New Years Resolution for Network Marketers (and Wannabes)

It's New Year's Eve, December 31st, 2013, and a New Year is almost upon us.

So I'd like to propose some new year's resolutions for the various network marketers and wannabes. Here are 7 simple items.

• I will not be hurried into making a decision I shall regret later. 
• I will not be swayed into making a decision after only hearing a one-sided presentation, no matter how good it sounds. 
• I will learn how promoters use psychological coercion on me and others so I can avoid such 
• I will not make bad arguments by using logical fallacies and irrelevant facts as that would only make me sound ignorant and stupid if I make such bad arguments. 
• I will fact-check and perform due diligence on claims I repeat. I shall remember 'Extraordinary claims require extraordinary evidence'. (Arthur C. Clarke)
• I will learn about pyramid schemes and Ponzi schemes from real sources, such as lawyers and scambusters, rather than people who don't know what they are talking about. 
• I will learn all I can about the career I an interested in, such as network marketing, even "negative" stuff that nobody seem to want to talk about because I don't want to be blind-sided by anything.  

All of these are for personal improvement, and none of them are very hard.

MLM Absurdities: Due Diligence is NOT Analysis Paralysis!

One of the more subtle reality inversion techniques used by scammers (and unethical sales people), and cloned by clueless MLM noobs, is misrepresenting "due diligence" as "analysis paralysis". 

Analysis paralysis usually refers to an organization attempting to analyze a certain proposed project or change and the effect it would have, but so much time and resource was spent on the analysis that the project never was actually adopted.  For an individual, it could be that s/he is attempting to reach a decision, but that decision has so many factors s/he was overwhelmed by combination of scope and interactions and end up making no decision at all.

However, a decision to "not participate because I clearly have no idea what I am getting into" is a decision, and reaching that conclusion is NOT analysis paralysis.

Yet many MLM veterans and noobs will mischaracterize their moment of commitment as "overcoming analysis paralysis". Here is one example from MLMBlonde(dot)com:

Or they may have been polite but also declined and you were crushed
SO you went into what I call "Analysis Paralysis".
You began to question if this could work for you. You start to analyze
your decision.
YOU FREEZE. You begin to think something may be WRONG with you
or you made a bad decision, after all, if those closest to you don't "GET
IT", how you possible speak to a stranger.
You sit back and think and think , and then you just NEVER
get up the nerve to move forward. You lose your excitement. You
just DO NOTHING. 

The problem is MLMblonde had NOT described analysis paralysis. She described "self-doubt paralysis", but slapped the "analysis paralysis" label on it. 

And she's not alone in doing so. Many MLM noobs seem to think any sort of doubt is analysis paralysis, even a full on analysis (i.e. "trust, but verify"). 

And due diligence is NOT doubt. 

Scam Psychology: The Problem of Willful Blindness, Recklessness, and Negligence

Horatio Nelson, origin of "willfully blind"?
 (Photo credit: Wikipedia)

In studying various reactions to criticism by MLM participants, it is interesting that so many of them are afflicted with "willful blindness", and it is a condition that can cause serious financial and legal problems.

The most popular example of "willful blindness" is an apocryphal story of Admiral Horatio Nelson in Battle of Copenhagen. When given a flag signal by a cautious fleet commander that Nelson may "withdraw at his discretion", and asked by a subordinate what shall he do, Nelson reported raised his spyglass to his blind eye (with an eye patch and all), then replied "I see no signal to withdraw", and continued the attack. The story was often told as if Nelson disobeyed a direct order, but the flag signal is "withdraw with commander's own discretion". This gave us the expression "turning a blind eye", and the term "Nelsonian Knowledge".

In modern times, "willful blindness" is defined as a situation where a participant INTENTIONALLY puts him- or herself in a situation where s/he cannot / does not know the facts that would make him/her liable for civil or criminal acts s/he had participated in. And it is a legal term. For example, traffic mules (those who smuggle contraband across borders) asked to be blindfolded during loading process so s/he does not know what's being trafficked. And thus, s/he want to argue they are innocent victims and thus should not be counted as accessory to trafficking.

The court had NOT accepted this defense, and has taken the position that willful blindness is merely legal sophistry, if it can be proven that the participant knows that such facts exist, and has taken deliberate steps to isolate him-/herself from knowing such facts. This case was even taken up by the Supreme Court back in 2011, when it ruled a file sharing service cannot disclaim responsibility for illegal acts of its users just because it doesn't want to see what's being shared, i.e. willfully blind to the copyright violations.

This is different from recklessness and negligence. Recklessness is knowing such risks of damaging facts do it any way, and negligence is "should have know such risks, but did not".

To illustrate with an example, using the smuggler mule as example:

recklessness: I know it's illegal, I'll take my chances

negligence: I should have known it's illegal, but I honestly thought those were nothing harmful...

willful blindness: I have no idea what they put in my luggage. I never asked. Don't need to know.

And many MLMers suffer from all three: recklessness, negligence, and willful blindness.

BREAKING NEWS: Zeek Ponzi "Determination of Claim" letters going out now

Zeek Rewards Receiver Ken Bell has released a new letter on the official website http://www.zeekrewardsreceivership.com/ dated 27-DEC-2013.

Determination of Claims basically confirms that you have a claim against Zeek Rewards (i.e. it owes you money). How much you will get back depends on how much he was able to claw back from the net winners... 15000 of them, 9000 of whom live in the US.

Even if you don't receive one (and as first batch is going out, and it'll take the remainder of the year just to finish the first batch)  that does not mean you don't have a claim. Some claims are harder than others to document and verify. If you have met the deadline to file your claim on the official website, you will eventually get a notice.

Here's some most interesting facts:

Scam Post Mortem: How Long Had Zeek Been Investigated Before They Were Closed?

When did US Secret Service start
investigating Zeek Rewards?
(Photo credit: Wikipedia)

With clawback lawsuits about to start against the "net winners" in the Zeek Ponzi scheme (there's still time to settle, lest you enjoy being served with a lawsuit) one the the questions burning on the minds of the victims (besides "when do I get my money") is how could the Zeek ponzi scheme lasted as long as it did? When did they, the insiders (Paul Burks, Dawn Wright-Olivares, etc.), knew they were being investigated? Why did they continue to perpetrate the fraud rather than shutting the whole thing down?

