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Is Beachbody’s Shakeology a Scam?

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[Editor's Note: This article is long and I hope you find the information you need to make an informed decision. Towards the end, I have a special gift for you. (If you want to cheat, click here to get it now.)]

Is Beachbody's Shakeology A Scam?

Is Beachbody's Shakeology A Scam?

Happy Halloween everyone. I've got a tale of a scary MLM to share. It's my first attempt using a new writing tool, Scrivener and a new writing shorthand called Markdown. Normally, I'd put more time into proofreading the article and formatting, but having spent dozens of hours on it as it is, I need to bite the bullet and publish.

Regular readers know that I have a hobby of analyzing MLMs and showing consumers how they deceive you. Last week, I noticed that Nick Loper of Side Hustle Nation had highlighted a friend who has grown a $4k a month business in an hour a day. Kellie Gimenez is doing it with an MLM called Beachbody. You may know of Beachbody’s workouts: P90X and Insanity are two of the most popular ones.

Truth is, I’ve been meaning to write about Beachbody for a couple of years now. I noticed a good high school friend of mine promoting it on Facebook. I pushed it to the back-burner because I wanted to believe it was legit for his sake. Also, I see nothing wrong with P90X. From what I’ve heard it is a great workout.

With Nick’s podcast and what Kellie said, I couldn’t ignore Beachbody any longer. Oh well, this could make for an awkward 20th reunion in a few weeks if we both go.

This is a long article so if you want the “TL;DR” version, it’s:

“Get the hell away from Beachbody's Shakeology and its 'business opportunity.' You are wasting your time and money. Every piece of information seems to show it is an illegal pyramid scheme according to the FTC’s guidelines. A former Beachbody Coach also gives good details into the pyramid scheme nature of the company. According to her, the focus is not on nutrition or fitness, but classes instead include: “How to never take no for an answer when trying to sign on new coaches” or “How to not take no for an answer when selling Shakeology.”

You can pick up Vega One available on Amazon which is extremely similar (and better in some ways) for half the price. A former Beachbody Coach mentioned Nature's Plus Spiru-Tein High Protein Energy Meal is a great choice at about a single dollar per serving, 1/4th price of Shakeology.

There's no reason to be a Coach to get a discount as you can get the Shakeology discount price on Ebay without paying coaching fees."

The Products

As I said in the introduction, I don’t mind the workouts. They seem legit.

What is extremely fishy is the Shakeology product. The product itself isn’t particularly, but the pricing. Before I cover it allow me to explain why pricing matters in an MLM.

Why Does Pricing Matter in an MLM?

This is a good question and few people seem to grasp it initially. One of the best explanations I’ve seen is by a commenter on FatWallet using an analogy:

”Say Mr Pyramid buys pens in bulk from Staples and sells them for $100 each. Who's gonna pay $100 for a pen? But tell them that they can also sell pens for $100, and we'll pay you $30 for every pen you sell, plus you can recruit people to sell pens as well, and you'll get $10 for every pen they sell, and $5 for every pen their recruits sell. Three levels, $45 commissions total on a $100 sale. Everyone has to buy 10 pens a month for personal use to participate in the program. Just find three people who find three people who find three people.... In the end, yeah, you are buying 10 pens a month for $1000, but you are getting $3150 in commissions, so don't sweat it. Why wouldn't you join?

Product is moving. The pens get used. No recruitment revenue, only product commissions. Absolutely 100% a pyramid scheme. The only real reason people are paying $100 for a pen is for the opportunity to make money off the sale of pens. Completely unsustainable as eventually, you run out of people to sell to and those at the bottom get hosed buying $1000 pens but not being able to sell them. This is an extreme example, but if you look at the world of MLM, there are some pretty big name companies out there that somewhat fit this mold on a less cut and dry basis.”

[I go into this analogy in more detail here.]

This is why The Verge and The Atlantic are writing about Herbalife which is being investigated by the FTC for being an MLM that is a pyramid scheme.

