A shout-out to an interesting blog, "Married to an Ambot", which is maintained by the wife of an ex-IBO in Amway. It's "IBO" for "Independent Business Owner". "Independent" is supposed to mean that you are your own boss, not tied down to a lousy J-O-B ("Just Over Broke"), but in reality it means you don't get paid, you don't get social security, you don't get medical insurance and, in general, don't get anything for working for Amway as a salesman for free.
Oh, did I say "for free"? Not quite; for a typical commission of about $10 a month for upwards of 100 hours of work a month. At $0.10 an hour, sweatshop workers in China. or federal prisoners, get paid better. And they don't get this "commission" mostly for buying hundreds of dollars a month of lousy products they don't need from the Amway corporation -- or as Amway calls it, "being your own best customer".
She tells it like it is: the brainwashing, the lousy products sold at absurdly high prices, the need to "edify your upline" -- i.e., to put him on a pedestal and do anything he says, despite the fact that he is the guy from down the block who is only "above" you in Amway because he joined a week earlier and talked you into joining. By the way, "to edify" actually means "to educate" or "to inform", but never mind.
Behind everything else there is the sheer tackiness of it all. New "Diamonds", wearing suit or frilly dresses (required), walk on a red carpet to the cheers of similarly-dressed Amway members. Numerous cliched speeches saying nothing more than to "keep doing Amway until you make it". Tacky motivational tapes with grinning "uplines" standing next to their brand-new car (90% owned by the bank) and mansion (ditto) and speaking of their great success.
As they (ungrammatically) say in Amway, "ain't it great"? No, it ain't great.
In case you have not seen it, here is John Oliver's Last Week Tonight's show segment about MLMs. It is very funny and, what is more, informative. I have found this video on the "MLM the Truth" web site, which -- contrary to most "the truth" web sites, which seem to be conspiracy-theory mongers... -- is an objective, well-researched site.
Another one of the 'you've got to be kidding' MLM products from Israel: a 250 ml (about 8.5 fl. oz.) bottle of conditioner in the Israeli Neways MLM web site is selling for 360 NIS -- or about $95 US at the time of this writing.
Actually, it's selling for 360 NIS and 10 Israeli cents (about 2-3 American ones) -- in order, no doubt, to make the customer think the price is somehow "scientifically" calculated and therefore couldn't possibly be made lower than 360 NIS.
The most expensive imported (apparently, flying first class) conditioner I could find from Israeli retailers online is about 80-100 NIS for a 250 ml bottle. These are high-end, fancy-hairdressers products (whether they are worth more than the regular products is highly debatable, but that's another issue). The standard, everyday products one buys in the supermarket (the equivalents of 'Head and Shoulders' or the like) are, usually, about 10-15 NIS for a 700 ml bottle, or nearly 1/100th of the price they want, per ounce.
The rest of their catalog is similar in its prices, as well. Anybody wants a quart of laundry detergent for $22? A steal at $88 a gallon! $17 for a 6 oz. tube of toothpaste?!
Oh, but I am sure this product is just wonderful for your hair's health. Only hair is dead matter (which is why one can cut it without pain, for example).
What a deal!
No surprise that the distributors' web sites, such as this man's [Hebrew], speak endlessly about (to quote the title) 'the way to reach happiness and wealth', but quote no prices for his wonderful natural products, knowing full well what the reaction of potential customers who are not yet brainwashed by the MLM story will be.
The "Pyramid Scheme Alert" site, whose logo is above, had been massively updated. Of particular interest is the fact that R. L. FitzPatrick, the creator of the site, also has a related "false profits" blog as one of the parts of the site. Well worth a look.
Al-Jazeera America has an in-depth five-part series of how MLMs recruit, brainwash, manipulate, and hurt people -- in short, why they are a financial cult -- as well as what the government, and you, can do about it.