Part of the answer on how long the insiders had known about the government investigation was hinted in the SEC press release on Dec 20, 2013 where they announced that SEC has brought charges of various securities law violations against Dawn Wright-Olivares and her stepson, Dan Olivares, respectively COO and CTO of ZeekRewards ponzi scheme, that they knew and covered up evidence of wrongdoing. The civil charges has been settled with both of them paying about 11.4 million dollars together, but the CRIMINAL charges being filed by the US Attorney's Office is still pending. 

Let us then put several more documented dates in a timeline so we can visualize it more clearly:

• circa early April, 2012 -- Zeek Rewards suddenly cancelled all members from certain European countries with a bogus explanation and only offered original money back
• April 18, 2012 -- Zeek Reward red carpet event in Lexington, NC
• circa end of May, 2012 -- Zeek posted a profit share of 8.9%, then told everybody they had a manual decimal displacement, it's really 0.89%. This basically proved that the percentage was not calculated, but manually entered
• May 28, 2012  -- over Memorial Day weekend, Zeek suddenly announced that all Zeek checks have to clear before June 1st or they are void. 
• June 4th, 2012 -- in a "training call" hosted by Dawn, she announced that 700 Zeek members in Montana can no longer participate due to some legal problems. 
• June 5th, 2012 -- in another "training call", Dawn announced eWallet through NxPay, then claimed that unless other affiliates put more money into Zeek's eWallet, Zeek cannot pay people. 
• June 6th, 2012 -- Zeek announced they no longer accept personal checks 
• June 6th, 2012 -- Dawn attempts to white-wash eWallet issues with now infamous "burger Analogy" (i.e. if you buy from BK you can't pick up your burgers at Wendy's, so if you buy bids with STP you can't get paid from NxPay)
• June 8, 2012 -- Dawn Wright-Olivares appeared with Troy Dooly on ACES Radio hosted by Jim Gillhouse. Dawn claimed that Burks "manages all that" when asked how was daily profit share calculated. 
• July 7th, 2012 -- North Carolina Office of Attorney General issued an information request to Zeek, but this was kept secret by both parties
• July 24th, 2012 -- Keith Laggos, Zeek consultant, "fired" for promoting Lyoness, revealed to be receiving 40K a month through Zeek as a Zeek member.
• July 30th, 2012 --  Darryl Douglas, major insider at Zeek, dropped out of sight
• August 1, 2012 -- North Carolina OAG request of Zeek documents was made public
• Circa August 6, 2012 -- training classes and red carpet event scheduled for August 22 cancelled
• August 16, 2012 -- Secret Service agents closed the doors of Zeek Rewards and RVG. 

Now, when did the Feds start investigating, and when did RVG / Zeek became aware of the investigation? 

MLM Absurdities: Why Do New MLM Businesses Just End Up Cloning Old Scams? (Is Lucrazon a scam?)

 Lucrazon logo via CrunchBase

In studying network marketing and its illegal cousins, the pyramid schemes and the Ponzi schemes, it is sometimes rather disheartening to see that some people just end up reinventing old scams, or are treading so close they may as well as claimed to have reinvented the wheel. Here's one of those cliche quotes to throw around:

Those who cannot remember the past are condemned to repeat it. -- George Santayana

Perhaps in the modern times, it's necessary to add a corollary:

Those who cannot research the past are doomed to repeat it

And today, we shall examine one such biz... a seemingly very upright one... except it seem to be a business model that's a copy of a scam that was closed by the FTC 13 years ago.

That business is called Lucrazon.

Bad Arguments: Misrepresenting Pyramid Schemes, esp. by people who should know better

Some of the most persistent bad arguments presented by network marketers (not just noobs, but also many veterans) are various misconceptions about pyramid schemes, and using those misconceptions to explain how network marketing is NOT like that. However, that explained nothing since the rebuttal is based on a misunderstanding.

Today, we shall explore a website called "Engineered Lifestyles" by a guy named Jamie Messina, who claimed to be an automotive engineer before getting bitten by the network marketing bug. You'd think that an engineer would know about a bit of critical thinking... but let's look at the evidence, rather than presumptions.

Okay, what does Jamie Messina say about pyramid schemes? This can be found at:

http://engineeredlifestyles.com/mlm/pyramid-scheme.html

For a page with the title "Recognizing Pyramid Schemes, and subtitle: Is MLM a Pyramid Scheme?", the page is surprising light on information, as there is not a proper definition of pyramid scheme on this page at all. Instead, the entire page is actually a sales pitch about network marketing in an attempt by pointing out the pyramid like structure is all around us therefore a pyramid shaped organization is nothing to be afraid of.

While technically correct, that pyramid shaped organization is all around us and nothing to be afraid of, it is IRRELEVANT as it has NOTHING to do with a "pyramid scheme". This is a very common obfuscation defense even by famous "advisors" such as Robert Kiyosaki. A pyramid scheme is a type of FINANCIAL FRAUD and nothing nothing to do with organizational shape of an organization.

Jamie has gotten off to a bad start. Let's see if he can redeem himself in the second half...

Scam Psychology: Why Do People Believe Celebrity Endorsement of Woo Products?

English: Jenny McCarthy (Photo credit: Wikipedia)

Celebrities pushing bad science and bad medicine is nothing new.

Jenny McCarthy -- Playboy model, actress, "celebrity", "former" anti-vaxxer, pusher of various bogus autism "treatments" (basically told parents "try anything (whatever it costs)")  [ see wikipedia entry ]

Suzanne Summers -- actress, singer, celebrity, and promoter of "Wiley Protocol", a hormonal replacement therapy that was NEVER proven with scientific study and may be dangerous, among other things. [ see wikipedia entry ]

English: Lisa Oz and Mehmet Oz at the 2010 Time 100. (Photo credit: Wikipedia)

And let's not forget the Oprah spawned... Mehmet Oz, i.e. "Doctor Oz"...  who seems to often fail basic grasp of science despite his medical training, as he had featured such pseudoscience on his show as homeopathy, Reiki (his wife's a Reiki master), bogus report of arsenic in apple juice, bogus "magic" ingredient of weight loss, and "curing homosexuality" among many others. [ see wikipedia entry ]

People who follow these and many other celebrities out there giving BAD ADVICE are very likely to take these people's BAD ADVICE seriously... JUST BECAUSE THEY ARE CELEBRITIES. 

