MLM Genre Analysis: CBD products have HUGE risks not understood by participants

Some of the more recent MLMs have latched onto CBD, or cannabidiol as their next big thing, and several companies have started selling products based on CBD oil for topical and other uses. However, what those people failed to consider is CBD is NOT legal in all 50 states. That's right, holding CBD oil in certain states can get you arrested for drug possession, which can RUIN YOUR LIFE!

Fact: DEA considers CBD oil as a schedule I controlled substance, with ONE exception

DEA considers CBD oil "marijuana extract" and remains on schedule I (same as cocaine and heroin). DEA has allowed a specific formulation, containing less than 0.1% THC, and approved by the FDA, to be reclassified Schedule V. This happened in October 2018.

This is often misquoted by CBD advocates as "DEA legalized CBD" when nothing of the sort took place.

With that said, DEA has bigger fish to fry, like the opioid epidemic. But it's illegal. And if your state law enforcement wants to bust you, it can, as a man in Indiana found out. He was arrested for possessing CBD oil and prosecutors chose not to charge him because the state legislature made CBD legal AFTER his arrest.

MLM Basics: Is there such thing as "good MLM"?

The MLM Skeptic has been asked repeatedly, "is _____ a good MLM?"

The short answer is: I don't know.

The longer answer is: I don't know. I can't do your due diligence for you, as I am not you.

But perhaps here's a more philosophical question... Is there such as thing as a "good MLM"?

Almost every MLM claimed they are good, and some may go as far as point out a few "bad apples" that had been stopped by government action, but they won't name a running company, unless the company's so egregious nobody is surprised they got shut down, such as Monavie head outright stated that Zeek Rewards is a ponzi scheme.

But first, we have to answer the question...

"What is a 'good mlm'?"

Good for the participant, good for the society, or good for the owner(s)?

I am going to assume that by asking this question, the asker is looking for the right company to participate in, and therefore, 'good mlm' means a company that justly compensates the participant for the effort put in. The other two factors (good for owner, good for society) are not really relevant for the participant, but they'd be nice to have.

But what exactly means "justly compensates participant for the effort put in?" While it may be "obvious" to everyone that one wants to be paid the maximum amount for doing minimal work, the real world is exactly the opposite... companies want you to do the maximum work for the minimum pay. The actual amount of work and pay is somewhere in between... at least, that's what's supposed to happen in a real job. Nobody want to be paid peanuts for hard labor, and no company will pay 1M a year for doing something that can be done in a few minutes with minimum skills.

The next question we have to answer: in MLM, are you rewarded for your own efforts?

But you're only PARTIALLY rewarded for your own efforts. Depending on how many levels of downlines you've developed (and how well they sell), you may make practically nothing based on your own efforts (your PV, personal volume is bare minimum), and you live mostly on the commission based on your group volume (GV) generated by your downlines.

In other words, the longer you spend in the business, the more you're rewarded for OTHER PEOPLE'S EFFORTS, as you build up your team. In fact, many MLM participants only knows how to recruit downlines. They can't sell the products they are supposed to be selling, and just buy the products themselves for self-consumption just enough to qualify for commission based on group volume.

And that's assuming you are in a real MLM selling real products

Keep in mind those "real product" MLMs can be illegal too. Just look at FHTM and Vemma.

Scam Alert: Bitcoin as disguise for Ponzi scheme

EDITOR'S NOTE: I counted the difficulty wrong. It's FAR MORE HOPELESS than I ever imagined. See revision throughout the last half of the article.

In the past 6 or so months there has been a plethora of suspect Ponzi schemes that involves Bitcoin as its disguise. Some of them are basically pure HYIPs (BitClub Network, Bitcoin Zones), while others are existing schemes that decided to incorporate Bitcoin as part of its various schemes (GetEasy, Paymony) Here's description from one of them:

XXXXXXX costs $99 for your membership. 

You can then buy shares in their three mining pools for $500; $1,000; and $2,000 per share respectively. 

Every share you purchase will pay you daily payouts for 1,000 days.

This, gentleman, is an unregistered security, as defined by US law known as the Howey Test.

A security in the US is defined as:

1. investment of money due to
2. an expectation of profits arising from
3. a common enterprise
4. which depends solely on the efforts of a promoter or third party

You "buy shares", you expect "payouts", you buy into "pool" which is obviously a "common enterprise", and payout solely depends on some unknown "mining pool".

This is OBVIOUSLY an investment security, and it's ILLEGAL to offer in the US of A.

