Found This Pix on Reddit: VERY appropriate

Actual Advice Mallard says:
If you have to pay anything up front before you start a job, you're a customer, no an employee. 

Isn't it surprising that so many MLMers fail to realize this, and manage to convince themselves that they are "entrepreneur" instead?

Scam Psychology: Scam Denial for Dummies (i.e. How to be happy sheeple)

Editor's Note: After reading the article "Science Denial for Beginners" by Austin Cline, I just had to adapt it for scam denial. All credit goes to original author, and any mistakes are my own!

--------

Scam Denial for Dummies: How to Be Obedient Sheeple

adapted by K. Chang 

from original "Science Denial for Beginners" by Austin Cline

Denialism is growing phenomenon around the world, esp. when it comes to scams. Denial is a means by which people hold on to ideologies ("my scheme is legal!") that are threatened by reality (Scheme is likely illegal / is illegal elsewhere) and preserve a sense of control over a world they cannot directly manage. Denialists tends to use the same tactics, because denialism originate from common mental processes. There are six tactics you can utilize to deny reality about the scheme you are involved in.

1. Conspiracies Everywhere!

You can't be an effective scam denialist if you don't understand that most people with proper amount of common sense and due diligence will disagree with you. You have left your common sense behind and the best way for you to express this to the masses is also a time-honored one: it's a conspiracy!

No matter who disagrees with you and no matter what reasons and evidence they offer, you know deep in your heart that their "real" reason is they are part of a massive conspiracy against the scheme you're involved in. There is a nefarious plot afoot which is designed to suppress the "truth" (as you know it) about your scheme. This makes you a brave warrior fighting for your truth, your justice, and your people, at least in your mind.

(Actually, this just makes you sound like a loon, like Don Quixote...)

Therefore, when you meet criticism, accuse the other side of all sorts of conspiracy, the crazier the better. Start tame, like "you are just jealous", "you are just negative", then upgrade to "you're working for a competitor", then go all the way to "you're the 1% out to keep us the 99% poor".  You will sound like a hero, as least to yourself and to your fellow partners in the scheme.

(Also see Pigeon Chess)

(Also see "Why Bad Arguers Retreat to Conspiracy as Final Defense")

2. Cherry-Picking Evidence

It may become depressing to keep finding evidence that supports the other side, but if you're persistent enough you're bound to stumble across little nuggets of information which, if presented just right will appear to support your truth (as you see it). The lack of obvious evidence is proof (at least to you) that the world needs you to cherry-pick any evidence you can find, or if need be, "manufacture" some. It's for a good cause, you think.  Or you can always buy some endorsement with small disclaimers and let fellow sheeples claim it's good news!

Therefore, you should emphasize ANY sort of news that can be "spun" to your advantage. Your personal observation is 100% true and you are infallible. Your paycheck is a marketing tool, flash it on your video. Never mind FTC guidance on what's legal or illegal. FTC is a part of conspiracy! If you see some sort of minor and inconsequential court victory, proclaim it as "final proof" that your scheme's legal! Who's going to check your word? It's all base on trust!  Make up your own definition of what's a pyramid scheme or a ponzi scheme! Your own people will understand!

(Actually, nobody is infallible, not even you. That's called the Self-serving bias.

Furthermore, making false income claims can get you into trouble with both the company's compliance department, and the authorities.

And lying or exaggerating will hurt you later. )

(Also see "Eleven Bad Arguments MLM Defenders Must Stop Using")

Scam Psychology: Why Bad Arguers Often Retreat to Conspiracies As Final Defense

Conspiracy Theory with Jesse Ventura
Making a living through selling nothing... like a lot
of scams that call themselves network marketing
(Photo credit: Wikipedia)

In studying the financial scams and its victims, as well as the common arguments the brainwashed sheeple use to 'defend' the scam they're in, one of the most common "final arguments" is accuse any 'opponents' as a part of the conspiracy against something. While most often found among the "lotion and potion" defenders, they can be found among all sorts of scams, esp. one that had gone viral across the world (and thus must be eradicated).

