Success By Health Is A Pyramid Scheme
Earn UNLIMITED income! Quit your job! Change your life!
What a load of nonsense. These MLM scams are all the same.
The FTC is charging Success By Health with operating a pyramid scheme, a venture that has bilked consumers who joined its sales network as “Affiliates” out of more than $7 million.
According to the FTC, SBH tells consumers they can replace their job income in six months and gain “financial freedom” in 18 months by selling its coffee, tea, and dietary supplements and recruiting other people to do the same. In reality, the FTC says, the vast majority of SBH Affiliates pay SBH more than they earn.
At the FTC’s request, a federal court has ordered SBH to halt its allegedly unlawful activities while the case is pending.
If you’re planning to buy into an MLM plan don’t!
Here are the details of the Success By Health scam:
SBM Defendants’ unincorporated SBH division distributes coffee, tea, and dietary supplements through a network of independent distributors called “Affiliates.”
To convince consumers to enroll as Affiliates, Defendants claim that Affiliates likely can replace their job income in six months and become financially free (and never have to work again) in 18 months by working hard and following Defendants’ instructions.
These claims are false, and, in reality, Defendants have been operating a pyramid scheme since SBH’s inception in or about July 2017. Most SBH Affiliates have lost money in the program. SBH’s commission plan emphasizes and incentivizes recruiting new Affiliates over selling products to ultimate users or consumers outside of the organization. SBH’s business practices also make it unlikely that Affiliates can meaningfully earn money by selling products to outside customers.
In many instances, Defendants fail to timely ship products to Affiliates and other consumers who place product orders. When those consumers complain to the company, seek a refund from the company, or seek a chargeback through their credit card company, Defendants respond with threats and lawsuits.
Defendants also host SBH and Success by Media events at hotels and additional locations other than their place of business. At those sometimes-mandatory events, Defendants use high-pressure sales tactics to force Affiliates to buy expensive consumer goods and services, including SBH products and tickets to future training events, without informing Affiliates of their legal right to cancel those transactions.
The SBH Marketing Scheme
Consumers pay an annual membership fee of $49 to become SBH Affiliates, making them eligible to sell SBH products and receive rewards for doing so.
Each SBH Affiliate receives a distinct URL that directs consumers to the Affiliate’s SBH website, a duplicate of the main SBH website. Product purchases made on either the Affiliate’s copy of the SBH website (the “Affiliate Website”) or on the main SBH website are handled identically—SBH receives the proceeds of the transaction and is responsible for fulfilling and shipping the order. Purchases made by Affiliates or nonAffiliates on an Affiliate Website, including purchases made by the Affiliate himself or herself, result in the Affiliate receiving credit for the sale toward commissions.
Any member of the public can buy SBH products from the company’s website, or an Affiliate Website, at the same “wholesale” price that SBH offers to Affiliates. SBH sets the pricing both on its website and on the Affiliate Websites. Affiliates do not have the ability to offer different prices on the internet.
Only SBH Affiliates are eligible to recruit a “downline” of additional SBH Affiliates and to earn commissions and other rewards based on purchases made through their own or their downline’s Affiliate Websites.
In practice, because SBH requires Affiliates to accrue $20 in commission before they can receive a payout and because SBH commissions generally do not exceed 10% of the purchase amount, an Affiliate or his or her downline must purchase, or generate purchases of, at least $200 from SBH before the Affiliate can receive any commission.
Affiliates only become eligible for certain rewards by increasing their SBH “rank.” The current 11 ranks range from “Business Affiliate” (“BA”), which requires $5,000 in monthly purchase volume from the Affiliate and the Affiliate’s downline, to “5 Star Diamond,” which requires $1.25 million in monthly purchase volume from the Affiliate and the Affiliate’s downline. To qualify for each rank, no more than 50% of the Affiliate’s qualifying purchase volume can come from a single downline Affiliate or that Affiliate’s own downline.
If Affiliates lack the downline volume to meet the monthly purchase volume requirements, they can personally purchase products to make up the difference and qualify for new rewards.
Each Affiliate’s rank resets every month. Therefore, to maintain his or her rank, an Affiliate must consistently meet the relevant purchase thresholds.
In addition to other forms of compensation, Affiliates earn percentage based commissions on total sales volume at various “tiers” within their downlines. “Tier 0” is the Affiliate himself or herself. “Tier 1” is recruits of the Tier 0 Affiliate. “Tier 2” is the Tier 1 Affiliates’ recruits, “Tier 3” is the Tier 2 Affiliates’ recruits, and so on.
The percentage-based commissions that an Affiliate earns depend on two variables: the Affiliate’s rank and the tier at which purchases occurred. As an Affiliate’s
rank increases, the Affiliate can access commissions at additional tiers and increase the applicable commission percentage at each tier.
Under this plan, a hypothetical Affiliate, “Joe,” with a rank of Super Business Affiliate 1 (“SBA1”) earns 10% commission on purchases made by Joe and by Joe’s “Tier 1” members—those Affiliates that Joe recruited personally. Joe also earns 10% commission on orders placed through his or his Tier 1 members’ Affiliate Websites. Joe earns 6% on Tier 2 purchases, 4% on Tier 3 purchases, 3% on Tier 4 purchases, and 2% on Tier 5 purchases. An Affiliate without any elevated rank, by contrast, earns 8% commission on Tier 1 sales, 2% on Tier 2, 1% on Tier 3, and no commission on Tiers 4 and 5.
Defendants also pay various bonuses based on recruiting new Affiliates who purchase $500 or $1,995 “product packs” upon enrollment. For example, Defendants’ “5×5 bonus” paid cash bonuses of up to $10,000 for recruiting five new Affiliates, each of whom purchased a product pack and recruited five new Affiliates who also purchased product packs.
Achieving SBA1 status—and gaining access to all five tiers of commission, in addition to other bonuses and rewards—requires an Affiliate and that Affiliate’s downline to purchase, or have others purchase through one of their Affiliate Websites, $15,000 in products in one month. Jay Noland, Lina Noland, Harris, and Sacca all participated in developing or revising SBH’s commission plan for Affiliate compensation.
SBH’s flagship product is its “MycoCafé” brand of instant coffee, which Defendants attempt to differentiate from other coffees by touting the inclusion of “ganoderma,” a mushroom that Defendants call the “king of herbs” for its myriad purported health benefits.
SBH is in a self-proclaimed “build-out” stage. The company’s recruiting and marketing materials explain that SBH plans to capture 1% of the world coffee market in 5-7 years, which will result in $24 billion in annual revenues.
Over two years into SBH’s 5-7 year plan, its annual revenues have yet to exceed $5 million.
From July 2017 through June 2019, more than 500 consumers in this District made more than 1,900 purchases from Defendants, totaling more than $460,000.
Consumers are suffering, have suffered, and will continue to suffer substantial injury as a result of Defendants’ violations of the FTC Act, the Merchandise Rule, and the Cooling-Off Rule. In addition, Defendants have been unjustly enriched as a result of their unlawful acts or practices. Absent injunctive relief by this Court, Defendants are likely to continue to injure consumers, reap unjust enrichment, and harm the public interest.
This type of scam should be very familiar to my readers. They keep getting shutdown and new ones just pop up again.