Back to Shakeology

Anyone who has read my ViSalus article knows this is a red flag. There I showed that ViSalus was charging $1.50 for a shake that any consumer could make with 3 simple ingredients for under 50 cents: whey protein, Fibersure, and a multivitamin. I know saving a dollar doesn’t seem like much, but in 10 minutes of time, you could save your $300 or more each year. Unless you are the CEO of company making millions this is exception use of your time.

Unfortunately Shakeology isn’t quite as easy to break apart. There are many ingredients. I found a nutritional label here, which is worth looking at.

There’s a pretty good product comparison of many shakes including Shakeology here. It criticizes Shakeology in quite a few places, but gives it an overall thumbs up for ingredient choices. His conclusion is interesting:

”Drinking shakes as meal replacements is not, in my opinion, a sustainable long term health plan. No liquid meal replacement satisfies the need to eat and chew solid food, which also stimulates the release of digestive enzymes in saliva… I do not recommend any of these products as a route to supreme good health. However, if you are going to drink a meal replacement, opt for Shakeology by Team Beachbody, it seems to be way better than the others in terms of the quality of the ingredients.”

So in fairness, Shakeology may have decent ingredients, but it isn’t necessarily a good health choice (according to this extensive review).

As we covered earlier, pricing does matter in MLM. According to Gimenez’ description on the Side Hustle Nation podcast, the meal replacement shake is around $4 or $120-130 a month. We’ll dig into pricing in a minute, but we are going to take a quick detour.

At the 11:50 mark of the podcast, Nick Loper politely says, “ummm, it didn’t really do it for me” while laughing (Translation: You don’t want to put this in your mouth.) Kellie says that some shakes “you can just shake in a shaker and go for it.” With Shakeology you need to “find your mix” and “you need to blend it.” She mixes the chocolate flavor with peanut butter, a banana, almond milk, ice.

This is where Shakeology starts to fall apart.

If you go back to the nutritional facts, it only has 140 calories a serving, not a good value for $4. It’s marketed a meal replacement, but I’ve never seen 140 qualify as a meal. The US RDA for calories in a day is around 2000 calories. (It varies with age/gender, but that is an average.) People typically eat three meals a day. Allowing for some snacks, a typical “meal replacement” should have between 400-500 calories.

Thus to get a true “meal replacement” you’d have to drink 3 shakes at a cost of $12. However, as Ms. Gimenez points out you need to “find your mix” and “blend it”, so it isn’t meant to be a “meal replacement” on its own. Let’s just say that for $4 and an additional dollar of mix ingredients, you can make yourself a $5 shake. That’s in your own home, not at a swanky restaurant as you might in Pulp Fiction (Note: adult language). If you are going to pay restaurant prices for a shake mix at home, you might as well buy $40/lb. steaks at your grocery store.

Wait, there aren’t any $40/lb. steaks at your grocery store? Are there any shake mixes that are $4 for 140 calories? The closest thing you can find is Carnation Breakfast Essentials, No Sugar Added, which has similar calories, protein, fiber, vitamins and minerals for $0.62 a serving (nutrition label: http://www.nestlehealthscience.us/asset-library/PublishingImages/8.0PRODUCTSLocalLandingPage/Nutritional%20Panels/CBE-Powder-NSA.jpg). If you use the Subscribe and Save option, the price comes down to 50 cents a serving. Yes, I know Shakeology Coaches are going to try to rip me apart for the comparison saying that Carnation is full of bad ingredients. However, as long as shakes aren’t a good health choice (according to the review referenced above) to begin with, quibbling over the differences here doesn’t make sense. What’s vastly more important is that the nutrition label is very, very similar, but at around 1/6th or 1/8th the price of Shakeology. If you are looking to get into shape the important things are calories, protein, carbs, fiber, etc., not whether it has apple pectin powder or wheatgrass in it.

Update 1: I found a similar product, Vega One available on Amazon, that is $53.48 (as I write this) or $2.43 per serving. Looks like it almost identical with digestive blends, antioxidant blends, probiotic blend, tons of vitamins and minerals, similar calories/protein. Vega One has double the fiber and an Omega 3 blend, which arguable makes it better at a much lower cost. Oh and Amazon's autoship (Subscribe and Save) saves me an additional 20% off the $53.48 price making it $42.78.