There seem to be 3 general types of conspiracies when it comes to network marketing, which is grouped by size: personal conspiracy (it's just some hidden reason why the "opponent" is against the scheme), industry conspiracy (some sort of nebulous attack by competitors, though sometimes it's the government), or global conspiracy (often involving some nebulous mention of Bilderbergs, etc.)

All the conspiracy boils down to is "motivation denial of evidence (of scam)". Such conspiracy accusations can take the following forms (but obviously is not limited to such)

• You must have failed at ____ to be so bitter
• You must work for our competitor
• You're just out to get hits for your blog
• You are a part of medical establishment against the "wellness industry"
• You're a part of conspiracy of the rich to keep the rest of us poor

Problem with such conspiracy accusations is conspiracies often rely on circular logic.

Q:Is there any signs of a conspiracy? 
A:No. 
Q:So why is there a conspiracy? 
A:Because conspiracy suppressed the signs! 

Or on a more personal level

Q: Why do you think I work for a competitor? 
A: Because you said we are a scam!
Q: Do you have evidence that I work for a competitor? 
A: No... but it made sense to me!
Q: Here's evidence why ____ is a scam. 
A: You are a liar and those evidence are fake.
Q: Why would I fake such? 
A: Because you work for a competitor.  
Q: But you said you have no evidence that I work for a competitor. 
A: Because you hid it really well! 

Basically, any sort of evidence can be dismissed by "it's part of a conspiracy (against us)".  You have to PRESUME the conspiracy to be true to make sense of the twisted circular logic. It's "self-sealing".

Conspiracy theories are often quite fascinating to study, as it's basically how the mind twists itself into a gordian knot. Psychologists have studied correlations of conspiracy theorists (PDF file), such as is there any correlation between beliefs of conspiracies (i.e. does believing free market make one more like to believe climate denial?)

The results are surprising, and a little troubling. And so was the reaction by the conspiratorial community.

Bad Propaganda: The Real Story Behind the "Dropout Lambo" Meme

A recent viral meme that was made popular by Vemma sheeple was the "Dropout" Lamborghini Aventador

Hyundai SantaFe with "Scholar" Vanity plate,
and Lamborghini Aventador LP700 (2012)  with "Dropout" vanity plate
via Flickr circa 2013

The intent from Vemma sheeple is to ridicule school, and how Vemma is going to change the lives of the young people participating in it.

But what's the *real* story about the DROPOUT Lambo?

The Lambo is real. Its owner "PK" (who asked not to be identified) contacted me to give me the real story. Yes, I've confirmed his identity.

Guest Post: Vemma and Napoleon Hill's "Think and Grow Rich", Part 3 of 6

Previously we had SlayerofScams, a fellow scambuster on IGN, posting his essay on how people misconstrue Napoleon Hill's advice to coerce the weak-minded sheeple. [ Part 1 of 6 ] [ Part 2 of 6 ]

Here's part 3.  Enjoy

------------

SlayerofScams, January 7, 2014

This seems like a good time for Round Three of Napoleon Hill's Smackdown of Vemma/Verve From Beyond the Grave.

Here is Hill’s twenty-seventh cause for failure at life:

27. INTENTIONAL DISHONESTY. There is no substitute for honesty. One may be temporarily dishonest by force of circumstances over which one has no control, without permanent damage. But, there is NO HOPE for the person who is dishonest by choice. Sooner or later, his deeds will catch up with him, and he will pay by loss of reputation, and perhaps even loss of liberty.

First, a special message to Bob Proctor: You see that, Bob Proctor? Your biggest hero and favorite role model condemns you for your intentional dishonesty in telling countless (tens of thousands? millions?) of people that Vemma/Verve is a great company and legitimate business opportunity. By the same token, Hill condemns you for your intentional dishonesty in bastardizing his words, "a winner never quits," in order to brainwash the Vemma/Verve victims to think that eventually they will get rich if only they keep allowing Vemma/Verve to rob them blind month after month and year after year.

You, Bob Proctor, have said in your own seminars, and in The Secret movie, things like, "whatever you put out to the universe is going to come back to you, whether good or bad." If you really believe that, then you know that your shilling for the illegal pyramid scheme/scam Vemma/Verve is destined to cause the universe to repay you with negative consequences for your evil behavior. Your reputation is already ruined, just as Hill predicted it would be. Was some more money - in the form of ill-gotten gains that BK Boreyko pays to you - really worth forever throwing away your [former] good name and legacy for, Bob?