And their reasoning process is virtually the SAME as people who got scammed out of money.

Just what *are* Your odds in Vemma? Is there an "insider's club" in Vemma?

Previously, MLM Skeptic have, through SaltyDroid's little expose on the Tartol Clan of Herbalifers, illustrated how what you thought are good odds are actually not so good for you average Joes in Herbalife, though absolutely great for the "insiders". John Tartol is on Herbalife board of directors, and 12 of his clan are among the top earners in Herbalife. Still think you have the same odds as them?

Science_getting_rich (Photo credit: kas10900)

Today, we shall explore Vemma... and whether someone closely related to the top of the company, unlike you, has an edge that you don't.

Any one heard of Bob Proctor? That's him in the middle there, in that beige suit. He was part of "The Secret", or "law of attraction", which, IMHO, is just positive thinking wrapped with mysticism and bogus psycho-babble. But that's not what's important here.

Turns out his wife, Linda Proctor, has rank of 'ambassador' in Vemma, with estimated intake of $14500 a month, according to a "top earners" website.  She was even profiled by Vemma themselves in a short video (where she goes to shop in some fancy store and have lunch in fancy restaurant) earlier in 2013.

According to Vemma dashboard, Mrs. Proctor appeared at "Star Presidential" rank on June 2011.

Which is actually... "level 10" on Vemma chart. Ambassador is only one level above that. And according to separate Vemma news, she achieved that on November 2011, the first Canadian to do so.

What's her secret? She claims it's great salesmanship and great inspiration from her husband, Bob Proctor.

What if it's not that? What if she has an "inside track" and has been "predestined" to success?

What if I told you that her husband, Bob Proctor, is a personal friend of Vemma head BK Boreyko, and Bob Proctor had appeared at many times at Vemma conventions as keynote speaker? Would that affect your view of her "success"?

What if I tell you that at least one OTHER person in the Proctor household is also a Vemma ambassador?

BREAKING NEWS: First Zeek Co-Conspirators Plead Guilty to Federal Charges (updated)

online fraud (Photo credit: ivers)

According to Times-News of North Carolina, Dawn Wright-Olivares, former COO of Zeek Rewards, and her son stepson Dan Olivares, former CTO of Zeek Rewards, have accepted a plea deal with the Federal prosecutors regarding criminal fraud charges against them. It is not known if they will receive jail time, but according to documents filed with the court, together they have received over TEN ELEVEN MILLION dollars from Zeek, and have agreed to restitution as a part of a separate deal with SEC's civil fraud charges.

It is now known if other "insiders" will also get similar deals. Other Zeek insiders includes Paul Burks, Darryl Douglas, Alex deBrantes (Dawn's new husband) and possibly many other individuals.

According to PatrickPretty.com, the charges were tax fraud, conspiracy to commit tax fraud, investment fraud, and conspiracy to commit investment tax fraud. Wire fraud was also alleged but have been dropped as per the plea deal.

Furthermore, the document suggests that Dan Olivares had been negotiating with Federal prosecutors since JULY 2012, almost a MONTH before SEC closed Zeek for good.

MLM Mythbusting: MLM is a lot like ___________, therefore it is legit

Real Estate Agent... is it comparable to MLM?
(Photo credit: Wikipedia)

Many of the newcomers to MLM, finding people's natural reluctance toward MLM, tried to use bad facts or outright lies and misinformation to present MLM in favorable "familiar" terms, as they often just "inherit" such bad information from their uplines, who simply parrots the information from THEIR upline without any understanding of the issues. 

For these noobs, MLM is often compared to:

• Real estate, for its two-level commission system
• Franchising, for the any one can "own a piece of the action"
• Buying club, for the "share the low prices sell direct" type deal

Unfortunately, all these analogies just proves that these noobs have NO IDEA what they're talking about. Let me explain one by one. 

The Real Estate Analogy

When I posted my first MLM Critique piece, I was called "king of disinformation" (really?) by a guy who took exception to EVERYTHING I wrote, and his first example was "real estate". (scroll down to first comment)

Creating your own competitors?

What, that is how Realty firms work. They train people on the laws and teach them how to sell houses for them for 1/2 of the commissions. Then once the "new" guy gets his/her license they become direct competition. 

In MLM you should train people how to sell the products and help them develop new business builders. This is where the residual income is found, or as you put it your number 2 flaw.

 My reply to him:

RE: Creating one's own competition -- except real estate agents usually have to sign non-competitive clauses for X years upon joining and getting trained, and MUST work through a "broker" who gets half the commission, right? Hardly comparable to MLM, where there is NO training, NO qualification, NO non-competition period, and runs in the SAME social circles. Real estate agent may run in the same local area, but they usually work on the SAME listings and split the rewards if they share sales. RE is far more cooperative than competitive.

I actually took a real estate course to be a real estate agent, but I never bothered to take the test as I am not interested in the field. But the system is pretty simple. Buyer has an agent. Seller has an agent. Each agent with has a "broker" who's sort of a supervisor / boss. Standard commission on real estate is 6%, which is split 4 ways: 1.5% each for buyer's agent, his broker, seller's agent, and his broker.

Agents basically take a course, pass a test, get RE Agent's license, and work under broker, get a sales streak going, and either become a broker, or find a better market. Brokers train agents to go out and find more deals, both as buyers and as sellers, and as explained, gets 50% of their commission.

But as I said in my reply, trained agents usually sign non-compete contracts and minimum employment length for informal apprenticeship, and agents are NOT allowed to sell without a broker (legally forbidden). MLM has no such restrictions. Real estate also only have two levels. MLM can have bazillion levels.

NOT COMPARABLE.

Why Is Robert Kiyosaki Trying to Shoehorn MLM onto his Cashflow Quadrant in the WRONG Quadrant?