As can be expected from this source -- a news network whose target audience is immigrants from the middle east -- they pay particular attention to the way MLMs use what is known as 'affinity fraud' to target minorities and immigrants. The titles of the five parts are worth mentioning:
1. An army of recruits
2. Seeing green
3. Your company loves you
4. Legal remedies
5. Thinking outside the pyramid
The last part, in particular, has some good advice on how to resist the sales pitch of the MLM. But read the whole thing.
...that Kevin Trudeau, the serial scammer who had recently been sentenced to 10 years in jail for stealing millions, was involved -- naturally, as the guy at the top -- in an MLM venture, ITV Direct Inc.? Or that, more generally speaking, one MLM after another is being prosecuted as a pyramid scheme -- which, of course, they all are? The last link, incidentally, takes you to an excellent anti-MLM blog.
A very good anti-fraud web site is the Fraud Files Blog -- which investigates all sort of frauds and scams. Its most recent (May 2014) emphasis is on divorce fraud (spouses hiding assets from each other using all kinds of illegal means), but there are much more information there. In particular, searching for 'MLM' in that blog leads to a huge list of articles, and looking for specific MLMs -- such as "Amway" -- leads to many others, many of them not likely to have been seen by readers here before. See if your own favorite MLM scammer is there (they likely are).
A common argument by MLMers is the argumentum ad populum -- so many people are successful, why won't you be? If they are all successful, can they all be wrong?
There are two reasons. First of all, they are likely simply lying. Statistics show that the average MLMer loses money and only a tiny fraction makes more than a part-time minimum wage job would have made with a lot more security and less effort.
But suppose they are correct? If so, then this is another reason to not join the MLM. As MLMs are pyramid schemes, where money is made by those in the top from those on the bottom, if many people are successful it merely means the pyramid's top -- joining it being the only way to make money -- is already full, so your chances of making money are even smaller than they already were.
I mean, would you buy a scratchcard from someone who told you to buy it because he already had won the grand prize in that batch?
So the next time someone tells you to join an MLM because they made it big, tell them 'that's why I'm not joining!'.
The Herbalife "Org" in Israel -- Same Old, Same Old
"I was a kid from Kiryat Ata [a poor town in Israel -- A.P.] Today I drive a car that costs as much as a house... those who bring money to invest here will succeed like I did... don't listen to your parents, they're dream stealers. People outside Herbalife are losers, making pennies, and want you to fail like they failed. Real friends support Herbalife; if they are critical, flush 'em. Haven't got money to invest? Take a loan from the bank..."
Sounds familiar? This, according to Haaretz[page in Hebrew], were common quotes in brain-washing "training seminars" passed by Israel's Herbalife "big man", Tzachi Gozali. If this sounds familiar, it should -- presuming that this is true, it is precisely the same sort of brainwashing technique used by other cults, in particular commercial cults like Amways' "orgs".
A quick note this time. Immanuel Kant noted that it is immoral to use people as mere means to an end. For example, murder is wrong since you use the person you kill merely as a means to whatever end you wish to achieve by their death (say, getting away from a crime scene, eliminating a witness, etc.)
Can you think of any business where "we are using you merely as a means to an end" is more true than in an MLM? Not only does nobody care about what happens to those in the "downline" (so long as they keep promoting the upline's goal of making money), but their training material actively encourages you to exploit friendships and personal relationships to get the person in your downline -- that is, to actively turn relationships based on caring to one based on exploitation.
Well, MLMs are arriving all over the world. Guess what? As in the USA, they too are dealing mostly with "lotions and potions" which are ludicrously overpriced.
Here, for example, is an Israeli one. It is the usual scam: there are no salesmen or workers, there are only "executives". Which, in this context, is a nice word for "salesmen who work for free". (But hey, you rather be an up-and-coming executive than one of those lousy salesmen or exploited workers, now wouldn't you?). There is tons of talk about "the environment" and "health" (they're doing this to save the world, you see). Of course the web site is full of talk about the "business opportunity".
But, naturally, no mention of the prices of the stuff they sell.