MLM Absurdities: To a Recruiter, There Are No Customers (Just Potential Downlines)

Previously, MLM Skeptic has posed the question... Why had network marketing lost its will to retail?  It was more of a hypothetical question as network marketing should be all about retail, but it seems that many network marketing firms had morphed into "product-based pyramid scheme" (PBPS) that seem to be making a lot of sales, but has no proof that it was actually retailing (most if not all) products to the end consumers. Instead, they are selling products to their distributors... and from there, they don't care any more. They'd love to have the distributors to consume all of the products, and in fact, DSA had fought so, by getting several states to adopt anti-pyramid laws that specifically legalized self-consumption, and DSA said about internal consumption (i.e. self-consumption)

...compensation received by salespeople for products they themselves buy and use, and those bought and used by other salespeople within their organization, is a legitimate, legal and ethical practice and not evidence of illegal pyramid activity. 

http://www.dsa.org/ethics/internalconsumptionwhitepaper.pdf

DSA, by adopting the position, has undermined its own position that network marketing is about retail, by allowing distributors to take "shortcuts" to sales goals by buying products themselves. Without audits and limits, self-consumption leads to product-based pyramid schemes.

Somewhere along the way between 1979 (FTC vs. Amway) and now, MLM had lost its soul along the way, by forgetting about retailing, but instead, embraced "self-consumption" and fudging numbers, and probably a bit of willful ignorance, i.e. we don't know about how much we retail because if we know, we may find ourselves illegal.

Part of the cause is the rise of the recruiter-MLMer, previously identified in "6 types of MLMer", and they helped PBPS along by playing loose with the rules.

But first, let us discuss what is the "ideal" MLM, and how far had the modern MLM wandered from that ideal.

MLM Dictionary: Omnitrition Case

The term "Omnitrition Case" refers to "Webster vs. Omnitrition" class action lawsuit that was argued in 9th Circuit Court (of Appeals) in 1996.

Explaining the Case

(editor's note: I am not a lawyer, so you can read the full case, and summaries by several MLM attorneys and MLM critics near the end.)

Omnitrition was started by Roger Daley, who had previously worked at Herbalife in the 1980's, and may have known Mark Hughes, founder of Herbalife, quite well. When Herbalife hit a rough patch, Daley went off on his own with a few close Herbalife fellow sellers and created OmniLife 4, a liquid supplement formula that became the foundation of Omnitrition International. Later, when Omnitrition hit a rough patch,  in the 1990's, he was served with multiple lawsuits, including the Webster vs. Omnitrition.

Shaun Webster and Robert Ligon worked for Omnitrition until they, in 1992, decided to sue Omnitrition International, a MLM selling vitamins and such supplements, charging it as a pyramid scheme. The case gained "class action' status, as it sought relief for all similar reps who had allegedly been cheated by Omnitrition. Webster also charged Omnitrition with violations of securities law as well as violations of California's "endless chain" (pyramid scheme) laws, as well as various other laws such as RICO (racketeering), wire and mail fraud, etc.

At the time, Omnitrition's comp plan has distributors (no multi-level commssion), and various ranks of supervisor. Lowest rank, "bronze supervisor" requires $2000 order in one month, or $1000 orders over two consecutive months. The order goes to Omnitrition.  (Omnitrition's comp plan is very similar to Herbalife's comp plan, because Daley used to work at Herbalife)

Omnitrition's defense is that it had followed Amway Safeguard Rules and thus it cannot be a pyramid scheme if Amway was ruled not a pyramid scheme by the FTC (per FTC vs. Amway).

District Court ruled in Omnitrition's favor in 1994, granting it a summary judgement ("Not pyramid scheme") and thus essentially dismissing the lawsuit. Webster appealed.

The 9th Circuit Court of Appeals reviewed the case in 1996 and found that the district court have ruled the summary judgement in error in not considering sufficient evidence. However, it had also ruled that some additional charges brought against Omnitrition's lawyers and such are not valid and the summary judgement issued by lower court for those are affirmed.