One of the most frequent pro-MLM arguments from fans of network marketing is "Robert Kiyosaki likes it!" (with an implied "he knows what he's talking about!")

Previously, MLM Skeptic has documented that Kiyosaki was actually an Amway rep (and a rather unsuccessful one, as he never touted his success there, or rather, NEVER EVER mentioned it) once upon a time, his book only became successful because it was "discovered" by Bill Galvin, a then diamond Amway rep, who recommended his sales organization, i.e. Yager Team, adopt it wholesale, as a part of the "Amway Tool Scam".  With the sales numbers "kickstarted" via MLM, Kiyosaki went to Warner Business Books and FINALLY (after YEARS of trying) got a real publisher instead self-publishing.

Thus, let's just say that Robert Kiyosaki is not exactly an impartitial expert when it comes to network marketing. Because he owes his entire publishing success to it, he's unlikely to say bad things about it.

But let's analyze the book Rich Dad Poor Dad, and its sequel, Cashflow Quadrant instead, and how it REALLY applies to MLM.

Most people who got the "recruiter's version" of "why you should choose MLM" will basically explain to you that MLM is in the "B" quadrant of Cashflow Quadrant, which looks like this, from a MLMer...

Employee works for Business owner, "has a job"

Self-Employed, or specialists, controls/owns their own job

Business owners own a system, so they can sit back and their business will continue to make money. (they hire employees)

Investor owns investments... money makes more money.

Sounds pithy, yes? Nothing *really* wrong with that. But... Where does a MLMer fit in on this quadrant?

The MLMers will say that it's in "B" quadrant. In fact, even Kiyosaki claimed that "network marketing is what I recommend for people who want to move to the B quadrant".

WRONG!

Robert Kiyosaki's Faustian Bargain With Network Marketing Is Confirmed

Previously, MLM Skeptic has raised the question whether Robert Kiyosaki had made a Faustian bargain with Network Marketing 

That's when someone pointed me to this sound-bite from Amquix, which confirmed that Kiyosaki was a downline in Amway under Bill Galvin.

http://www.amquix.info/sounds/kiyosaki_in_amway.mp3

Bill Galvin was a "diamond" level sales leader in Amway from way back when. In fact, he was thanked in the dedication / acknowledgement page of "Rich Dad Poor Dad". Here's a screenshot from the Amazon "look inside" and there's the name "Bill Galvin" right there. In fact, if you Google the names on this list, most of them *are* high-level Amway IBOs.

This is also confirmed via research done by SimpleDollar

Amway Global (Photo credit: Wikipedia)

He [Robert T. Kiyosaki] was involved in several business deals (most notably, nylon Velcro wallets) in the 1970s and 1980s which fell apart, leaving him bankrupt in the mid-1980s. In this timeframe, he became heavily involved with Amway, a multi-level marketing system, and began to cultivate relationships with many of the “top” members. In 1985, Kiyosaki founded Cashflow Technologies, a company that was designed to pitch a series of books and other educational materials that eventually evolved into Rich Dad, Poor Dad. 

By the mid-1990s, Kiyosaki had self-printed Rich Dad, Poor Dad and it was starting to appear in wide distribution among members of the Amway/Quixtar organization, as individuals higher in the pyramid would recommend it to people further down the chain looking to get ahead. 

Yet you NEVER hear Kiyosaki talk about his MLM career, did you? Nope. It was NOT mentioned in ANY of his books.

Perhaps he doesn't want you to know, hmmm?

But wait, there's more!

MLM Absurdities: Once a Woo Peddler, Always a Woo Peddler?

Penta Water: proven woo on multiple contients (Photo credit: Wikipedia)

I was just reading a review of "Nature's Sunshine" nutritional supplement MLM on Oz's BehindMLM when I spotted a name I never thought I'd see again: Penta Water.

For those of you who don't know, Penta Water is woo... it claims to be ultrapure water that somehow is "better" for you, with some buzzwords like "improved cell survivability" and other random junk jargon, coupled with WTF? claims like "using these in medical tests improves test accuracy"... But they'll gladly sell you bottles of it for you to drink (at a premium, of course, at prices higher than even Evian water). It was so bull****, the British ad supervisory agency shut them down for making false claims.  It's so notorious, it has its own Wikipedia page.

James Randi (Photo credit: Wikipedia)

And in the US, it attracted the attention of no less than James Randi, probably the best known skeptic in the world, and the entire skeptic community in debunking their bull****. James Randi has long offered a prize of $1 million dollars of any evidence of paranormal supernatural, or occult occurances, abilities, or products... under proper observing conditions (i.e. reproducible). To date it had NOT been claimed even once. Penta Water was at one time announced that they will try for the prize, then wiffle-waffled, then tried t
o stipulate that they want to use their machine, which JREF said fine, as long as you can detect 37 out of 50 random users that drank your Penta Water. Then after a while, Penta Water stopped responding altogether, claiming it can't find a representative to oversee the test.

And the head of Penta Water was Gregory L. Probert.

Apparently, Mr. Probert had been pushing woo for a while, as he's now head of "Nature's Sunshine", after Penta Water went... down the drain (so to speak).

Scam Psychology: Intuitive Mind vs. the Rational Mind

A scammer is always leading you into getting the wrong impression of him, and thus of his scheme, and thus, this calls for you to think as little as possible. How that works requires explaining how your mind works.

Basically, your mind has roughly 3 parts... Reflexive, Intuitive, and Rational.

The reflexive mind (something that's so ingrained in you, it's a reflex, like move your hand away from something that causes pain, such as hot plate, electric shock, and so on. Thats completely automatic that you don't even have to think about it. It's in your subconsciousness.

Daniel Kahneman (Photo credit: Wikipedia)

The Intuitive mind handles something that is not completely similar (i.e. handled by reflex), but is similar enough that you are comfortable the recognition. This is "common sense", "going by feeling", "first impression", and so on. This is also sometimes known as "System 1" per Daniel Kahneman's book "Thinking... fast and slow".

The Rational Mind handles the rest, when something requires deeper thought beyond intuition and impression, such as logical and scientific analysis. This is also known as "System 2" per Kahneman book.