Well, small-minded dream-stealer that I am, I happen to know what the price is, from a personal acquaintance who was propositioned by a new "executive" of this (or perhaps a similar) MLM. A litre (a little more than a quart) of their noni juice is now promoted @ 150 N.I.S. per litre
Currently, the most expensive fruit juice I could find in an Israeli supermarket costs about 20 N.I.S. per litre (link in Hebrew to a site which compares prices). Most cost 10-15 per litre. Soft drinks cost about 5 N.I.S. per litre.
Behind MLM blog notes that Penn and Teller see right through MLMs in the "Easy Money" episode of their scam-exposing show, titled, ahem, Bullsh*t!.
Highly recommended -- but slightly NSFW: language and, surpirsingly, sexual content.
You see, one of the MLMs they investigate is "pure romance", a company specializing in what their web site calls (wink wink, nudge nudge) "bedroom accessories".
Is the American Economy a pyramid scheme? The answer is, of course, "no". Nevertheless, there are some elements of a "pyramid" in it -- as in any economy -- and its viability depends on fighting them.
1). First of all there must be people interested in actually buying what Americans make. There are, of course -- but not enough, apparently, which is one of the reasons for the recession. The American economy cannot survive by everybody selling to everybody; something must be produced.
2). Second, one must not build one's "prosperity" on the sand of the "greater fool" theory, like the internet or housing bubble. Real estate prices, as well as internet companies' stock prices, were built on people buying something one knows is terribly overpriced with the expectation that someone else will buyfrom you.
3). One should, as far as possible, live within one's means (yeah, I know, I know -- none of us do, but you know what I mean...) Do not spend your money on shiny gadgets in order to impress people if it gets you into debt. It is hard enough to pay legitimate debt (like mortages or bills for food, medicine, education, etc.) without adding to it that extra payment for the hot car or big-screen TV you really want.
The list could be extended. But does this seem to have a familiar ring? Why, yes -- this is precisely the MLM business model. The weaknesses and problems of the American economy (or of any advanced economy): overspending, buying overpriced useless stuff so that others will buy it knowing it is overpriced useless stuff but hoping others will buy from them, a proportion of about 1:100 between the number of salesmen in the MLM in relation to the number of people who actually produce their product, etc., etc. -- is what MLMs are all about.
Even if there was no problem at all with MLMs legally or morally speaking, they would be economically worthless.
You know the political party you founded is in trouble when, in the founding ceremony, you have to resort to MLM BS mathematics to encourage the faithful.
Israeli politician Ehud Barak had recently founded a new political party, Atzmaut [Independence]. In the founding ceremony [link in Hebrew], he said (my translation):
In this room there are only 80 people... but if each one of them brings 80 people, and so on, we will get 20 mandates [out of 120 in the Israeli Parliament].
Barak's math is slightly off. If things do in fact go "and so on" four times, they will have not 20 mandates -- about 1,000,000 votes in Israel -- but 40,000,000+ votes. Unfortunately Israel's entire population is about 7,500,000.
Well, it had to happen. A college is now offering a degree in Multi-Level Marketing. (Hat tip: Doc Bunkum on the Quatloos! forum).
From the article:
Will this new program boost enrollment at Bethany? The college currently enrolls just 592 students. But if 10 percent of those students enroll in the network marketing major — and they recruit 10 of their friends, and each of those friends recruits 10 of their friends … move over Harvard?
There is the old saying that "wrapping yourself in the flag" is the way to get suckers to believe you are doing something for unselfish, patriotic reasons, when in reality you're just promoting yourself.
One example is this man -- who moved from homeless taxi driver to multi-millionaire, according to the stories (hey, and he wouldn't lie about that, now would he?). Now he wants to help you succeed, and achieve the American dream. Of course the way to do this is the usual "magical nostrums" MLM company, among other things. By the way -- a 60-capsule box of these magical pills (Omega-3 oil) costs somewhere between one and a half to two and a half times as much as competing non-MLM brands -- depending if you have the distributor's "special discount" or not.
No wonder he recommends, as a selling point, to tell people not "how much it costs, but how much it is worth -- after which the price will look very low!". But if he is such a succesful millionaire, why does he need to keep giving motivational seminars and recommend that people hawk overpriced MLM products as a road to riches?
