLM. He was always trying to “make it big” and high hopes for quick riches through various programs. Despite his motivation, he made a lot of bad choices and eventually lost his house to foreclosure and filed for bankruptcy. I’m not saying his financial crash was specifically caused by MLM but I don’t think the messaging helped him any.
“I wondered if the book did well, if my publisher would want to put my face on the cover of the next one, to me a deep and incontrovertible signifier of the author being a huckster.”
And that’s why my wife and I like your blog and your first book!
Thank you for sharing your story. I, too, have been digging into my childhood to understand my relationship with money. I don’t have a dramatic story but there are still a lot of behaviors and spending decisions to reflect on and learn from. It can be painful at times to really think about it.
As for MLM, I’ve encountered more of these schemes as an adult. My spouse is a military officer and there is a serious lack of employment opportunities for spouses (rural bases, frequent moves to different states/countries, etc.) and so a huge percentage of (mostly female) spouses participate in these programs. It’s so predatory but I understand why people get sucked in by the promises when they lack legitimate employment opportunities.
“that could make an ordinary person into a millionaire if you paid several hundred dollars, and later a few thousand dollars, to attend his seminars”
Looks like a Chautauqua, that must be real scam!
Jokes apart, thanks for having shared your story. I always considered ONL one of the most transparent blog in the personal finance community. Your Blogging Manifesto is one of the few bookmarks in my AWESOME folder. Keep asking questions like “am I a fraud?”, they definitely lower the risk you’ll become a fraud.
I was *just* thinking about how my brother got into an MLM in the late 90s and how my parents, so eager for him to succeed in *something* for once, did everything they could to help him with it. It’s a darn shame they wasted so much energy on helping him in that, while burning bridges with their own “contacts” (ahem, family and friends) on what was ultimately a scam. He, being more lazy and after an even quicker buck, never got in as deep as your parents because he simply couldn’t be bothered to work that hard but if he’d been just a bit more motivated, he could have done a whole lot more damage. To this day I don’t know how bad it was, I’m just so grateful it fizzled out when it did.
I hadn’t thought about that in ages but it’s also why I viewed Robert Kiyosaki and all financial gurus with deep suspicion. I’m glad something good – you! An ethical blogger! – came out of one of those experiences.
Thanks for sharing this. It made me realise we got taken in my a legacy scam a few years ago which was paying a large amount of money to help us buy property. I’d read a few reviews knew it was odd but did it anyway. We brought no property and were made to feel as if we were crap investors in the process. It really affected my mindset around one of our properties and how we run it. Time to get rid of this baggage! Thank you 😊
I’ve been working on something to do with MLMs, and I’ve been thinking a lot about how… similar-sounding some FIRE discourse (or other personal finance advice) and MLM sales pitches can be. (Some MLMs ttalk tons and tons about “financial freedom” and getting more “time” to spend on what you want, though of course, what they’re selling is very different from FIRE.) And like Revanche said, Robert Kiyosaki is deep into promoting MLMs. MLM companies also like hiring big names from the self help genre to speak at their events and promote them (including Rachel Hollis, Tony Robbins, etc.)
I can also second the recommendation for The Dream podcast. I found it to be a bit of a slow burn at first, since they start with a bunch of MLMs I hadn’t heard of before and wasn’t as interested in, but it really ramps up towards the end of the season. You will not believe some of the big names and ostensibly legitimate people (from outside the self help and personal finance advice genres) who have also been involved in promoting MLMs before.
I’m so glad The Dream could help you wrap your head around MLM stuff from childhood! And thanks for sharing such a personal story in order to help others.
I don’t have much personal experience with MLMs but I wanted to share for any of your readers: the one person I know whose Facebook page started featuring a lot of MLM stuff (BeachBody shakes in this case) has a PhD in Neuroscience. It made me really understand that anyone can get suckered in and it’s not a sign of stupidity. Anyone can get suckered in! So, be kind to yourself or your loved ones if you or they have gotten suckered in.
Thanks for sharing your experience. Another thing I really don’t like about MLM companies is how people are pressured into exploiting their relationships. People don’t even realize they’re doing this. I get that there are MLM companies that have products people really like. But I’m just not comfortable buying them at all, knowing how some people over-spend due to false promises, while a few get rich off them.
I’ve been digging into my financial past as well to try to better understand spending triggers and emotions around money. Thanks for sharing your story. When I was still in college I joined a MLM that sold makeup…which is hilarious to me now as I’ve never been big on makeup. I joined a few months before our wedding day to try to earn some extra money for the wedding. I never had anyone working under me and am thankful that I wasn’t good at selling it. I lost hundreds of dollars (due to product that was needed for inventory), but at least I didn’t pass that onto a friend or family member by selling them on being a “team member.” Lesson learned!
Thank you for sharing this. As always I love it when you dig into the emotions and feelings behind financial decision making.
Although I’m fully aware that our emotions play a big role in decision making, this of course doesn’t translate into instant 100% awareness of why I’m doing what I’m doing all the time, so I enjoy hearing about how others have increased their awareness or had an ‘aha’ moment (eg in this case The Dream podcast for you).
It’s interesting to hear to MLM scam involving actual personal finance. I’ve covered dozens and only came across a couple. They were very, very tiny and I think they’ve collapsed by now. Most of the MLM scams today seem to be about lotions (beauty) and potions (questionably “health” products).
My wife was introduced to a $45 juice (MonaVie) and of course I had to write about the value of it. I didn’t realize it was just a required purchase – an admission ticket to build the pyramid at the time. The article got popular and commenters fed me more information. Soon I got emails asking me to cover other MLMs. I think I did deep dives into more than 30 become known as the “MLM PF blogger” (which wasn’t my goal). I ended up getting sued 3 times because the companies needed to protect their “Google storefront” (the first page of Google). I managed to successfully defend myself (at a great cost) and now leave it to Tina.org and their lawyers.
I couldn’t help but read this and think of other personal finance gurus. Dave Ramsey appears to have gotten his start by partnering with the predecessor to Primerica (an insurance MLM). He’s been known to give favorable reviews to MLM. Robert Kiyosaki sold Rich Dad, Poor Dad to Amway people, but couldn’t make it in the MLM himself. He’s continued to market his books to that crowd.
There’s a lot of backstory going on about Suze Orman and it seems that she’s almost like Givens but without the MLM… selling a lot of advice, some of it bad (speculate gold, personalized debit card). I looked on her website now and of course she’s celebrating her huge talk at Avon’s event.
MLM and finance? It’s all over CNBC. The brother options Gurus and their secret options courses, Cramer etc. The one thing about America is you get to self author your own life, and all time travel is forward looking, the past but a wisp of a memory.
One of the changes I made was to turn of all notifications except texts (since the kids and wife need to get hold of me). It makes a big difference not to have your phone squawking at you all the time.
I have now put Twitter back on my phone and I am now regretting it. I may follow your lead and just use it on the laptop.
Thanks for sharing this story. As a young kid, I remember the times – probably a dozen! – when various hucksters would come knocking on my parents’ door trying to con them out of money in various ways. My parents were much too polite, often listening to the long spiels. They bit once and only once, and it took decades to back them out of those “investments” that continually lost money. They have been forever scarred. These experiences had a deep impact on me to this day, and specifically have given me similar misgivings about financial blogging and writing.