Scammers can't do anything about your mind... except how you perceive the scheme, so they will do all they can to make their scheme look familiar, and thus you NOT engage the rational mind, but stay with the intuitive mind. There are many ways to do that, but the the 4 basic techniques are

• Priming the idea
• Clear Visual Display
• Keep you in good mood
• Repeated experience

If they can use these four techniques on you, and you are not the pensive kind (i.e. you prefer to think things over, instead of doing things on impulse)  they can basically make you forget about "due diligence" and join just because "it sounds good".  

And that "first impression" will be wrong.. because the scheme was designed that way to take advantage of your cognitive biases to give you the wrong impression. 

Bad Argument: I Only Listen to People Who Made Money

One of more "cultish" arguments raised by followers of a particular scheme (starts with V) is "I don't have to listen to you. I listen to people who made money! How much did you make, huh?"

A somewhat more polite version would be, "If I want to play basketball I want to be like Michael Jordan. If I want to play football I want to be like Peyton Manning. If I want to make money I'll want to be someone who has made lots of money, such as my leader _______ in ______."

This sounds like it made sense... For about 3 seconds.

Why would you NOT want to emulate the top billionaires in the US of A... like Bill Gates (Microsoft), Warren Buffet (Berkshire Hathaway), or Larry Ellison (Oracle), or heck, Mark Zuckerberg (Facebook)? Why would you suddenly lower your goalpost? What sort of crazy argument is that?

It's like saying, "I want to be the best in the field... EXCEPT when it comes to money!"

WTF?! Man... WTF.

But wait, there's more!

BREAKING NEWS: WCM777 and TelexFree now ILLEGAL in Peru

The Superintendency of Banking and Investments of Peru has issued its ruling... Neither WCM777 nor TelexFree are allowed to receive public funds in Peru.

http://www.andina.com.pe/Espanol/noticia-empresas-wcm777-y-telexfree-no-estan-autorizados-para-captar-dinero-del-publico-486768.aspx#.Uq0tNPRDt8E  (link in Spanish)

The article urges anyone who have remitted money to either entities operating illegally in Peru to contact the authorities immediately. Both phone numbers and email address have been provided and is at the link.

EDIT: Secondary link found

http://www.larepublica.pe/12-12-2013/advierten-que-wcm777-estafa-con-practica-piramidal-fraudulenta

BREAKING NEWS: Possible Confirmation of US DOJ Investigation into Payza / Obopay

According to PatrickPretty.com, one of their sharp-eyed readers tipped them off as the the following developement:

Which reads:

If you have questions or concerns about your Obopay or Payza account, please call 202-252-1903 and leave your name and contact information.  Someone will return your call within 3 business days.

Scam Absurdities: A Top "Net Winner" of Zeek Ponzi whines on Facebook about persecution... I mean prosecution

Previously we've reported on how the ZeekRewards Receiver Ken Bell has filed civil motion against the top "net winners" of the 700 million Ponzi scheme shut down in 2012, and among the top winner list is Dave and Mary Kettner.

Usually, the best way to deal with this sort of publicity is to simply clam up: "no comment", as anything you say can and will be used against you in a court of public opinion. Unfortunately, (or perhaps, fortunately for the people who study scammers and their psychology, such as the MLM Skeptic here)  some people just can't keep their mouth shut. And in this, Mary Kettner is believed to have posted certain "whine-y" comments on Facebook, which was forwarded to Oz over at BehindMLM

Well I am listed as a net winner. What a laugh… its not because of the amount but because i stuck out my neck to defend what we were doing as a business and got a big old target on my back… 

I didn’t even earn half a million in the year and a half that we were doing the penny auction business..and because it was a business I was running I paid my taxes…which was just over 50 % of what my company earned. 

We paid state, federal, and employee type taxes… Add in expenses, cost of business, travel and training of my team…and there is very little left…and alot of that went to lawyers when Zeek went down….

What a laugh? I fail to see the humor in facing a lawsuit for about one million dollars. Why one million? She claimed did not even earn half a million... AFTER taxes. That suggests her take from Zeek is 1 million dollars over about 18 months (by her claim).

And she whines about having no money... hahahahaha.

BREAKING NEWS: Top "Net Winners" of Zeek Rewards Has Been Made Public!

ZeekRewards is back in the news, with pending auction of their building in North Carolina, and now, the receiver has gone ahead and made the list of the worst "net winners". They are:

• Todd Disner (as himself and as trustee of Kestrel Spendthrift Trust)
• Trudy Gilmond and Trudy Gilmond LLC
• Jerry Napier
• Darren Miller 
• Rhonda Gates 
• David Sorrels 
• Innovation Marketing LLC 
• Aaron Andrews, Shara Andrews 
• Global Internet Formula Inc. 
• T LeMont Silver, Karen Silver 
• Michael Van Leeuwen 
• Durant Brockett 
• David Kettner and Mary Kettner.

These folks have yet to cough up their ill-gotten "profits" by paying back the receiver, and are top of the list of "net winners". Basically, if you profited by $1000 or more, expect to see a clawback lawsuit.

Robert T. Kiyosaki's Sins, According to Robert T. Kiyosaki

Recently I ran into this rather amusing vidcap of a Kiyosaki video:

Yes, that's Robert T. Kiyosaki giving his "haters" a piece of his mind.

Well, according to Kiyosaki's own words, Kiyosaki's a sinner!

How so, you ask?

Ah, that's a story to tell. There's betrayal, there's vindication, there's a second betrayal, and lies to "spin doctor" the treachery into triumph.

So have a seat, and let us discover a chapter of "Rich Dad" that Kiyosaki would rather you not mention.

MLM Absurdities: What is Herbalife Doing in Cambodia?

Back in November 2013, Herbalife announced it is entering Cambodia with its flagship products: nutritional shake, personalized protein powder, and herbal tea concentrate, having previously entered Vietnam.

The question here is... what is Herbalife doing there? Is there a need for Herbalife products in Cambodia (or Vietnam)?

According to Herbalife, Formula 1, personalized protein powder, and herbal tea concentrate are all a part of its weight management product line.

