John Oliver vs MLM Scams
John Oliver, on his show Last Week Tonight, did a wonderful job exposing the MLM scams that are functioning as product-based pyramid schemes. Billions of dollars are being extracted from people that think they are getting the opportunity of a lifetime. Instead they are getting ripped off. This video is comedy, but it contains a lot of truth.
Here are some of the key quotes I want to share with you:
DSA estimated retail sales $36.12 billion 2015.
Vemma Representative: It is shaped like a pyramid, but it is not an illegal pyramid scheme.
From the outside these companies have the trappings of legitimacy.
The dangling of lifestyle improvements is at the heart of the MLM pitch.
Denise and Tom Chenault are Youngevity. You don’t let someone embody your company if you don’t agree with them.
MLM’s hold out the hope that if you work hard you can take control of your life, start your own business, and help your family. But, how real is the opportunity?
Herbalife Distributor: You don’t make money from selling the products. You make a little. Not much. Not enough to pay the bills that are racking up. You make money from signing people up.
Robert FitzPatrick: Almost all of these schemes say that you can make money by recruiting 2, 3, 4 or 5 lets say 5. Then you let the 5 do their 5 that gives you 25. What they don’t show you is that you can only do that 13 cycles and you would exceed the population of the earth.
The FTC finished a multi-year investigation into the company (Herbalife) and filed a blistering complaint walking right up to the line of out right calling it a pyramid scheme. They alleged that the Herbalife compensation program doesn’t incentivise retail sales, but rather the recruiting of additional participants who fuel the enterprise by making wholesale purchases of products. Which sounds like how pyramid schemes work.
MLM’s might present themselves as a great opportunity, but your chance at success is actually remote. Just look at the income disclosure statements.
Kyani’s shows that just under 40% of active distributors received a check for $10 or more.
Nu Skin’s says that around 18% of active distributors earned commission checks which is actually worse than it sounds because active distributors represent only around 36% of total distributors. So if you do the math which they conveniently did not, that would mean that 93% of all Nu Skin distributors received zero commissions from the company in an average month.
John Oliver understands how MLM scams are taking advantage of people. I hope you do now too.