Hello, everyone and welcome back to an all new episode of The Financial Confessions.

I am-- I know I say this a lot, but I have to give extra emphasis this time-- incredibly excited for this episode because it is probably the most hotly requested topic in terms of the intersection between finance, media, pop culture, our daily lives, social media. Basically everywhere we go this has become a more and more prevalent topic, for both better and worse.

I am talking about MLMs, pyramid schemes, and basically all of the other get rich quick stuff that you're seeing both on your Instagram feed and also probably in all kinds of series, and documentaries and exposes. It's something worth considering that despite the pandemic having such an enormous economic toll, it also was a context in which these schemes, which many people on some level know are not legitimate and don't lead to success for most people, managed to thrive. And it is particularly that resilience in popularity, even through a devastating economic downturn, that made me want to have an expert on to talk about what these kind of schemes are, why they continue to be so popular, and maybe how to become even better at not only avoiding them ourselves, but also helping people we might know and love not fall into them themselves or get out once they're already in.

And before we hop into our interview with today's guest, I want to thank our sponsor Avast for supporting today's episode of TFC. Avast's new all-in-one solution, Avast One, helps you take control of your safety and privacy online. So learn more about Avast One at Avast.com.

My guest today just happens to be an expert on all of that. He is a professor of marketing at the College of New Jersey, and his name is Dr. Bill Keep.

Welcome. Thank you. Thank you for the invitation.

So as I mentioned, you have a class specifically on these subjects. Can you tell us a little bit about it and how you got into this space in the first place? Sure.

Well, I think the class focuses mostly on what I would call trust-based fraud. So Ponzi schemes, of course, and multi-level marketing style pyramid schemes, which I've been involved in since about-- 1996 was the first time I was involved in a case. I was then a professor at University of Kentucky, and the Department of Justice came to the business school to ask for some help to prosecute a couple who were running a scheme.

And this is a little bit unusual, and it was criminal prosecution. The couple went to prison for 10 years. Wow.

What made it criminal? It's a choice actually on the prosecutors-- the prosecutor can choose. The DOJ has a choice.

The FTC does not. The FTC can only bring a civil case. They can recommend it to the DOJ.

But the DOJ can choose, do we want to go civil or criminal. And there are different conditions, and I'm not a lawyer, but there are some differences. So when you were brought into the case, you were brought in as an expert?

Yeah, I was a fairly young professor at the time. And they came to the business school and said they were looking to prosecute this pyramid scheme. And I said, I don't know what a pyramid scheme is.

And he said, well, they say they're doing retailing. Well, I was the retail expert at Kentucky. I taught retailing for many years.

And I said, well, I can definitely tell you if they're doing retailing or not. And of course, they weren't. Like pyramid schemes, in general, have little or no actual retailing to the public.

So then I started getting phone calls. I was in some private cases, a case between Procter & Gamble and Amway. I was in some state cases.

I've worked with the FTC, the SEC, and have a couple of private cases right now. So are all MLMs pyramid schemes? And how do they differ?

That's a really good question. And I certainly have colleagues among MLM critics who would answer that by saying, yes, they're all. I have not said that because I'm an academic.

I like to see data. And this is a notoriously opaque industry. We have a very, very hard time getting data.

We do know that, for example, in the case of AdvoCare that had operated for 25 years, and finally the FTC shut it down. So we know that what looks like a legitimate MLM can operate for many years and actually be operating a pyramid scheme. Now, what I'm personally-- and we've done a lot of videos, articles, all kinds of things on the subject of MLMs-- and what I still feel that I don't fully understand is what really separates an MLM from being legitimate.

I mean, Amway is still around, unless I'm mistaken. Amway is around. Let me just touch on Amway specifically for a moment, and then I'll go back to your question.

Amway is the only company that faced a pyramid scheme charge with the FTC and defended themselves. Successfully. Successfully.

Well, but so how are some-- and Amway is just one example. There are many. Mary Kay still exists and things like that.

What separates the ones which are able to operate for so long successfully, and the ones which get labeled a pyramid scheme and go out of business? Well, the prosecution is at the discretion of the prosecutors, of course. And in a sense, choosing to prosecute a case is almost like being a policeman and deciding which speeding car you're going to stop on the highway, right?

You're not going to stop them all. And it's too resource-intensive. These cases can take years to prosecute sometimes.