MLM Absurdities: How Scam Evolve Around MLMs and Pseudo-MLM Scams

Previously, MLM Skeptic have pointed out that many so-called "legitimate" MLMs have scams revolving around them in what's known as "lead generation" companies. They work by sending out teases to large number of people by selling them bogus "business starter kits", then sell the info of these people who bought a kit to affiliates desperate to sign people up. Company benefits twice. (Read full details on the Verge)

Herbalife had realized this and in 2013 have disallowed the use of most lead generations companies, esp. those ran or have close ties to its own affiliates. According to its own affiliate agreement, affiliates are prohibited from selling leads to each other, but these lead generations companies had NOT been scrutinized... UNTIL Ackman raised the pyramid scheme allegations.

While the Herbalife situation is rather unique, in that Shawn Dahl's company is a clone of his mother-in-laws pyramid operation outlawed in Canada (also for Herbalife), the phenomenon of creating potentially ILLEGAL business around supposedly legitimate companies is hardly unique to Herbalife.

Let us explore the underbelly of network marketing... You will learn about:

• How "fake" lead generation really works
• How "sales aid" companies perpetuate the "tool scam"
• How top affiliates get rich from training other affiliates
• How feeder matrix schemes feed pyramid schemes
• How fake ad posting requirements in Ponzi schemes spawn ad posting companies

Let's get started... First stop... How "fake" lead generation really works...

Bad Propaganda: Perpetuating Myths and Misunderstandings to Deflect Criticism

Editor's Note: This is start of a new segment 'Bad Propaganda' where I will analyze bad propaganda used by various MLM promoters who, whether intentionally, or by accident, or perhaps, even ignorance, perpetuate myths, misunderstandings, half-truths, and "spin" to promote their MLM when they don't have to. I've done this several times before, but usually as some sort of rebuttal (for Wazzub, Zeek, TVI Express, and other scams). This will make it a new 'regular feature'.

When a new MLM recruit wants to express their enthusiasm for their new venture, one of the things they do now is create a web page, esp. if they wish to market online. And one of the frequently asked questions asked about many MLMs is "isn't it just a pyramid scheme?"  There's the right way to answer it (explain the Koscot test and why MLM does NOT fit the Koscot test... if done correctly)... and then there is this way... done by a Vemma Rep.

In order not to embarrass him too badly, his name will not be used, and URL will NOT be included (don't want to give him any LinkJuice), but you can see a picture of his web page below...

The title is "Vemma : Scam or a legitimate opportunity for you and your friends" by "Nick".

From here on, his stuff is in blue, and my counterpoints will be in red.

You might be wondering if there is an opportunity to make money with Vemma, or if the Vemma scam allegations are true. Don't worry you have come to the right place seeking answers so look no further.

Wow, he claims to be the ONLY place on the web to offer answers about Vemma, look no further! This guy is full of himself, isn't he?

Nick (censored) is a 21 year old adventure seeker, who went from scrubbing dishes at an old hospital for minimum wage to traveling the Northwest and has built a distribution network of close to 1,000 people in the past 12 months. He has inspired young entrepreneurs into taking charge of their lives, and isn't afraid to challenge the status quo. CLICK HERE to learn about how you can become one of the next success stories on his team, and work personally with Nick and the other leaders of Treasure (censored) Vemma.

The standard rags-to-riches underdog story that appeals to the "rebel youth" crowd. 

   There are many Vemma reviews on the internet that make claims about the company, and for someone who wants to cut straight through the BS you need answers. So lets get to the bread and butter, but know that multi level marketing scams are hard to detect so in this article I will help you swim through the sludge of information on the web.

    In order to confirm or deny if Vemma is a scam you need to understand what the company is. They are a health and wellness business based out of Scottsdale Arizona. Founded in 2004 by Bk Boreyko, Vemma has done over 1 billion dollars in sales over the past nine years. Pretty big for a scam i'de say.

First paragraph is a completely waste of space, as it said nothing. Second paragraph started off wrong. To know whether Vemma is a scam, you need to define what a scam is, not what Vemma is. That comes second.

