Pyramid Scheme Disguises Itself as a Multi-Level Marketing Company
In the past five months, more than 150 consumers have complained about a Wisconsin-based company, 30 Day Success Formula. Consumers have reported total losses exceeding $150,000.
30 Day Success Formula, which has an F rating with the BBB, uses three Wisconsin addresses – in Oak Creek, Kenosha and Mt. Pleasant. All of them are rental boxes at UPS Stores.
According to the complaints, the company promises consumers they can earn thousands of dollars when they become a member for a fee. However, the only “product” they receive when they join are flyers to help them recruit others into their program. If consumers didn’t receive at least their initial investment back within 90 days, the company would refund their money, complainants said. Flyers weren’t sent on their behalf, and promised refunds were never issued, according to the complaints.
Pyramid schemes have been around for decades, and differ from legitimate, multi-level marketing (MLM) companies that sell the company’s products through independent salespeople. Pyramid schemes are illegal and focus on making quick profits that are earned by selling the right to recruit others. The entire purpose of the scheme is to get your money upfront. There is no real product to be sold. When the supply of willing investors runs out, the pyramid collapses, and most participants lose their money.
Complaints have come from consumers in 38 states, including Alabama, most of which have not been responded to by the company. Consumers say they lost between $89 and $12,500 each. In addition, the company did not respond to BBB’s requests for basic information, to substantiate claims made on its website and to correct a pattern of BBB complaints. Several complaints state that they were required to send cash via overnight delivery when they joined.
Many complainants state that they heard about the company through social media posts and advertisements, including endorsements from social media influencers. The company’s online BBB profile has been viewed more than 5,600 times since March 2019.
BBB offers these tips to consumers to help them spot the red flags of an illegal pyramid scheme:
- Beware of any plan that makes exaggerated earnings claims, especially when there seem to be no real underlying product sales or investment profits.
- Beware of any plan that offers commissions for recruiting new distributors, particularly when there is no product involved or when there is a separate, up-front membership fee.
- If a plan purports to sell a product or service, check to see whether its price is inflated, whether new members must buy costly inventory, or whether members make most “sales” to other members rather than the general public. If any of these conditions exist, the purported “sale” of the product or service may just mask a pyramid scheme that promotes an endless chain of recruiting and inventory loading.
- Beware of any program that claims to have a secret plan, overseas connection or special relationship that is difficult to verify.
- Beware of any plan that delays meeting its commitments while asking members to “keep the faith.” Many pyramid schemes advertise that they are in the “pre-launch” stage, yet they never can and never do launch.
- Finally, beware of programs that attempt to capitalize on the public’s interest in hi-tech or newly deregulated markets. Every investor fantasizes about becoming wealthy overnight, but in fact, most hi-tech ventures are risky and yield substantial profits only after years of hard work.