Is Network Marketing a cult? Good Question! The Answer is Yes (keep reading)

Born into This (Photo credit: Wikipedia)

There had been charges for many many years from critics of Amway (and MLM in general) that some MLM meetings resemble cult meetings. Indeed, it was documented that at one time, Amway's own "Infocenter" FAQ contained an item where it attempted to answer the question that why do MLM meetings resemble a cult meeting (FAQ no longer available).

The answer is "Yes, some factions of Amway use cult tactics". Indeed, many MLMers found it much easier to use cult tactics to grow their downline than to do real sales.

But first, let us define what are cults, and cult tactics.

Cult: A system of religious veneration and devotion directed toward a particular figure or object.

In this case, the "object" is the business, or the "ideal" of the MLM business.

Cult tactics are designed to not only recruit more members to the cult, it is also designed to keep the members in the cult and never leave.

MLM "cults" are especially destructive due to the monthly autoship and/or monthly "qualification" purchases. Those add up to a continual drain of bank account of the afflicted.

BREAKING NEWS: Liberty Reserve payment processor closed, owner arrested for money laundering

English: Coat of arms of Costa Rica (Photo credit: Wikipedia)

Liberty Reserve, a darling among the HYIP and suspect schemes due to its international nature (send money to it, and use it to remit money anywhere in the world, no questions asked) was raided by police today at its two locations (office and home) in Costa Rica, and its owner, Bodovsky, was arrested on charges of money laundering.

As reported by TicoTimes:

Arthur Budovsky Belanchuk, 39, on Friday was arrested in Spain as part of a money laundering investigation performed jointly by police agencies in the United States and Costa Rica.

Costa Rican prosecutor José Pablo González said Budovsky, a Costa Rican citizen of Ukrainian origin, has been under investigation since 2011 for money laundering using a company he created in the country called Liberty Reserve.

Local investigations began after a request from a prosecutor’s office in New York. On Friday, San José prosecutors conducted raids in Budovsky's house and offices in Escazá, Santa Ana, southwest of San José, and in the province of Heredia, north of the capital. 

Budovsky's businesses in Costa Rica apparently were financed by using money from child pornography websites and drug trafficking.

Bad Argument: "Don't Blame Me (even though I told you to join a scam)"

Don't Blame Me (album)
(Photo credit: Wikipedia)

Scammers are often an extremely egotistical bunch, and supreme narcissists. Even when caught, they will refuse to take responsibility of their own actions, but instead, rationalize some reason to deflect the blame from themselves. In case of multi-level Ponzi schemes, where "investors" are recruited in order to enrich the people who are already in, the recruiters will often bring up the "don't blame me" excuse.

One of the most egregious excused was uttered recently by Paul Burks, operator of the $700 million Zeek Rewards ponzi scheme that ensnared a million people around the world. When asked by Associated Press...

Asked if he had anything to say to victims, he shook his head.

"I never told anyone to invest more money than they could afford," Burks snapped. "I didn't tell them to do that. Never."

He said if they lost money, "it's their fault. Not mine. Don't blame me."

http://www.usatoday.com/story/money/business/2013/03/30/authorities-600m-scheme-incubated-nc-town/2037975/

He blamed the victims for giving him money. In his mind, it was given to him of free will, and he had "warned" them, so if they're too dumb to understand the warning, it certainly ain't his fault.

It's victim blaming. It's a stupid tactic. 

Narcissism is a recognized personality disorder in psychology and some psychologists have added a subtype, known as unprincipled narcissism, to described the scoundrel type that see themselves above the rest and everybody else deserve to be fleeced.

Fake Biwako Bank HYIP Goes Dark, Was Pitched to Zeek and Profitable Sunrise Victims

According to report on PatrickPretty.com, the "Biwako Bank" HYIP apparently has gone bust.

This particular Biwako Bank was a fake website setup to assume the name of a former Japanese bank that had been merged into another bank in 2010.  It's identity fraud on a different scale.

This fake bank was clearly setup as an HYIP with multiple "plans" that offered up to 3.05% PER DAY. Yet some promoters are touting it as "NOT an HYIP, but a REAL BANK!"

Some reports indicate it apparently went bust two weeks ago and stopped paying out, and earlier this week the website went offline completely.

It was pitched to Profitable Sunrise victims as well as Zeek Rewards victims as a way to recoup their losses, making it a "reload scam".

http://www.patrickpretty.com/2013/05/22/update-pushed-to-profitable-sunrise-victims-biwako-bank-limited-appears-to-be-doa

Related articles

• BREAKING NEWS: "Universal Private Banking", not a bank, got flagged as PHISHING SCAM by McAfee
• More Reload Scams Targeting Ponzi Victims
• BREAKING NEWS: Multiple Profitable Sunrise Pitchmen subpoenas to appear in Federal Court investigation
• BREAKING NEWS: GoFunRewards Commits Seppuku, spirit returns to Hong Kong

MYTHBUSTING: The myth of "reward for promotional giveaway", and why it's illegal

Don't You Lie to Me (Photo credit: Wikipedia)

The best type of lie is a half-lie, in which truth is combined with lie so you don't know which is which and accept the whole thing is true.