That was segued into a "too big/old to be a scam" myth, though he did couched it as a personal opinion, bad spelling and all.  Go look up FHTM should tell you it lasted 11 years before being shut down by the FTC as a pyramid scheme. Bernie Madoff's ponzi scheme took even longer. Both are much bigger than Vemma. Clearly, Nick had NO IDEA what he was talking about. 

But wait, there's more! Lots more!

Scam Psychology: Intelligence is NOT Rationality

Many people have asked... How can intelligent people, lawyers, doctors, people who got rich through their own efforts, and so on, end up joining a scam? Aren't they intelligent enough to avoid such things? Some even use this as a bad argument that I termed "association with authority" argument, such as "X is not dumb or stupid, therefore he could not have joined a scam. Thus, whatever he joined cannot be a scam."

Turns out psychologists knew about this problem for a while, and the explanation is very simple: intelligence is not the same as rationality.

Intelligence is usually defined as "ability to acquire and apply skill and knowledge"

Rationality, on the other hand, is  "the state of having good common sense and sound judgment".

The two definitions can overlap, butare not required to overlap. It is possible to have no sound judgment, yet have ability to acquire and apply skill and knowledge. A savant, for example, esp. an "idiot savant", has the phenomenal abilities such as mental math, perfect recall, photographic memory, and so on, yet has virtually no judgment or social skills outside of his/her expertise.

Of us the common people, we are just as guilty of what appears to be irrational decisions, caused by our various cognitive biases, and often, what we WANTED to be true. We are intelligent, but we are NOT always rational.

And scammers are very quick to convince us that being intelligent is being rational... and it's rational to join their scheme. And scammers are often amateur psychologists exploiting your cognitive biases to coerce you (without you realizing it).

MLM Dictionary: Pyramid scheme

A pyramid scheme is a type of financial fraud that usually disguises itself as a business, but the participants earn compensation by first paying into the system some sort of fee, in exchange of right to recruit additional participants and sell the product / service, and will be compensated primarily by the number of additional participants they recruit (who also pay the fee). Little if any of the compensation will be based on actual sale of the product or service.

The earliest pyramid schemes, and modern HYIP matrix schemes, are investment frauds, in that you pay in (buy a position), recruit others, then when enough people joined, you are "cycled out" and get the big payout. This has lead to much confusion in modern times where scammers insist on using the original definition of pyramid scheme and insist their business cannot possibly be a pyramid scheme (by the old definition).

In the US, pyramid scheme is defined by the Koscot Test.

Pyramid scheme is related to Ponzi scheme, but pyramid scheme requires participants to recruit in order to be compensated, whereas the Ponzi scheme do not require recruiting.  There are many other differences between pyramid scheme and Ponzi scheme.

Pyramid schemes are known by several names to law enforcement, including franchise fraud, chain referral / endless chain, matrix scheme, and pyramid selling.

Franchise Fraud 

Franchise fraud is mainly used by the US Federal Bureau of Investigations (FBI), it stated:

pyramid schemes — also referred to as franchise fraud or chain referral schemes — are marketing and investment frauds in which an individual is offered a distributorship or franchise to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships. Emphasis on selling franchises rather than the product eventually leads to a point where the supply of potential investors is exhausted and the pyramid collapses

Basically, this sort of pyramid scheme sells the opportunity itself, rather than the products. Thus, it is a disguised pyramid scheme.

Note that franchises are governed by franchise laws, under the purview of the Federal Trade Commission (FTC), which also prosecutes pyramid schemes on the Federal level as consumer fraud.


Chain Referral / Endless Chain

In many US states, including California, "endless chain" is the same as pyramid scheme. The California Office of the Attorney General (OAG) writes:

Millions of Americans have lost money participating in pyramid schemes which are also known as "endless chains" - - because they cannot work unless the chain is endless and, of course, it cannot really be endless because at some point there are no more people willing to join the scheme.... An "endless chain" or an unlawful pyramid is a plan in which a person pays money or buys merchandise for the chance to receive money when additional participants are introduced into the scheme.

