Inline Marketing Scam: Same MLM Scam, Different MLM Name

Through the years, multi-level marketing companies and MLM distributors have played a clever game of changing the wording to hide the truth. MLM activities have been referred to as direct sales, dual marketing, network marketing, multilevel marketing, consumer direct marketing, affiliate marketing, seller assisted marketing scams, home-based business franchising, and referral marketing. (Skeptics refer to this “business model” as pyramid selling, pyramid schemes, pyramid scams, endless chain recruiting, and Ponzi schemes.)

Why all the names? To confuse potential customers and recruits. These companies know negative impressions are associated with multi-level recruiting and sales. So if they can change the name, maybe they will get to people who would otherwise be turned off by the name MLM.

The latest in this series of alternate names for multilevel marketing is “inline marketing.” The creators of this name, Nutraceuticals Inc.,  think their invention is so clever, that they’ve registered it as a trademark. But even they are clear about what they’re trying to bamboozle us with! The trademark “inline marketing” is described:

Goods and Services IC 035. US 100 101 102. G & S: Multi-level marketing business services

“Live The Source” (CEO and founder Ted Farnsworth) claims this new terminology as its own. Alternately claiming this is a “new method” and stating that it’s the old method of “network marketing”:

livethesource® has created a new method of person to person selling (commonly known as Network Marketing) to introduce our products to the public, we call it Inline marketing™.

But go to the trademark registration of Livethesource, and you will see that this too, is old-style multi-level marketing:

Goods and Services … IC 035. US 100 101 102. G & S: Multi-level marketing business services; Promotion and marketing services and related consulting; Providing business marketing information. FIRST USE: 20090609. FIRST USE IN COMMERCE: 20090609 …

Is it old or new? You’ll never know! But it seems consistent with the old shell game of find the ball. In this short con, the victim is supposed to guess where the ball is hidden, but magically, only the shills win. Everyone else never finds the ball, as the shell man swiftly keeps hiding it.

So it is with multi-level marketing, a business method that is nothing more than a legalized scam, in my opinion. The owners of the company get rich, a few select individuals at the top of the pyramid make out too, and nearly everyone else loses their shirt… many never realizing that they’ve been conned in a recruiting game they can never win.

The nice people at Inline Marketing want you to think you’re being recruited into something different. They say:

Everyone is familiar with Network Marketing. Network Marketing has been one of the most popular, fastest growing distribution methods for new product entries in the past several years. This traditional business model combines direct marketing with franchising. Network marketing businesses function by recruiting distributors to sell a product while offering additional sales commissions and bonuses based on personal sales, along with those of people recruited into your down-line.

Inline marketing™ is different. At livethesource we have created a new, better way of doing business. In fact, some industry insiders refer to us as a “market disruption” company…because we have thrown out an old, outdated model for something better, much better – which is sending shock waves throughout the industry.

What exactly are they “throwing out”? Even their own trademark registrations say that they’re multi-level marketing. Why are they trying to convince you that they are something different and new, when their trademark registrations make it clear that it’s the same old MLM scheme?

Interested in more doublespeak from Livethesource and Inline Marketing? Look no further than their bait to get you to sign up. They say:

Here’s why the livethesource opportunity is so unique:

  • No start up costs – It’s free to join

Free? Really? NO!

The company’s FAQ page mentions the fee:

What do I get when I sign up and pay the membership fee?
When you become an entrepreneur, you begin a partnership with livethesource. Your success is our success, so the partnership is something in which livethesource invests heavily. Along with access to livethesource ‘s corporate meetings and events and training support, you will receive an entrepreneur Kit containing several sales tools and support materials to help you get started. We also have a well training customer service department and order entry available 24 hours a day for your convenience. We even have an internet site with a back office for your convenience in tracking your business growth and progress.

Oh wait. I must have misunderstood. One page said it was free to join. Yeah, it’s free to “sign up,” but you have to pay a fee if you actually want to participate.

