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About Just out. (Portland, OR) 1983-2013 | View Entire Issue (Aug. 1, 1997)
ju st o u t ▼ a u g u s t 1, 1 0 0 7 ▼ 21 ing claims that the products cure or mitigate disease. Despite that, Jan Margosian, who handles consumer issues for the Oregon Department of Justice, says her office has received “hundreds of complaints” statewide about Cell Tech. She says some callers say the products made them sick. More often, the calls revolve around members’ complaints that they didn’t experience the income enhancement they felt they were prom ised. A Cell Tech brochure says distributors can pump up their personal incomes by an “extra $500 or $ l ,000 per month, up to $ 10,000, $20,000 and more.” (Stapley estimates he made about $400 in commissions in June with relatively minor ef fort.) Margosian says the complaints are being re ferred to the Federal Trade Commission, which is looking into claims involving Cell Tech. Like many educators and counselors, she didn’t know whether she would have a job to go back to. So she began pondering the possibility of earning money other ways. “I had worked in social services my whole professional life,” says Zrinyi, 40, who is active in the Portland Lesbian Choir and First Tuesday Coffeehouse. Zrinyi says an associate she met through the coffeehouse introduced her to Nationwide Auto Club Inc., an Atlanta-based company founded in ome people view multilevel marketing with skepticism because they associate it with pyramid schemes, which, under Oregon law, areillegal. According to the attorney general’s office, a typical pyramid scheme involves a few individuals at the top who recruit a few partici pants, who in turn recruit other participants. Re cruits are often offered the promise of large sums of money if they successfully bring in others who pay money to join the pyramid. Pyramid schemes focus on the exchange of money and recruitment, and usually there is no legitimate product being sold. According to Margosian, pyramid schemes Cindy Zrinyi makes her pitch to Karlyn Rood may be disguised as chain letters, buying clubs or mail-order operations. 1992, whose mission “is to revolutionize the way (One 30-year-old lesbian we talked with says the American public obtains new cars.” she dumped $500 into what sounds like a pyramid Zrinyi liked what she heard, and cut a $695 chain-letter scheme, making just $60. She’s since check to receive a two-year Personal Benefits opted for a career in real estate.) Package, which includes Jiffy Lube and Hertz State officials say the sale of legitimate prod Rent A Car discounts and “no hassle, no haggle ucts is what distinguishes multilevel operations new car purchasing,” among other benefits. from pyramids. When the emphasis is on recruit As with other multilevel marketers, in order to ing new members rather than selling something of make money, Nationwide Auto Club members value, the organization is probably an illegal must recruit new members who in turn recruit more new members. pyramid. Pyramid schemes invariably fail when a few By becoming a member, Zrinyi became au people drop out or refuse to pay, and new mem thorized to sell Nationwide Auto Club packages to others. bers are not recruited in their place. In order for a pyramid scheme to profit, there People have the option of signing on free of would have to be a never-ending supply of not charge as independent marketing directors, mean only potential but willing participants. ing they don’t receive a benefits package but are “Pyramids inevitably collapse, because it is authorized to sell them. mathematically impossible to recruit the number Zrinyi makes a commission from each mem of people required to support the pyramid,” ber she brings on board, but not independent Margosian says, adding: “All pyramids are mul marketing directors. tilevel, but not all multilevels are pyramids. It’s a She says of the five members she has signed up fine line.” (at a $50-per-head commission), all are lesbians. Multilevel marketers that have withstood the According to Zrinyi, participants must simply test of time—and proven lucrative to some par “find two other people, who, like you, want to ticipants—include Amway and cosmetics giant walk down this road to financial independence.” Mary Kay. Major enterprises, particularly tele “At first I was looking at this from a perspec phone companies—are also linked with multi tive of how I personally could benefit,” she says. “But then I began to change my focus to, ‘This is level marketing, including AT&T, MCI and Sprint. a way to empower the entire lesbian and gay community.’ ” ome gay men and lesbians (like members of Zrinyi promotes her new passion with fliers other communities) are drawn to multilevel that read: “Financial independence by choice.. not marketing. chance! Looking for optimistic, dynamic people Their reasons? They like the thought of work to create a financially empowered gay/lesbian ing independently— free from suffocating 9-to-5 force in this community. No inventory to sell, no jobs in less-than-queer friendly environments. They huge time or money investment. Incredibly lucra also say it’s a great way to help friends bolster both tive opportunity for individuals as well as non their physical and financial well-being. profit organizations.” Cindy Zrinyi is a counselor with Portland In another promo, Zrinyi tells us Nationwide Public Schools. She says she became involved in network marketing a few months ago, primarily Auto Club “is for real...and if I’m going to ‘get rich’ I’m going to bring the whole community because of concerns over budget cuts. with me!” Nonprofits “like the Portland Lesbian Choir,” she says, can “become empowered, too.” All it takes, she explains with enormous zeal, is four members of the nonprofit signing up for benefit packages. Each must in turn sign on at least two people, etc. When certain “mile markers” are reached, the nonprofit organization receives financial com pensation. Margosian says her office has seven inquiries S S on Nationwide Auto Club, and has not investi gated the company. “There are literally thousands of these opera tions,” she says. Like Stapley, Zrinyi says she is in the rela tively early stages of her multilevel marketing activities, essentially doing it on a part-time basis. She admits she has yet to clear the original $695 she plunked down. “But I’m right on the edge,” she stresses. rian, who asked that we not disclose his last name, never even came close to that edge. The 36-year-old gay Portlander estimates he “easily dumped $10,000” of his own money into Equinox, a Nevada-based multimillion-dollarcom pany whose product line includes air and water treatment systems, and nutrition and herbal goods. Last summer, Brian, who previously worked in the hospitality business, saw an Equinox ad in a trade publication and decided to check it out. “My friends call me a wheeler and dealer,” he laughs. “I’m willing to try anything once.” Brian attended one of the local introductory meetings, which featured a slick presentation alluding to the riches waiting to be had. That sounded good to Brian. "There were various ways you could get in volved,” he explains. “You could simply buy the products for personal use, or start your own dis tributorship by selling yourself. Or you could recruit people to sell the product for you—to build your own sales force.” Brian opted for the latter and from August 1996 to March 1997 struggled to recruit a sales force. He first purchased an estimated $5,000 worth of Equinox products to have readily available for any recruit he signed up. Then he placed advertisements in various pub lications, again using his own money, and he looked to friends and associates as potential mem bers of his team. “I have so many friends who say they hate their jobs and wish they could do something else. This seemed like something that would be perfect for them,” he says. He also thought the gay community would be interested. ‘There’s this joke about the three fast est forms of communication: telegraph, telephone and telefag,” he half-seriously jests. Telefag, in thiscaseat least, fell flat. Brian was essentially looked upon as the leering used-car salesman ready to sell you a big fat lemon. As for the ads, Brian says he’d get as many as five calls a day, would sign folks up “and then never see them again.” Finally, afterexperiencing big economic losses, as well as growing frustration “with people,” Brian threw in the towel—when it came to Equi nox, that is. Remarkably, Brian immediately jumped into another multilevel marketing enterprise, called Destiny Telecom International Inc., a California company that markets prepaid long distance call ing cards. Brian says he dropped $1,000 into Destiny before getting out two months later. According to Margosian, both Equinox and Destiny Telecom are operating under court orders in Oregon. Though neither company has admitted to violating the law, their assurances of voluntary compliance stipulate, among other points, that they will not misrepresent the income a person may reasonably expect to earn. “I think it can be a good opportunity,” says Brian, who has since turned his attention to real estate, “if you’re able to attract the right people.” Margosian agrees. “You have to be the right type of person to do this. You have to approach everybody, even though they might run away. This is very difficult work. If anyone tells you this is an easy way to make a living, that should be a dead giveaway, because this is the hardest work B A word to the wise Margosian offers some tips to those con sidering jumping into the confusing world of multilevel marketing: Make sure there is a legitimate product involved; the sale of the product should be the focus, not the recruit ment of members. Be wary of big start-up fees. Avoid purchasing lots of inventory up front, but if you must stock up, check the refund policy. Understand the pay structure. Be cer tain that those above you in the network are reliable and knowledgeable. And alw ays rem em ber this, warns Margosian: “If it sounds too good to be true, it is.” Questions about multilevel marketing op erations or reports of possible pyramid schemes may be directed to the Oregon attorney general’s office consumer hot line: 229-5576 in Portland, or (503) 378-4320elsewhere. The hours are 8:30 am to noon on weekdays.
