 et's
talk about TV trays. Other products would do, but for illustrative purposes,
let's just suppose you need some TV trays.
Buy a barbecue by mail-order, same thing. New pillowcases and other household items: figure 10% goes into your trust account. Necessities such as health care and gasoline are not covered under the plan; however, from your monthly phone bill, FundAmerica's long-distance provider applies 20% to your nest-egg. Book an airplane trip through a particular travel agent and get 5%; stay in certain hotels and resorts, send flowers and champagne, chocolate and teddy bears -- these are all things you're going to purchase anyway, right? -- go ahead and salt the money away.
As a member, though, you are urged to "think FundAmerica first." Accordingly, you might pass up "GIANT SAVINGS" elsewhere. 'Discounts' not 'rebates' -- but real savings just the same. {Rebate} Why, you could set up your own 'trust account' and take all your unspent discounts straight to the bank. You probably won't, though. If you need somebody to do that for you -- to take some of your money away from you so that you cannot spend it -- then FundAmerica may be just the ticket.
Still, as an alternative, you could simply have more money withheld from your paycheck and sent to the IRS. That way, you don't even see it -- until next spring. Which brings to mind the t-word. And the title for this article. Members are in effect taxed by FundAmerica for each purchase. As we shall see, there are plenty of places for those 'taxes' to go other than into trust accounts. {TaxPayer} By the way, one FundAmerica provider offers a biweekly service to members who do not like to use scissors. For a moderate fee, you receive coupons sent to you in the mail automatically. Not quite automatically: you do have to send in marked up lists of the products you want. Later, maybe they'll come up with a service that does the marking for you. For a fee. Which brings up fees in general. The person who recruits you gets a percentage of the money you spend for the TV trays. So does another person -- the person who recruited the person who recruited you. In fact, as many as five members get a percentage of the money you spend for those same TV trays. That's because FundAmerica uses one of those 'multi-level marketing' (MLM) programs. Like NuSkin, like Herbalife, and like the grandaddy of them all, AmWay. In all these MLM programs, each "independent representative"...
 there
are two whopping differences between FunAmerica and other MLMs, and as
I like to say: Differences are more important than similarities.
Viewed from the top of the 'down-line,' there is plenty of money to be made. {Numbers}. Which raises a question: Where does all that money come from?
"Group buying power" would doubtless produce economies of scale, to be passed along to FundAmerica members, similar to "quantity purchasing power" enjoyed by low-overhead warehouse operations. There are also what might be called 'economies of limited selection.' Yet, it's some kind of an amazement that FundAmerica can pump cash into trust accounts while paying all those overrides -- and still give you a good price for TV trays. Oh yes, and there is just this one other thing. You would not expect membership to be free. FundAmerica costs $100 per year, and it costs you $140 to join FundAmerica, which is OK. Part of that fee goes to the person who 'sponsors' you ($20, if I remember correctly). That's OK, too. Maybe. An exclamation point belongs right there -- even more so at the end of the next sentence. Part of your $140 fee goes to the person who sponsored the person who sponsored you. That's not OK.{Pyramid} People went to jail, I think. FundAmerica went out of business years ago. {Epilog}
HyperNotes In the summer of 1990, an associate of mine (guess I'd better give him the name 'Robert' here) became deeply involved with FundAmerica. Robert had come under the influence of the famous Newsletterist, Howard Ruff, who stoked up his followers to join FundAmerica in great numbers. I still have the video that Robert gave me, somewhere. It's an infommercial featuring Arthur Laffer -- Mr. Trickle-Down himself. Robert, misty-eyed with expectations, began devoting his not inconsiderable energies to recruiting a 'down-line' of his own by bringing aboard friends and family. I expressed skepticism to Robert, but he would have none of it. My advice was based primarily on numerical realities. Robert rejected it, and so did any number of editors who turned down TaxAmerica (originally drafted on July 24, 1990). My review of another MLM scheme -- NuSkin -- entitled "Pig in a Python" suffered the same consequence. For both articles, I prepared graphs and diagrams to go with the numbers. To no avail. {Return}
There's a difference between 'rebate' and 'discount': You have to pay sales taxes on the purchase price of those TV trays -- including the amount which FundAmerica rebates into your trust account.