"Now wait a minute", I hear you ask... "Are you telling me Bitcoin mining is illegal?"

NO! You see, in a *typical* bitcoin mining operation, you contribute CPU POWER ONLY (think of it as labor or material), not actual money. For example, this is how you join the BitMinter pool:

1. Register
2.  start bitminter clientBitminter client: Hit the start button to start Bitminter client. You get bitcoins for the work it does. Works on Windows, Linux and Mac. Requires updated Java. Other clients: bfgminer, cgminer, etc. Connect to the pool at stratum+tcp://mint.bitminter.com:3333. As user name put your Bitminter user name, an underscore, then a worker name, e.g. DrHaribo_asic3. In case you have firewall issues, port 443 and 5050 (Stratum) are also available. There is no password check, any password is accepted.
3. Get a wallet to transfer your coins to. Make sure you secure your wallet.

Other actual MINING pools are the same: you join by contributing CPU / processing power, NOT actual money.

In fact, you can join one now, using your regular desktop PC. It won't do much compared to dedicated hardware that costs THOUSANDS of dollars, but you can do it for FREE (and your payout will be negligible).

Ah, but you say, but *maybe* they really are buying the hardware to do the mining with the money you gave them?

Then it'd be a stupid investment, and I'll explain to you why by crunching some numbers.

Bad Argument: The "We shall see" parting shot and how it's linked to cultism

When defenders of a certain scheme ran completely out of viable arguments, they will often depart with a throwaway comment:

"we shall see"

It has several variations, like

"Time will tell"

"History will be the judge"

"Truth will prevail"

and such.

This is a pretty lame departing shot, as it basically demonstrate they have *faith* that they will be vindicated eventually, but they don't have any evidence to support their opinion right now, which makes that a BELIEF.

faith

fāTH/

noun

1. 1.

   complete trust or confidence in someone or something.

   "this restores one's faith in politicians"

   synonyms:

   trust, belief, confidence, conviction; More
2. 2.

   strong belief in God or in the doctrines of a religion, based on spiritual apprehension rather than proof.

   synonyms:

   religion, church, sect, denomination, (religious) persuasion, (religious) belief, ideology, creed, teaching, doctrine More

Note definition #2... "based on ... apprehension rather than proof".

That's exactly what happened here... they have only their own apprehension of how the scheme will make them rich, rather than actual proof. It's religious, rather than evidence-based.

The fact that many scheme promoters behave in a religious fashion have lead to cult experts in calling such schemes "commercial cults".

BREAKING NEWS: Dietary Supplement caused nearly 100 hepatitis cases

An outbreak of nearly 100 cases of hepatitis in Hawaii was pinpointed to be caused by one dietary supplement.  

But that's not the scary part. This is: 

Because the FDA regulates supplements only after they come to market, companies are not required to prove that their products are safe and effective before marketing them.

"This really points to the fact that there's no safety testing … before a new ingredient shows up in a supplement in the United States," Cohen said. "Guess who's the experimental animal — the consumer."

livescience.com

So if you are taking one such dietary supplement, one that's brand new and never tested...

You may want to reevaluate that risk.

Esp. when it is based on junk science or even worse bogosities.

Related articles

• FDA investigates outbreak of non-viral hepatitis in Hawaii
• The FDA Says a Dallas-Made Bodybuilding Supplement May Be Causing Hepatitis
• MLM Absurdities: The "Big Placebo" industry that markets nutritional supplement woo
• More Hilarious Woo Endorsements: Having a Chiropractor as your "Chief Science Officer"

MLM Absurdities: What They Don't Want You To Know About Ganoderma "Healthy Coffee"

In the past several years, a plethora (plague?) of "healthy coffee" companies appeared on the market. They bear names such as "Gano Excel", "Organo Gold", "Vidacup", "SereniGy", and so on. And they claim to bring you coffee, but with some magical healthy ingredient added to make you healthier, like ganoderma mushrooms and/or some other magical herbs. Sounds enticing, but here's what they don't want you to know.

1) Lousy coffee beans are used to make flavored coffee.

Traditionally, there are good coffee beans... and bad coffee beans. People would buy the good ones for a premium. So what do they do with the not so good ones?

They make flavored coffee with them. The added flavor (and smell) made the bad coffee more palatable.

Coffee geeks would never desecrate good coffee with flavors, even good flavors.

2) How are flavored coffees made any way? 