Sometimes not, sometimes they'll fold right away. The case of BurnLounge took seven years. It went through the appellate court.

So it's a prosecutorial decision. Will you go after this company or not? Sure.

What we know distinguishes them is that multi-level marketing companies that have little or no consumer demand beyond the distributors themselves have been successfully prosecuted. Now that doesn't mean that all the ones that could be prosecuted have been prosecuted. Right.

It just means that when we look at the ones that were successfully prosecuted, one of the things they had in common-- a key thing they had in common-- was that they did not have-- they could not demonstrate consumer demand for their products beyond the distributors themselves. The other thing they always have in common is deception, in terms of maybe what the product would do or how much money you could make. So misleading product and income claims has been systemic to this industry since the 1940s.

Now something that has always confused me is there have to be elements of these MLMs that could just cease to happen from inception if we change the regulation around some of these things. Yeah. We as citizens-- and I'm including myself in this, even though I've been looking at this industry for a long time-- we don't always understand what gets turned into a law, and what doesn't, and how laws get prosecuted.

So for example, and I'll draw a parallel here-- there is no law against insider trading. There is no law against pyramid schemes. The law that has been established is case law.

So in other words, there's no piece of legislation that defines insider trading or piece of legislation that defines a pyramid scheme. We might wish there was. And there have been times in the past when there have been legislation introduced, way back to the 70s in the case of pyramid schemes.

But no law has ever been passed. Now the industry has been trying to push a law that would essentially mean that the only people that they need to sell to are their own distributors, which would be contrary to 30 years of case law. Something we see a lot in MLMs are overlaps, sometimes just sort of figuratively, but sometimes quite literally, with cults.

That's right. You know, I don't know all of my NXIVM fans out there, but I mean, aside from the fact that it's sort of operated itself as an MLM, the cult leader got his start in other well-established MLMs. And we see that a lot of the psychology around the two seem to line up.

And people who get out of MLMs often will refer to themselves as having been in a cult. Can you explain a little bit about that particular aspect of the psychology and the success of them? I can do a little bit of that.

I don't want to pass myself off as a cult expert. And I was tangentially involved in the NXIVM and that we were-- I was about to go to court against him when he fled to Mexico. A celebrity is in our midst. [LAUGHTER] We know-- and I used the term earlier, a trust-based scheme.

We know that you can use the term affinity marketing, warm markets. We know that we try to find something, a shared value, whether it is an economic situation, having a baby, hours got cut at work. The whole range of things where we will capitalize on that connection and then we will reinforce this through, not just the person that connected to you, but everyone else as well.

Right. One of the very deceptive aspects here is the conveyance of the notion that there is a path to success and that it's knowable. And so you will hear that if you just do these things, if you follow the path that I went, and I'm the successful example, you too will be successful.

That message in itself is deceptive. Right. I mean, to be fair though, it somewhat feels like a bit of a microcosm of the American dream when you look at the stats.

I mean, the idea that when we have fairly low class mobility compared to other developed nations, the idea that there's this path to success seems pretty anchored in our culture, would you say? I think that's exactly right. Yeah.

So obviously, as I mentioned in the intro, we've seen these things gain in popularity, not just after the pandemic and during the pandemic, but also during a flourishing of a pretty robust anti-MLM movement, in which we occasionally participate. How do you see the cognitive dissonance between the information and the popularity of how bad these things are becoming so widely available, and then becoming even more successful? Yeah.

I think, first of all, in the United States, they aren't becoming more successful. They're becoming more plentiful. Right.

According to the industry's data-- and like I said, this is a very opaque industry-- but according to the industry data, as a percentage of US retail sales, multi-level marketing has actually been declining. And I have put out a couple of short pieces on that. And the industry has not refuted them.

We believe that the industry is up against headwinds in the United States right now. And we believe that the anti-MLM movement has been a real part of that. It's not the only part of it, but it's been an important part of it.

And a number of them have, of course, reached out to me and others. So I think that the industry isn't as healthy as it portrays itself to be. But where it is healthy is internationally.

The first thing, if you're going to develop one of these schemes, the first thing you're going to do is you're going to go international. You're going to do it for two reasons. First, you're going to do it because there's a whole market out there, and their regulatory environment is probably even more ineffective than ours.

And the second thing is it sounds like it's more legitimate. We're now in 10 countries, or eight countries, or whatever. Yeah.