There has been several businesses in recent years that claims to 'reward' its affiliates for promoting the business by buying the the products (by the affiliates) and giving them away to the public (free). The more they do this, the more they are rewarded.

This particular explanation is only half true, but do you know which half?

Let us first examine how one such scheme works.

The "Promotion Disguised Ponzi"

The best known example of such in recent years is Zeek Rewards, a Ponzi scheme that was shut down in August 16, 2012 by the Security Exchange Commission, believe to have sucked in over 700 million dollars from about a million members, making it the widest spread Ponzi scheme in US history. For comparison, Bernie Madoff's Ponzi involved BILLIONS of dollars, but only about 10000 victims or less. This sort of Ponzi is more insidious because it went after the "average Joe", the everyman, whereas Bernie Madoff went after the "fat cats", people who can afford to lose such money.

NOTE: The following is a short summary on how Zeek Rewards worked. If you want detail history how what was Zeek Rewards, please refer to my "investigation" piece.

Zeek Rewards allegedly "rewards" its affiliates for affiliate's purchase of "bids" in its Zeekler penny auction (a sister business, owned by the parent umbrella corporation Rex Venture Group) and giving them away to "potential customers" (usually nothing more than an email address). For every bid purchased and given away the affiliate gets "VIP Points" that entitles them to "revenue share" at rates of up to 1.8% per day, compounded daily. There are a couple wrinkles like the VIP points expire after 90 days, and the rate varies between 0.5 and 1.8% daily, but the overall idea is the same: the more you buy (and give away), the more revenue you share.

You have two balances in Zeek, a "cash" account, and a "VIP Points" account. Every night, based on how much VIP points you have, the "daily profit share" is added to your cash account. For example, let's say you have 1000 VIP points. And the daily profit share is 1.5%. At midnight, you will have 1000 VIP points and 15 dollars is added to your cash account. Then the cash account is distributed as you wish, as you can repurchase the bids (rollover) from 0 to 100%. If you do 100% repurchase, you will have 0 in cash account and 1015 VIP points, for example. Your cash account can be "cashed" once per week, but you are encouraged to "repurchase" bids for compounding.

There is very little documented genuine purchase from customers who buy bids as bids, not as VIP points that entitle them to revenue share, affiliates are paying each other, thus, Ponzi scheme, albeit a rather fancy looking one. Indeed, when Zeek Rewards was shut down, and SEC court document was made public, it was revealed that Zeek had virtually NO profit in July 2012 (took in 172 million, paid out 170 million) and would have gone insolvent very soon.

Yet Zeek Rewards is hardly the first company that encouraged its affiliates to buy their product and give it away for free to participate in the comp plan and got slapped hard for it... One of those prior offenders was Omnitirtion International, in a case that rocked the MLM world in 1992.

MUST READ FOR MLM-ERS: What CAN You Say (and NOT say) In Online Ads

Ever created your own capture page, online ad, website, banners, and so on, for your "online business"?

Did you just throw in whatever you think would capture a click, or are you aware of the LEGAL implications of what you write?

Oh, but you're thinking, there are LEGAL implications?

Of course there are, silly. Else you can be charged with false advertising, making deceptive claims, and not only get yourself in trouble (such as termination of your enrollment in the company), you may even get the company in trouble for allowing you to make such schemes!

Never happen, you say? Don't be a moron. FTC have gone after PLENTY of people who made bogus claims, and others have sued companies for allowing their affiliates to make such claims. Mannatech was sued by multiple Nobel laureates for letting its affiliates falsely associate the Nobel laureate to Mannatech products. Kevin Trudeau was sued multiple times by FTC for making fake claims selling various products.

Ah, but you ask... What do you need to know?

I'll bet this is something one of you or your uplines would know! They can't help you (probably).

What you need to do is read this article from Kevin Thompson:

http://thompsonburton.com/mlmattorney/2013/05/22/ftcs-disclosure-guidelines-for-online-marketing-how-to-get-it-right-part-1/

Bad Argument: The Open-Mindedness Strawman

Open-minded image
(Photo credit: Wikipedia)

When promoter of a questionable scheme that claims to have something new and exotic, cannot refute your logical criticism, they will often summon the "open-mindedness strawman". Basically, they accuse you of being closed minded and not accept their idea of business or product.

Here are a couple examples, all real comments posted to BehindMLM:

• I’M AN OPEN MINDED OPPORTUNITY SEEKER. This sounds like a good opportunity.
• We give away FREE “membership” cards to open minded people we choose to invite to share in our good fortune. 
• Open your mind! Maybe, just maybe, life does not have to be crap? You do not HAVE to LOOK FOR NEGATIVES in truly amazing opportunites?
• Since you are not ready to open up your minds and accept the new thing you will not be able to cherish this new concept
• and many many more. 

The problem is their definition of open-minded is NOT the dictionary definition. The dictionary definition of open-minded is "willingness to entertain new ideas". It means to consider and evaluate new ideas. It does NOT mean ACCEPT new ideas without evaluation and deliberation.