Does Cambodia and Vietnam have a population overweight problem? No. In fact, they have an UNDERweight problem.

Just what *are* your odds in Herbalife? (With bonus Kiyosaki debunking)

Apparently some Herbalife distributors were spreading this on Facebook

(following picture courtesy of SaltyDroid)

Notice the graph says "Rich Kid Smart Kid?" We'll get back to that.

Let's assume that the odds are accurate... for the Herbalife portion... But there's something SERIOUSLY not mentioned in the odds... That the odds are NOT evenly distributed, like you'd been lead to assume.

That's right... Some people have far better odds in Herbalife than the average distributor.

The relatives of those already in "President's Club" have much better odds. It's an insider's game, not "equal opportunity" like you'd been lead to believe.

Is Robert "Rich Dad" Kiyosaki in a Faustian Bargain with Network Marketing?

Robert Kiyosaki Flipping Off the Haters
(Photo credit: i am real estate photographer)

Before 2000, NOBODY knew who Robert T. Kiyosaki is, other than a few seminar attendees, desperate for some advice to get rich.

Then in 2000, the book "Rich Dad Poor Dad" was published by Warner Business Books, and that thing just TOOK OFF like a rocket, resulting in a series of books that are just one rehash after another, filled with "pithy" sayings that may or may not apply, anecdotes that were presented as "these are the true stories of my two fathers"... but later admitted to be a myth, a fiction.

But what is the real secret behind the success of Robert T. Kiyosaki and his book "Rich Dad Poor Dad"?

A implicit bargain with an industry desperate for legitimacy... the "network marketing" industry.

Is it a Faustian bargain?  Does Kiyosaki care, or he just view everybody who asks as "haters"? As he can't make a mistake?

Paul Orberson dead at 57, best known for his pyramid scheme FHTM

English: Paul Orberson speaking at a convention. (Photo credit: Wikipedia)

Paul Orberson, controversial head of Fortune High Tech Marketing (FHTM), is dead at age of 57 from his kidney cancer, diagnosed in 2003, as reported by the Kentuckian.

Orberson start out humbly and went to college on a baseball scholarship, before eventually returning to his hometown as a high school basketball coach. During that time, he started doing Excel Communications that sell long distance phone service through MLM. He claimed that after doing Excel for 4 years he made a million dollars and retired to Florida in 1996. but boredom drove him to start a new company in 2001... Fortune High Tech Marketing. He signed up a couple famous companies such as Cingular (now AT&T Wireless) and GE Security in order to offer their products, and 12 people paid $299 to join. A month later, sales force grew to 1200 (each of whom paid $299). From there the company grew very quickly across the US, Canada, and UK.

In 2003, Orberson was diagnosed with kidney cancer but apparently forced it into remission.

Over the years, FHTM was charged by several states such as Texas, Montana, and North Carolina as pyramid schemes, and settled with each with fines and promises to reform certain practices.

English: Fortune Hi-Tech Marketing, Inc. (FHTM) Logo (Photo credit: Wikipedia)

That came to an abrupt end in January 2013 when the Federal Trade Commission, along with multiple states, including his home state of Kentucky, brought suit and killed the company as a pyramid scheme. Later audits revealed that while Orberson and his top lieutenants shared over 40 million in profits average ANNUAL commission of a typical FHTM affiliate is about 1000 dollars (not counting expenses).

Kevin Trudeau Will Face Jail for Lying on TV... AND Stiffing the Court of Penalties

Kevin Trudeau
 (Photo credit: Wikipedia)

Kevin Trudeau is a master salesman. Unfortunately, his early exposure to MLM seem to have lead him down a dark path, and he became a scammer instead. And now he's really going to pay the price... in jail. Following is a short history of Kevin Trudeau.

----------

Kevin Trudeau apparently was a real go-getter even when he was young. He was voted "most likely to succeed" by his high school graduating class. However, he refused to go to college. He claimed he went to an Amway meeting at 15 and have wanted to be financially free ever since. He claim to have started a mail order company before he was 18. However, after high school he tried selling cars for a while, found it boring, then went on the seminar circuit, peddling one thing after another, like "super memory!" around the nation. Apparently that was not challenging or lucrative enough, as he went into fraud.

Apparently around 1990 he impersonated a doctor when meeting with bank officials to open accounts, then wrote 80000 worth of bad checks. He apparently also fraudulently obtained 11 credit cards (identify theft) and spent them. For the first crime he spent maybe a month in jail as the judge gave him a soft sentence for first time offender. A year later, when he got caught for the credit card fraud, he spent almost two years in a Federal prison.

When interviewed by Washington Post in 2005, Trudeau blamed "math error" and "overzealous bank officials" for his rap sheet. For the fraudulent credit cards, he said he was unfairly penalized for paying late one time his AMEX card which resulting in him not being able to get any card, and he had no choice but to apply with fake social security numbers.

He just cannot admit that he did anything wrong. Such narcissistic behavior is indicative of sociopathic personalities.

The prison stay did not stop his criminal behavior at all. It only make him even MORE determined to make his money... through any means possible. He also met up with a guy named Jules Leib (to whom he gave a Tony Robbins self-help book while in prison), and when they got out, they teamed up to make money... through MLM.

Network Marketing? Or Cargo Cult Marketing?

Ever heard of Cargo Cults? No? It's a cult (alternative religion) that evolved during WW2 in Malenesia (little Pacific Islands) where the natives evolved a religion based on airplanes dropping huge amounts of cargo out of the sky and if they pray and march and wear the right uniforms and build "runways" or "fake airplanes" the great plane will come and give them more cargo. And yes, they're still around.

Cargo Cult of the Pacific, via http://www.rusticaobsessa.com/?p=257

Those of us who know a little history would realize that those were WW2 supply missions where transport planes drop supplies for our troops that probably went off course for one reason or another.

Cargo cults existed for 50 years and no great planes have appeared since WW2. Yet it persists. Why? Because they *wanted* to believe, even though it doesn't work and hadn't worked for 50 years. They keep doing the same thing.