We're scanning people in 10 different countries. Exactly. One thing that I have noticed in particular over the past two years that seems like a pretty interesting overlap is in the time of the pandemic, we've seen a pretty incredible proliferation of pseudoscience, of dubious health claims, of alternative medicines that are no such thing.

And a lot of that dovetails really nicely with the MLM movement. We recently did a video where we talked about specifically essential oil and, you know, faux health, MLMs. Can you speak a little bit about that sub-genre of MLM in particular?

Yeah. It's very interesting. I'm going to make a little bit of an analogy here.

When we had our housing crisis, to some extent the housing crisis was the result of the mortgage initiators going from protecting buyers to facilitating sellers. Right. And when we securitized mortgages, that allowed for that switch.

And the reason I mention that as an analogy is because when you decide to become a distributor for an MLM company, you take on a dual role. You must keep purchasing, or you won't be eligible for income. So the MLM locks you in.

The irony of this being capitalism and free enterprise is that when you join an MLM, you actually leave the marketplace for those products, and you commit yourself to that company's products only. Because you're going to have to spend that money every month, or whatever the requirement is. But at the same time, the only way you're going to get successful is when you put your seller's hat on.

Right. And once you put your seller's hat on, what makes you want to pursue that income is the notion that this is the most wonderful product you've ever heard of. I'm going to convey that to my friends.

It was conveyed to me, I bought in. I'm going to convey that to others. And so we begin to overstate the qualities of the product to the point of just flat out lying.

Right. Curing cancer, treating autism. Outrageous, untruthful things being said by thousands of people, all in the effort to pursue income.

Do you feel-- and this is a bit more of an existential question, but especially as an academic, as a subject matter expert who even in some of these questions goes out of your way to narrow the field in which you can really claim expertise, do you feel overall optimistic or pessimistic about the internet's proliferation of information with a simultaneous flattening of expertise? Because I feel like that is a big contributing factor to MLMs, as well, especially in that space. That's a really good way to put it, and it's a very interesting question.

Because I think that we in academia, of course, I think have been struggling since the internet as if we're competing against it in exactly the same mode you're talking about. My students are self-assured that they can go out and find whatever they need on the internet, whether it's true or not, right? Right.

And so that's exactly what's happening. The internet is a very uncaring place. Right.

But yet we go there a lot. Sure. And so there's a sort of contradiction between wanting that connection and even wanting to trust the connection emotionally, and then intellectually knowing that this is a swamp.

This is a two-part question, but do you feel that the disclaimers that social media-- and I feel like it's not a sufficient attempt, but that social media platforms are starting to put on potentially dubious or misleading information, do you think that those are helpful on aggregate? And then secondly, do you think those sorts of warning labels should be put on promotions and content about MLMs? Yeah, most MLMs will use some disclosure.

And I know social media outlets are also. The Federal Trade Commission has used a notion called net impression, which means the disclosure doesn't mean much if all the other messaging is in the opposite direction. And so that's one aspect of it.

And I also think that the trick to MLM is the personal connection. So if I say to you, you're such a bright young lady, and I know that there are still things you want in life, and I've got an opportunity for you. It's just not for everybody, but it's a good opportunity for you.

And I start building that up for you, even though I'm going to show you data that's going to show most people can't do this successfully, I'm going to convince you that you can. Yeah. Yeah.

So how does one-- and this will kind of get us into a lot of our audience questions-- how does one fight against it. and protect themselves against it, for themselves, but also for the people? I mean, even as much as I talk about them, I have family members who've gotten into MLMs. Well, we all have, I think.

At this point. The easy answer is to say just walk away from it. People won't walk away from it, at least not everyone will.

But the easy answer is to say, we know for sure that your probability of success is very, very low. And we also know that the people who have been successful continue to be successful, meaning there isn't a lot of room at the top. Right.

And so I use the term top earner persistence. If top earners persist in an MLM, and they do, then in fact what is the probability of you achieving that level? And how do people achieve it, also opaque.

So in other words, the industry will give you a single answer to every question about how do people get successful. They achieved it because of hard work. I believe that's not true.

I believe that hard work is not correlated to success in the MLM industry. Or in America-- sorry, continue. Or in America.

Now if you see someone who worked hard and is successful, then that doesn't mean it was causal, or it doesn't mean that in every environment, if you did the exact same thing that person did, you'd be successful too. Right. But the message from the MLM is exactly as I described.

