Friday, May 20, 2016

Bad Argument: MLM Strawman Arguments Labelled as Mythbusting

A lot of so-called MLM "coaches" write articles to drum up business and recruit downlines, and they have to deal with, what they perceive as "undue criticism" of MLM. However, what they often ended up doing is defeat strawman arguments.

Recently I came across a certain article titled "6 Biggest Myths about MLM -- A Must Read" by Nathan Sloan posted on Network Marketing HQ dot co dot uk.  (Interesting, the URL says 7, so he seem to have lost one in the edit), and it served as a prime example of how MLMers argue... broad insinuations, strawman, this guy used them all.

His myth #1: Pyramid structures are bad

Pyramid SCHEMES are bad. Pyramid structure or pyramid-shaped organizations are not necessarily bad. If a MLMer, even a noob, can't explain the difference between a pyramid structure and a pyramid SCHEME, s/he is uneducated in the MLM fundamentals and his/her upline should be ashamed.

However, instead of explaining this fundamental difference, Mr. Sloan instead pointed out that pyramid structures surrounds us. Basically, he failed to identify the real problem, and instead, went to equivocation fallacy instead. Indeed, this is a common "MLM defense" tactic, present a strawman equivocation with "safe" structures.

Verdict: strawman myth

Solution: Mr. Sloan should concentrate on differentiating pyramid SCHEME vs. pyramid organization. Pyramid scheme is fraud. Pyramid organization is just a shape.

His myth #2: MLM is a Scam

Is MLM a scam? Sloan's explanation is that pyramid schemes are illegal, MLM is not. However, instead of explaining the difference between MLM and pyramid scheme, he simply quoted an OUTDATED definition he copied from "Ultimate Guide to Network Marketing" without attribution. And yes, I have this book on my bookshelf. That's how I recognized it. It was published more than 10 years ago (2005).

For the record, MLM in its current form was created in 1979 when Amway settled with American Federal Trade Commission to institute several reforms (today known as the "Amway Safeguard Rules") in order to keep on operating. The short of it is, the difference between MLM and pyramid scheme is MLM NEVER pays on recruitment (but there are ways to disguise the payment). This is what Sloan failed to address.

However, Sloan then went on to knock down another strawman. He claimed that any one who said MLM is a scam are lying to cover up their laziness and failure. This is in clear contrast of several pyramid schemes that presented themselves as MLM that were shut down. FHTM (shut down 2013) and Vemma (shut down 2015) are just some recent examples. By ignoring a prime example where a scam MLM did operate, Sloan is guilty of lying by omission AND a strawman, not to mention victim-blaming.

Verdict: strawman fallacy, lying by omission (or ignorance), plagiarism, unsupported argument (did not explain difference between pyramid scheme and MLM)

Solution: Sloan should acknowledge that many MLMs are done fraudulently, and attempt to explain the real LEGAL differences why MLM is not a pyramid scheme. Simply quoting a definition is not defense without explaining how that applies to your defense.

Wednesday, May 18, 2016

Another article of how WCM got smashed in China (AGAIN), translated

Previously #MLMskeptic translated the article from about how WCM got smashed. This time we're translating a different article of the same event, with additional details.

海归硕士开空壳公司 以“虚拟货币”连环套诈骗数亿

Master Degree Open Shell Companies, "Cryptocurrency" Scammed Hundreds of Millions


In May 2015, Zhaoqing City, Dinghu Branch, Economic Investigation Unit (EIU from now on), in Guangdong province received report from citizen Xie, who claimed that he was fooled into believe a Ms. Liang and purchased several Wantong Miracle  (WM from now on) Suites for 26000 RMB, received the WM card, and was supposed to receive daily profit of 32 USD, but so far received nothing, and there's no sign of his original investment.


With economic investigation unit of three cities: Guangzhou, Shenzhen, and Zhaoqing cooperating, they revealed a huge illegal securities crime, that never was approved or licensed by authorities, and uses buzzwords such as protoshare investment product, e-commerce, and so on, with promises of huge profits.


Recently, Shenzhen EIU told Penpai News that this scam has victims in 28 provinces, 147 jurisdictions, and over 5800 victims, with amount of scam in the hundreds of millions of RMB. Investigation is ongoing.