...is why the MLM promoters keep insisting that their particular MLM is perfectly legal, and not an illegal pyramid scheme like all those other MLMs.
Let's say they are 100% correct.
So what?
It's also 100% legal to take all your money and throw it into the sea, or to bang your head against a wall repeatedly, or to watch paint dry. Whether MLMs are legal or not is a red herring. What matters is whether they're a good investment of one's time and effort.
Money and Philosophy and Movies -- who is really to blame in MLMs
Here are two good movies about the things people would do for money -- including making a more or less dishonest buck:
The difference between the two movies?
In the first, back-to-the-wall generally honest real-estate agents will do anything to sell real estate, including getting good "leads" by more or less dishonest means. But their inter-office fights and hard-sale techniques, after all, result (at most) at a client getting real estate he doesn't really want at a price he doesn't really want to pay. In the second, a group of scammers deliberately inflate stock prices, unload it on unsuspecting people in a pump-and-dump scheme, and care not one bit about their "investors"' ruined lives.
We all met Glengarry Glen Ross like people in real life -- perhaps we are them in real life -- and it wasn't the end of the world. But touch the scammers from Boiler Room with a ten-foot pole and you're dead. The difference is that the Glengarry Glen Ross real-estate agents do it to survive and keep their job; those in Boiler Room do it to make as much money as they can. Aristotle's dictum holds true: 'The worst offences are made by those driven by greed, not by those driven by necessity'.
What does this have to do with MLMs? It illustrates the moral difference between those lower on the MLM pyramid and those at the top. The folks on the bottom do it under the delusional view that it's a small business. We already discovered why this is false, but still, at least their goal is to make some money because they need it. They might lie to you about the earning potential or how great it is to be in Amway (or whatever company), but they won't do serious wrong -- yet.
Those at the top, on the other hand, are different. They are sharks who are driven, not by necessity, but by greed. Many MLM "heads" are nothing more than professional scammers, setting up one MLM after another -- with themselves at the top, of course -- in order to squeeze as much money as possible from the gullible before moving on to the next MLM. They care nothing at all for their downline, let alone the MLM's (non-existent) customers.
So one of the risks of joining an MLM is not that you will fail, but that you will succeed: that you will become one of those at the top, and, for money, move from being someone who does a little wrong out of necessity to someone who does a lot of wrong, voluntarily, out of greed. For what will it profit a man, if he shall gain the whole world, and lose his own soul? (Mark 8:36).
On the other hand, perhaps you shouldn't worry. Chances of becoming one of the "top" when starting at the "bottom" at an MLM are 0.01% or so in the best case scenario, and de facto 0% in most case.
Are MLMs cults? We have the idea of cults as nutty folks who believe in the end of the world, UFOs, the end of the world by UFOs, and similar things. But in reality what makes a cult a cult is not so much what it believes, but its social structure and the interplay between members and leaders.
"Weird" beliefs alone are neither necessary nor sufficient to make a group a cult. E.g., Christian dogma might seem extremely odd to (say) Zen Buddhists and vice versa, but that in itself doesn't mean either Christianity or Buddhism are cults. On the other hand, groups that have core beliefs that are, in themselves, not necessarily odd, are sometimes cultic.
One often-ignore field of cultic behavior is that of economic cults. As a very informative web site notes, Amway in particular (and many MLMs) are cultic. The include thought control, dividing the world into "us" (in the MLM) and "them (all those who are not part of the MLM world), special jargon, etc. The point is to seperate the member from the world, so that he can be better exploited by the cult's leaders, in this case, the upline.
An example of what can happens when MLMs become a cult, as they often do, is found in the article "Shaking the Money Tree" by Amy Mills.
To be fair, certainly not all MLMs are cults; e.g., Avon or Tupperware are not, as -- however silly they might be as a way to make money -- they at least concentrate on actually selling products and do not require the seller to turn over their lives to the corporation. But it is a significant risk one should consider before one joins an MLM, in addition to the economic unfeasability of it.
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