Modern flavored coffee is made by adding flavored oil to whole roasted beans, before they are grounded. Generally, 3% flavor oil (i.e. 3 pounds of flavor oil for 100 pound of beans) is added. Then the whole thing is sent through a mixer so the oil coats the beans (which can mess up your grinders)

Flavor oil on coffee. Hmmm...  So how did they get Lingzhi flavor onto coffee, if it's generally water extracted?  (see 4)

3) Generally there are only 4 camps of flavored coffee (no mushrooms)

Coffee dated back hundreds of years from Africa when the inhabitants of present-day Yemen drank coffee flavored with nuts. Later, fruits, chocolate, and such flavors are added. Foodeditorials wrote:

Generally speaking, there are four categories of this type of coffee. The first category includes flavors based upon spices such as clove, cinnamon, anise, and cardamom. Next, there are also some coffee flavors that are based upon fruits such as coconut or raspberry. Chocolate based flavors are the next type with the most common being chocolate mint. Lastly, some flavors are based upon nuts like vanilla, hazelnut or macadamia nuts. Crème coffees also have their share of followers; these include flavors such as Irish Creme or French Vanilla coffee.

To recap, that's spice, fruits, chocolate, and nuts. For hundreds of years, these are the four main categories of flavored coffee.

No mushrooms. Ever wonder why?

The Real Reasons Why Network Marketing Needs Reputation Management

It's interesting how the topics in this blog suggest themselves: why network marketing needs reputation management. It's not because there's a bunch of "meanies" out there... though there are. It's usually because they have some actions that looks shady, and people will point that out.

Recently, a company called BidForMyMeds was reviewed on BehindMLM. The company employed a whole slew of questionable conduct, including listing some other company's management as if it's their own, and implying a far tighter integration between the two companies than there actually is.  The truth is BidForMyMeds is a marketing company that markets BidRx through MLM. However, BidForMyMeds at many times implied that they are BidRX, and borrowed various BidRX media as if that is them.

So Oz / BehindMLM published the review with the questions, wondering if BidForMyMeds is really authorized to by BidRX as it is not behaving ethically. Within hours, Oz was sent a "cease and desist" email by BidForMyMeds' lawyer who demanded the review be taken down. Oz, who knows his rights, put the threat online instead, with even MORE questions and other information received, revealing that BidRX has multiple marketing partners, none of them pretended to be BidRX. And the MONTHLY fees ($7) that BidForMyMeds charged is almost 300% the cost charged elsewhere for BidRX ($2.50), and so on and so forth. AND if you pay even more ($17), you can benefit from recruiting other people who also pay the monthly fee.

That alone takes it into the potential pyramid scheme territory.

Then Kevin "The MLM Attorney" Thompson posted an entry on his blog about Cease and Desist.. cited Oz's reaction, then discussed when C&D should be used, and when it's an empty threat.

In the comments is a Mr. Jonathan Gilliam of Momentum Factor, touting their reputation defense can deal with "online Meanies".

...Our reputation defense team similarly serves
at the front end of a company's need to "do something" to combat online
Meanies. Lawsuits as you know are often just too distracting, involved and
expensive for some CEOs.
The good news is, companies CAN
defend themselves, often without the Meanie even knowing, via online
suppression strategies...

In other words, he just spam-commented a lawyer's blog with an ad for his firm. :)

And he basically claimed that he can "bury" negative comments through "suppression", which may or may not involve shill reviews. :)

But what's *really* surprising is what sort of people would employ Mr. Gilliam's firm...

Bad Argument: Neglect to Mention, Revisited (How Crooks are Riding the Coattails of Bitcoin to scam people)

Do you ever hear something, accepted as "yeah, that's cool", only to realize later that you've been hoaxed or been told only half or less of the story? If so, you've been victim of "neglect to mention" bad argument.

The problem is with the modern tech devices such as smart phones and tablets, we often do "like" or "retweet" or "repost" without doing any fact-checking. I admit I sometimes do stuff like that, but I generally do it to cute-sy stuff like cute animals, funny pictures, and so on. I don't form opinions about something important, like money, based solely on one-sided info... Or I try to. And I've been hoaxed recently when I reposted that story about that alleged ex-marine waitress who got no tip because she claimed the family took her for a lesbian.  I didn't look carefully and later when it was revealed to be a hoax, I was embarrassed.

I vowed to fact-check stuff I repost or share or comment from now on. But apparently some people don't, as they've been influenced by half (or less) of the story.