The policies and procedures page for Livethesource gives more information on the real costs:

3.24 Inventory Purchases.
No inventory purchase is required to become a LTS Entrepreneur, although LTS strongly urges the purchase of an Entrepreneur’s Kit. This Kit is the ultimate source of information about LTS, its Policies and Procedures, its Products, and its Compensation Plan Any initial purchase of products or services is made entirely at the Entrepreneur’s discretion, and this fact should be stated clearly to any potential Entrepreneur

Ah yes, the “kit.” Everyone needs a kit! And we won’t force you to buy anything. It’s your choice. But you’re a loser if you don’t. How much is it going to cost you? The “kit” that I think they’re referring to runs a cool $600, according to the first item on this list of very expensive choices. If you’re more ambitious – – and who doesn’t want to set themselves up for success?? – – you could buy the Diamond Kit for $950. Add on a few extras, and you’re easily spending a couple thousand dollars.

Multi-level marketing companies skirt the laws by telling you no purchase is required, and that no one makes commission when you sign up. They only make commission when you sell something! Well, actually, they mean someone only makes commission when you buy something. (They don’t care if you ever sell that to a customer or not!)

It’s still your choice to buy products, right? Of course! But you won’t “qualify” for any commissions unless you continually make minimum purchases (cleverly called PV or “personal volume”) or con customers into purchases from you:

Autoship is not mandatory, however, an Entrepreneur needs to maintain a PV of 108 monthly to receive commissions.

No multi-level marketing plan is complete without confusing pay structures. These pay structures continually point us back to the real focus in these companies: recruiting. The Livethesource compensation plan has lots of buzz words for each of the many parts of the pay plan: uni-level commission, generation commission, dynamic compression, executive, bronze, silver, gold, platinum, diamond, ambassador, qualified level, generation pay, leg, width, bonus pool, commission rollup.

The company is careful to tell distributors about what they can and cannot say related to income. This is always a problematic area, as recruiters seem inclined to exaggerate their earnings. So Livethesource tells you:

5.3 Income Representation.
When discussing the Compensation Plan and income potential for LTS Entrepreneurs, Entrepreneurs must:

– not disclose their own income;

– explain that Entrepreneur’s individual earnings depend solely upon their level of effort and personal commitment;

– NOT give random, hypothetical examples of what is mathematically possible, nor suggest that it is easy to attain high income levels;

– NOT make false or misleading statements about the income of the Entrepreneur or that of any other Entrepreneur, exaggerate income potential, or guarantee the success of any prospect.

Sounds great, except you will be prohibited from disclosing your own income. Initially you might think this sounds good. People won’t be enticed by the high incomes of the recruiters. But since 99% of people in multi-level marketing lose money, I suggest this clause is actually cleverly designed to prohibit potential recruits from finding out how many people are losing money in these ventures.

The company virtually assures that distributors will be focused on recruiting, by making it nearly impossible to make a living on only sales from the products:

1. Retail Profit
*Purchase products from livethesource at wholesale (20% discount); sell products to customers.
* Entrepreneur Autoship(Source Plan) receives a 25% discount.
* Entrepreneur’s Customer places an order directly with livethesource . Entrepreneur receives 20% of the retail cost of the product, exclusive of S&H charges and taxes.

With the opportunity to make only 20% or 25% on the suggested retail price of products (and that’s only if you can sell it for full retail price) you’d have to sell an enormous volume of products to make a living from sales alone. How well do you think you’ll be able to sell a multi-vitamin product that costs $65 for a 30 day supply? (Yes, that’s a cost of $2.17 per day for a multi-vitamin!) Even if you can sell it, you’d make only $15 per bottle sold. And that’s before all your business expenses!

Just to make minimum wage, you’d have to sell 1,005 bottles per year with no business expenses whatsoever. That means you’d have to find 84 people willing to buy overpriced vitamins every single month. As one person attempting face-to-face selling (with no retail location allowed, and therefore no foot traffic), how likely would that be? And since you will have business expenses, and since I assume you would prefer to make more than minimum wage, you’d have to sell quite a bit more. If you want to make $20 per hour and you have business expenses of $500 per month, you’d have to sell nearly 3,000 bottles of overpriced vitamins a year. Unlikely!!!!

