World is full of Shady Opportunities that want you to put in money with promises of payback. Here are ten signs of shady schemes. Obviously a scheme probably would not have all ten, but the more signs you spot, the more likely it will be a scam.
- Clickbait-y Slogan
- Misinterpreted results
- Conflict of interest(s)
- Correlation vs. Causation
- Weasel words
- Bad Samples
- (Lack of) Control Group
- Unverifiable testimonial and Improper disclosure
- Cherrypicked and unreplicable results
- Paid or fake media coverage and reviews
Clickbait-y Slogan
EVERYBODY hates clickbaits... They are headlines written with intentional hyperbole and tease to get you to tease. Shady opportunities are the same. Does the scheme make incredulous claims such as "On our team everyone makes money"? Or they somehow "Pay One time $289 and get a minimum of $1040 back Guaranteed!" perhaps? Before you say "nobody is stupid enough to make this sort of stupid claims"... think again:
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| Screen cap of Google Search results, yes, someone promised and guaranteed that $289 will magically grow to $1040 and more. It's obviously clickbait. |
As Carl Sagan said before, "extraordinary claim requires extraordinary evidence". If they made such extraordinary claim, then they should supply the extraordinary evidence to support their claim. And since there are so many ILLEGAL ways of making money... Making money in itself is no proof.
It doesn't matter if the claims are repeated by the people you trust. They could have been duped and/or brainwashed. If they didn't ask for extraordinary evidence and is convinced of such, then you should not trust their judgement, esp. when they are in no position to evaluate such.
Misinterpreted Results
We are all affected by confirmation bias to one extent or another. If we hear some evidence, we are going to interpret them based on your experiences, while someone else may see the same data and interpret them very separately. Here's another example:
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| Monty comic / Is it going to be McCain or Obama? (old joke on confirmation bias) |
The sales pitch is designed to say "just enough" so you think it applies to you, and NOT tell you that parts that "this may not apply to you"... so you can misinterpret the results to be relevant.
Your mindset affects how you interpret the results, and willful blindness, Dunning-Kruger effect, and self-serving bias will lead you down the wrong path.
Your mindset affects how you interpret the results, and willful blindness, Dunning-Kruger effect, and self-serving bias will lead you down the wrong path.
Conflict(s) of interest
Most MLM companies in the "lotions and potions business" (nutritional supplements and cosmetics) employ scientists to carry out and publish research... But remember, those scientists may have conflict of interest, and if they did not disclose so, that is a huge ethical violation, as research can be misrepresented for personal or financial gain.
The worst example of which is (former doctor) Darryl M. See, who previously was a researcher at UC Irvine. He wrote a paper touting a Mannatech (MLM) product that he claimed has proven results in his study, and got it published in pretty famous American medical journal on nutrition. However, he never disclosed that 1) he had resigned from UC Irvine months before publication to pursue a career endorsing Mannatech (and was paid thousand per day for speaking gigs), 2) his wife had been a Mannatech rep for years, and 3) he made dozens of audio tapes sold at Mannatech conventions and seminars touting Mannatech products 4) His father was a personal friend of the journal's publisher.
When the news broke, UC Irvine had NO RECORD of any such study had occurred, but Mannatech's president already announced such to its legion of reps. In the end, Mannatech sued See, who jumped to a different company, before eventually forced to give up his medical license due to multiple medical ethics violations.
When the news broke, UC Irvine had NO RECORD of any such study had occurred, but Mannatech's president already announced such to its legion of reps. In the end, Mannatech sued See, who jumped to a different company, before eventually forced to give up his medical license due to multiple medical ethics violations.
If someone suggests MLM as a way to solve your financial needs, you need to consider... Are they really doing it because they think it's the right thing for you to make some money... or is it because THEY, by recruiting you, will make some money off of you joining?
Stay skeptical of any and all claims, esp. when it is done with the ultimate aim to recruit you.
Correlation vs. Causation
When two things happen together, it does NOT mean one caused the other, despite how much you feel one *must* have caused the other.
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| XKCD... Did cell phone cause cancer... or did cancer cause cell phones? |
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| Is there relation between Autism and Organic Food? They correlate to the third decimal point!?!?! |
Yet many MLMers want you to believe that their nutritional supplement made them healthier, their magic rub took away their pain, their magic juice / tea / coffee took away their diabetes, and so on, because those effects "only" appeared when they started using those stuff.
For those of you who watch Stephen Colbert, this is related to the difference between the truth... and truthiness. Or as Colbert himself puts it:
Truthiness is 'What I say is right, and [nothing] anyone else says could possibly be true.' It's not only that I feel it to be true, but that I feel it to be true. There's not only an emotional quality, but there's a selfish quality.