To promoters of questionable schemes, open-minded means "accept whatever I said as the truth, and ignore everybody else".

Never mind any proof or logic that points the other way.

Don't quite see it? Here's an example:

A: I believe in T because of X, Y, an Z.
B: T is wrong because of I, J, and K. Your use of X, Y, and Z are wrong because of _____.
A: You are just close minded! You refuse to accept T as real!

If A had analyzed B's position, and can explain why his rejection of X, Y, Z proof are not correct, and/or explain why I, J, and K does NOT disprove T, and they are all solid logic, not fallacies, then he would be open-minded. However, in this case, B was the open-minded one because he had studied A's position and have rejected it due to evidence and logic. A's refusal to even CONSIDER B's position is all the more ironic in that he's the close-minded one, yet he accuses B of being close-minded.

What If Online Scams are Real People At Your Door?

Hapstance Film made this short film called "The Inbox", and it's absolutely hilarious.  Imagine all those online scams in your Inbox... except they're real people in your home... And this is what it would look like.

http://gizmodo.com/what-online-scams-would-look-like-if-they-were-real-peo-508003494

CNN and AllVoices Spammed by Fake University Report

CNN has a feature called iReport, where it engages regular netizens into helping CNN with certain coverage of hot events as well as some local or national interest stories. Unfortunately, it seems that scammers have managed to infiltrate a fake article advertising a nonexistent university (so-called "empty diploma mill") called Riverbanks University. 

Below is the CNN iReport, as shown at 10PM, 20-MAY-2013

This alleged report was posted in March, and was the ONLY report ever posted by this user. 

A quick check of the photo provided shows it's just a stock photo from iStockphoto

Zeek Rewards Receivership Updates Claim FAQ

Any one who is filing a claim should read the FAQ

http://www.zeekrewardsreceivership.com/claim.php

China hands out Death Sentence to Ponzi Schemer (not the first time)

Wenzhou in China (Photo credit: Wikipedia)

As reported by court website in Wenzhou, China through Nasdaq news website, Haiyan Lin, 39, has been sentenced to death for her role in leading a $428 RMB ($70 million USD) Ponzi scheme since 2007. The scheme came apart in October 2011 and she was arrested.

A different woman in the same region, Ying Wu, had her death sentence commuted to life without parole recently when an outcry over equivocal evidence presented at the trial. She was accused of running a $60 million USD Ponzi when her attempt to expand her nail salon franchise tanked.

HILARIOUS: The evasive deflection of reasonable questions to MLM

English: Speech balloons. Question and Answer. Icon for FAQ or Help. (Photo credit: Wikipedia)

There are some perfectly reasonable questions to ask an upline that tries to sponsor/recruit you, and some folks out there, "veteran MLMers" have written answers to them.

Frankly, some of the answers are total crap. They are evasive deflections that may work on naive and gullible sheeple, not genuine prospects that you hope to turn into sales leaders that will sell a lot of stuff and make you rich in NMLM (if NMLM works the way it was supposed to work, but that's another story).

I ran into one such article, titled "Handling the Top 6 Questions People Ask About Joining a MLM company" written by a Melanie Michelle, and it's truly hilarious. Virtually every one of her answers could be cited as a "bad argument". Let us examine her article here:


Question: How much money are you making?

Her Answer: It’s really is none of their business. However, this is a great way to answer that question: “My lifestyle requires a different dollar amount than yours does. I am very happy with what I’m making. Don’t focus on how much I’m contributing to my household, but focus on how much you want to make and we can both work towards your goal.”

Why this answer is wrong: This can be roughly summed up as "How much do you want to make?"  And answering a question with another question is a deflection. Here's the same sort of Q&A, albeit about a much older profession...

Q: What's your name, pretty one?
A: What do you want it to be, sugar? 

A Much Better Answer: I think what you meant to ask is... How much can YOU make, realistically, in the first year, right? Honestly, I don't know. I am not you, I don't know how good you can sell, though I know you like the product(s), and that goes a long way....

Bonus Brutally Realistic Answer that no upline would give: First year? Almost nothing after expenses, perhaps not ever.

Chance of that answer being given? Zero.


Question: Why do I have to pay money to join?

Her Answer: What business can you get for free? If you start a traditional business you have to pay for a business license, storage, rent, overhead, and much much more. When you pay to join an MLM company you are starting your own business. It’s almost like paying for a franchise except that your investment is much smaller and you have minimal expenses. Don’t worry about why or how much does it cost, but rather ask how much it can make you.

Why this answer is wrong: The answer doesn't answer the WHY. Her answer is an evasion: "but a 'real' biz cost money too, then a half-lie 'you have minimum expenses', then a deflection 'think about how much it can make you'. Sheesh!

A Much Better Answer: (I am assuming this is a legal business)  The signup fee is $X for membership paperwork and setup. The rest is for a "starter kit" that contains ____, ____, and ____ that you can try out and start demonstrations almost right away.