Wednesday, July 29, 2015

HUMOR: Suspect Credential Translator

A lot of scams misrepresent their "credentials" by inflating what they do, piling on euphemisms, and stretching the definition of the term to be something that's barely relevant.

MLMSkeptic has compiled the following terms and show you the real meaning behind the fancy terms.

They say: US based company!

Reality Says: I registered this online in Nevada (or Delaware) for $149 (or less)!

They say: Renowned Investment Group!

Reality says: I registered more than one companies online!

They say: International Conglomerate!

Reality says: I registered companies online in more than one country / continent!

They say: Decades of experience in the industry!

Reality says: I spent decades amounting to nothing (which is why I'm STILL at it!)

They say: Internet advertising platform!

Reality says: I know how to deploy a free banner rotation script!

They say: We have investments in biotech!

Reality says: I sell some nutritional supplements I got from some no-name factory in Asia!

They say: Experienced Internet entrepreneur!

Reality says:  I launched multiple failed schemes one after another!

They say: We have signed contract, making everybody a ton of money!

Reality says: A memorandum of understanding... i.e. "intent", not a contract, can be backed out at any time. 

They say: We have resort on _____!

Reality says:  We have a piece of rocky beach that nobody would bother build a resort on.

They say: We have a golf course!

Reality says: We have a CLOSED golf course we *want* to redevelop! 

Monday, July 27, 2015

Scam Tactics: Two-face... being very different things to different people

One of the most memorable villains to Batman is Two-face, formerly district attorney Harvey Dent. After a severe injury that left him scarred on half of his face, he developed full blown schizophrenia: two completely personalities depending on which side is talking to you.

And guess what company is acting like Two-Face? Herbalife. To lawmakers, it's presenting itself as a company that's changing lives, and it's FLYING IN members from across the country to show them off in Washington D.C. to, quote, "talk about the benefits of Herbalife's science-based nutrition products. Members will also be sharing their own experiences and the income-generating opportunities available to Herbalife members through hard-work and dedication", as per Herbalife's own press release.

Why are a bunch of distributors talking "science-based nutrition", not scientists and nutritionists?

Furthermore, why are these 12 members talking about "income-generating opportunities available to Herbalife members" when Herbalife itself stated that 73% of members did NOT join Herbalife for income as a primary reason? Are 9 of these 12 NOT going to talk about the opportunities, as Herbalife itself claimed?
Herbalife rebuttal slide, page 91, circa 2014
Of course not. Herbalife flew these 12 in because they are bright-eyed and bushy-tailed enthusiastic distributors (sheeple?) properly trained in Herbalife's alternate reality. They may be telling the truth as they know it, but it's not "the" truth, and they sure do NOT represent the rank and file as Herbalife want Congress to believe.

In the meanwhile, Herbalife is hiring as many high-level government people as it can, as well as lobbyists. But that's not the other face. The other face is the Herbalife convention in St. Louis.

Friday, July 24, 2015

USFIA Update: Is USFIA involved in child labor exploitation of amber mines in Mexico?

Thanks to SierraMadreTattler, MLMSkeptic was recently made aware of an article published back in May 2015 that certain unnamed Chinese has been hiring anybody who can work (including children) in the tiny town of Simojovel, in Chiapas, Mexico, to mine amber. Children as young as 7 were hired to work in the amber mines, often during school breaks, with promise of pay of up to $500 pesos per day. Many even die in the mines.

But is there any link to USFIA? We don't know as USFIA does not specify if they use any Mexican amber. In fact, most of their amber mining references are about amber mining in Dominican Republic. However, since each affiliate prepare their own slides based on whatever sales meeting they attended at USFIA HQ, they often have additional insight, such as the one I found here:

USFIA affiliate states that Chen Yan, VP of USFIA, frequently travels to factory (mine?) in Mexico
and Dominican Republic, and stated their mine seems to be in a TINY village in Mexico. 
So here, we have an USFIA affiliate claiming (based on his attending USFIA HQ seminar) that no less than Chen Yan, Steve Chen's brother, visiting Mexico to check up on factory (mine?) of amber. And it's in a tiny village.

Sunday, July 19, 2015

MLM Basics: Is Multi-Level Marketing a Shared Delusion?

In a blogpost back in 2014, author Robert Fitzpatrick, who operates the website PyramidSchemeAlert postulated that Multi-level Marketing, i.e. MLM is really a delusion that redefined various terms to create a myth around itself that cloaked its true nature (as a part of his "Myths of MLM" series). It is an interesting viewpoint, and I can see how he came to that conclusion. The premise can be narrowed down to five separate yet related delusions that MLM participants perpetuate. Fitzpatrick claimed that by accepting the myth jargon, the participants gave the MLM myth power over themselves.