That you see these people up on stage, or you see these people with these lifestyles, that's duplicatable by you. Sometimes the message is it's duplicatable by everybody. Clearly not true.

Right. Even just statistically makes no sense. It makes no sense.

But I do think that-- and this goes back to your earlier point about social mobility because I am someone who did achieve social mobility. I do think that our social mobility is pitiful. And as I'm sure you know, our income inequality here is now as unequal as it was in the 1920s.

It's never been that bad. I have concerned college students, and we have a whole generation of people who are wondering, how do I get what it is that other generations have gotten? Now sure, we're all aspirational and we may not get everything we want.

That's fine. But we have to be able to see some paths. Right.

I similarly changed social class, and in doing so, have become even more convinced that it is not possible for the vast majority of people, in terms of the number of things that have to go right in order for it to happen. And we see that all the time in terms of-- I think it's more than half the country, slightly more than half the country doesn't have enough to cover a $500 emergency in cash. They have to put it on card, and so forth.

So that means that even a huge part of ascending in class is just nothing bad happening for a long stretch of time, which is something that even the hardest-working person can't control for. But part of what I think makes these MLMs so persistent is the fact that their ethos and their mythology is 100% tied into the broader American mythology. Well, I mean, it is.

And they have wrapped themselves up in that. Amway, the American way, free enterprise is promoted within the MLM industry all the time. Yet, like I said, when you really look at it, it isn't free enterprise.

First of all, you're buying in to commit yourself as a customer. And second of all, you are not an entrepreneur. You have no control over the product.

You have no control over the price. You have no control over the primary promotional messages. Right.

All you can do is try to get other people to believe what you believe. And on that note, I want to take a quick pause and once again, thank today's episode sponsor, Avast. As a digital first media company-- and as you can tell from today's episode, digital safety is incredibly necessary in all forms and is something that is extremely important to us here at TFD.

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Well, on that note, though, it has quite a lot of similarities to organized religion. We recently filmed a video talking about some of the overlaps between some organized religions and MLMs and other financial schemes, because they do tend to proliferate in certain churches. Can you speak a little bit about that connection?

Yeah. It's fairly common to see a religious theme. We've seen it both in MLM-style pyramid schemes and financial pyramid schemes, often called gifting clubs.

Can you talk about what a gifting club is? Sure. A gifting club is me inviting a bunch of friends around, and I say, things are tough, but I've gone into something where if you put in $1,500 and you go on, get a few more people to put in $1,500, within three steps or whatever, you'll walk away with $6,000, $8,000, whatever the amount is.

It's a pure money transfer scheme. And naturally, the bulk of the people are still at the bottom who have put their money in and haven't gotten any money. And these gifting clubs date back decades.

Wow. So sorry, you were saying we do see overlap between. Yeah.

There's been a religious theme, and you'll hear people speak from the stage thanking God, thinking their faith for causing them to be successful in an MLM context. They talk a lot about family. They talk a lot about praying.

And so we have, again, we're trying to bring in the distributor into our world. And that means they need to not be as much in their old world. And that's why we end up also seeing divorces, a family member not talking to each other anymore, those kinds of things.

Because we're going to bring them into our world of belief. And faith in religion and faith in what this person is telling you from the stage aren't too dissimilar. Now as I mentioned in the intro, this has been incredibly highly requested.

So we have a substantive list of audience questions that I will hop into. So this one is interesting. Is it possible, or is it such a thing for an ethical MLM to exist?

I think it is possible. I wrote a piece that was in CNBC a few years ago. You would have to structure it a little differently than what we're seeing.

All the MLMs that I'm aware now follow an endless chain scheme recruitment pattern. Could you limit that so that recruitment wasn't the main emphasis and that you were actually doing what we used to call in the old days as direct selling? The Direct Selling Association likes to call that-- use that term now.

But in fact, the Direct Selling Association is simply representative of the MLM industry, and not what we would say old school Avon. But yes, to go back, could it be ethical? If it was structured properly and if it was transparent enough, I think it could be.

And in that case, you're talking more about a door to door salesman type thing. Yeah, party planned also can be very popular. There is a social aspect to getting together.

People have been selling to friends and family member, many things for a long time. Your cousin does your car insurance, or something like that. A friend is a real estate agent, those kinds of things.