Recently some celebrity / news / Bitcoin worshipper made the following comment in response to my opinion/rant about Bitcoin is too risky.

Forgive me K Chang. But Bitcoin has already been around since 2009 (5years). Even Sir Richard Branson And Lamborghini is taking Bitcoin payments.
Neither you or I have a crystal ball. But I would rather listen to Billionaires like Sir Richard Branson that have vision, rather than an opinion shot from the hip :-)

Nothing wrong with Lambourghini or Sir Richard Branson accepting Bitcoins... Except neither are true, or at least, not completely true.

Q: Is Sir Richard Branson accepting Bitcoins?

A: Sort of. Virgin Galactic, the $250000 USD spaceflight takes Bitcoin

Source: http://www.theverge.com/2013/11/22/5133362/richard-branson-endorses-bitcoin-says-virgin-galactic-will-accept-the

Analysis: Well, that's not so impressive now, is it? Can you buy a Virgin Atlantic ticket with Bitcoin? Apparently not! I guess if you're a billionaire you don't care if you accept some Bitcoins and they become worthless... And the PR value alone (getting mentioned in every newspaper in the world) is worth it.

Q: Is Lambourghini accepting Bitcoins?

A: No. One Lambo dealer in Long Beach claimed to accepted Bitcoins for a brand new Tesla Model S. However, later they admitted they asked the payer to convert it into dollars first.

Source: http://www.theverge.com/2013/12/6/5181864/lamborghini-dealership-starts-accepting-bitcoin

Again, the dealer is relying on the PR value, getting mentioned in every newspaper in the world (or at least the US) is worth it. Besides, they even made the guy convert the payment into dollars first. They will lose nothing. It's a publicity stunt, nothing more.

Later the commenter did a shifting goalpost, and claimed that it was all Lambo dealers in UK that's accepting Bitcoins, but further research got NOTHING, and the comment has produced no proof. Heh...

The commenter has made a fundamental mistake of not doing his/her own fact-checking, and fallen for the "sensational headline" soundbites, and then applied that mistaken impression as evidence to support a premise, that Bitcoin is NOT as risky as I claim it is.

Is Robert "Rich Dad" Kiyosaki in a Faustian Bargain with Network Marketing?

Robert Kiyosaki Flipping Off the Haters
(Photo credit: i am real estate photographer)

Before 2000, NOBODY knew who Robert T. Kiyosaki is, other than a few seminar attendees, desperate for some advice to get rich.

Then in 2000, the book "Rich Dad Poor Dad" was published by Warner Business Books, and that thing just TOOK OFF like a rocket, resulting in a series of books that are just one rehash after another, filled with "pithy" sayings that may or may not apply, anecdotes that were presented as "these are the true stories of my two fathers"... but later admitted to be a myth, a fiction.

But what is the real secret behind the success of Robert T. Kiyosaki and his book "Rich Dad Poor Dad"?

A implicit bargain with an industry desperate for legitimacy... the "network marketing" industry.

Is it a Faustian bargain?  Does Kiyosaki care, or he just view everybody who asks as "haters"? As he can't make a mistake?

Network Marketing? Or Cargo Cult Marketing?

Ever heard of Cargo Cults? No? It's a cult (alternative religion) that evolved during WW2 in Malenesia (little Pacific Islands) where the natives evolved a religion based on airplanes dropping huge amounts of cargo out of the sky and if they pray and march and wear the right uniforms and build "runways" or "fake airplanes" the great plane will come and give them more cargo. And yes, they're still around.

Cargo Cult of the Pacific, via http://www.rusticaobsessa.com/?p=257

Those of us who know a little history would realize that those were WW2 supply missions where transport planes drop supplies for our troops that probably went off course for one reason or another.

Cargo cults existed for 50 years and no great planes have appeared since WW2. Yet it persists. Why? Because they *wanted* to believe, even though it doesn't work and hadn't worked for 50 years. They keep doing the same thing.

Richard Feynman coined the term "Cargo Cult Science", where people are doing apparently scientific research, studies, theories, etc. trying to explain some problems and propose solutions, except they have tried for decades, and nothing has worked. He was referring to criminal science (how to reform criminals) and pseudo-science such as ESP. Things have NOT improved for those fields. It's gotten WORSE.

Network Marketing is the same way. It is really "cargo cult marketing" because in most cases most network marketers only know how to indoctrinate as many people as possible and hope they make you rich. All the junior reps are recruited through "edification" of the top reps, and was given the message: monkey see, monkey do. (i.e. you can be me if you do what I do) even though there is no proof that doing what they did is the key to success.