If you BELIEVE it's causation, you'll never accept it's merely correlation. If you believe your nutritional supplements made you feel better, or that special widget increased your car's mileage by 15%, you'll never believe accept that the supplement's merely placebo effect, and the widget is relying on your lighter foot as you FEEL less need to speed and get better mileage. You believe truthiness (There is an effect and I caused it!) instead of the truth (It's just correlation and coincidence).
Correlation is NOT causation (until proven otherwise).
Correlation is NOT causation (until proven otherwise).
Weasel Words
Weasel words such as speculations are not facts, so if the statement contains "weasel words" like "may", "could", "might", and so on, then it's likely to be speculation, rather than conclusion.
You can often spot this when a "lotions and potions" company presents some study that "sort of" proves their product works. But this can also apply to income claims, which is usually frowned upon.
For example, a certain MLM nutritional supplement company's entire product line is based on this speculation published in "Medical Hypotheses (2002)"
...Based on a review of the literature we propose the hypothesis that in situ mobilization of stem cells from the bone marrow and their migration to various tissues is a normal physiological process of regeneration and repair and that therapeutic benefits can be generated with less invasive regimens than the removal and re-injection of stem cells, through the stimulation of normal stem cell migration. We further propose that effort should be made to identify natural compounds characterized by their ability to augment this normal process of mobilization and re-colonization of bone marrow stem cells for the potential treatment of various degenerative diseases.
If you can't read medical jargon, let me translate that for you...
Stem cells are cool. We think stem cells gets into the blood and travel around the body to where it's needed to help healing. Maybe we can find a natural something that'll make the body produce more stem cells.
That's right, this is a HYPOTHESIS. There is no proof that having more "loose" stem cells in your body would improve your health (remember, HYPOTHESIS), much less any compound that can do so.
Doesn't stop this MLM company from making products with such claims, of course. In fact, some of the principals in this company were previously sued (heading an earlier company) in Texas and lost a false advertising suit... also involving stem cells. That company used blue-green algae, some of which are POISONOUS (see "microcystins") And it seems this particular company is still using similar formulas.
The company may sound confident in stating such things on their advertising materials. Look beyond the marketing material and look at the original research their products are based on. You may be surprised.
Conversely, if a company "guarantees" something, look for caveats and fine print.
Bad Samples
In studies or trials, the smaller the sample size, the worse the "confidence" of the results. If the drink is mean to be consumed by millions, and the study is of less than a hundred people, it's not much of a study, is it?
Sample in studies or trials are supposed to be representative of the population being studied. If the sample's different, then the conclusion will unlikely to be applicable to the general population. For example, if you are marketing the drinks in North America, but you did your study in China with a completely different diet... or if you are marketing drinks to young folks, but ran the tests on seniors...
You may say that no company is stupid enough to do that. But I assure you, it's done all the time. They simply neglect to mention the aspects that sound bad. Like neglect to mention study size, location, age group, and so on. For example, a highly touted study (which is indeed double-blind, randomized, and placebo controlled) by a certain MLM energy drink maker, had only 59 participants all from a single city in China.
Can a trial size of only 59 participants (30 woman, 29 men, presumably all from Beijing China and between 40 and 60 years old, with no significant health issues) really predict that the drink will "significantly enhanced immune responses and improved the subject's self-appraisal on his or her overall health status" to the world's 8 billion humans of various races?
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| Excerpt from the study... 59 Chinese subjects between 40-60 is supposed to prove that the product is good for everybody on Earth... really? |
Can a trial size of only 59 participants (30 woman, 29 men, presumably all from Beijing China and between 40 and 60 years old, with no significant health issues) really predict that the drink will "significantly enhanced immune responses and improved the subject's self-appraisal on his or her overall health status" to the world's 8 billion humans of various races?
You have to read the study to realize that they asked almost 700 people, and vast majority (over 80%) of people turned them down (refused to participate).
The OTHER study the company touted is even smaller... 10 men, and 10 women, between ages of 20-23 (i.e. university students of good health) in Beijing, and was tested for anti-oxidant levels after half (5M, 5F) drank this company's product. What's really hilarious is their own study proved that their product did NOT enhance anti-oxidant value.
Even if it did, that just proves that anti-oxidant works... That's like proving "water is wet". Sounds impressive, practically useless.
(Lack of) Control
Most studies would rely on a "control group" that are NOT given the actual substance being studied, and the results compared with the results from people who were given the substance. Allocation should be random. If there is no control group, then the study has no 'baseline' comparison and therefore confidence of conclusion would be much lower.
This particular problem manifests itself in MLM in two ways. One way is the product was not test with a control group, as the subjects are told to self-report the results. Another way is the facts are presented with a good vibe, but with no baseline to compare against.