The MLM Myth has five major components, according to Fitzpatrick:

1) MLM is described as "direct selling", but few if any participants actually make retail sales or profits from such.

2) MLM is described as "income opportunity" even though most MLM participants lose money.

3) MLM is described as a "business" even though there is no fair exchange of value... Majority of people lose money.

4) MLM is described as "legal" even though it's merely "have not been proven to be illegal", i.e. presumed innocent

5) MLM is described as "network", "relationship", "personal" even though it disrupts the social norm.

Let us examine each part and see if Mr. Fitzpatrick is right.

Is MLM really Direct Selling? 

From my personal experience, most people in MLM had learned to emphasize the "multi-level" part of MLM rather than the "marketing" part. I have read comments of hundreds of people on BehindMLM and many commenters believe one cannot succeed in MLM without recruiting, and the emphasis should be on recruiting and retaining downlines, rather than product sales. Not that BehindMLM attracts the "typical" MLMer, of course.

It is also interesting that the MLM industry association is called Direct Selling Association, even though the organization actually predated MLM by about 20-30 years. DSA started its life as "Agent Credit Association" in 1910, and its members are companies that employed door-to-door sales, and Avon, then known as California Perfume Company, was a founding member. It wasn't until 1968 that it adopted its current name, Direct Selling Association.  Most people accept that MLM was popularized with California Vitamin Company, later Nutrilite, in the 1930's, which eventually became an Amway brand, founded in 1950's. Thus, MLM came AFTER direct selling, but took over the name direct selling.

For what it's worth, Avon was direct sales up to 2005, when it went multi-level. Didn't seem to help its bottom line though.

There is no doubt that MLM is supposed to have a direct sales component, but in reality, this is rarely put into practice. When the companies themselves count purchases BY the distributors as "sales" for calculating commission, instead of actual retail sales by the associates, there really is little if any incentive to retail. Even Direct Selling Association want to formalize "self-consumption" as a RIGHT of MLM distributors, i.e. they have the RIGHT to NOT retail what they buy, and still have that counted for commission. A couple states even put that into law thanks to lobbying by DSA.

Indeed, in the past decade or two DSA has fought every attempt by various groups to require the companies to document how much retail was actually performed by the industry. Any stats they compile are based on estimates by the companies themselves based on sales to distributors.

In 2013/2014 Herbalife was accused by none other than Bill Ackman to be a huge pyramid scheme. You'd think that Herbalife would simply produce some numbers proving they were retailing their products, and if they didn't, they have a WHOLE YEAR to gather that data, but no, instead, it spent money on hiring lobbyists instead, and hire survey teams, but NO ACTUAL RETAIL FIGURES. And DSA said nothing, because DSA is not a regulatory body... DSA is a lobbying organization for the companies.

Think about it. The Direct SELLING association does NOT want its members to prove they are actually SELLING stuff, through their distributors, to the public. And claims it is a RIGHT for distributors to NOT SELL their stock.

Verdict: MLM is now mostly NOT direct selling, even though it was meant to be.

Is MLM really an income opportunity? 

Proponents of MLM claimed this is a way to earn supplemental income, part-time income, side job, with potential transition to full-time if you find yourself attracted to it.

The REAL pros in the business knows that to make serious income in MLM you need to dedicate two to five YEARS to build your organization and during which you will achieve MINIMAL income.

Thus one can be answered pretty definitively: NO, not for a vast majority of the people involved.

From DSA's own statistics for 2014:
  • 18.2 million people involved in direct selling
  • Estimated product sold 34.47 billion dollars
That's average SALES of... $1894 dollars per person PER YEAR. And that's just revenue, not profit. We haven't taken into account any of the expenses involved either. Even if the person was able to achieve 50% profit, (i.e. $947) AFTER counting expenses (highly unlikely), and spent only two hours a week on this... That's only that's $9.10 per hour, not much above Federal minimum wage of $7.50 an hour.

Furthermore, Herbalife, in their own defense, claimed that 73% of their own distributors DID NOT JOIN FOR INCOME. This is one of their own slides released as rebuttal of Bill Ackman's claim that Herbalife is a pyramid scheme.
Herbalife, in 2013, claimed that 73% of distributors did NOT join for income as primary reason

Thus, MLM can be an income opportunity... for a tiny minority of people who made it to the top. The rest of you are likely to lose money or earn minimum wage, or not even that, as you get no benefits or even income security, unlike a minimum wage job.

