We are going to examine a major player in the multi-level marketing world that was taken to its knees, and then the head was chopped off. When this assassination happened, there were many people clapping and yelling with joy. But, there were also some people crying and screaming foul.
So who was right?
I cannot objectively give an answer to that question. After all, I do need to attempt to not take sides in the downfall of an industry giant named Fortune Hi-Tech Marketing.
You may wonder why I am being so “matter-of-fact” about this situation. The fact is, I have to be pragmatic about it so everyone reading can be their own judge. And hopefully, MLM companies and those who are independent representatives with direct sales companies can learn some huge lessons from this.
But first, I must tell you that I was a person who “bought in” on the Fortune Hi-Tech Marketing system. In many ways, I didn’t do so of my own free will, but actually I did. That may sound like an oxymoron, so let me explain.
It was 2010 and life had been quite difficult for us. We had lived in Lebanon, Missouri for many years where my wife and I raised our children. The children grown, I ran into a political battle in Lebanon as I had a Grandson that I feel, was murdered. The prosecutor didn’t agree even though a team of coroners from around the country did think Jonathan was murdered (the suspect is now in prison for other charges).
The battle I waged against the small town politics was frightening. And then, our house burnt to the ground. On top of this, my wife was on kidney dialysis. We used the insurance money to buy a place in O’Fallon, Missouri away from the memories of Lebanon. I went to work for a construction company in St Louis, and the owner was a Fortune Hi-Tech Marketing rep. He kept pushing me, but I put him off, and then my wife died.
He told me that everything would be so much better for me and that he would just take the enrollment fee out of my check. My mind was spinning over my wife of 30 years, so I just shook my head yes.
But, that was then, and this is now. I wrote off that loss and when I saw that FHTM was no more, I must say, it did not hurt my feelings.
Now that you know my story, I will lay it to the side, and tell you about the fall of FHTM from an objective stance.
The Start Of Fortune Hi-Tech Marketing
Previously, I had written about a huge telecommunications MLM called Excel Communications. Two men who had done quite well with Excel decided to start their own multi-level marketing company.
In 2001, Paul Orberson and Thomas Mills started FHTM. The idea was to attain a wide variety of both products and services so that representatives would have a virtual shopping mall in the palm of their hands.
In my opinion, Paul and Thomas had a great idea, and also felt that it would be legal, or they would never have attempted it. FHTM carried things like mobile phone service, shampoos, vitamins, Dish Network and more.
To be able to sell these services and make commissions, along with building a downline of other representatives, the individual would have to pay a sign up fee. These were anywhere from $99 up to $249. And here lies the issue with the FHTM method.
The Problems With The FHTM Business Model
While FHTM had some good products at reasonable prices, there was very little commission to be made off product sales. When a representative sold a product, they would get a commission of somewhere between 1/4 of 1% and 1% of the sale price in commission. So just consider if you sold an item for $200 and received the maximum of 1% commission (I bet the math wizards already have this figured out). Yes, the commission would be a whopping $2. It would take many sales to just make back the sign up fee.
So, the system started pointing out that there was a lot more money to be made by just recruiting. When you have others below you selling, you get a percentage and all you need do is keep recruiting.
This is when a MLM system becomes known as an illegal pyramid scheme. While all businesses are a pyramid structure, it becomes illegal if only the people on top of the pyramid can win. Anyone located at the bottom of the FHTM pyramid could not win unless they attained a bunch of representatives and moved themselves up towards the top of the pyramid.
Why Wasn’t Fortune Hi-Tech Marketing Shut Down Sooner?
FHTM should have been shut down much sooner than it was. One of the problems was who was endorsing the system (several well known personalities, along with political statesmen).
The State of Montana was the first to go after the FHTM system, and other states followed, along with the Federal Trade Commission.
Paul Orberson died in 2013, and in 2014, FHTM agreed to shut it all down and pay $7.75 million to former clients and representatives. Also, company officials could not participate in any MLM practices anymore.
What Can MLM Prospects Learn From This?
The biggest lesson that possible MLM prospects can learn from the Fortune Hi-Tech Marketing situation is: Do Your Research Before Joining.
Before paying such a high entrance fee, a person should do the math and see what the commissions will be. Don’t allow hype to sell you. Just because someone tells you that you can make millions doesn’t make it so. If I would have studied it before I fell in the trap, I never would have joined.
What Should The Owners and Operators of MLM Companies Learn From This?
There are many lessons that MLM company owners can learn from the fall of FHTM. Some of which are:
Self-Regulation: If the company measures itself against industry standards and government regulations, it can regularly perform self-regulation. If FHTM would have looked at the picture, they would have realized that representatives were not trying to sell the products or services nearly as much as trying to get more reps.
Listen To Those Who Are Upset: There were many former independent representatives complaining to FHTM officials. Instead of listening and trying to alleviate the problems, FHTM would just sue them.
Work With The Government. Don’t Fight Them: MLM has gotten a bad rap, and companies such as FHTM have helped to build that rap worse. If MLM owners would lobby and stand in agreement with government regulators, they would gain more respect. As they say, “You get more flies with honey than with vinegar.”
Make Sure The Whole Pyramid Can Win: If everyone in the pyramid has the opportunity, it isn’t illegal.
I could go on and on about the court cases, and the people who lost big and those who won millions, but what good would it do? It is over and Fortune Hi-Tech Marketing is a bad check mark in MLM history.
It is up to people like you and I to help build the MLM reputation back to good standing. The hype and lies need to be tossed in a closet. We need to run our MLM businesses with a pride and uprightness that gives those who come in contact with us a warm, fuzzy feeling, not a feeling of “oh no, where can I hide?”
What are your thoughts on the fall of Fortune Hi-Tech Marketing? Do you agree with my assessment, or do you have a different opinion. Go ahead and tell us in the comment area below.
Also, if you were involved with FHTM, tell us your story, if you will.
Lastly, I don’t want to sound like a hater. To those who are family to the late Paul Orberson, my condolences. I know that he was a wise man and I do believe he meant well for members of the FHTM team. It just didn’t go the way he expected.
Rest in peace Paul Orberson.
- FHTM on Wikipedia
- “SKAPEGOAT the FHTM Blame Game Story”
- Some Fortune Hi-Tech Marketing members defiant after court-ordered shutdown
- FTC Settlement Bans Pyramid Scheme Operators From Multi-Level Marketing
- Federal, state regulators shut down Fortune Hi-Tech
About the Author
Greg Boudonck is a freelance writer and the author of over 50 books. He writes on many different topics, but business subjects are one of his primary areas of writing expertise. You can see more about Greg and his work by visiting his website at Lancerlife.com.