Chain referral scheme can also describe a fraudulent sales plan, where you order an item at the given price, but if you can make friends and family to also buy the same item, your price of the item will be reduced (possibly all the way up to free).  However, in reality, the item is vastly overpriced, and the demand for the item is vastly exaggerated. This was prosecuted many times by Postal Inspectors as mail fraud in the 1970's.

Please note that referral sales is ILLEGAL in the US, and if a company offers such a plan... It may be in legal trouble.

MLM Dictionary: Amway Safeguard Rules

English: Honda- Amway（AVCL）Hồ Chí Minh (Photo credit: Wikipedia)

Amway Safeguard Rules represents a set of "rules" (actually concessions) implemented by Amway when it was sued by the Federal Trade Commission (FTC) in 1975. With the reform of the compensation plan where the IBOs (independent business owners, i.e. sales affiliates) are only paid for what they sell and what their downlines well, and the provisions in these rules, FTC reluctantly agreed that Amway does NOT fit the Koscot test for pyramid scheme. This was finalized in 1979, and became the basis for the entire "multi-level marketing" industry.

In the successful 1975 FTC prosecution of "Koscot Interplanetary" and earlier prosecution of "Dare to be Great", FTC specified the four specific problems they have with the pyramid scheme:

• a) Large membership fees (Dare to be Great can cost up to $2000 or more in 1970's!)
• b) Front-end loading (buying a huge "starter kit") and inventory loading (buying so much inventory just so your upline can get the commission)
• c) Programs in which distributors were misled as to the amount of commission they might reasonably earn (misleading income claims), and
• d) Programs in which commissions were not based on the sale of product to the ultimate consumers. (no true retail customer means it's a money circulation game)

SEC had also previously joined in the prosecution of "Dare to be Great" in 1973, as it considered a pyramid scheme similar to a ponzi scheme...  you put in money, and you expect to get more out of it with rather minimal effort, via the rule known as the "Howey Test".

In fact, many states as well as the US Postal Service have also joined in the prosecution of misleading direct sales, esp. those sent through the mail. Some argued that this patchwork of regulations, different from state to state, created such a hostile atmosphere for direct sales that it would have perished...

An infamous player of this era is called Cambridge Plan International, founded by Jack and Eileen Feather. Some of their most infamous products are "Mark Eden Bust Developer" (diet supplement to make women's boobs bigger), "Astro-Trimmer" (diet supplement that shrinks your tummy fat), and their namesake, the "Cambridge Diet", powdered drinks, soup, and such, only 350 calories, developed by Cambridge professor!  Cambridge eventually went bust when it tried to shift from mail order model (prosecuted multiple times for mail fraud) to direct sales, then the direct sales went bubble and burst. It started with 25 reps in 1981, to 150000 reps in 1982...  and declared Chapter 11 bankruptcy in 1983.

Direct sales basically would not have survived had Amway not survived the FTC lawsuit, and it did not survive unscaped. The ruling, 1979 FTC vs. Amway, resulting in a consent decree where the company agreed to several fundamental changes, that became known as the "Amway Safeguard Rules". (Incidentally, Amway also agreed to tone down income claims, and agree not to restrict the power of affiliates to set prices, i.e. price-fixing).

So what are the Amway safeguard rules? It's quite simple... 3 simple steps.

Scam Psychology: The Need for Self-Delusion

English: Saul Bellow (Photo credit: Wikipedia)

MLM Skeptic has tracked various scams over several years, and it is always amazing to the MLM Skeptic how much self-delusion can the victims of a scam engage in, refusing the believe they were involved in a scam. Instead of probing for the truth and understand how they had been deceived, they instead invest their intelligence into justifying their own delusion that they could not possibly be involved in a scam.

The following quote seem to illustrate the point perfectly.

“A great deal of intelligence can be invested in ignorance when the need for illusion is deep.”
― Saul Bellow, To Jerusalem and Back

And indeed, the victims of a scam, so shocked by the news, have a deep need for illusion, or delusion, to prove to themselves that somehow, they could not have made a mistake, that everybody else must be mistaken.

Let us explore our cognitive biases, and understand how we came to behave irrationally.