Verdict: MLM in general is not income opportunity (with small exceptions)

Thursday, July 16, 2015

USFIA Update: If you or family or friend invested in Gemcoin, a US Reporter Would Like to Talk To You

Following comment was left on BehindMLM website, and the email address is verified.

Posted by: Carol Matlack
Jul 16th, 2015 at 10:16 pm  (Q)
Hello, I am a journalist with Bloomberg Businessweek magazine. I’ve been doing some research on USFIA and the Gemcoin, and I’m interested in speaking with investors and friends & families of investors, about their experience.
The moderator of this forum has kindly agreed to post my email address so you can contact me: (This address will only be posted here for a week, so please make a note of it if you plan to contact me.) Thank you.
And just in case, here's Chinese version:
您好我是彭博商业周刊(Bloomberg Businessweek) 的记者。我一直在做关于USFIA和Gemcoin珍寶幣研究,而我想知道投资者和投资者家庭朋友的经验。本次论坛的主持人也欣然同意貼我的电邮地址,以便你可以与我联系此地址将只被张贴在这里一个星期,所以请记下它,如果你打算与我联系。 )谢谢。

I have no doubt some Gemcoin supporters will spam her account with promo material, about how nothing is wrong and a couple haters are spreading "lies" about Gemcoin. Good, show her why you tell the truth and everybody else ain't.

And if you are on the side of justice and truth, and you have some personal experience on Gemcoin (maybe you were in that "motorcade" that went to Quail Ranch?) let her know.

And as original comment stated, this will only stay up for ONE WEEK STARTING TODAY.

EDIT: And a shoutout to the, fellow blogger keeping track of the situation in Sierra Madre, neighbor of Arcadia! Thanks for the repost! I added the Chinese translation after you reposted it, sorry!

USFIA Update: Who are they trying to fool with these "screenshots"?

A few days ago, the "official" Facebook page of Gemcoin / USFIA posted this:

Facebook post by Gemcoin / USFIA official page
Can you see the problems? No?

The "Blockchain Wallet" is the first problem.  Blockchain never heard of Germcoin.

Second one requires a bit closer look.... Look carefully:

Getting the details of one of those pictures... See the problem yet? 
Do you see the problem yet? No? Let's go a little closer:

The title says: [unreadable Chinese] Gemcoin Wallet.pdf -- Adobe Reader
That's right, you're looking at a photo of PDF being displayed on a computer screen. In fact, if you open Adobe Reader XI now, you should see the SAME toolbar. Here, I'll even show you.

Screenshot of Adobe Reader toolbar / menu bar
They're showing off a PDF file and claiming it "proves" that their cryptocurrency blockchains are working?!?!?!

How stupid do they think people really are?

Scam Tactic: Gaslighting (indignant denial)

English: This bright gas lamp has three mantle...
English: This bright gas lamp has three mantles in UK
 (Photo credit: Wikipedia)
Ever heard of "gaslighting"?

From Wikipedia: Gas-lighting (or gaslighting) is a form of mental abuse in which information is twisted or spun, selectively omitted to favor the abuser, or false information is presented with the intent of making victims doubt their own memory, perception, and sanity.

Scammers LOVE gaslighting, because they need to destroy victim's sense of reality, so they can substitute their own alternate reality, where selling is buying, black is white, and profit is loss.

Scammers deny facts that they don't want to explain (i.e. inconvenient truth). They will insist that the victims remembered it wrong. It wasn't like that. If victim is already weak-willed, victim will question his or her own reality... Did it happened the way I remembered it, or did I just imagined it? Was the way I learned selling really what selling means?

Scam victims who complained are dismissed as "whiners" and shouted down by shills, denigrated as "unbelievers" who "do not share the vision". Often, there are outright threats, from threats to cancel membership (triggering FOMO, fear of missing out), to verbal abuse to threats of physical abuse to legal threats (Cease and Desist orders) to even death threats. The victims were ostracized and put down emotionally, manipulated into believing it was their own fault for failing, that the system worked for everybody else, thus it must be the victim's own fault. Any one who failed is automatically weak, unbelieving, and sometimes, traitors who want to blame their own failings on the organization, and so on.

Pyramid schemes are very good at that. If one wins, the system gets credit as "the system works!" Individuals get no recognition unless some are needed to be shown in award ceremonies, but only to entice people who are on the fence. If one does NOT win one is blamed for the failings, as in "You must have screwed up! It worked for everybody else!"