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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.