Combating pyramid schemes aimed at youth

Christine Carrillo

Despite having the age-old saying, “if it sounds too good to be

true, it probably is,” booming in their ears, college students

continue to fall victim to the appealing advertisements of

commission-based employment, particularly multilevel marketing

employment.

Selling goods or services through distributors and receiving

commissions for both sales and distributor recruitment, students

become enamored with the idea of working on their own schedules and

at their own pace with the promise of earning big bucks, fast.

While there are many legitimate businesses that follow multilevel

marketing plans, the overall practice raises many ethical questions

among professional business men and woman. Multilevel marketing

organizations often use their tiered structure to sell products and

services that otherwise would not get sold. In addition, they often

encourage their distributors to exploit personal friendships and

relationships via networking leading them to loose the majority of

their credibility, experts say.

“I think they target college students ... because students are

pretty much lured into making a quick return,” said Dennis Morgan,

assistant professor of marketing at Orange Coast College in Costa

Mesa. “There’s often a misrepresentation of the product they’re

offering and an overemphasis on signing people up for the network.”

Even though many of these businesses, while promoting ethically

questionable practices, are legitimate, the basic structure and idea

of a multilevel marketing organization lends itself to becoming the

inspiration for illegal schemes.

Under such schemes, usually referred to as pyramid schemes,

commissions are based entirely on the recruitment of other

distributors and not the sales of products to consumers. In fact, in

many cases the underlying products and services only exist to make

the schemes appear legitimate.

“I teach them not to accept anything on face value and that every

claim should be substantiated,” said Morgan, who admits to receiving

inquiries from students every semester in relation to such

employment. “One of the things I always ask them to do is look for

the red flags ... the No. 1, frontloading.”

Frontloading is when an organization requires the student to pay a

certain amount of money up front.

“If the company can’t provide 30 to 40 references by the drop of a

hat they’re not worth it,” Morgan said.

After experiencing the impact multilevel marketing was having on

his students, Morgan decided to incorporate pertinent information in

his curriculum that would aid his students in deciphering the

legitimacy of the business and the return they would receive by

participating in it.

Unable to regulate every job posting on campus or in their career

centers, both OCC and UC Irvine have made individual attempts to

protect students from getting caught in illegitimate marketing

businesses.

“I hate to see our students getting taken advantage of,” said

MaryAnn Profeta, assistant director of employer relations at UCI.

“We’ve had some problems ... so even though it’s a public university

every posting needs to be sponsored through one of the university’s

departments.”

OCC, on the other hand, has placed most of the responsibility of

getting involved with such commission-based jobs on the students

themselves.

“I don’t think I would ever restrict those job postings; I just

don’t see the need to,” said Debbie Wisner, the job placement

coordinator at OCC. “We do list any jobs and the only time we would

pull it is if we have a legitimate complaint from students.”

While OCC and UCI are unable to monitor every job listing or

employment opportunity posted on campus, they are able to restrict

those same employment company recruiters from having a physical

presence on campus.

The executive board of the associated students at OCC recently

voted to not allow any job recruiters on campus because of the

numerous complaints of students feeling constantly harassed.

“It should be up to the students and it is up to them, but they

shouldn’t be harassed here at school,” Wisner said. “When they’re

here, they’re here for school. When they’re inquiring about listings

on the job board, they’re choosing it. That’s their choice.”

While OCC leaves the choice of whether or not to get involved with

multilevel marketing employment, Vanguard University in Costa Mesa

has decided to protect students from having to make that choice.

“I’ve really eliminated any jobs that are commission-based ...

anything that’s multitiered marketing, they’re just not suitable for

our students,” said Rosanne Freilich, director of career planning and

placement at Vanguard. “As a private university and a faith-based

university, things like that are pretty much screened out.”

But every now and then, even the private universities can’t

isolate their students from the endless bombardment of multilevel

marketing seekers.

“We do occasionally have people that do get involved with that ...

but it hasn’t gotten to a point that we’ve needed a campus-wide

policy,” said Ed Westbrook, a business professor at Vanguard. “We

tend to do a little bit more of an individualized approach. We try to

utilize our broad network of alums and relationships with

[businesses] and we get a lot of referrals.”

For those students wanting to enter the entrepreneurial or

marketing world, the experts agree that there’s no better route to

take than hard work.

“It all starts with trying to find a need in the market that’s not

being met,” Morgan said. “Find out what people want, do research to

find the demand and then come up with a product that will meet that

need.”