Only a few PROFESSIONALS realize the truth and try to do it the right way. VAST MAJORITY of people are doing it wrong, and they are either ignorant... or simply don't care. They see their own success as "proof" of their own brilliance, not realizing they are simply lucky... or good at OTHER things... such as recruiting or cult indoctrination.

And that's exactly what a cargo cult does. They do what their "ancestors" did even though there is no proof and no reason it would work.

But there's more... the CULT aspects.

Russian SEC Member Calls Herbalife a Pyramid Scheme

Herbalife (Photo credit: netodarkis)

Andrei Volgin, who claims to be a member of the Russian Securities Market Commission (their equivalent of the American SEC), just published an essay on SeekingAlpha, where he declared FLAT OUT that HERBALIFE IS A PYRAMID SCHEME. Not only he's joining Ackman in the short, he thinks it's perfectly ETHICAL thing to do.

You may or may not agree, but it's worth reading his points, and he brought up something I had thus far neglect to mention: the churn rate in MLM.

The "churn rate" of a MLM is the amount of distributors that does NOT choose to continue participating in the MLM. It is sometimes known as the "attrition rate" or "distributor turnover". (see wikipedia)  However, how does it affect whether the business is a pyramid scheme or not? That again, goes back to the matter of "self-consumption".

According to Herbalife's SEC 10-K filing of 2004:

For the latest twelve month re-qualification period ending January 2005, approximately 60 percent of our supervisors did not re-qualify and more than 90% of our distributors that are not supervisors turned over.

This was left in the footnote was one of the tables in the filing, NOT in the main body of text. (One wonders if Herbalife was hoping people will ignore it? But let's put that observation aside...) What does that MEAN? 

It means 60% of the people who were earning multi-level commissions ("supervisor") failed to KEEP earning such, by meeting "sales goals" (of 2500 points for 2 consecutive months, or 4000 points for a single month) just ONCE out of that 12 month period ending January 2005. In other words, 60% of people qualified for "supervisor" once in 2003 (bought at least $4000 of stuff), failed to requalify in 2004 (i.e. buy that much again). 

But here's the shocker: "more than 90% of our distributors that are not supervisors turned over." As it's the SAME SENTENCE, there's only one interpretation: over 90% of "distributors" (from 2003, did not qualify as supervisor with the big purchases) bought NO Herbalife product in 2004 (i.e. turned over). 

The conclusion is simple: Herbalife has very few repeat customers, not enough to support the lowest rank of distributors. 

Which leads to another conclusion: only the people on the top are getting rich because they are attracting a new bunch of distributors every year who were told to buy a starter kit and TRY to sell it to over people (and failing, so they quit, and replaced by a new batch next year). 

Such is a sign of pyramid scheme: if you stop recruiting, you die. 

Alarms Raised at Colleges Over Pyramid Allegations of MLM Vemma

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)

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:

http://www.valuewalk.com/2013/10/bill-ackman-herbalife-j-c-penney/

EDITORIAL OPINION: Where Is A Reputation Tracker For Network Marketing?

NOTE: Editorial Opinion is my personal thoughts on the state of the network marketing industry. 

The entire network marketing industry is overdue for a reputation tracking system, for companies, executives, and affiliates. And this would be maintained, much like credit bureaus track credit history, by similar private entities.

If you join a company that claim to be "started by veterans of MLM that has combined 20 years of MLM industry experience", don't you want to know who they are, and whether their experience are successes or failures? And if they are successes, did their DOWNLINES enjoy success as well? Or are they just cloning themselves with their downlines? If they are failures, don't you want to know WHY they failed? Are they bad at management, operated a scam, or just right business wrong time?

If you are joining someone as a downline, don't you want to know who your upline really are? What schemes / biz have they joined before? What were they promoting? Would you join someone if they have a history of pushing shady businesses, or worse, businesses that turned out to be scams?

Companies can publish their stats, like income disclosure statements, in a COMMON format (right now they are free to mangle the sheet as long as it contains the right fields).

Frankly, a lot of this is just due diligence, which is SORELY lacking, a very surprising fact given that network marketing is founded on social interactions, and thus, relies a lot on trust, and trusting without due diligence leads to one getting scammed.

Now you're probably thinking, no way! That's invasion of privacy! You will want to read on.

