MLM Absurdities: Due Diligence is NOT Analysis Paralysis!

One of the more subtle reality inversion techniques used by scammers (and unethical sales people), and cloned by clueless MLM noobs, is misrepresenting "due diligence" as "analysis paralysis". 

Analysis paralysis usually refers to an organization attempting to analyze a certain proposed project or change and the effect it would have, but so much time and resource was spent on the analysis that the project never was actually adopted.  For an individual, it could be that s/he is attempting to reach a decision, but that decision has so many factors s/he was overwhelmed by combination of scope and interactions and end up making no decision at all.

However, a decision to "not participate because I clearly have no idea what I am getting into" is a decision, and reaching that conclusion is NOT analysis paralysis.

Yet many MLM veterans and noobs will mischaracterize their moment of commitment as "overcoming analysis paralysis". Here is one example from MLMBlonde(dot)com:

Or they may have been polite but also declined and you were crushed
SO you went into what I call "Analysis Paralysis".
You began to question if this could work for you. You start to analyze
your decision.
YOU FREEZE. You begin to think something may be WRONG with you
or you made a bad decision, after all, if those closest to you don't "GET
IT", how you possible speak to a stranger.
You sit back and think and think , and then you just NEVER
get up the nerve to move forward. You lose your excitement. You
just DO NOTHING. 

The problem is MLMblonde had NOT described analysis paralysis. She described "self-doubt paralysis", but slapped the "analysis paralysis" label on it. 

And she's not alone in doing so. Many MLM noobs seem to think any sort of doubt is analysis paralysis, even a full on analysis (i.e. "trust, but verify"). 

And due diligence is NOT doubt. 

Scam Psychology: The Problem of Willful Blindness, Recklessness, and Negligence

Horatio Nelson, origin of "willfully blind"?
 (Photo credit: Wikipedia)

In studying various reactions to criticism by MLM participants, it is interesting that so many of them are afflicted with "willful blindness", and it is a condition that can cause serious financial and legal problems.

The most popular example of "willful blindness" is an apocryphal story of Admiral Horatio Nelson in Battle of Copenhagen. When given a flag signal by a cautious fleet commander that Nelson may "withdraw at his discretion", and asked by a subordinate what shall he do, Nelson reported raised his spyglass to his blind eye (with an eye patch and all), then replied "I see no signal to withdraw", and continued the attack. The story was often told as if Nelson disobeyed a direct order, but the flag signal is "withdraw with commander's own discretion". This gave us the expression "turning a blind eye", and the term "Nelsonian Knowledge".

In modern times, "willful blindness" is defined as a situation where a participant INTENTIONALLY puts him- or herself in a situation where s/he cannot / does not know the facts that would make him/her liable for civil or criminal acts s/he had participated in. And it is a legal term. For example, traffic mules (those who smuggle contraband across borders) asked to be blindfolded during loading process so s/he does not know what's being trafficked. And thus, s/he want to argue they are innocent victims and thus should not be counted as accessory to trafficking.

The court had NOT accepted this defense, and has taken the position that willful blindness is merely legal sophistry, if it can be proven that the participant knows that such facts exist, and has taken deliberate steps to isolate him-/herself from knowing such facts. This case was even taken up by the Supreme Court back in 2011, when it ruled a file sharing service cannot disclaim responsibility for illegal acts of its users just because it doesn't want to see what's being shared, i.e. willfully blind to the copyright violations.

This is different from recklessness and negligence. Recklessness is knowing such risks of damaging facts do it any way, and negligence is "should have know such risks, but did not".

To illustrate with an example, using the smuggler mule as example:

recklessness: I know it's illegal, I'll take my chances

negligence: I should have known it's illegal, but I honestly thought those were nothing harmful...

willful blindness: I have no idea what they put in my luggage. I never asked. Don't need to know.

And many MLMers suffer from all three: recklessness, negligence, and willful blindness.