So there has been, and there's nothing wrong with that component. But first and foremost, you must actually be moving the product or service. People must be the actual consumers of it.

Yeah. We need to have people who don't have a vested interest in getting other people to become distributors themselves. Is it always unethical to buy a product from someone you know who's in an MLM?

Is that just sort of enabling them? Yeah. I'm not comfortable labeling it as unethical because I think we all do things for people we care about, and we think we're being helpful.

But I think enabling is the right term there. When you become a distributor initially, you have a great deal of hope. That's why you did it.

And so if my niece or nephew came to me and said, Uncle Bill-- they wouldn't come to me because they know what I do. But if they did, you're going to have that inclination to want to be helpful. But it won't go away because they need to persist.

And in the end, they need to recruit. One of the things actually on that note that I wanted to ask-- so in my opinion, one of the things that makes it such a resilient industry comparatively is the fact that it can be very difficult to differentiate and very blurry to differentiate between someone who's a victim of an MLM, and someone who's sort of a predator of an MLM. And especially as you get towards the top, we've watched these documentaries where you have people who've made quite a lot of money.

They're not the founders, they're not the owners of the company, but they've made quite a lot of money by duping and exploiting other people. How do you kind of determine-- and I don't think it should be a line where we separate people-- but at what point does our response and our obligation to people become different based on where they are in the chain and what they're doing? Yeah, I think that's a good question.

And when we look at multi-level marketing companies, we will see a layer of recruiters that could care less about you as a person. They're just good at this. Right.

And so for my mind, that's where the line is drawn. The people who have connected with their family and friends, I want to call them victims, even though they're also recruiting their family and friends. They're pursuing an opportunity.

We know for sure that 90%, 95%, once we include expenses, are going to be in a financial loss position. Sure. They're never going to make the income that they were pursuing.

That top layer, I would call those predators. They don't really care. And in cases, they just move from one MLM to another.

Put those people in jail. OK. I've tried, actually.

Ooh, this is a really good question. Why have MLMs so effectively targeted the Spanish-speaking community? I think because that community has fewer ready options, economic options.

It's tight-knit, it's among themselves. There are people among that community, of course, who are undocumented. It's a community that's very faith-based.

And I think that it really lends itself, if you read or heard much about the Herbalife situation and when Bill Ackman did the short against them, there was a whole section there on the Hispanic community. So I think that they're a community that thinks that they are prepared to work hard. And that they hear that this is the requirement to be successful here.

They're prepared to do that. But we're again talking about trust-based recruitment. A Hispanic person recruiting a Hispanic person, recruiting a Hispanic person.

I mean, it seems like whether it's a religious group, or military spouses, or the Hispanic community, Latino community, we're sort of in a situation where any time there's a tight-knit group of people with fairly limited options in many cases, depending on the given situation, those are going to be the prime targets. I think that's right. I think that you have shared, and I listened to some of that about your own path, and mine too, where I reached a point with my wife, having been married so young, that we just didn't know where we were going to go.

The path was just really uncertain. You have two problems. First of all, you got to make sure you pay your bills this month.

And the second problem is, how am I going to change my situation. Right. And the MLM presents itself as a solution to both, and it isn't.

So one of the questions-- we got a lot of questions specifically about the stay at home mom aspect of MLMs. So I'm sure this is probably a difficult question to answer, but I'd love to hear your take on it. How can we talk about the need and address the need for alternatives in areas where it feels like an MLM or nothing for stay at home moms?

Yeah. When we were young parents, we complained about how little our culture seemed to care about that problem. And now we're grandparents, and same conversation.

Right. Probably slightly worse. Yeah.

So I mean, nothing strikes you as more important as those very first years with your child, both for your own connection and also that sense of responsibility. Right. So we need to do a much better job socially and try to open up opportunities for part-time employment.

The good thing-- the good news is there are, of course, more flexibilities in terms of working remote, et cetera. But that doesn't make up for the gaps that people may have in training, or finding those opportunities when there are so many predatory messaging going out, so much messaging going out that making money at home, et cetera. The Federal Trade Commission is going to reopen its business opportunity rule, which it shamefully, in my view, excluded the MLMs from that rule.

They won't say it the way I said it because I know they won't because they told me they wouldn't. But in 2011, when they promulgated that rule, in leading up to that, the MLM industry had a concerted national campaign against the FTC, including them. And the FTC, in my view, folded and excluded them.

