Saturday, October 5, 2013

Bad Argument: You have no CONCLUSIVE proof that this is a scam!

Sidney Paget: Sherlock Holmes
Sherlock Holmes, drawn by Sidney Paget
(Photo credit: Wikipedia)
When discussing the legality of a potential scam, often the defender of such scheme will resort to a "demand conclusive proof", which often takes this form:
A: Acme XYZ is a scam because of ____, ____, and ____
B: That's not conclusive proof! I demand to see CONCLUSIVE proof!   
This is sometimes also known as "demand for smoking gun".

Not all crimes are solved by "smoking gun" evidence. Indeed, it was a Sherlock Holmes story that gave us the expression, and none of Sherlock Holmes' cases have a "smoking gun"... Crimes are solved MOSTLY via deduction. Demand for "smoking gun" proof of fraud is just... idiotic.

Sometimes B will even specify what s/he considers to be conclusive proof, and it may not be "smoking gun", but certain amount of circumstantial proof. However, often the type of proof demanded does not exist (yet).

For example, if the scam is a pyramid / Ponzi scheme, the demand is often "I want to see convictions! investigations!" or sometimes, "I want to see alleged victims telling me it's a scam and they've been cheated out of their money!"

Frankly that's just as idiotic. Investigations are almost always conducted in secret, and fraud victims remain ignorant that they are a victim UNTIL the day either they realized it's a scam, or the government stepped in a shut the whole scam down. Just look at Zeek Rewards... People were lined out outside their office day after day... Until one day US Secret Service showed up and changed their door locks, shutting the whole operation down and froze all related funds. Even a year later, some people can't believe they were scammed by Zeek, and rather believe government ruined a money-making opportunity.

A financial crime that had not been shut down or collapsed will have few if any visible and self-aware victims. Thus, demand for such is about as useful as demanding a sign from God (whatever his name) that the scam is indeed a scam.

Friday, October 4, 2013

Social Cost of MLM: How it exploits group mentality and cult indoctrination

There is a new article over at SaltyDroid which includes a true story by a member whose handle is Roger Wilco, and he has a sad story to tell. However, before I send you off to read it, I need to get my point across: MLM has a very heavy social cost, and some MLM leaders are exploiting their downlines through cult indoctrination and group mentality (whether they are aware of it is a good question) that they basically rose to success on their member's backs.

Much of MLM makes fun of people in regular jobs (which EVERYBODY have at one point or another) as a deadend, wage slave, and so on, while those in MLM will succeed, be their own boss, blah blah blah, which is a psychological attack, on both the company and personal (upline to downline) level to a person's self-worth and self-identity. The overall message is simple: do what MLM says, you no longer think for yourself. All of your thoughts came from the MLM and your upline. You became a parrot and sycophant without even realizing it.

And now the alienation starts.

Thursday, October 3, 2013

Alarms Raised at Colleges Over Pyramid Allegations of MLM Vemma

Vemma Product Photography and Ad
Vemma Product Photography and Ad
(Photo credit: themichaelminer)
Vemma is a potions company that two years ago created "Verve" energy drink and came up with a strategy to get college kids (and for a while, high school kids) to promote it as brand partners, which is just another fancy name for affiliate (i.e. consultant / distributor / member / whatever). However, they need to buy a case, then try to sell it.  And they're lured in with promise of "easy sell, everybody needs energy drinks" and rewards such as "free car" (with a lot of fine print).

Energy drinks are not what they cracked up to be, and Vemma reps are making a LOT of potentially misleading claims, like their Verve is "healthy" (and other energy drinks like Red Bull and Monster are not). It's been analyzed that they contain roughly the same amount of caffeine, the primary active ingredient, so any claim that Vemma's drinks are healthy(-ier?) is unfounded. Caffeine can kill people, and proliferation of energy drinks made that even more widespread.

Previously MLM Skeptic have covered the energy drink market, and found it to be in a world already saturated with conventionally marketed products (namely Red Bull, Rockstar, Monster, etc.) and thus viability is in doubt.

Now we find Verve pushers basically making up bull**** about how *their* drink is healthier than other drinks when it contains the same active ingredients, in the same portions and thus is just as dangerous.

But Vemma's Verve is doing something else: burning through participant's pocketbooks. And most participants are college kids (who have little enough money as is)

Wednesday, October 2, 2013

Bill Ackman Explains Why He STILL Expects Herbalife to Fail

According to Bill Ackman, all the current bullishness on Herbalife is from ONE guy's speculation that Herbalife will raise a bunch of corporate bonds at cheap interest rates, and use that money to buy back stocks, thus forcing the prices higher.

