Michael Johnson, CEO of Herbalife, talks about how the company is based on recruiting. ” Today, we’re recruiting. We’re still a recruiting company, and we’ve got to never not be this [again pointing to the word “Recruiting” on the slide behind him]…”
The multi-level marketing industry is no stranger to ruses that make it look legitimate. The Direct Selling Association (DSA) that has held itself out as an MLM industry watchdog. In fact, it is essentially a lobbying organization whose job is to convince lawmakers to keep their scams legal. And so it follows that “TAMM” would give out silly awards to those who perpetuate multi-level marketing scams.Continue reading
In its most general sense, a fair use is any copying of copyrighted material done for a limited and “transformative” purpose, such as to comment upon, criticize, or parody a copyrighted work. Such uses can be done without permission from the copyright owner. In other words, fair use is a defense against a claim of copyright infringement. If your use qualifies as a fair use, then it would not be considered an illegal infringement.
The clip was a part of a longer video (about 71 minutes long) was first reported on in June 2015 by Michelle Celarier at the NY Post. The video clip posted last week was about a minute and a half long, and it was posted in order for people to comment upon it. No one was trying to steal some copyrighted materials from Herbalife and infringe on that copyright. Instead, the whole point was to expose what Michael Johnson said about Herbalife’s recruiting.
So why would Herbalife want to make a bogus copyright claim? Because the clip of CEO Michael Johnson put the company in a really bad light. And we can’t have that!Continue reading
This week New York State Senator Jeff Klein and Public Advocate Letitia James issued a scathing report on multi-level marketing company Herbalife (NYSE: HLF). The report, The Amercian Scheme: Herbalife’s Pyramid ‘Shake’down, is based on complaints filed by 56 Herbalife victims. It definitively calls the company a pyramid scheme and highlights the company’s deceptive practices.
The key findings include:
Since 2004, only 56 Herbalife victims in New York have been brave enough to file complaints against the company. Most victims are afraid of betraying family, friends, and neighbors.
The 56 victims that have filed complaints reported nearly $1 million in financial losses ranging from $90 to $100,000. The average amount loss was approximately $20,000.
Over 60 percent of new members make initial investments larger than the required $60 to $100 for the new member kit. The average initial investment is $1,800, but some are as high as $10,000.
Herbalife distributors purport that supervisors can make as much as $20,000 in monthly income.
Of 56 complaints analyzed, only eight victims received a check directly from Herbalife for their royalty claims. The average amount was $100.
AdvoCare is a multi-level-marketing company (MLM), founded in 1993 by Charles Ragus. Charlie once worked as a regional vice president for Fidelity Union Insurance while being a distributor for Herbalife. In 1989 Charlie co-founded Omnitrition International. Similar to AdvoCare, Omnitrition sold nutritional supplements, vitamins and skin care products. Charlie sold out after only a few years when Omnitrition became embroiled in controversy for being a pyramid scheme. The resulting lawsuit, Webster v. Omnitrition International Inc has become a landmark case in the MLM industry.
AdvoCare claims to provide physical and financial wellness through the sale of sports performance, nutritional, weight control, and skincare products (AdvoCare). Similar to other MLM companies, such as Mary Kay, Vemma, and Herbalife, they recruit distributors to sell their products via word of mouth and face-to-face sales, all the while promoting the idea that wealth and success can be obtained by anyone that adheres to their business model.Continue reading
Robert FitzPatrick of Pyramid Scheme Alert is bombarded every week by consumers who want to ask him, “What about this MLM?”
You see, the marketers of multi-level marketing companies have gotten very savvy. They know that plenty of us have figured out their con game. They now have consumers convinced that theirs is “one of the good ones.” They’ve convinced consumers that they’ve seen the “bad” MLMs, and that theirs is surely one of the “good” MLMs. (Yet they never tell consumers which ones are the “bad” ones, do they? Why is that?)Continue reading
Over 9 years ago, I started the website “Pink Truth” to help educate consumers about the truth behind Mary Kay Inc. Four long-time Pink Truth members were interviewed at length for they story. They were all sales directors, and therefore part of the “top 2% of Mary Kay.” These women are part of the Mary Kay Cosmetics success story. Or are they? The truth is that the majority of the sales directors are barely making a minimum wage living, while some of them are actually losing money.
This story digs into the Mary Kay con that has been crafted and refined for over 50 years. Please take the time to watch this story. And if you have any friends or family involved in multi-level marketing, please encourage them to watch too.
Our opinion has always been that Vemma was likely an illegal structure – it has that endless chain feature where “Affiliates” are incentivized to buy a high-priced starter kit with minimal real value, only to turn around and very quickly find two, three or four others to do the same so that they can reap a quick profit and recoup their initial “investment,” said Ramey.
This is a familiar argument. MLMs left standing after one is shut down claim that THEIR company doesn’t pay for recruiting. And technically it appears that they don’t. Except they do. They may not have a “high priced starter kit” or may not pay a “commission” on the starter kit. Instead, they encourage distributors to buy a bunch of products up front and commission is paid on those. Since those products could theoretically be sold, I suppose that’s not paying for recruiting so much it is paying for getting the recruit to buy some overpriced, hard-to-sell products. MLM attorneys will tell you that you have to make it look like you’re not paying for recruiting or the kit.Continue reading
Multi-level marketing companies – – MLMs for short – – go to great lengths to distance themselves from pyramid schemes. The Direct Selling Association (a lobbying group funded by multi-level marketing companies that helps ensure our government continues to allow MLMs to operate) says that legitimate MLMs have legitimate products or services for sale and base compensation primarily on the sales of projects. In contrast, they say that pyramid schemes focus on recruiting and base compensation on recruiting.
In reality, multi-level marketing companies have products that are simply a “front” for the real business, which is recruiting. They talk about all the riches distributors can earn, knowing that almost everyone who participates will lose money. (And when those losses inevitably occur, the companies say it is the fault of the distributors who must not have worked hard enough.)