BREAKING NEWS: Zeek Ponzi "Determination of Claim" letters going out now

Zeek Rewards Receiver Ken Bell has released a new letter on the official website http://www.zeekrewardsreceivership.com/ dated 27-DEC-2013.

Determination of Claims basically confirms that you have a claim against Zeek Rewards (i.e. it owes you money). How much you will get back depends on how much he was able to claw back from the net winners... 15000 of them, 9000 of whom live in the US.

Even if you don't receive one (and as first batch is going out, and it'll take the remainder of the year just to finish the first batch)  that does not mean you don't have a claim. Some claims are harder than others to document and verify. If you have met the deadline to file your claim on the official website, you will eventually get a notice.

Here's some most interesting facts:

Scam Post Mortem: How Long Had Zeek Been Investigated Before They Were Closed?

When did US Secret Service start
investigating Zeek Rewards?
(Photo credit: Wikipedia)

With clawback lawsuits about to start against the "net winners" in the Zeek Ponzi scheme (there's still time to settle, lest you enjoy being served with a lawsuit) one the the questions burning on the minds of the victims (besides "when do I get my money") is how could the Zeek ponzi scheme lasted as long as it did? When did they, the insiders (Paul Burks, Dawn Wright-Olivares, etc.), knew they were being investigated? Why did they continue to perpetrate the fraud rather than shutting the whole thing down?

Part of the answer on how long the insiders had known about the government investigation was hinted in the SEC press release on Dec 20, 2013 where they announced that SEC has brought charges of various securities law violations against Dawn Wright-Olivares and her stepson, Dan Olivares, respectively COO and CTO of ZeekRewards ponzi scheme, that they knew and covered up evidence of wrongdoing. The civil charges has been settled with both of them paying about 11.4 million dollars together, but the CRIMINAL charges being filed by the US Attorney's Office is still pending. 

Let us then put several more documented dates in a timeline so we can visualize it more clearly:

• circa early April, 2012 -- Zeek Rewards suddenly cancelled all members from certain European countries with a bogus explanation and only offered original money back
• April 18, 2012 -- Zeek Reward red carpet event in Lexington, NC
• circa end of May, 2012 -- Zeek posted a profit share of 8.9%, then told everybody they had a manual decimal displacement, it's really 0.89%. This basically proved that the percentage was not calculated, but manually entered
• May 28, 2012  -- over Memorial Day weekend, Zeek suddenly announced that all Zeek checks have to clear before June 1st or they are void. 
• June 4th, 2012 -- in a "training call" hosted by Dawn, she announced that 700 Zeek members in Montana can no longer participate due to some legal problems. 
• June 5th, 2012 -- in another "training call", Dawn announced eWallet through NxPay, then claimed that unless other affiliates put more money into Zeek's eWallet, Zeek cannot pay people. 
• June 6th, 2012 -- Zeek announced they no longer accept personal checks 
• June 6th, 2012 -- Dawn attempts to white-wash eWallet issues with now infamous "burger Analogy" (i.e. if you buy from BK you can't pick up your burgers at Wendy's, so if you buy bids with STP you can't get paid from NxPay)
• June 8, 2012 -- Dawn Wright-Olivares appeared with Troy Dooly on ACES Radio hosted by Jim Gillhouse. Dawn claimed that Burks "manages all that" when asked how was daily profit share calculated. 
• July 7th, 2012 -- North Carolina Office of Attorney General issued an information request to Zeek, but this was kept secret by both parties
• July 24th, 2012 -- Keith Laggos, Zeek consultant, "fired" for promoting Lyoness, revealed to be receiving 40K a month through Zeek as a Zeek member.
• July 30th, 2012 --  Darryl Douglas, major insider at Zeek, dropped out of sight
• August 1, 2012 -- North Carolina OAG request of Zeek documents was made public
• Circa August 6, 2012 -- training classes and red carpet event scheduled for August 22 cancelled
• August 16, 2012 -- Secret Service agents closed the doors of Zeek Rewards and RVG. 