Are the Herbalife Diet Clubs Legal? (Hint: Probably not!)

Let's get to the point: Herbalife's best selling point: the diet club, is probably illegal in most instances, because they are not licensed or permitted to prepare food. In fact, I doubt most even have a license to retail food. 

Previously we've discussed Herbalife many times, and some of the stuff is how people who support Herbalife believe that most of its value is from the "diet clubs" that its distributors are running. I've discussed the problems with that particular view, though recently I realized I made a bad assumption. Peterson apparently introduced Herbalife to Mexico back in late 1980's, but nobody started doing "diet clubs" in Mexico until 2003, and it backfilled into the US in 2006. (I had assumed he introduced stuff to Mexico much later.)

However, here's a more interesting question... Are the diet clubs even LEGAL?

Now you're probably going, huh? How can a diet club be illegal?

By being an illegal food preparer and retailer without the proper permits.

Genre Analysis: The Hilarity of Carbon Credit MLMs

United Nations Framework Convention on Climate Change (Photo credit: Wikipedia)

EDITOR'S NOTE: Genre Analysis is my personal opinion on a particular genre of network marketing, like MLM + penny auction, or MLM + daily deals, and so on.  

You can mix MLM with almost any business that needs a lot of consumer-level marketing, In the past several years, there has been some attempt to create multi-level "carbon credit" MLMs. So what exactly is a carbon credit? 

A carbon credit refers to any sort of trade-able certificate that permits the emission of one ton of CO2 or any equivalent greenhouse gas. Now you're probably going... Why would ANYBODY want to buy that? Good question! To understand that, we have to take a sidetrip to discuss global warming. 

Basically, the globe is warming (how much and how fast is subject to some debate) due to all the carbon emissions we're putting into the air from all the fossil fuel we've been burning. And the warming ocean is not good for us in the long run, so United Nations created a framework in 1997 called UNFCCC which established a global quota on how much carbon emissions is allowed for each country. This was signed in Kyoto, Japan, so it's known as the Kyoto Protocol. 192 different states signed, and it was formally adopted in 2005 by the UN at Montreal (see logo above). 

What's significant is while US representative signed the treaty, Congress never ratified it, so this protocol is NOT binding on the US. (i.e. US has no requirement to follow the quota given)  Canada withdrew from the protocol in 2012, and many nations that had was committed to first period (2008 to 2012) stated that they have no intention to continue onto second period (2013 to 2020). So basically this thing is dead in the water, and may sink altogether. 

That doesn't prevent some hucksters from selling you some carbon credits though. 

Why do Some MLMers expect other people to take them seriously, when they do NOT take other people seriously?

English: Different customer loyalty cards (airlines, car rental companies, hotels etc.) (Photo credit: Wikipedia)

In life, "fairness" is often expected. You do something for me, I do something for you.

So why is it different in the MLM world?

A common theme that often emerges in discussion of a particular opportunity's legality is the promoter wants you (the critic) and anybody else to take what they say seriously, while they discount everything YOU wrote/discussed/pointed out as utter garbage to be ignored. Indeed, much of this blog covers such excuses used by such promoters to dismiss criticisms.

Recently, the discussion was rehashed about the opportunity called Lyoness.

Lyoness is a strange hybrid of a shopping loyalty program where you can earn shopping credits (funded by merchant contributions based on your purchase and purchases of those you recruited). However, it also has this potentially illegal component where you can purchase account units (normally generated through shopping) directly, bypass all the shopping, and get money THAT way. Some MLM experts (not me, really) have pointed out this is basically a Ponzi scheme.

Troy Dooly published a blogpost on July 22nd 2013 titled" Lyoness America Violating Pyramid, Ponzi, Securities, and Business Opportunities regulations?"  And the **** really hit the fan. Mr. Dooly lost a bit of credibility when he practically endorsed the ponzi scheme Zeek Rewards, but he was willing to admit his mistakes and learned from it. Now, after being advised by one of his close friends and MLM analyst, he decided to put the information he got out there.

A month later, he was invited down to Miami to talk with Lyoness American leadership and legal counsel in what is pretty obviously a damage control spin attempt by Lyoness.

So what do Lyoness supporters have to say about Lyoness itself, while ignoring its critics?

Bad Argument: The "Instinctual Reaction"

This blog has discussed many times that MLM seem to rely people using emotion, instead of logic, to conduct their business, leading to rash decisions. One of those rash decisions, when combined with confirmation bias, will lead to some very stupid actions such as spreading someone else's lies.