Police investigator said in May 2013, WM series of securities was established by Mr. Xu, president of some investment bank holding group, a Mr. Liu, CEO, an executive director Mr. Xu something Zhong, and a "financial scholar" Mr. Sun

Belief in WM Investment Profit, Ensnared in Trap


Ms. Chen of Changsha, Hunan province, was an investment in WM. In September 2013, a friend Chen (something) Fang told her that this Wantong (WT from now on) company released a series of WM products, promised huge profits if invested. Asked her to look into it.


Later, Ms. Chen searched the boss of Wantong, a Mr. Xu online. "Xu, online, is an angel investor, CEO of an investment bank, helped 7 Chinese companies get listed in foreign exchanges."


Ms. Chen believed all these to be true, and joined a WM related QQ Chat group, and learned of a recruiting meeting held by Wantong in Shenzhen coming in November 2013. Unable to resist, she went to Shenzhen to attend the meeting.


Based on memory, there were hundreds of people there. Wantong's executive direct, Mr. Zhou, promised the sun and the moon, described a bright future, and answered all of the questions from the attendants.


"If I invest 13000, I can profit 100 per day, that's very high profit." Not long after the meet, Ms. Chen bought in with 39000 RMB and bought three of the WM suite called "WCM705", at $1999 USD each.


Ms. Chen explained that WM suite has 5 amounts: $399, $799, $999, $1599, and $1999. Daily profit is dependent on the amount invested. For the $1999 suite, daily share is 16 E-points, worth 16 USD.


After the purchase of these suites, Ms. Chen registered in WM website, and can view her account and accumulated e-points, and even cash out at the beginning, but soon, cashing out became a problem.


"First it was delays, then later all cashing out was stopped. By April 2014, the entire website is gone." Ms. Chen asked her friend's upline, a Mr. Wang (something) Po, but he had no explanation.


In May 2015, Ms. Chen hard that Mr. Xu has established a new company in Shenzhen called WanYiTong (WYT from now on), and will do a promo event at a 5-star hotel. She went to check it out.

Tuesday, May 17, 2016

BREAKING NEWS: WCM777 smashed AGAIN in China, is Phil Ming Xu in custody? spotted a news in ShanghaiDaily that a Mr. Xu of "World Capital Market" was arrested by Chinese police for pyramid scheme in China. It appears that Phil Ming Xu of WCM777 has moved back to China and restarted his scam which collapsed in 2014 in the US. Below is a bilingual version of the news, with English version provided by me.

会员遍布28省 涉案金额数亿
Members spread across 28 provinces, amount into hundreds of millions

Wantong Miracle suspected of illegal securities, being investigated

发布时间:2016-05-15 20:42 星期日   来源:法制日报——法制网
Posted: May 15 2016 Sunday 20:42     Source:,cn

法制网记者 李想  Reporting for LegalDaily Xiang Li


On May 27, 2015, Ms. Zhou Hua (pseudonym) who resided in Guandong, reported to the local Police Economic Crime Detachment to report that she had been defrauded. The frustrated Ms. Zhou told police that she trusted others and invested in "Wantong Miracle Social Capital Cloud Computing Platform", and not only did not get any promised profit, the 26000 investment is "gone with the wind".


Police followed the leads, and revealed this humongous illegal securities crime syndicate that used various new concepts such as "protoshare money management", "e-commerce" to disguise itself. Based on investigation, this crime involved over 5800 Wantong Card members, spread across 28 different provinces (in China), involving hundreds of millions in RMB

A exquisite facade to deceive the masses


According to police, in January 2014, Ms. Zhou believed suspects Mr. Liang and Mr. Chen, and purchased two of the Wantong Miracle "WCM705" suite at cost of $1999 each. Based on the then published rate of 6.5 RMB to 1 dollar that's about 13000 RMB. This would give the investor 1999 "points". According to the then promises, she can get 16 USD every day as profit share, and can do it 100 times. 


Legal Daily reporter searched the Internet about "Wantong Miracle", and found there were many people asking online is Wantong Miracle" legal. So what sort of company is Wantong Miracle? 


May 6th (2016), in Shenzhen 2nd detention center, reporter met the suspect Mr. Xu, who had been arrested. Mr. Xu claimed, after graduating from university he worked as producer in media, then transferred to finance. 


According to Zhang Zhaohui, deputy chief, economic investigation detachment, Zhaoqing Public Security, Wantong Miracle's various products was introduced to China in May 2013, by a Mr. Xu (supposedly some "investment bank holding group CEO") and others. Xu, et al, claimed that "Wantong Miracle" is a social capital revolution, using Internet, cloud computing, and world retail discount system, to provide "capital magnification" to global customers.