Evil MLM: Get Payday Loan to Join MLM? WTF?!

Editor's note: This is a start of a new, and hopefully continuing series of what NOT to do in MLM, under the tag "Evil MLM". Basically, this is the sort of bad behavior that gave MLM a bad rap (much of it deserved).

I've heard of people spending their severance pay to join MLM. In fact, this is done quite often in Israel, where when you are discharged from the required service in the Israeli armed forces, you're given a severance pay to help you get back into civilian life, and some sleazy MLMers have gone as far as park their fancy car, glitzy bling, and pretty girls next to discharge stations to snatch up recruits as they walk out. Too bad their leader is a f***ing cult leader who pushes Herbalife. 

But here's something more disturbing, closer to home... a "leader" in Vemma telling people on Facebook, that they should not worry about not having any money to join Vemma as a poor college kid. Instead, they should go take out a payday loan (with their usurious interest rates) and use that cash to join Vemma, and immediately do a full court press, to get the money back so the check doesn't bounce.

Don't believe me? Here's proof on Facebook:

Coalition Petitions FTC to Fully Investigate Herbalife, includes dozens of experts on various subjects

This just came up on my news alert: Coalition Petitions FTC to fully investigate Herbalife.

Among the names you'll find some familiar names if you are attuned to the MLM "controversy"

• Robert Fitzpatrick of pyramidschemealert.org, long-time opponent of MLM model, believes all MLMs are effectively pyramid schemes. I agree with him 90%. 
• Dr. Jon M. Taylor, who cooperated with Fitzpatrick on many of the papers, but also has his own anti-MLM website
• David Brear, another long-time vocal opponent of MLM, who also believes that all MLMs are pyramid schemes, albeit disguised. He and I have butted heads despite we agree 90% of the time. His blog is at mlmtheamericannightmare.blogspot.com (I may have misspelled that)
• Shyam Sundar, David Brear's counterpart in India, runs corporatefraudswatch.blogspot.com and covers mainly Indian scams, but also reposts Brear's blogposts
• Doug Brooks, who had started multiple class-action lawsuits against multiple MLM companies

Some notable anti-scam bloggers are there:

• Jason Jones, aka Salty Droid, whose stance on scams and pyramid schemes are well known and he considers MLMs in the same arena. He can be found at saltydroid.info
• Omri Shabat, of glancingweb. Omri had been writing superbly sarcastic and caustic blog posts about various Internet marketers and small time scammers, the type that was covered in The Verge's "Scamworld" series, for years

Update on WCM777: the more we dig, the more weird stuff we find

A few fellow Internet sleuths decided to look a bit more into what's left of World Capital Market in the US, and the more we look, the more interesting things we find. Stuff like Siemen denies being involved with WCM, and more domain names, and corporate entities linked with WCM and Ming Xu, and more. These are stuff WCM777 affiliates would rather you do NOT know about.

You may want to read my previous investigation on WCM777, WCM, and Phil Ming Xu, if you want to get the whole picture.

First, someone apparently invoked Siemens' name in WCM777 ad.

.@siemens_press? WCM777 cooperated with Siemens to launch a series of personal cloud service products http://t.co/4xrLL21ZWk via @sharethis
— daSilvaEdison (@daSilvaEdison) September 16, 2013

Here's another version (from Facebook):

Here's one WCM777 ad that even used their logo:

It's interesting to note that most of these companies has NOTHING to do with investment or finance except four: that Chinese one on top ( Chungching International Trust and Investment LTD ), Goldman Sachs, Merriman Curhan Ford & Co. (aka Merriman Capital) and that logo just to the left of Marriott, which is "China Galaxy Securities".

What is interesting is Siemens there at the middle. Someone decided to do due diligence! Here's the result (feel free to search on Twitter yourself to confirm this conversation)

Clearly, whatever WCM claimed was misconstrued... or WCM outright "fibbed" and mislead.

Someone is Tweeting at Denny's Restaurant asking them to confirm that they are doing business with WCM. Stay tuned!

Cult Sales Conviction Upheld in France. Is US Next?

French Court recently handed down a decision that upheld conviction of Church of Scientology and its bookstores of preying upon members in the 1990's by pushing them into buying books... One victim claimed she was pushed into buying books and various devices totaling over 20000 Euros, including "a meter that measures mental energy". Court ordered the church to pay over 600000 Euros in fines and damages. Church itself claims its religious freedom is being trampled and vows to appeal to European Union court.

While I have no desire to debate whether Scientology is a cult or not (the French say it is, so debate it with them) I wish to point out that cult sales is a real problem. 

Cult Sales, as opposed to normal "sales job", is sales job with a dose of cult indoctrination to keep you producing, often with your own money. And many network marketing companies, along with a few abusive direct sales companies, are essentially cult sales companies.  Whether their products are real or valuable is irrelevant.

