DCHL - product based pyramid schemes

This morning I received an email from Mr Jon M. Taylor, who I have corresponded on the issue of DCHL. This is what he wrote:

Thank you for linking our site to your blog. Good move.

And thank you for sending the compensation plan for DCHL. Based on our "5 Red Flags" analysis, I have added DCHL to the list of “recruiting MLM’s”, or product-based pyramid schemes. Where we have been able to get the data, we have found that in such schemes with all “5 Red Flags” in their compensation plans – at least 99% of participants lose money!

Keep up the good work. These schemes need to be exposed.

- Jon M. Taylor, Ph.D., President, Consumer Awareness Institute

and Advisor, Pyramid Scheme Alert

E-mail: jonmtaylor@juno.com

Web site for MLM research and guides – www.mlm-thetruth.com

Here is what he meant by red flags (steps to determine if the mlm is a product based pyramid schemes:

Red Flag #1: Participants are recruited in an endless chain of participants.

Red Flag #2: Advancement in the scheme is by recruitment, rather than by appointment.

Red Flag #3: Participants are expected to buy (or subscribe to) products or services in order to qualify for commissions or bonuses or to advance in the scheme.

Red Flag #4: The company pays commissions and bonuses on more than four levels of participants. (LB has 6 generations...)

Red Flag #5: Company payout per sale for the total of all upline participants exceeds that for the person actually selling the product.