Saturday, January 18, 2014

BREAKING NEWS: NuSkin in Serious Legal Trouble in China

NUSKIN 2008 _1280x1024.jpg
NUSKIN logo (Photo credit: Ellery Chen)
China usually don't advertise internal troubles, except when they are about to make an example of somebody. So when NuSkin was mentioned on People's Daily, the official newspaper of the government, people really noticed. And it's NOT in a good way. 

Just reading this paragraph from Xinhua (Chinese official press agency) is enough to send NuSkin stock price in the US plummet 30%. 
BEIJING, Jan. 16 (Xinhua) -- Local authorities have been told to investigate media reports that allege Nu Skin distributes false information and conducts illegal business in China, the country's State Administration for Industry and Commerce (SAIC) said Thursday.
The "media reports" in China had been posted in June or July 2013, as had continued research from Citron Research, since 2012! [Link 1]  [Link 2]

if you wish to do your own research, what you need to know is reports are in Chinese, so you will need to search with the Chinese name: 如新

When China represents 30% of the company's revenue, and sales had SHRUNK in the rest of the world vs. China, this is going to be a MAJOR blow to NuSkin, whether the reports are 100% true or not. And there's no doubt there is *some* truth to the media reports, esp. when it came from widely different sources, in different parts of the country, and even Citron's own investigative report.

But what's REALLY disturbing is the cult-brainwashing.

Wednesday, January 15, 2014

Scam Absurdities: A Leopard Can't Change His Spots, A Scammer Can't Change His Ways

It is sometimes painfully obvious why would any one fall for a particular scheme, when all you need to do is look at the people involved in the scheme, and what were they doing before the scheme. Were they involved in scams? And if so, in what role? With power of Google and a few minutes on a computer, you can find a lot of information that can only save you from possible crooks.

Recently, TelexFree's "International Marketing Director" Steve Labriola released some sort of a video assuring there is no US investigation (that he knows about). About 3 minute in, there's this some sort of "assured revenue" thing:

In other words, you pay TelexFree, then you pay LifeRevs to do some work for you, and TelexFree will pay you big bucks. Pay in 15125, plus $924, and you get back 57200, and they even said it's "income claims", something that is very much verboten in the MLM industry.

But who runs LifeRevs? And this AdAssureLite? Turns out, it's related to Zeek Rewards ponzi.

BREAKING NEWS: Peruvian Police Raided WCM777 office in Lima, Peru

According to Peruvian newspaper LaRepublica, Peruvian authorities raided a local headquarters of WCM777 Ponzi scheme, already outlawed in Peru. Locals have been charged with various violations of laws. Authorities urge WCM777 victims to report to the police.  (link is in Spanish)

Bad Argument: "You can't live a positive life with a negative mind"

Recently, I ran into some MLM promoters, who, when confronted with problems about their particular scheme(s), tossed back this particular reply:
"You can't live a positive life with a negative mind."
Frankly, this is just sloganeering. And it's often used with a favorite: "Analysis paralysis."

Care to guess who was this quote attributed to? Miley Cyrus. Yes, *that* Miley Cyrus. Though this is apparently from her pre-Twerk days, as part of her song lyric. 

Of course, nowadays, when we think of a Miley Cyrus quote it'd be like this:

Obviously Miley Cyrus didn't invent the quote, but she sure made it popular in recent years. 

Of course, I'd tell you first that who said it wasn't important. If it's true, it's true no matter who said it. So, is the quote "you can't live a positive life with a negative mind" true or false. 

The answer is: it is true for life in general, but false in the context in which it was used. 

Now you're probably thinking: did you just give a weasel answer? 

No, I'll explain that in detail. 

Tuesday, January 14, 2014

Breaking News: Former Zeek Bank, Four Oaks Blank, settled with DOJ for being negligent regarding Zeek Ponzi Scheme

Dismissed U.S. attorneys summary
Seal of US Department of Justice
 (Photo credit: Wikipedia)
Breaking news out of North Carolina: Four Oaks Bank, which held money for Zeek Rewards, as well as a payment processor called NX Systems, settled with the Department of Justice for its role in the Zeek Rewards ponzi scheme and other scams that processed funds through Four Oaks bank, and agreed to fine of 1.2 million dollars without admission of guilt.

DOJ charged that Four Oaks Bank granted "Automatic Clearing House (ACH)" check processing access to Rex Venture Group, parent company of Zeek Rewards Ponzi, despite multiple warning signs such as no visible prinpals and unverifiable or suspicious address (one of which is a vacant lot).

Scam Psychology: The Need for Self-Delusion

English: Saul Bellow
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.

Monday, January 13, 2014

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

Tywin Lannister armor
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...

Sunday, January 12, 2014

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.