Richard Feynman coined the term "Cargo Cult Science", where people are doing apparently scientific research, studies, theories, etc. trying to explain some problems and propose solutions, except they have tried for decades, and nothing has worked. He was referring to criminal science (how to reform criminals) and pseudo-science such as ESP. Things have NOT improved for those fields. It's gotten WORSE.

Network Marketing is the same way. It is really "cargo cult marketing" because in most cases most network marketers only know how to indoctrinate as many people as possible and hope they make you rich. All the junior reps are recruited through "edification" of the top reps, and was given the message: monkey see, monkey do. (i.e. you can be me if you do what I do) even though there is no proof that doing what they did is the key to success.

Only a few PROFESSIONALS realize the truth and try to do it the right way. VAST MAJORITY of people are doing it wrong, and they are either ignorant... or simply don't care. They see their own success as "proof" of their own brilliance, not realizing they are simply lucky... or good at OTHER things... such as recruiting or cult indoctrination.

And that's exactly what a cargo cult does. They do what their "ancestors" did even though there is no proof and no reason it would work.

But there's more... the CULT aspects.

MLM Mythbusting: No, MLM Did NOT Create the most millionaires of any modern industry

Recently, I can across yet ANOTHER MLM wild claim  from a MLM supporter

He claimed that "MLM has produced more millionaires than any other industry".

I asked him does he have any proof, and he never got back to me.

Time to call in the MLM Mythbusters!  Is the claim "MLM has produced more millionaires than any other industry" true or false?

The story is quite fascinating, as it demonstrates some of the worst aspects of MLM... blind repetition of claims with no verification.

First, there is NO PROOF of this claim in ANY popular fact-checking sources, or any reputable news source.

The sole source that can be verified was that it was ALLEGEDLY stated by "Les Brown", pretty famous motivational speaker. It was cited by multiple MLM fan sources, but nobody can give a specific date, time, or speech that he allegedly said that, nor was his source of that claim given.

UPDATE: MLM Consultant Len Clements (whose website is InsideNM.com) identified the source of the myth as Beverly Nadler, a popular MLM author in the 1980's and 1990's, who since has backed away from her own claims. MLM Skeptic have previously identified Nadler as the source of "Harvard Teaches MLM" myth. Please see comments at the end.

A secondary source is Paul Zane Pilzer, an economist who likes to play entrepreneur and encourage the wellness industry, which jibes with a lot of MLM pushing "nutritional supplements". Pilzer claimed that the wellness industry, and network marketing will be the two largest growth markets in the US in the coming decades. However, he didn't say it already produced millionaires.

THERE IS NO PROOF that MLM / Network Marketing has produced the most millionaires in modern times (say, since MLM got started with Amway in late 1970's) other than ONE man's word, with no evidence and no source.

But it's repeated by all the MLM fan sites, with NO fact-checking.

So which industry did produce the millionaires, if not network marketing?

UPDATED NEWS: Payza funds in US frozen by Department of Homeland Security? Or Not?

U.S. Department of Homeland Security Official Signature Websafe Colors (Photo credit: Wikipedia)

According to Ultralight Financial Services (ultralightfs.com), aka Obopay's homepage, funds that originally belonged to Payza (i.e. MH Pillars, who bought out AlertPay earlier) was frozen by Department of Homeland Security.

EDIT: Some updated info regarding Obopay. Please click "continued" and see the UPDATE section.

Those who play in HYIP or suspect Ponzi scheme circles should be familiar with Payza, because Payza doesn't have the restrictions of Paypal (no HYIP, no get rich quick schemes, etc.). With closing of Liberty Reserve earlier (and guilty plea by one of the co-owners not long ago) Payza had inherited the "Dark Paypal" moniker from Liberty Reserve.

Several suspect Ponzi schemes (they call themselves "income systems" or "rev share systems" or such) are definitely using Payza. Though some European firms prefer the Russian version.

However, Payza does not have license to transmit money in the US, so it has an exchange agreement with Obopay (i.e. Ultralight Financial Services) which has such license.

And now Payza US funds are frozen. Not seized, mind you, merely frozen. ALL OF IT, millions of dollars.

This apparently was noticed days ago, when Payza started notifying their US customers that they cannot get through to Obopay to pay people in the US, and they will have to start legal action against Obopay.

Then suddenly the notice on Obopay's home website appeared... Assets frozen.

It's suddenly very clear that Obopay was under a gag order... They are NOT to reveal what's going on with Payza's account... Until they are allowed to say so... and it's clear that DHS now has a full record of who got / sent how much Payza money via Obopay to / from whom.

While no reason was given by Obopay, one can easily surmise the reason had everything to do with money laundering... the same reason Liberty Reserve was shut down.

And speculations are running wild.

HAPPY THANKSGIVING, and a message from MLM Skeptic

Today is Thanksgiving Day in the US, where we are supposed to give thanks to the world and each other about having made it another year.

So here's best wishes to you, the reader, with a bit of help from a South Park meme... (look up "Craig")

"If I could get some real customers
instead of just friends and family needing
favors... I would be so happy." 

If you are in MLM, may you find real customers (who are NOT affiliates like yourself) and make a profit the way it's meant to be made.

If you are a victim of scams, may you find relief soon... and the wisdom to not fall for a reload scam or any other types of scams.

If you're neither, you get the generic "Happy Holidays" wishes. :D

MLM Mythbusting: No, Network Marketing is NOT Among the Best Paid Careers

Did Success magazine ever said that network marketing is among the best paid careers of the world?
(Photo credit: Wikipedia)

Recently I ran into someone claiming that "network marketing is the best paid profession in the world". Yes, that's the exact quote.

I find that quote... idiotic, as it lit off all my skeptic sense alarms. :)

First, that makes no sense, as UN doesn't keep stats on best paid professions, yet UN is like the only agency that could have tallied "in the world" stats.

Second, no such quote can be found on Google. What Google said, is that some websites claimed that Success Magazine wrote once that "Network marketing is among the the best paid professions in the world."

Well, that's busted already, but how true is that "revised" quote? Is network marketing among the best paid professions in the world? Did Success Magazine ever published this quote?