Have you figured out yet exactly what this “inline” is, or how this company is different than every other multi-level marketing company out there? Me neither. It is clear as mud when the company explains:

Our company markets products through multiple channels; direct sales (direct to consumer via TV, Radio, Web, Mail), retail sales (think of stores like Costco.com, Walgreens & Rite-Aid), and network marketing sales (as described above). What makes Inline marketing™ unique and so innovative is that you (the entrepreneur) earn income from all channels, not just from the sales you make or from those in your down-line. You earn from the Inline! You can literally earn income while you sleep…as someone purchases one of our retail products at a store like Walgreens, anywhere in the country…or in the world!

Our unique, inline approach insures the viability of our company for many years to come. Additionally, each channel functions independently. Products sold by entrepreneurs are not available through retail or direct sales, nor are retail products available through our entrepreneurs. Inline marketing™ is the new standard by which all (traditional) network marketing companies will be measured.

They still give us no clue what “inline” really means. But they sure use enough MLM buzzwords like “income while you sleep” and “multiple channels” and “downline.”

And like any good and legitimate multi-level marketing company, Livethesource calls you an entrepreneur when you really are not. You are a contractor, subject to the whims of the company. You don’t even own the information on your downline:

5.15 Prohibition on Cross-Sponsoring and Recruiting – Ownership of Downline Information.
The Entrepreneur has the exclusive right to collect commissions on its downline organization. However, the names, addresses, and other personal information of an Entrepreneur’s downline Entrepreneurs is, and remains at all times, the sole and separate property of LTS with the exception of those persons personally sponsored by the Entrepreneur. An Entrepreneur may not use, or cause anyone to use, this information to recruit, solicit or otherwise induce any other Entrepreneur to, in any manner, join, participate, or enter into an agreement of any kind with any other network marketing company or direct sales company during the term of the Entrepreneur’s engagement with LTS.

You can be terminated at any time “for cause” (good luck figuring out what the company will decide is cause), and you will lose your entire business. That doesn’t sound very entrepreneurial to me.

Livethesource claims their “opportunity” is “so unique.” They cite things like free to join, work at home, income from multiple channels, financial security, and financial independence. Newsflash people…. this is the same garbage that nearly every multi-level marketing company claims they offer.

Educate yourself on the evils of multi-level marketing. It is a losing proposition for almost everyone, so I recommend you don’t waste your time or money on them. Even when new companies that claim to be different, like Livethesource and their Inline Marketing. A simple analysis of their business and their claims reveals they’re talking in circles and putting lipstick on a pig.

15 thoughts on “Inline Marketing Scam: Same MLM Scam, Different MLM Name”

  1. Nice article. I think the solution to MLM scams (since the Feds won’t do anything to stop it, is to fix the Franchise Rule by lowering the signup fee from $500 to $0. This would require all MLMs to abide by the Franchise Rule and as a result, MLMs would have to tell the truth. Nobody would sign up if they knew their chances were really less than 1% that they would turn a profit.

  2. Our government is not inclined to regulate MLMs at all, thanks to the effective lobbying efforts of the Direct Selling Association. So my solution is to provide information. If consumers are willing to research a little, they can find out the truth about MLMs and avoid their financial black hole.

  3. I’m an entrepreneur with Live The Source and I want to make you aware that your article is deceptive and not true. There is absolutely NO cost to join the company or to even earn in the compensation plan. Also, they don’t make me feel like a loser if I don’t decide to purchase product. The kit you are referring to is not the kit that is required to join it’s optional. Please reconsider some of the remarks and reevaluate the companies FAQ’s once again and you will clearly see that there is no way that you have to purchase a kit so yes you can come in absolutely free and just pay for product. Thanks.

  4. I do agree that Inline is same old same old. But they are not breaking the law. So to all you whiners out there, its very simple, DON’T JOIN!!
    There are many good MLM companies. It stands for MULTI LEVEL MARKETING. If you are not a marketer and have no desire to market, don’t join. If you are going to join a company, i think you should make sure that they have been around for at least 5 years and that you like the product and it pays you pretty well for your effort. Weigh out your pros and cons and don’t make a move until you feel secure about it. Also there are a few people out there that love to throw around the word SCAM for everything. I agree…there are some scams out there and you should be careful, that’s life… but at the same time there are many Good companies as well. If some of these LOSERS would bother to work a good company rather than spend time knocking everything they would be making some money and wouldn’t FEEL the need to come to a page like this and write there BS. Just do your due diligence and you will be fine. Blessings.

