MLM: It’s About Recruiting, Not Sales

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pyramid-scheme-mlmI’ve been telling you for years that multi-level marketing is NOT about selling products. It’s about recruiting people into a fake opportunity. The products are the “front,” meant to make MLM look like a legitimate business. In reality, very little product is retailed to actual consumers. Instead, it’s sold to new recruits into the scheme, who have little chance of ever retailing those products for a profit.

Look no further than the case of Herbalife to prove my point. (This point is usually difficult to prove, as MLMs do their best to hide the numbers so we never see the truth behind the scam.) This month Herbalife entered into a settlement agreement with the FTC that has them paying $200 million and substantially changing how the company does business.

Herbalife falsely claimed: “Settlement Does Not Change Herbalife’s Business Model as a Direct Selling Company.”

The FTC clearly disagrees, and said in its press release about the settlement (emphasis mine): Continue reading

Pyramid Legalization Act of 2016

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A new bill is making its way through Congress, and it’s titled “Anti-Pyramid Promotional Scheme Act of 2016.” What’s it all about? It is an attempt by the Direct Selling Association and multi-level marketing companies to make sure that their pyramid schemes are never shut down. It is a bunch of fluff that is designed to look like it protects consumers, while the bill is really protection for MLMs. It makes inventory loading (getting recruits to buy inventory to “qualify” for commissions, regardless of the fact that they will likely never be able to sell that inventory) perfectly legal under basically all circumstances.

Attorney Douglas Brooks has analyzed the bill and dubs it the “Pyramid Legalization Act of 2016.” This is his analysis:

In the guise of an “anti-pyramid” bill, the proposed legislation would more accurately be called the “Pyramid Legalization Act of 2016.”   The bill would make it extremely difficult if not impossible to prosecute the most pernicious forms of deceptive multi-level marketing programs and product-based pyramid schemes. Continue reading

ESPN on AdvoCare

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Yesterday ESPN published an article about AdvoCare, Drew Brees Has A Dream He’d Like To Sell You. AdvoCare is a typical multi-level marketing (MLM) company. It focuses on selling a “business opportunity” and uses nutritional products to make it appear as thought they’re not promoting a pyramid scheme. Unfortunately, more than 99% of participants in MLM lose money, making it a “business opportunity” that is even worse than gambling at a casino.

Mina Kimes did an outstanding job of digging into AdvoCare’s empty promises to distributors. It’s a long article, so I’m going to pull out some of the most interesting excerpts for you. Here is one of the most important things to remember: ESPN has nothing to gain from misleading you. They don’t care one way or another if AdvoCare or any other MLM is a legitimate opportunity.  AdvoCare, on the other hand, lives or dies by the public perception… they are fully invested in consumers believing that they push a good and beneficial opportunity.

On selling hope:

AdvoCare, which has used athlete endorsers and event sponsorships to cultivate deep ties to the sports world, portrays itself as a company that “offers the average American the chance to make an above-average income,” but, in truth, only a tiny percentage of salespeople ever make significant money.

Slight correction: Only a tiny percentage of MLM salespeople ever make any profits. Continue reading

ESPN Outside the Lines on AdvoCare

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advocareUPDATE: The television segment has been pushed back, but the article is out today.

ESPN has been investigating AdvoCare, a multi-level marketing company that sells a “business opportunity” using nutritional products as their hook. Today, ESPN’s investigative news show Outside the Lines is running a segment in AdvoCare, airing at 1:30pm Eastern time. The broadcast will be replayed on Sunday, March 20th at 9:30am Eastern time.

The broadcast must be good, because Advocare launched into damage control mode a few days ago. The company has posted a video that purports to be an excerpt from the interview, but it is clearly a self-promotional piece. They also are promoting the hashtag #AdvoStrong. on Twitter.

In conjunction with this broadcast, ESPN the Magazine is publishing an article about AdvoCare by Mina Kimes.

Please check out both the segment and the article, as they both help shine a light on the negative effects of multi-level marketing.

Herbalife Victims Video: Almost Everyone Loses Money in MLM

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Multi-level marketing is not a business. I’ve written numerous times about the fact that more than 99% of participants in multi-level marketing (MLM) lose money. Companies like Mary Kay Cosmetics promote the “income opportunity,” but when the vast majority of MLM distributors say they lost money, the story changes to “they didn’t really want to make money,” or “they just did it for fun,” or “they didn’t try hard enough.”

The truth is that MLM is not a “business opportunity.” Almost everyone who participates is guaranteed to lose money. You can follow all the instructions, talk to everyone you know, invest money in the scam, and you will still lose money. Why? Because MLM is nothing but a pyramid scheme in which all the people at the bottom of the pyramid will lose money.

Check out this new video featuring victims of the Herbalife “business opportunity.” They put lots of money, time, and effort into their “businesses” and ended up losers. Continue reading

MLM is Not a Business (It’s a Pyramid Scheme)

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I’ve written many times about how multi-level marketing (MLM) is not a business. Don’t believe me? Others have said the same thing. Today Lazy Man and Money lays out the reasons why MLM is not a business. You’ll have to read the details at his site, but the reasons include:

  1. Businesses obey the Commandment of Control
  2. Business 101 Excludes MLM
  3. Businesses obey the Commandment of Entry
  4. MLM Doesn’t Obey the Laws of Supply and Demand
  5. More than 99% of people LOSE money
  6. MLM is Not like Any Other Small Business
  7. It Doesn’t Matter How Hard You Work

The bottom line that any job is better than MLM. In MLM, you’re almost guaranteed to lose money. With a job, even one paying only minimum wage, you’re still making money.

Herbalife $HLF Doesn’t Want You to See This Video

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Herbalife (HLF) does not want you to see or hear the evidence that the company is nothing more than a recruiting scheme. Audio and video footage was obtained of CEO Michael Johnson talking about how Herbalife is a recruiting company:

It’s the recruiting, meaning bringing new distributors into our company, which is the most vital part of our bloodstream. We bring new distributors in, we grow. It’s that simple. It’s that simple. And the company has built its whole reputation, its whole life, on recruiting.

But every time someone publishes this audio or video footage, Herbalife makes a bogus copyright claim and has it taken down. Continue reading

Herbalife CEO Michael Johnson on Recruiting

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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]…”

This is the problem with multi-level marketing. The “business” is not about the product. It is about recruiting. The product is merely an inconvenience that is necessary to make it appear that these companies are not pyramid schemes. Read more at Quoth the Raven.

Update: Video is now available here.

Thompson Burton: Support Company of the Year from Academy of Multilevel Marketing

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lolThompson Burton, a law firm providing services to multi-level marketing companies, provides our comic relief today, along with “The Academy of Multilevel Marketing” (TAMM).

The Academy of Multi-Level Marketing is an organization created by MLM industry supporters to make up some awards to give legitimacy to those involved in the grand scam that is called multilevel marketing, direct sales, network marketing, or other clever names (generally used to disguise the fact that these companies are nothing but endless chain recruiting schemes).

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

Herbalife $HLF CEO Michael Johnson on Recruiting

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michael-johnson-herbalife-recruitingLast week a video was posted to YouTube showing Herbalife CEO Michael Johnson talking about recruiting. Herbalife had the video pulled from YouTube on the basis of copyright infringement. That is most certainly a bogus claim. I’m not an attorney, but I’m smart enough to understand the concept of fair use:

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