Sometime during the nineties, while I was not paying attention, I lost my citizenship in the most wonderful country in the world. Apparently, I became merely a 'taxpayer.' That's all that seems to matter. To politicians, to journalists, to cocktail party goers. It was without doubt the consequence of a general angst about Government and spending and waste and debt. Accordingly, Americans were demoted to taxpayerhood. Not only that but it's only 'hard-earned' money that most of us pay our taxes with. One might expect that 'easy-earned' money, as from trust funds or interest or capital gains, would call for a different outlook -- less resentment, less consciousness of the taxicity and more of the greatness of the country, as evidenced by what achievements we as citizens somehow find the resources to do. Not so. Easier the money, louder the complaint. All I know is, I'd rather be regarded as...
Most of us find the verb form to be respectively insensitive, mean-spirited, cruel, peremptory, arbitrary.
Let's start out with the number five:
Sure pays to be an M1. Of the total overrides collected from the 625 M5s, $11,011.50, M1 gets 23%. Meanwhile, 155 other members divide up $8,478.75, for an average of only $54.70 each. Of course, all those M2s, M3s, M4s, and M5s are out there recruiting to beat hell, each striving to become an M1. But wait: Suppose that M1 recruited not 5 but 10 M2s; same for members at all the other levels. Holy moly, M1's down-line would comprise 11,110 members. That's $1 million dollars worth of TV trays, and M1 collects $40,070.00, the others divide up $5,243.90, for an average of only $4.72 each.
Only one of 781 members (1 + 5 + 25 + 125 + 625) gets to be an M1 under the assumption of a recruitment ratio of 5. A more sophisticated model would take into account the fact that the recruitment rate will decline with market penetration, starting out greater than five, perhaps and become less than five later on. A shallow 8-7-6-5 sequence would produce a total of 2,080 in each M1's 'down-line.' Under that assumption, if all the households in the U.S. became members of FundAmerica, there might be no more than 50,000 M1s. Better get in early. {Return}
As computed by persons far more sophisticated than I am, MLM programs classifed as discount buyer's services cannot work. Beyond that impracticabiliy, FundAmerica got into legal trouble. If I remember correctly, criminal prosecution resulted from FundAmerica's policy whereby part of each sign-up fee from new members was deposited into the accounts of old members -- not as a 'commission' to one solitary member but as overrides -- channeling funds through the multi-level down-line structure. That created a 'pyramid'...
FundAmerica has been out of business for years. A much more interesting article than "TaxAmerica" would be one that reports the magnitude of financial impacts upon hopeful people like my friend Robert. As a superficialist, I thought I knew something about MLM programs, but the FundAmerica story has been long dead. I was about to delete my 'fundamer.doc' file, then... Just for the hell of it, I clicked up Yahoo and typed "fundamerica." I was surprised to get a hit: http://www.marketwaveinc.com/articles/zealots.asp -- a most informative special report by Newsletterist Leonard W. Clements 2001, 2003Leonard W. Clements, entitled "Anti-MLM Zealots Do They Have a Point?" Earlier articles list under the category "Discount Buyer's Services" the following MLM programs that are all defunct:
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f
you don't like to find your own bargains, fine. However, next chance you
get, take a look at any page in your newspaper. Look at all those percent
signs -- each preceded by a two-digit number: "25% off," "50% off," whatever.
ccording
to officials of FundAmerica, some of the price of TV trays ordinarily goes
into advertisements and such. Inasmuch as FundAmerica delivers a captive
customer base to the provider of the TV trays, they can presumably save
on promotional expenses. However, the same can be said of any club-like
enterprise, so there must be more to the formula. Both "eliminate the middleman,"
too.
