Back in May, a class action lawsuit was filed against multi-level marketing company WorldVentures. This is the travel MLM that encourages distributors to share photos of themselves holding signs saying “You Should Be Here.” It is marketed as a direct sales travel club, yet the “start a business” part of their website doesn’t even mention what you will be selling or doing. The World Ventures compensation plan mentions making money from selling products and from recruiting others, yet the entire document speaks only to the money that is made from enrolling new distributors (called enrolling new product customers). Making money from selling something seems to be wholly disregarded.
Some multi-level marketing (MLM) companies release income disclosures or earnings disclosures. These documents theoretically provide insight into how much distributors earn in commissions or overrides.
However, the disclosures are generally worthless. What is more important than the information in these documents? The information that is not disclosed in the documents.
Multilevel marketing companies purposely omit important information that would allow potential distributors or investors to have real insight into these plans. Continue reading
1. Both Medifast (NYSE:MED) and YTB International have 10 levels of commission payouts. That means on any given sale of actual products or services, the person selling it will receive a small commission, while 9 other levels will receive a total commission exceeding the seller’s commission.Continue reading
Noted MLM expert Robert FitzPatrick did a recent blog post on the YourTravelBiz.com lawsuit filed by the California Attorney General. He has a nice analysis of how and why YTB is nothing more than a pyramid. These multi-level marketing companies are almost always the same, they each just have a different “hook.” In this case, the hook is travel services, although according to the company’s own numbers, very little travel is actually sold. (That’s a clue to it being a pyramid scheme… Little “real” business done, in favor of instead selling a dream and recruiting with that dream.)
Yesterday on WalletPop, I wrote about how California’s Attorney General announced a lawsuit against YourTravelBiz.com (YTB) and called it a “gigantic pyramid scheme.” The evidence that it is a pyramid scheme is based upon the fact that the company theoretically offers members a chance to sell travel services to customers, yet that’s only a small fraction of how the money really flows.
The real money in YTB is in recruiting new members, who pay $450 to join and pay $50 a month to stay active and eligible for commissions. Hmmmm… Kind of sounds like the $448 it costs to join Shop to Earn and the minimum monthly purchase of $100 from its “Shop to Earth” products in order to be “qualified” to be paid commissions.Continue reading