Now, when did the Feds start investigating, and when did RVG / Zeek became aware of the investigation? 

MLM Absurdities: Why Do New MLM Businesses Just End Up Cloning Old Scams? (Is Lucrazon a scam?)

 Lucrazon logo via CrunchBase

In studying network marketing and its illegal cousins, the pyramid schemes and the Ponzi schemes, it is sometimes rather disheartening to see that some people just end up reinventing old scams, or are treading so close they may as well as claimed to have reinvented the wheel. Here's one of those cliche quotes to throw around:

Those who cannot remember the past are condemned to repeat it. -- George Santayana

Perhaps in the modern times, it's necessary to add a corollary:

Those who cannot research the past are doomed to repeat it

And today, we shall examine one such biz... a seemingly very upright one... except it seem to be a business model that's a copy of a scam that was closed by the FTC 13 years ago.

That business is called Lucrazon.

Bad Arguments: Misrepresenting Pyramid Schemes, esp. by people who should know better

Some of the most persistent bad arguments presented by network marketers (not just noobs, but also many veterans) are various misconceptions about pyramid schemes, and using those misconceptions to explain how network marketing is NOT like that. However, that explained nothing since the rebuttal is based on a misunderstanding.

Today, we shall explore a website called "Engineered Lifestyles" by a guy named Jamie Messina, who claimed to be an automotive engineer before getting bitten by the network marketing bug. You'd think that an engineer would know about a bit of critical thinking... but let's look at the evidence, rather than presumptions.

Okay, what does Jamie Messina say about pyramid schemes? This can be found at:

http://engineeredlifestyles.com/mlm/pyramid-scheme.html

For a page with the title "Recognizing Pyramid Schemes, and subtitle: Is MLM a Pyramid Scheme?", the page is surprising light on information, as there is not a proper definition of pyramid scheme on this page at all. Instead, the entire page is actually a sales pitch about network marketing in an attempt by pointing out the pyramid like structure is all around us therefore a pyramid shaped organization is nothing to be afraid of.

While technically correct, that pyramid shaped organization is all around us and nothing to be afraid of, it is IRRELEVANT as it has NOTHING to do with a "pyramid scheme". This is a very common obfuscation defense even by famous "advisors" such as Robert Kiyosaki. A pyramid scheme is a type of FINANCIAL FRAUD and nothing nothing to do with organizational shape of an organization.

Jamie has gotten off to a bad start. Let's see if he can redeem himself in the second half...

Scam Psychology: Why Do People Believe Celebrity Endorsement of Woo Products?

English: Jenny McCarthy (Photo credit: Wikipedia)

Celebrities pushing bad science and bad medicine is nothing new.

Jenny McCarthy -- Playboy model, actress, "celebrity", "former" anti-vaxxer, pusher of various bogus autism "treatments" (basically told parents "try anything (whatever it costs)")  [ see wikipedia entry ]

Suzanne Summers -- actress, singer, celebrity, and promoter of "Wiley Protocol", a hormonal replacement therapy that was NEVER proven with scientific study and may be dangerous, among other things. [ see wikipedia entry ]

English: Lisa Oz and Mehmet Oz at the 2010 Time 100. (Photo credit: Wikipedia)

And let's not forget the Oprah spawned... Mehmet Oz, i.e. "Doctor Oz"...  who seems to often fail basic grasp of science despite his medical training, as he had featured such pseudoscience on his show as homeopathy, Reiki (his wife's a Reiki master), bogus report of arsenic in apple juice, bogus "magic" ingredient of weight loss, and "curing homosexuality" among many others. [ see wikipedia entry ]

People who follow these and many other celebrities out there giving BAD ADVICE are very likely to take these people's BAD ADVICE seriously... JUST BECAUSE THEY ARE CELEBRITIES. 

And their reasoning process is virtually the SAME as people who got scammed out of money.