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
Bill Ackman and Pershing Square produced an educational video about multi-level marketing companies and how and why they are pyramid schemes. Yes, I often hear:
- “Pyramid schemes are illegal!”
- “If XYZ Company was a pyramid scheme, the government would shut them down!”
Yes, pyramid schemes are illegal. No, our government generally doesn’t shut down pyramid schemes masquerading as multi-level marketing. Continue reading
In a video released this week, Pershing Square (the hedge fund that exposed the Herbalife fraud) contrasts Herbalife’s public statements about the “business opportunity” with the statements made behind closed doors.
Herbalife claims to offer “the best business opportunity on the face of the earth.” But the reality is that it is an opportunity in which you are almost guaranteed to fail, with 96% of distributors making less than half of what is earned by employees making minimum wage (per the video). Despite Herbalife executives and high level distributors publicly repeating how lots of money can be made, the numbers really look like this (according to the video): Continue reading
Multi-level marketing companies that advertise shakes and potions designed to help you lose weight and get healthier are generally all guilty of the same offense: Distributors making false health claims. The products are generally terrible for losing weight and maintaining the weight loss. And the health benefits are nothing more than one could get from eating well and taking a simple multivitamin.
Nonetheless, people involved in MLMs routinely claim these potions cure things like ADHD, arthritis, high cholesterol, lupus, asthma, migraines, cancer, fibromyalgia, and more. The most disturbing part of this is when the distributors encourage people to stop taking medications that are critical to their health. This advice is simply dangerous.
Today Bill Ackman released a video demonstrating that Herbalife distributors are violating U.S. law by making false and deceptive claims about the Herbalife products. How do they get away with this? The company likely would contend that there is nothing illegal about distributors giving personal testimonials about the results they received from the products. Good luck with that defense. Continue reading
Herb Greenberg, a stocks commentator for CNBC did a ten-month investigation of multi-level marketing company Herbalife. Its conclusion is this 20 minute documentary, and the timing couldn’t be better. Herbalife has been accused of being a pyramid scheme again, this time by Bill Ackman of Pershing Square.
Despite the fact that CEO Michael Johnson claims he’s never heard of Herbalife being referred to as a scam, there are plenty of people who will tell you different. This documentary is a very, very good piece and well worth the time to watch.
As we patiently wait for Herbalife’s “analyst and investor meeting” on January 10 to address the pyramid scheme allegations made by short seller Bill Ackman, there is plenty of good discussion of HLF around the world wide web.
Kid Dynamite said Bill Ackman is wrong about Herbalife, citing that:
- HLF is not a pyramid scheme because commissions are paid based on sales of products, not recruitment (Wrong. Commissions are paid largely based on required minimum purchases of products by recruits.)
- Herbalife has not committed accounting fraud in reporting their product sales. (I’m not so sure about that. The numbers as reported are deliberately and materially misleading.) Continue reading