In a lesser case, a supporter of a particular suspect scheme, upon reading something that he considers to be "derogatory" of that scheme, will often leave a nasty comment complaining about some issue that was actually addressed, as well as use plenty of bad arguments discussed in this blog.

Here is one such example, as posted to my blogpost of Lyoness being investigated and sued in its home country of Austria as potential Ponzi scheme. I'm showing a redacted version, though you can see the original through the link:

or in text form, with a few numbers added so I can refer to different sections...

Can someone please show me a legitimate news article on this topic, an article written and published by a real news company? (1) The only articles discussed in threads like this are ones written by blog writers who primarily want to attract readers for their own gain (i.e. advertising and affiliate revenue). (2) There is no proof of what you've written, just anecdotal heresay. (3) Substantiate your claims and I'm sure the traffic to your website, and subsequent revenue, will go through the roof! Then you'll be providing a real service to the world, and not just spreading lies and rumors so you can make a profit. (4)

Okay, let's see if the comment makes any sense...

The MLM Test by Rod Cook of MLMWatchDog

Is your "business" based
out of one of these?
A UPS Store?
Image via CrunchBase

Rod Cook, who runs the MLM Watchdog website, has been a long-time player in the MLM scene, and he's well known for his blunt style when it comes to suspicious schemes. His website reflects its style, in that it looks like it came from the 1990's.  None of the flashy menus or such.

He has a list of 12 questions you should use to check into any MLM company you want to join. It's a good list, but there's a few items I don't agree with. Let's take a look at his test, and see what we can learn from it.


1.  SIMPLEST MLM DETECTIVE INVESTIGATION: LOOKING FOR THE BEST? Get into the "BRAIN & PUSHBUTTON" When you are look for the Best or Good MLM or Nework Marketing Company!  A friend told you that MLM Company XXX is the very best. First Look at the MLM Company’s website.  First GOOD suspect clue would be no street or city address, worse yet, only an email address, no phone number.  Then look for the pictures and names of the owners of the company.  Not having these on a website is a quick absolute reason  NOT to join. Also A GOOD TOOL in your search for a good or the best MLM - Networking company:

A. DRIVE BY THE OFFICE  - Wise, seasoned MLM distributors doing their good Due Dilligence Investigation will use Google street view to save gas.  Go to Google street maps and do a good electronic drive by!

 B. A really good clue the Picture on Google above not the same as website = run!  Address = trailer house or home?  That is a 911 = Run!

This is a good tip, though I do have one thing to add... Search the address and make sure it's not something offered by Regus as a "virtual office". In general, if it doesn't have a suite number, it's somewhat suspicious. If it does have a suite number, make sure it's not a Fedex or UPS Store.

Also keep in mind that increasing number of these shady companies are registered overseas. Cyprus, Malta, British Virgin Islands, Belize...

Then search the owner's pictures through TinEye and/or Google Image Search and/or Bing Image Search to make sure it's not some random photo stolen by scammers to look legitimate. Once I found some scammer who used picture of Pepsi's CEO as some random "testimonial" picture.


2.  RUN FROM A COMPANY TAKING ONLY BANK WIRES, MONEY ORDERS OR CHECKS: Use your MLM Detective Investigative "BRAIN." Only use a Good credit card that will accept charge backs.  Returns? Good honest companies allow refunds within 60-90 days (8 states require a year)!  It is NOT GOOD to allow deductions from your bank account unless the company passes every test on this page for a Good or the Best MLM - Network Marketing Company!

A. Money by Fedex - UPS only?  Yikes! Best Scam Time not any good MLM!  A good trained MLM Dectective will tell you the scam artists do this to avoid USPS Postal Fraud charges!   Many good MLM - Network Marketing have found that U.S. Postal mail is the best way to ship products! 

B. A PMB (private mail box) address (in a mail box store) is a good indicator of dodging USPS Postal Fraud Investigators = 911 run a SCAM!  Never for a good-best MLM Company.

Just one thing to add... Watch out for people who insist on getting paid through odd payment processors such as Liberty Reserve, Payza, Solid Trust Pay, or some payment processors you never heard of... or worse... Western Union money transfer.

Also, anything that insists "no refund" is automatically suspect.

3.  GOOD EASY MLM INVESTIGATION TRICKS: Next in your search for the Best - Good Company MLM Detectives will go to the Internet and enter the following into one or two of the major search engines:

   A. The MLM Company's name (owners too) and the word "scam". Go through two pages!  Look for  forum message comments for legitimate complaints (see D below).  A good hint is that some sites have phoney information on them.