I CANNOT find such a quote on the Success magazine website. I tried using search for "network marketing best paid" and got a bunch of articles, NONE of which contained the sentence that is even CLOSE to "network marketing is among the best paid professions in the world."  I tried searching just for "best paid" (in quotes) and got NOTHING. It is likely that the quote did NOT come from Success magazine.

(To the doubters... find me the article. Magazine scan will do, or PDF reprint, or such official statements, and I'll clearly issue an update.)

But where did the quote come from?

Woo Most Bizarre: Fake "Device" Sold by Now Transvestite Singer Fugitive

It is quite often that the MLM Skeptic encountered woo, but this one is far more bizarre than most. In fact, this may be the most bizarre woo that I have ever encountered (even including "cans of air certified to do nothing" and "fuel additive that violates laws of thermodynamics")

This woo is called QXCI, but it is also known as EPFX, or even SCIO. What the letters stand for is not important (it'll be listed at the end).

It roughly looks like this (laptop not included):

QXCI (everything except the laptop), picture courtesy of
http://www.badscience.net/2008/08/bill-nelson-wins-the-internet/

The important part is they are just random jumble of buzzwords. It's a machine that claims to be woo for all seasons... it is  (I am quoting from a website pushing such)

"... is an incredibly acurate (sic) biofeedback stress reduction system, combining the best of biofeedback, stress reduction, Rife machines, homeopathic medicine, bioresonance, electro-acupuncture, computer technology and quantum physics”.

And the operating principle of this device is based on...

"the following modalities: naturopathy, homeopathy, acupuncture, chiropractic, energetic medicine, psychology, aromatherapy, reflexology, colour therapy, Neuro- Linguistic Programming, biofeedback and Rife Resonator. It also incorporates knowledge of metaphysical subjects to bring a unique synergistic perspective to natural healing."

In other words, this is every quack woo lover naturopath dream machine!

But you'd never guess who invented this... and what happened to him...

BREAKING NEWS: What is TelexFree US Doing In Bed With ex-FHTM Joseph "Joe" Isaacs?

Logo of the United States Federal Communications Commission, used on their website and some publications since the early 2000s. (Photo credit: Wikipedia)

Recently some TelexFree fanatics, desperate to find ANY shred of legitimacy for that suspect Ponzi scheme, found that TelexFree US (not Brazil, mind you, where it's actually called Yimpactus, and has NO license to operate telecom in Brazil) has gained preliminary FCC Approval in the US (ITC2142013082200236;) as of September 2013.

For timeline, TelexFree Brazil was shut down in June 2013 by court injunction, and has been in a limbo since. Its lawyers launched appeal after appeal to no avail, while telling affiliates that they should register with TelexFree US and get paid by TelexFree US.

It is also interesting to note the timeframe... late July is when Gerald "I see no Ponzi" Nehra said TelexFree is legal in the US, at a TelexFree event in Newport Beach, California. Presumably, that's when they started applying for the FCC license, not that there's any proof that TelexFree actually OWNS any "telecom facilities", as specified in the FCC license it had obtained. They went through "streamlined" FCC approval process where the public was given a few weeks to comment, and voila: "authority granted".

Can you BUY any TelexFree service and use it? Good question. I haven't found ANYONE that claimed to done so that is believable.

What's surprising the the other name that appeared on TelexFree's FCC license... Joe "I love then hate FHTM" Isaacs.

BREAKING NEWS: WCM777 admits being an ILLEGAL US business, may be involved in insulting Muslims?

Following message appeared on WCM777's Hong Kong website

...However, because the sale of securities failed to fully comply with laws and regulations in United States, our operations in the U.S. will be on hold until further notice...

This is a full out admission... almost a full week after the sanctions by US State of Massachusetts had been made public (despite the notice back in September)  that WCM777 is illegal fraud; telling people it's NOT securities when it surely is securities.

Frankly, WCM777 had admitted such back when it closed its US branch in Southern California, as previously reported, almost two MONTHS ago.

And it's also interesting that they left in September... At the same time they'd been investigated by Massachusetts.

Why leave when you don't even know the results? The obvious conclusion is WCM777 *knew* they're illegal, even before they saw the settlement with state of Massachusetts.

Shouldn't WCM777 have halted US operations back in September, instead of now? Did they just admit that they operated illegally for another 2 months? 

But there is even MORE bizarre behavior... Such as claiming to have "founded" a TV station ALREADY founded years ago... and one involved in a MAJOR religious controversy!

More Hilarious Woo Endorsements: Having a Chiropractor as your "Chief Science Officer"

Folks, I have no problem with you buying woo, as long as you UNDERSTAND it's woo, that any claims to benefit are merely CLAIMs, for worse, UNPROVEN claims. 

However, the marketers of woo should at least pick REPUTABLE and SCIENTIFIC people to be their advisors, to look legitimate. 

Previously, MLM Skeptic have pointed out some other woo products (a patch that claims to affect accupressure points through 'wireless communication', sea 'scum' dried and packed into pills as ULTIMATE nutrition, and a product that's based on assuming that the seller's hypothetical position paper about stem cells is true) MLM Skeptic now must add another item to the list of woo: a Chiropractor selling brain supplements as co-founder and "chief science officer". 

First, before the "haterz" (a term I borrow from my, well.. haterz)  jump all over me, I have nothing against chiropractors... other than they shouldn't pretend to know stuff they know nothing about... same as anyone else. There are special chiropractors, such as Ted Carrick, who may have invented something called Chiropractic Neurology. On the other hand, there are also chiropractors who want to be family M.D. can't get the degree, but want the job any way. 

So what's wrong with this guy? Let's start with the premise: brain supplement. I.e. nutritional supplement that helps your brain, with 14 important ingredients! What are they? They ain't telling. 

The company is called Brain Abundance, where they claimed the following:

In fact, thanks to our Co-founder Dr. Pejman Behrouzi, along with our team of top experts in the fields of neuroscience, nutrition, medical science, and product formulation Brain Fuel PLUS is the most complete supplement for your brain ever created!

On a different page Dr. Pejman Behrouzi is listed as "chief science officer" along with head of the company. 

Notice the word "neuromusculoskeletal"? That's codeword for "chiropractor".