Bad Argument: Lion Doesn't Lose Sleep Over Opinion of Sheep

Tywin Lannister armor (Photo credit: paul.hadsall)

Sometimes, when confronted with detailed criticism and lacking a proper reply, a MLMer would resort to sloganism, such as

"Lion Doesn't Lose Sleep Over Opinion of Sheep"

Apparently it had been adopted by Vemma followers as a general psych defense against criticism, as a substitute for "I don't care what you think. Ha!"

But what does this quote *really* mean?

Origin of the Quote

It was recently uttered by Tywin Lannister in "Game of Thrones" in the following form:

"A lion doesn't concern himself with the opinion of a sheep."

The origin of the expression seem to be lost in history. I've seen claims that it originated in Aesop's fables, in Homer's Illiad, and so on. What can be positively attributed was American author Vernon Howard (1912-1992), who wrote:

A truly strong person does not need the approval of others any more than a lion needs the approval of sheep.

The quote is a little on the wordy side, and let's just say Vernon Howard's books leans a bit toward the, uh... esoteric... With such words like "Cosmic Power", "Mental Magic", "Mystic Path", and so on...

It seems Mr. Howard merely rephrased Andrew Carnegie (1835-1919) who stated:

Do not look for approval except for the consciousness of doing your best. 

Screen cap of The Simpsons 3e07 "Marge be NOT Proud"
where Bart put a lampshade over his head and is beating on it
with his slipper so he can't hear Marge lecturing him.
Is that you, when faced with proper criticism?

Clearly, the intent of the quote is to explain that if you do something, you should not do it because other people approve of it, you should do it because YOU want to do it.

It is NOT about criticism. It is about approval.

Therefore any attempt to use the quote to deflect criticism, i.e. "I don't want to listen to your negativity", is wrong. It's be like Bart putting a lampshade on his head and beating on it with his slipper so he can't hear Marge lecturing him.

But let's explore a little deeper...

MLM Mythbusting: Does Having a real product prove business is not a pyramid scheme?

One of the most often repeated myths spoken in the network marketing industry is "we have a product, therefore we are not a pyramid scheme". In fact, this position had apparently been adopted by Direct Selling Association itself. Here's one example:

Is this myth confirmed, plausible, or busted? Let's examine a few things:

• Is there an example (or more) where a proven pyramid scheme (closed by FTC or other authorities) have real, actual, non-woo products? 
• Does the definition of pyramid scheme precludes the existence of real non-woo products? 

Let's get started.

Bad Argument: Neglect to Mention, Revisited (How Crooks are Riding the Coattails of Bitcoin to scam people)

Do you ever hear something, accepted as "yeah, that's cool", only to realize later that you've been hoaxed or been told only half or less of the story? If so, you've been victim of "neglect to mention" bad argument.

The problem is with the modern tech devices such as smart phones and tablets, we often do "like" or "retweet" or "repost" without doing any fact-checking. I admit I sometimes do stuff like that, but I generally do it to cute-sy stuff like cute animals, funny pictures, and so on. I don't form opinions about something important, like money, based solely on one-sided info... Or I try to. And I've been hoaxed recently when I reposted that story about that alleged ex-marine waitress who got no tip because she claimed the family took her for a lesbian.  I didn't look carefully and later when it was revealed to be a hoax, I was embarrassed.

I vowed to fact-check stuff I repost or share or comment from now on. But apparently some people don't, as they've been influenced by half (or less) of the story.

Recently some celebrity / news / Bitcoin worshipper made the following comment in response to my opinion/rant about Bitcoin is too risky.

Forgive me K Chang. But Bitcoin has already been around since 2009 (5years). Even Sir Richard Branson And Lamborghini is taking Bitcoin payments.
Neither you or I have a crystal ball. But I would rather listen to Billionaires like Sir Richard Branson that have vision, rather than an opinion shot from the hip :-)

Nothing wrong with Lambourghini or Sir Richard Branson accepting Bitcoins... Except neither are true, or at least, not completely true.

Q: Is Sir Richard Branson accepting Bitcoins?