Ackman calculated the chances of that actually happening to be near zero. I don't have time or expertise to check his math and reasoning without further research, but I wouldn't dismiss his explanation without regard either.

Read why Ackman is still shorting Herbalife:

Another High-Flying Herbalife Rep Crashed and Burned... Who's Next?

Michael Burton, another high-flying Herbalife salesman, who claimed to be pulling in 25K a month, and showed off his 6-pack abs, dramatic transformation from his days as overweight car salesman. Both of which he attributed to Herbalife. Even just last week at an Herbalife event in Germany he reported that things are going great. 

NYPost found a very different picture in the US. Burton, and his wife have actually declared bankruptcy over the summer, owing over 8 MILLION dollars, including 1 million to the IRS. Their total assets? Less than 75000 TOTAL, TOGETHER. House was already foreclosed, and less than $100 in the bank. 

Burton owed a LOT of money, several hundred thousand, to lead generator companies that was recently banned by Herbalife. Though in various statements, Burton stated that Herbalife had NOTHING to do with his financial problems. 

Tuesday, October 1, 2013

ELEVEN Rebuttal Mistakes MLM Marketers Must Avoid

8-ball pyramid scheme model.
8-ball pyramid scheme model. (Photo credit: Wikipedia)
When one has been exposed to various MLM "opportunities", many of which are really pseudo-MLM pyramid schemes, one can anticipate the "defense points" the participants parrot from their upline whenever you see some real examinations of the scheme. Some of those do come prepared with facts. Unfortunately, they are the WRONG facts as they are often irrelevant. They generally fall into 3 categories:
  • Money-related (but irrelevant) facts as defense (3)
All sorts of facts about the company's revenue, advertising budget, payout, bonus, etc, followed by "Still think _____ is a scam?"  When it's completely irrelevant.
  • Name-related (but irrelevant) facts as defense (5)
All sorts of names associated with the company... Lawyers, consultants, celebrities, companies that may have done business with the company... Do they prove that the company's legal? No. 
  • Logical Fallacy-related facts (irrelevant appeal) (3)
All sorts of facts that form irrelevant appeal, such as appeal to age, appeal to tradition, and so on. 

Let us examine each in detail:

BREAKING NEWS: SEC slaps Troy Dooly of MLMHelpDesk with fines regarding Zeek ponzi

SEC tweeted on 30-SEP-2013

This is none other than "Troy Dooly" of (one of the sites listed in "resources" section of this very blog).

Mr. Dooly, self-proclaimed "MLM Advocate", claims to be advocating for the rights of the affiliates and MLM industry in general. However, in the SEC cease and desist, it was revealed that under two successive contracts between Rex Ventures Group, parent company of Zeek Rewards, and Troy Dooly, Dooly was being paid $6000 USD A MONTH to improve the company's image, counter negative press, conduct interviews, and so on and so forth.

And SEC slapped him with a fine for failure to disclose, and actively mislead the public of his involvement with the largest Ponzi scheme in the US (in terms of number of victims).

This is PROFOUNDLY disappointing, not merely to the MLM Skeptic, but to the MLM community at large. Can Mr. Dooly, claiming to advocate for the affiliates, actually be taking money from a company to hide, suppress, belittle, and obfuscate the truth regarding a fraud? According to the SEC, that's EXACTLY what he did.

Can such a trust EVER be regained?

Monday, September 30, 2013

Internet, MLM and FOMO... is that what Rippln's about?

As I was updating my Rippln review I also listened to some podcasts, and one of them mentioned FOMO, or "fear of missing out", and how this social phobia is driving some obsessive behavior such as checking on Facebook / LinkedIn / Twitter constantly, in fear of missing some news updates, social happenings, or such that would somehow instantly make you a pariah among peers. Then the figurative lightbulb lit up over my head: 

Rippln is just a FOMO exploiter. 

Rippln's entire idea is to team up with somebody and market THEIR stuff to its constituents, and if some of the constituents buy the stuff, their upline(s) get a cut of the profit. But this is basically exploiting FOMO, where you subscribe to Rippln and hope you don't miss some special deal. 

Unfortunately for Rippln, in order to make sure that there's enough PROFIT to be split bazillion ways among what they claim to be 1.4 million ripplers, thus far Rippln has picked a couple duds. 

Sunday, September 29, 2013

You really think Herbalife Sold That Much Stuff in Mexico? Maybe Not...

Turns out there's a new wrinkle to the "explosive growth" Herbalife enjoyed in Mexico and further south... According to indictment of one of the drug kingpins... Herbalife Account is used to launder money for the drug cartel!

Really really makes you wonder if that "60% sales by Latino distributors" is for real sales or not, doesn't it?