They are going to-- they've reported that they're going to start soliciting information. So what I would say if-- when this happens, we all write to the FTC because we need to be concerned about scams, MLMs firms that are scamming people, but others as well, when all these people want to do is be good parents. Would you say, as a rule of thumb, that a stay at home mom who feels that she has extremely limited employment options and is considering an MLM that she is better off remaining unemployed than joining an MLM?

Yes. And I've written a couple of pieces. You can make more money working part-time at minimum wage-- I mean, actually make the money.

Right. One of the stunning aspects of an MLM that people don't talk about is most of the people who generate one or more sales for an MLM company make nothing-- zero. They do not make a commission on those.

There's no direct commission for selling. And so I would much rather see someone work on their own-- focus on a smaller set of skills, and then find the part-time employment that will help you use those skills to build. I think there are opportunities out there to do that.

But it does take a bit of a plan, and you have to be a little bit patient. This is not going to make you wealthy in a year and a half. Well said.

So one of the things that so many people are asking is, how do you help a loved one get out. What do you say to them? Yeah.

It's really hard. I've got an email-- I've kept it for a long time-- this fellow who hasn't spoken to his mom for years. And in court cases and depositions I've read about divorces, et cetera.

I think that the best thing you can do is to simply say that that's not something you yourself can participate in, and that you have to draw a line if they are doing something that affects your household finances. There are examples where people in MLMs have been encouraged to lie to their spouse about money being spent, to use a credit card that the spouse doesn't know about, those kinds of things. So at a minimum, you have to be able to talk with-- I'm going to assume this is a very intimate kind of situation, not just a friend, but a partner, a close friend, a spouse.

So at a minimum, you have to agree to limit the financial harm. And that means keeping track of everything being spent. And the other thing is I would encourage-- is just to simply have them keep a diary.

How much time did you just spend today on your MLM? And let that data speak to them over time. You may not know the answer to this because it is a legal question, but what recourse does a person have if, let's say, my husband behind my back depletes 100% of our life savings to an MLM?

What recourse do I have? Right. Well, it depends.

MLMs have increasingly required people to agree to go into some sort of arbitration or something if they have a complaint against them. In other words, to try to forego a class action against them. One of the things that you can do is to participate in a class action.

So right now, I'm an expert in a case in California where they have identified a class, and they are bringing a pyramid scheme charge, a suit, complaint against this company. And they intend to recover some money. We have to be careful in class action.

There are class action lawyers that I wouldn't want anybody to work with, and there are class action lawyers that I've refused to work with. And there are class action lawyers who know what they're doing. Class action lawyers put a lot of money up front, and they get a lot of money in the end.

They're going to get probably a third or whatever. But that is a way, and it is possible. It takes a while.

You're not going to get that money back right away. But that is a way. But this is an industry that hires Harvard-trained lawyers all the time.

And when they go global, they hire some of the finest international law firms in the world to represent them. How shameful to represent them. Deal drugs.

You'd do less harm to the community, honestly. OK. Why are women so often targeted to join more than men are?

Well, I think that because of the life stages that women might go through, I think they might find themselves in a situation where they would just like to make a little extra money here and there. They may be a new mom or something like that. And I want to be a little bit careful here.

But men aren't very helpful to men. That's true. I thought you were going to be like, because women be shopping.

No. Women are helpful to each other or try to be. Now in this case, it's not helpful.

But there is, among-- and my experience is-- there's just a warmth of sharing among women that I don't believe exists in most male to male relationships. Oh, 100% Even though I think most male relationships can be very satisfying. They can, although when you look at the numbers on aggregate, past a certain age, men don't really have friends.

They have very few statistically, and the ones they do have are typically through their wife in some capacity. So I think just in terms of not having that many people to sell to, that's also probably a contributing factor. Women tend to have much larger friend groups.

Right. I think that's right. And men tend to be competitive.

And if a man wanted to talk to me about a business deal, I'd be highly skeptical. Yeah. Although I don't know if this is an MLM model or an affiliate model, but all of those very male audience podcasts are all selling those brain supplements, and vitality powders, and things like that.

That's true. And the newest thing that is male-centric, or at least mostly male-centric, I understand, is NFTs. Oh my God.

Sorry. Do you have anything to say about NFTs? Let's pivot to that.