  5. Sorry, David, but YOU are the one who is being untruthful. This article is completely true, and the information was gathered from the Live The Source website. Any inaccuracies are the fault of that company. They stated there was a “membership fee”, and so that is exactly what I wrote. I also discussed the OPTIONAL kit. There are many choices for the kit/kits, and the choices are all up to the distributor…. but with MLMs, there is always heavy pressure to buy the kits and inventory. I am confident that this one is no different.

    You are also being untruthful when you say there is no cost to “earn in the compensation plan.” The pay plan clearly states there is a minimum PV needed each month to “qualify” for commissions.

    Also David, you are not an entrepreneur. You do not own a business. All you have is a contract that allows you to shill for livethesource, but they own everything. They could terminate you and you would have NOTHING. No downline, no ability to buy products, no customers….

  6. Rob – Charlatans like you are what keep me writing about MLM companies. I have never, ever found and MLM that is anything other than a recruitment scheme in which almost everyone loses money.

    Yes, there are lots of “pro-MLM” people out there. And they are almost exclusively MLM distributors who have a vested interest in people signing up and continually flushing their money down the toilet.

    These companies are legal. Our government will likely never change that. But it doesn’t mean they aren’t unethical and abusive. They are. Almost everyone loses money. It is a flawed design that makes money for the owners of the company and a few lucky ones at the top. That’s it.

    I will continue to educate the masses on these opportunities. They sound good, but the recruiting spiels are filled with lies and half-truths. And I will keep exposing them.

  7. Thanks for the informative article Tracy. Actually, I think you mean to say that MLMs are UNethical and abusive.

  8. Sorry, Tracy, but no I’m not being untruthful at all. I’m on the inside and you are just very critical of MLM’s and think everything is a scam.

    First, there is no membership fee as per the FAQ’s and you would have found that to be the truth when you posted this article. That may be the case in the past but you need to give correct and updated information so don’t blame the company because you were the one posting this information as fact. I informed you that was the case and you need to update your remarks as appropriate. So, if you are to give correct and balanced information please give up to date and accurate information. Please check today and then please update your remarks in your posting that you were incorrect.

    Tracy, as far as being called an entrepreneur… The company does not make me an entrepreneur it’s just how they refer their distributors. You can’t say that I’m not an entrepreneur because you don’t know me. Enough said… Have a great day Tracy..

  9. David – You most certainly ARE being untruthful, so you won’t be allowed to comment here anymore. I copied text directly from the FAQ page of Live the Source, which says: “What do I get when I sign up and pay the membership fee?”

    If you have a problem with what the FAQs say, you need to contact the Inline Marketing people, not make false accusations against me.

    I have given correct and accurate information… I have posted exactly what the company says on their website.

  10. Tracy,

    Thanks so much for educating the public. I have not found one MLM company worthy of any consideration other than maybe Avon. My wife sells their products but does not want anything to do with the recruiting aspect, nor do I. She is happy enough making sales. I feel as though they are of of the only companies that do not sell overpriced products/services required by most MLM’s to pay out commissions on all levels. As you said, it is a flawed model!

  11. Avon used to be more of a true “direct sales” company with a focus on selling products, but they have gone more toward recruiting now that they’ve seen how lucrative it is for other MLMs. The problem with Avon is that there is so little money to be made on the products. The commissions are low, so the volume needed to sell in order to make a living is huge.

  12. You are 100% correct in what you are saying. Very hard to make money selling Avon. We don’t depend on that as income source. I just like not having to deal with the whole recruiting aspect. I just feel that anyone who buys their products is not being ripped off.

  13. Tracy,

    Inline Marketing also deducts $5 from the distributor’s commission check each month as part of a processing fee.

    They charge $25 for a annual renewal fee.

    They claim there is no fee to join as an Entrepreneur, but then force the new distributor to purchase a Kit which costs over $100. This is not voluntary and thus is considered part of a membership fee. Quite deceptive.

  14. I signed up for LTS in early August. NEVER received my order but kept being told that it had been shipped. Then was told it wasn’t shipped and would’t be shipped, and I would have to go through my credit card company to get my $700+ refund. Sounds pretty fishy to me!

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