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The 5 Red Flags
Five Causal and Defining Characteristics of
Product-Based Pyramid Schemes,
or Recruiting MLMs*
Report for Consumers, Regulators, and Legislators - 2008 Edition
By Jon M. Taylor, Ph.D., President, Consumer Awareness Institute
and Advisor, Pyramid Scheme Alert
(author of THE NETWORK MARKETING GAME: Gospel Perspectives on Multi-level
Marketing, and PRODUCT-BASED PYRAMID SCHEMES: When Should an MLM or
Network Marketing* Program Be Considered an Illegal Pyramid Scheme?)
Revised from text summarized in a white paper for the 2002 Economic Crime Summit
Conference (sponsored by the National White Collar Crime Center and Coalition for the
Prevention of Economic Crime) – and presented in a Power Point presentation at the
Economic Crime Summit Conference in Dallas, August 17, 2004
(Revised July 9, 200