It's standard SEO tactic now for someone to register a domain name, and also the "sucks", "scam", "fraud" related domain names just to make sure nobody else does. I've even seen a few scams that even created their own "verified authentic" websites, "review" websites, and of course, the "___scam" websites that insist it's not a scam. So you'll have to go through 5 to 10 pages of results just to make sure the comments you should be reading wasn't buried under those "white noise" SEO techniques.

    B. Then do the same for "complaints, lawsuits, and news articles archived on search engines.  In this day and age of lawsuits good MLM Companies will have a lawsuit or two.  If they have a lot of MLM lawsuits this may NOT be the best MLM - Network Marketing Company to join. Another good trick is to use the GOOGLE searchengine on this website (NOTE: mlmwatchdog.com, not this blog) for a good search of MLM lawsuits!  What is good about it is that it is fast and we have a good collection of lawsuits.

  C. Another good trick check who registered the website domain of any new company claiming:  amazing, incredible, proprietary, never seen before in the universe, revolutionary, products, services or technologies! Check Whois.net for the domain lookup (WEBSITE NAME). MLM Companies with good offerings would register a name 6 months to a year ahead of time (shows good planning).  

The date is a good point. However, earlier or later date does not add any credibility.

A lot of these shady deals use "private registration" where the domain is registered through a proxy so the WHOIS records show nothing useful.

   D. A warning on MLM due diligence for MLM Researchers for good MLM's!  There are sad sites and forums that are unfairly negative toward all MLM - Network Marketing companies.  Ignore these "Anti -MLM Zealots" and only look for appropriate information.  A good MLM Detective will ignore 99% of their B.s. in their search for A Good or "The Best" MLM Company.

There are people out there who believe ALL MLM are illegal. They are just as ideologically dumb as the people who believe ALL MLM are legal. There are legal ones, and there are illegal ones. That's why we're giving you the tools, such as what really separates pyramid schemes from Multi-level marketing, so you can make up your own mind.

4.  GOOD SECRET DUE DILIGENCE TOOLS:  Compete.com and Alexa.com are good Internet  tools because it can show you how much traffic a Best or Good MLM Network Markeing company is getting,  by individual hits.  The person you talked to may be ignorant themselves.  This trick for finding the Best or a Good MLM only 1 out of 10,000 know about.  If the traffic is headed down?  A GOOD indication? Under 2000 hits on a decreasing curve and this is supposed to be a Good or Best MLM Company?  Tell the person bye!  Go to Compete.com or Alexa.com to see their traffic
CLICK  HERE: TO JOIN GOOD MLM COMPANY 

I do not agree with Rod Cook on this one. Both are easily manipulated through botnets and viral buzz marketing. This is best used as a negative signal (i.e. low traffic? forget about it!)  It should not be used to justify the legitimacy of anything. Many scams, including TVI Express, have tried to use Alexa ratings as "proof" they are going strong.

Bad Argument: "Don't Blame Me (even though I told you to join a scam)"

Don't Blame Me (album)
(Photo credit: Wikipedia)

Scammers are often an extremely egotistical bunch, and supreme narcissists. Even when caught, they will refuse to take responsibility of their own actions, but instead, rationalize some reason to deflect the blame from themselves. In case of multi-level Ponzi schemes, where "investors" are recruited in order to enrich the people who are already in, the recruiters will often bring up the "don't blame me" excuse.

One of the most egregious excused was uttered recently by Paul Burks, operator of the $700 million Zeek Rewards ponzi scheme that ensnared a million people around the world. When asked by Associated Press...

Asked if he had anything to say to victims, he shook his head.

"I never told anyone to invest more money than they could afford," Burks snapped. "I didn't tell them to do that. Never."

He said if they lost money, "it's their fault. Not mine. Don't blame me."

http://www.usatoday.com/story/money/business/2013/03/30/authorities-600m-scheme-incubated-nc-town/2037975/

He blamed the victims for giving him money. In his mind, it was given to him of free will, and he had "warned" them, so if they're too dumb to understand the warning, it certainly ain't his fault.

It's victim blaming. It's a stupid tactic. 

Narcissism is a recognized personality disorder in psychology and some psychologists have added a subtype, known as unprincipled narcissism, to described the scoundrel type that see themselves above the rest and everybody else deserve to be fleeced.