Saturday, July 19, 2014

Anti-Scam: A Rough Guide to Spotting Shady Opportunities, (part 3 of 3)

This guide is an adaptation of "A Rough Guide to Spotting Bad Science" by "Compound Interest", converted for spotting "shady opportunities". For length reasons, this is presented in 3 parts. This is part 3 of 3.

A Rough Guide To Spotting Shady Opportunities  (part 3 of 3)

Shady Opportunities are out there, waiting to take your money on promises of fabulous income... if you hand over your money first. There are twelve signs. Obviously a shady opportunity may not have all the signs, but the more signs you spot, the more shady the opportunity is.

9) 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.

Dan Ariely speaking at TED
Dan Ariely speaking at TED (Photo credit: Wikipedia)
A person who paid a tidy sum for this 'wonder pill' will have a vested interest to learn that s/he did not spent the $$$ on worthless junk, thus they will be EXPECTING a positive result. 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?

Furthermore, the 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.

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.

10) Cherry-picked results
11) 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. The conclusion was:
There were no statistically significant effects of the treatments on the performance on any of the outcome measures.

Yet in the 2010 study by the same Dr. Best, with slightly different methodology, she claims noticeable performance increase.
Significant beneficial effects of saccharide supplementation were found for memory performance and indicators of well-being

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.

Thursday, July 17, 2014

Is USANA in trouble? Probably. But It Started a LONG TIME ago.

You may or may not have heard USANA, but it's okay, it's not that important. They sell pills, lotions, and baby formulas. Yes, one of these items does not fit.

Any way, their high pressure tactics in China means they NEVER received a direct sales license in China, even though other companies like NuSkin and Amway have them.

So what do they do? They basically bought one... By buying out a company called BabyCare in China in 2010, and that company did get a direct sales license in China in 2011.

So by merging the product line a bit, USANA now sells baby formula... and gets a backdoor into China, mainly by making Chinese sellers pretending to be in Hong Kong.

Previously MLMSkeptic have pointed out that Hong Kong is often used by flaunt Mainland Chinese laws. Chinese citizens are encouraged to travel to Hong Kong to sign up for various pyramid selling schemes for outrageous promises of IPO riches. One such, Interush, was busted in Hong Kong last year.

Citron Research, which previously pointed out problems with NuSkin and China, has just dropped another bombshell... USANA may be next on the chopping block.

In the article referred to, USANA affiliates in China have been citing some very odd references... USANA founder Dr. Wentz's "Einstein Prize", and a "North American Nutritional Supplement Guide" by "MacWilliams.

Let us examine each one in a bit more detail.

Wednesday, July 16, 2014

Breaking News: TelexFree trustee announced "no intention to reorganizing or restarting"

TelexFree trustee Stephen B. Darr, in filing today to the court, announced that he has "no intention to reorganizing or restarting" the TelexFree business, and have conceded that the entire business is a ponzi / pyramid scheme. Quoting from the court filing:
"based upon the information available to the Trustee, it appears that the early investors were paid not from sales of the VoIP services but rather from the money received from the later investors, thus evidencing a classic Ponzi/pyramid scheme..."
Jordan "Ponzitracker" Maglich, who is a lawyer that specialized in tracking ponzi schemes, opined that this wording indicates that the trustee will likely convert the bankruptcy from Chapter 11 reorganization to a Chapter 7 liquidation, in the near future. 

You can see the actual filing documents by clicking through to the Ponzitracker site:

Why Do Fraudsters Think They Can Get Away With It: Part 2 the juice vendor

It was only yesterday 15-JUL-2014 when FTC announced a major settlement with Trivita for Trivita's false and unsubstantiated claims regarding their "Nopalea" drink made from Nopales cactus, yet another superfruit fad (remember noni, magosteen, and acai berry?)  Trivita, without admitting fault, agrees to cough up 3.5 million refund for not having enough science to back up their claims, and not disclosing many of the testimonials in their ads are actually from affiliates (who have financial interest in seeing the product succeed).

But here's the saddest part... Trivita was warned back in 2011 regarding the SAME PROBLEMS, and apparently chose to IGNORE THE WARNING!

They think they can get away with it, and they almost did... until the FTC slapped them.

Read on for details.

Tuesday, July 15, 2014

News Update 15-JUL-2014: Trivita Settle with FTC; SEC oppose Merrill access to 4 million; TelexFree Trustee issued more subpoenas

Seal of the United States Federal Trade Commis...
Seal of the United States
Federal Trade Commission.
(Photo credit: Wikipedia)
Remember, readers: VERIFY the information for yourself. If they don't include links, their news probably cannot be trusted. Even if they include links, make sure it's to a reputable website like news websites and such.

Trivita Settle with FTC?

According to leaked letter to its affiliates, Trivita has settled a demand from Federal Trade Commission against its alleged false health claims regarding its Nopalea related products. Nopalea, also known as prickly pear (a type of cactus), is reputed to have some healing properties and is often pushed by so-called alternative medicine proponents in the same manner as prior fads such as noni, mangosteen, and acai berry products.

Report by Courthouse news showed that FTC filed the demand on July 11th. However, this did not seem to have received any news coverage.

According to leaked letter as published on BehindMLM (and thus far, unverified), the settlement involves stop making false claims, and paying a large fine with no admission of wrongdoing and no stop of sales of such products (provided no further misleading claims are made). All affiliates must acknowledge the new restrictions or their commission will be withheld pending acknowledgement.

EDIT: FTC's own press release just dropped:

SEC opposes Merrill's "motion" to release 4 million for "expenses"

James Merrill, co-owner of TelexFree, out on bail, had previously filed a motion to release over 4 million dollars in one of the frozen accounts to pay for his legal defense. And SEC has filed an answer to that, explaining that James Merrill have plenty of assets available including accounts of several hundred thousand dollars, not to mention possible other sources (one of which is the house he used as bond to get himself out of jail). Why was he asking for 4 million in possibly tainted funds from alleged Ponzi scheme TelexFree? And since he haven't been indicted (merely charged), how much is his lawyers charging to require that much money, beyond what he has now?

Sunday, July 13, 2014

News Update 13-JUL-2014: International Schemes on the Rise; World Ventures threatens critic

Been busy last week, so this will have to be a big news update. Remember folks, I link to the actual news items, not just random blog posts.

International Suspect Schemes on the Rise 

Recent scheme reviews on BehindMLM revealed that more and more schemes claim to be international, when most of the international presence are mere facades.

Mr. Link IT Solutions -- probable Ponzi investment scheme, claims to be IT exporter from Japan with office in China and Japan... AND Brazil (where it's really based in)

BrokerAds -- clone of BannerBroker ponzi scheme, with horrible broken English, and Alexa traffic pattern indicating it's probably ran out of Pakistan, even though the site's disclaimer seem to suggest a US connection.

LEO (Learn, Earn, Own) -- PO Box in Dubai UAE, Mail drop in Hong Kong, Regus Virtual office in Egypt and India, and more virtual office in other locations.

Beware when you run into one of these "international" companies. Do your due diligence.