A: Sort of. Virgin Galactic, the $250000 USD spaceflight takes Bitcoin

Source: http://www.theverge.com/2013/11/22/5133362/richard-branson-endorses-bitcoin-says-virgin-galactic-will-accept-the

Analysis: Well, that's not so impressive now, is it? Can you buy a Virgin Atlantic ticket with Bitcoin? Apparently not! I guess if you're a billionaire you don't care if you accept some Bitcoins and they become worthless... And the PR value alone (getting mentioned in every newspaper in the world) is worth it.

Q: Is Lambourghini accepting Bitcoins?

A: No. One Lambo dealer in Long Beach claimed to accepted Bitcoins for a brand new Tesla Model S. However, later they admitted they asked the payer to convert it into dollars first.

Source: http://www.theverge.com/2013/12/6/5181864/lamborghini-dealership-starts-accepting-bitcoin

Again, the dealer is relying on the PR value, getting mentioned in every newspaper in the world (or at least the US) is worth it. Besides, they even made the guy convert the payment into dollars first. They will lose nothing. It's a publicity stunt, nothing more.

Later the commenter did a shifting goalpost, and claimed that it was all Lambo dealers in UK that's accepting Bitcoins, but further research got NOTHING, and the comment has produced no proof. Heh...

The commenter has made a fundamental mistake of not doing his/her own fact-checking, and fallen for the "sensational headline" soundbites, and then applied that mistaken impression as evidence to support a premise, that Bitcoin is NOT as risky as I claim it is.

Bad Argument: If it were a scam it would have been busted by cops long ago!

Previously we had covered the bad argument: Wall Street Legitimacy Gauge, where being traded on Wall Street, for a long time, was used as "proof" of legitimacy when it's proven that Wall Street don't care as long as the stock prices go up.

Today we'll cover a parallel bad argument: because the government(s) haven't closed them for such a long time (5 years, 10 years, or even longer) they must be legal beyond reproach.

Very often, the fact that the network marketing company had been around for more than 5 years was touted by some of the most junior reps as a sign of legitimacy (both to themselves and to others), with an implied corollary "If they were illegal government would have shut them down long time ago!"

If you put it in the A therefore B form, it would be

a) company has not been deemed illegal for X years
therefore
b) company will never be deemed illegal in the future

Logically, this doesn't fly, as it's "appeal to age/tradition" fallacy.  It is... because it always had been. That's not a reason, that's just a statement.

Frankly, there is one example in 2013 that easily disproves this bad argument... Fortune High Tech Marketing, otherwise known as FHTM. FHTM was founded by Paul Orberson in 2001, and closed by FTC and several state attorney generals in January 2013. Took the authorities 11 years to close this pyramid scheme.

However, the problem apparently was even more endemic than that... the problem is the authorities... In that the victims have to complain for the authorities to act... and Pyramid/Ponzi schemes are very good in keep its victims in the dark with the mushroom treatment.

BREAKING NEWS: How Many Corporate Entities Does Dawn Wright-Olivares Really Have?

According to reports by PatrickPretty.com, Dawn Wright-Olivares's agent / attorney for corporation in Arkansas had been disbarred back in May 2013, and may be responsible for more than one of Dawn Wright-Olivares's corporations.

Dawn Wright-Olivares (just "Dawn" from here on) is owner of "Wandering Phoenix LLC", an entity registered through N. Donald Jenkins Jr. of Arkansas.

Search through Arkansas corporate records shows that Dawn is also owner of "Wandering Rex LLC".

Dawn was COO of "Rex Venture Group", operator of Zeek Rewards, for years before changing to Greg Caldwell 2 months before RVG was closed by SEC (August 17, 2012) as a Ponzi scheme.

N. Donald Jenkins Jr. , the register agent, was apparently disbarred in May 2013, which may have resulted in a disciplinary investigation that started on Aug 17, 2012, same day SEC closed Zeek. While this could be a coincidence, it could also be a coordinated effort between the disciplinary board and SEC as not to tip of the culprits that they are under investigation.

(Thanks to PatrickPretty.com for the lead  http://www.patrickpretty.com/2014/01/05/special-report-attorney-linked-to-zeeks-wright-olivares-has-record-of-disbarment-and-suspensions-possible-co-agent-spent-time-in-federal-prison-for-credit-card-swindle-and-was-charged-in-arkansas/ )

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.