The most frequent misrepresentation in MLM is the income claims, where the various leaders and "top earners" parade themselves on stage "inspiring" you all to sell, sell, sell (or worse, recruit, recruit, recruit), with promises like "you can be just like me!" (driving a free car, paying off my college, helping my family...)
If you check the various MLM income disclosure statements you will find that vast majority (80% or higher) earn very little, while the very top took home most of the money, and I am NOT talking about the executive team, but the distributors. For example, following is Vemma's 2013 numbers:
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| Vemma Income Disclosure Chart 2013, regraphed |
That's right, vast majority of Vemma reps earned very little, while some earned 2.5 mil in 2013. Here's their version of the same data. Note they cut the graph in two and used different scales (exponential instead of linear) to make the graph look more "even".
When your upline tell you that "you can be just like me", what he really mean is maybe 1 in 100 can be like me, but it *could* be you. That's assuming he's making 30K (0.96% of active reps, according to the graph). If he is making 193K, that's 1 in 770 odds.
And that's NOT counting people who had quit or is not buying enough to qualify as active. And that's not counting cost, like hours spent on the road, living in hotels, making speeches multiple times a week, or even a day, partying and schmoozing prospects at night if you are successful...
And let's not forget that Vemma was shut down by FTC in 2015 for running a pyramid scheme...
And let's not forget that Vemma was shut down by FTC in 2015 for running a pyramid scheme...
The actual odds are probably much worse. But if you don't know the baseline, you have nothing to compare it against, and his claim thus sounds much more impressive.
Unverifiable Testimonials / Improper disclosure
Real testimonials were unsolicited from users who have no personal interest in the success of the product.
The problem is "personal interest" spans a huge range, and often in areas that you may not expect.
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| Dan Ariely speaking at TED (Photo credit: Wikipedia) |
Behavioral economist Dan Ariely of Duke University have previously done a study that showed that more expensive placebo works better. How do you know if the product you paid a like $40 for monthly supply really works better than fancy sugar pills? How do you know if the product really works unless you took it for a whole month, and actually have a proper objective measurement instead of "how do you feel" i.e. subjective mood? How do you know the person making the testimonials (that you are listening, watching, reading) are not affected thus?
Testimonials often came from promoters... who are out to recruit you. They have a FINANCIAL interest in making sure the product works, more than merely effectiveness interest. And when they don't even identify themselves as promoters, they are running afoul of Federal Trade Commission guidelines on online advertising. Yes, commercial speech IS regulated.
Testimonials in generally CANNOT be relied upon. You need large scale scientific studies to verify efficacy. If they rely on testimonials instead of science, they are shady and should not be trusted.
Cherry-picked and/or unreplicable results
If they only mention the good studies they probably have something to hide.
Mannatech, in attempt to prove themselves, have indeed sponsored many clinical trials for their "glyconutrients", and many were indeed done by large reputable research labs. Two of the tests was done by Dr. Best in Australia's Flinders University.
Back in 2005, Dr. Best did a research on Ambrotose, Mannatech's flagship product. The conclusion was:
There were no statistically significant effects of the treatments on the performance on any of the outcome measures. (link to study)
Yet in the 2010 study by the same Dr. Best claimed noticeable performance increase.
Significant beneficial effects of saccharide supplementation were found for memory performance and indicators of well-being (link to study)
But of course, it was the 2010 study that was heavily highlighted and distributed to all Mannatech members, and was even mentioned by Mannatech’s “forward looking statement” to investors. Not a single WORD about the 2005 study contradicting the 2010 study. That's cherry-picking, folks.
Extraordinary claims require extraordinary evidence... VERIFIABLE evidence. Unreplicable and contradictory studies are NOT supporting evidence, much less "extraordinary" evidence.
Paid or Fake Media Coverage and Reviews
Who wrote about this opportunity? If nobody covered it, or only covered as "press releases", then the company is not nearly as big as it claimed to be.
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| PR Newswire logo (Photo credit: Wikipedia) |
And sometimes, some website will simply FAKE press releases, by claiming their announcement had been seen on various legitimate outlets but it's hosted on their own website. This happened so often, FTC sued ten of these fraudulent PR companies to stop them from making up fake news.
If you got more money, you can pay magazines to cover you, in special branding supplements, i.e. special advertising section.
Remember, scammers are perfectly willing to lie, and you accept the lie.
And you will do so if you are ignorant of the facts, and are just NOT skeptical enough to question "proof" provided, then you should not complain about why could people trick you, when you ALLOW yourself to be defrauded.
Wow! This is a very interesting article. Could you please tell me more about your conclusion?
ReplyDeleteThanks for not reading the conclusion... spammer.
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