Yeah. Well first of all, NFTs, cryptocurrency, blockchain-- there can be an MLM connection. And the last case I was on with the Federal Trade Commission, the firm positioned itself as sort of crowd-sourcing and investing.

And it was just a crypto multi-level marketing pyramid scheme. But NFTs, I find them to be curious. And the one thing that they share with an MLM is they got to keep you believing.

Because the value of that-- you can call it art, you can call it whatever it is. I don't care if it's Snoop Dogg's memorabilia, the value of that is all subjective. And so we need to make sure that you really are buying into this.

And I find it to be surprising. And this is an area where men will, for lack of a better word, screw each other. Well, 100%.

Because it doesn't quite have the same structure as a pyramid scheme in a lot of cases. But it has that aspect of hot potato, in terms of not being the last one holding it. You got to pass it off to someone.

Not only that, I can hike the value. So suppose I own an NFT that I paid $5,000 for. Suppose I very quickly borrow $10,000 in crypto.

We're going to do this fast. It doesn't cost me too much interest. I'm going to give that $10,000 to you.

You buy that NFT from me for $9,500. You keep the $500. I pay off my loan.

I now have an NFT that's worth $9,500. Right. Where two days ago, it was worth $5,000.

Easy, easy peasy. And I can do it again. Yeah.

It's funny because I do feel a strong sense of empathy for the stay at home moms getting targeted by essential oils, and very little for the bros on Reddit hoodwinking each other. Partially because I think there's something about the NFT market in particular and the cryptocurrency. I don't have the data on this-- maybe you do-- but it doesn't seem to as often be coming out of a place of total financial desperation.

It seems to be coming more from wanting to game the system in some way. Financial foolishness. Right.

And similar to day trading, and things like that, people who want to get there quickly. Right. And I want to just go back, for a moment, if I may, to the issue of young mothers and women, in general.

I think that I would really, really encourage people, young women, to look into their own selves and to their own interests, find something that you just can't read enough about, and learn more about it, and find a way to add value. It's clearly what you have done here. It's what other people have done.

When I see former students who, when I had them in class, they didn't know what they were doing, and then I see them three or four years later, and they found it. Oh, 100%. And so some of the answer is coming from inside.

Of course. Also as bleak as it is to say, listen, if you already are about to have a kid or have a kid, that ship has sailed. But if you haven't yet, this is why planning for a family as first and foremost a financial decision is the most important thing you can possibly do. [LAUGHS] After you have children, you'll wonder where your money and your time went.

There you go. For sure. But I do think it's strange to me that as much as there's an emphasis on having a perfect wedding, and your soulmate, and love, and obviously, the next step is having kids.

Is it? Well, actually, that's a good point. My own personal history is I got married at 19, and my wife and I were like, boy, this is just too young to think about kids.

So we didn't have any children for five years, and we did it purposely. Yeah. And that was back in the day, so to speak.

And I would encourage anyone to think about that. Having a child and raising a child brings so much more uncertainty into your life because you're hoping you're doing it right, and you're learning a lot of different things. So let's get things settled, and let's get a sense of that.

I think if you're waiting to be financially secure to have children, you just will never have them. But I think if you have a sense of your finance, and you have a sense of where you will be three years from now, then I think that makes a lot of sense. Sure.

Listen, I'm not saying you need to have a million in the bank to have a kid. But I do think the part of-- listen, fair or not-- and it's not-- we have a very, very thin social safety net, particularly for young parents, and particularly, on top of that, for young mothers. So to not plan the decision out from a financial perspective, as detailed as you would what you're painting the nursery, you're buying all the binkies.

But what are you doing with your income? Right. Yeah, it's very, very difficult to get someone to appreciate what happens once you have a child, in terms of what happens to your finances, and what happens to your time, and what happens to your emotional connections, and what happens to your options.

It's very difficult. After a while, your options foreclose. Right.

I went back to get my PhD with a four-year-old and a nine-year-old. Most people wouldn't do that. And it took five years.

Out of curiosity, what was your wife doing at that time? She was working her butt off as a medical transcriptionist. Wow.

Making it work. Making it work. And when I approached her with the idea, I said, here's the thing.

I want to quit my job. You will have to get a job. Because she, at the time, was just working part-time.

You'll have to work full-time. It's going to take five years. And we'll have to borrow $20,000.