Some signs of cult sales:

• Always hiring / looking out for new blood
• Rah-rah chants and songs in the morning to get you "pumped up"
• Daily or weekly confession / recognition of sales results (or lack of)
• Shadow new recruits with a "mentor" (and you will later shadow a noob, treat noobs to social events, indoctrinate them just like they did to you)
• Fake it till you make it (fund your own attire, even before you can afford it)
• Overwork you, always selling around the clock, portrayed as "dedication"
• Dominate off-work hours too with "social" events and training and such
• If you don't recruit you're not "dedicated" enough to the company
• Guilt-trip if you tried to quit

Minority Groups Calling for California AG to Investigate Herbalife: HLF CEO really irked

California Attorney General's Kamala Harris
 (Photo credit: Wikipedia)

Multiple minority groups, including black and latino minority civic groups mounted a demonstration outside an herbalife event in LA, calling for full investigation of Herbalife by California Attorney General Kamala Harris. (see right) on whether Herbalife is a pyramid scheme.  Protestors are waving signs that says "Stop Exploiting Us" and similar wording.

What's interesting is apparently Herbalife CEO Michael O. Johnson, normally a pretty calm individual, lost his cool, and went up to the protest organizer, and outright accused the organizer of believing in lies and should be ashamed of doing so.

Herbalife spokeswoman later confirmed that a dialog did take place, but denies Johnson lost his cool.

How To Help People You Suspect Are Being Scammed

There has been many questions by folks with friends and relatives who were into suspicious schemes. The victims are so cult-indoctrinated that nothing seem to work. What can be done, if one cannot afford cult deprogramming / exit interview? And what if the victim does NOT wish help?

First, a disclaimer. I'm not a psychologist, psychiatrist, or know anything about the mind, other than some critical thinking. The following stuff is UNTRIED, UNTESTED "common sense" sort of approach I would take if I were to approach someone in a similar predicament.

My approach is... asking questions, Socratic questions. But this is NOT a quick fix. Undoing the knot will take a lot of time, and a lot of questions. This is my personal idea, based on Socratic Questions (as explained in Skeptoid #384). I hope this is of use to people, and I welcome any feedback. Any way...

You will probably need an empty work area, preferably with a big table where you can spread stuff out, a computer to do research on various topics, and a big stack of index cards. Figure at least 100, if not 200 cards, and a few pens, different color (you use one color for questions, he uses another for answers). You will definitely need one big red marker in addition to other colored pens.

And finally, you will need several hours, with refreshments and snack breaks in between, but NO CELLPHONES. The idea is to get the victim AWAY from his/her upline's influence for a while.

And you will need a quick lesson in critical thinking, and understand what is a "null hypothesis". I suggest you research a bit of critical thinking on your own before you attempt this "intervention".  Null hypothesis is best described as unknown / indeterminate state. If the premise is "WooPlus cures cancer", the null hypothesis would be "we don't know whether WooPlus cures cancer or not". the ANTI-premise is "WooPlus does NOT cure cancer". Facts and Logic (evidence) are suppose to move you from null hypothesis toward the premise. When there's not enough evidence you're left with the null hypothesis, not the anti-premise. Yet many people mistake the critical thinking process into thinking that it's either the premise, or the anti-premise, with no null hypothesis.

In the future, I may publish some of the better questions to ask, though this is highly dependent on the individual subject.

NOTE: If you cannot finish this in one sitting, you may want to pick a smaller premise, like "WooPlus product is effective for _____" first. Or perhaps ask for help analyzing his answers, even online. Just don't let him consult upline (yet). If questioned, reply that you want to get to the facts, which are easily Googled, instead of relying on someone else's memory.

There are three general phases:

• Engage and clarify premise with supporting evidence and logic
• Identify ambiguities, assumptions, and logical fallacies
• Re-examine premise with multiple perspectives

SEC Warns All About "profit-sharing" Pyramid Schemes Pretending to be MLMs

Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

The US Securities and Exchange Commission, SEC for short, has just released an Investor Alert warning all to watch out for pyramid schemes masquerading as MLM companies. It comes two days after SEC busting yet ANOTHER Ponzi scheme called CKB168, a purported MLM allegedly selling online children's courses, pitched primarily toward Asian Americans in the US. However, it mentioned something very interesting: SEC recognized the potentially illegal profitsharing by pseudo-MLMs back in 1971.

Back in 1971, when MLM first came upon the scene, SEC had ALREADY recognized the danger of "profit-sharing" schemes that are falsely marketed as "not investments". You are welcome to read the full SEC "interpretation", but here's an excerpt (with some sections bolded by me):

The Securities and Exchange Com­mission has considered-the applicabllity of the securities laws to multilevel dis­tributorship and other business opportunities that are being offered to prospective participants through pyramid sales plans. The Commission believes that the operation of. such plans -often Involves the offering of an "Investment contract" or a "participation in a profit-sharing agreement," which are securities within the meaning of section 2(1) of the Securities Act of. 1933. In such cases the security involved-the agreement between the offering company and the Investor­ must be registered with the commission unless an exemption is available. In the absence of registration or an exemption, sales of these securities violate section 5 of the Securities Act.