And she said, no. She said, that's not a good idea. I said, I really think it can be.

And we talked about it. And we bought a really crummy old farmhouse because we could afford it. And I went to back to school and got the PhD, and everything changed.

What a great story. We love long-term life partners who made it work. Well, we celebrate 50 next summer. 50 years together?

That's so wonderful. Aw. Shoutout to Bill's wife.

OK. Do the people who sell for MLMs actively realize they're scamming the people they're selling to? Yes.

Thank you. Are there honest MLM members who are aware of the harms that MLMs can perpetuate and who would speak candidly about it, do you think? We've seen some of that.

We've seen some of that in the anti-MLM movement. And some of that came out in the LuLaRich documentary based on LuLaRoe. So we've seen some of it, and we need to see more.

Just as there are people drawing people into MLMs, there are people who have experienced MLMs that can warn people about them, that can let them know what goes on behind the curtain, what gets said when they're not around. And I think that's a really important aspect of this. And I'm in connection with a few people in the anti-MLM movement, and they've been thoughtful.

They've been caring about getting their messages out. You have to be very careful. This is a very litigious industry.

They will sue you in a minute. This is maybe more of a subjective question. But is attempting to recruit for an MLM a reasonable cause to end a friendship or to at least distance yourself substantially?

I would go with the distance yourself. Here's the thing. It's not going to get better.

So the longer that friend stays in the MLM, the greater the chance that this is not going to end well with your relationship anyhow. And again, I think that when we see someone get involved with something that we care about, we want the best for them. We recognize they may not be in a place where they're listening.

I think that the best we can do is to tell them that it's not for us, and that from what you heard, it takes a lot of time and money. And that if nothing else, are they keeping track of their time and money? And I think if we can encourage them to do that, and let them find a time when they may be willing to talk more about it.

But it can be difficult when someone is committed, when someone spent thousands and thousands of dollars, there's an embarrassment issue there. Sure, And I think that it's hard. If you've got five friends in a MLM, you're going to lose some of them forever.

Yeah. I had a person extremely close to me who was in a very vulnerable position, and a "friend" was really coming at her hard core to join this extremely expensive MLM. I think it was like $5,000 just to start.

And I wanted to sue that person into the ground. I was like, how dare you? How dare you?

Because the thing is, as you said, they know what they're doing to this person. And to try and put them in a deep financial hole in such a vulnerable time, to me, it's really hard to get over that, even though in your earlier framing, they are still victims. They are.

And I think, as you had mentioned earlier, if this is the American way, then shame on us. Shame on us. If we take pride in getting people involved in things that they cannot succeed at, and that cost their families thousands of dollars, and that takes a big chunk out of their self-esteem, if that's what it takes, I think that's a problem.

I totally agree. As a last question-- actually sorry, two more questions. What is the difference between affiliate marketing and multi-level marketing?

I'd have to see it a little more in context, but potentially, no difference at all. I think, at least from my experience, one of the differences in affiliate marketing is that there's often no startup cost. It's just you promote this thing, and you get paid when you sell.

Yeah, that's right. Terms get moved around. So I've seen the term affiliate marketing used in the context of MLM.

But I think it could not be as well. And so I would take-- the example you gave would not be an MLM example. Right.

I think it can still be predatory in its way, and it definitely can be exploitative to the people who are participating in it. But in that sense, it's not. Why do intelligent people still fall for MLMs?

Because they think they're smart. There it is. Well, Bill, thank you so much for joining us.

Where can people go to read more of your writing and to follow a little bit of what you do? I have a lot of pieces out on Seeking Alpha. And I've been writing about-- it started about Herbalife in particular, but also about the MLM industry in general.

Some of my pieces have been complimentary to the FTC. Some of them have been critical to the FTC. We've had a conference.

We're going to have another conference that we'll be promoting. It's open to the public. It'll be a Zoom webinar type conference.

And if you want more information, or if you have questions, my last name is Keep. My email is keep@tcnj.edu. Send me a note.

And if I need to connect you with someone, there's a network of lawyers out there. There's a lot of people out there, the anti-MLM people. I'd be happy to make that connection.

I love that. It's also a very academic thing to encourage people to just email you directly. Sure, why not?

I love that. Well, thank you so much for joining us again. Thank you.

And thank you guys all for tuning in. We will see you next Monday on a brand new episode of The Financial Confessions. Bye.