Update 2: A former Beachbody Coach mentioned Nature's Plus Spiru-Tein High Protein Energy Meal as a great choice in the comments. It is about a $1.15 a serving or nearly 1/4th the price of Shakeology. The comment also gives good details into the pyramid scheme nature of the company. According to her, the focus is not on nutrition or fitness, but classes instead include: “How to never take no for an answer when trying to sign on new coaches” or “How to not take no for an answer when selling Shakeology.”

In a year, you would spend over $1200 a year drinking Shakeology, but save a thousand dollars going with Carnation Breakfast at $225. That buys a lot of Beachbody workouts, time with a personal trainer, or other things that will help you get in shape.

And let’s take a minute to mention how terribly inconvenient it is blend a shake if competing products have an option to “shake in a shaker.” You certainly aren’t paying for convenience with Shakeology… you are paying for inconvenience.

However, if you are going to go with blending route anyway, I suggest that you get a Nutribullet (here’s my review) and make this mix at home for around 50 cents a serving. I combine frozen fruit (around a cup), whey protein (1/2 scoop), Greek yogurt (a tablespoon), and some spinach (you’ll never know it is there) and blend away. Sometimes I get crazy and add flax seed. It tastes great and costs probably around 50 cents a serving… again a fraction of Shakeology. So for the health nuts that have a problem with the Carnation Breakfast option, this is another option that should eliminate all health questions.

Finally here are some other cheaper alternatives to look into:

To summarize, it seems like Shakeology tastes so terrible that you need to mask it with a plethora of other ingredients. It is so expensive that the pricing at a restaurant is famous in a movie for being outrageous. Shakeology may be healthy for a shake, but shakes aren’t healthy to begin with. It misrepresents itself as a meal replacement when it is really nothing of the sort at only 140 calories. In only becomes a meal replacement when you add the other ingredients… at which point you might as well just had the meal.

Beachbody Bummer has a great chart about how absurd Shakeology pricing is... Pricing for 200 calories: Slimfast is $0.63, Ensure is $1.03, GNC Total Lean is 2.36, Shakeology is $6.66. Yikes!

Given all the problems with Shakeology, a natural question to ask is, “Who is going to pay $4 a serving for Shakeology?” If that sounds like the “Who's gonna pay $100 for a pen?” from the Pen Pyramid Scheme, you are starting to get the idea.

What Can you Expect to Earn as Beachbody Coach

When someone presents you with a business opportunity it is always wise to crunch the numbers. Beachbody has posted an their income disclosure statement (PDF) on its website. You’ll want to click on that.

The first thing you’ll notice is that the document is from 2010-2011. Hmmm, that’s not a good sign. Giving Beachbody the benefit of the doubt, I dug deeper and found a Beachbody income disclosure statement from 2011-2012 at an obscure URL (see the link when you mouse over it).

I was unable to find information from 2012-2013. Maybe it exists, but I think Beachbody just gave up and didn’t release one. You’ll find out why I presumed they gave up as we analyze it.

To make things easy, these income disclosure statements are commonly referred to as an IDS in the MLM world, and I’ll keep the same convention. Also since they go from the end of December to the end of December, I’ll just use the year that encompasses 99% of the data. So I’ll refer to the 2010-2011 as simply the 2011 IDS and the 2011-2012 as the 2012 IDS.

I’ve evaluated IDSs from dozens of MLMs, and the first place to look is always the fine print. In footnote 2 of the 2011 IDS you’ll find that only 49.3 of Coaches earned a check from Beachbody… 50.7% earned nothing, nada, zilch. In the 2012 IDS it gets worse as footnote 3 says that only 45.9% earned checks… 54.1% earned nothing, nada, zilch.

Thus the chart that you see in each of the IDS’ is automatically missing half the data. It’s like analyzing hitter’s performance in baseball, by only looking at the hits and ignoring the outs he makes. Or it’s like evaluating a QB in football by looking at only the completed passes he makes and ignoring the incomplete passes.

It doesn’t make sense to sweep the failure of 50+% of the workforce under the rug in a footnote

…but it gets worse.

In each IDS footnote 1 says that it includes Coaches who were with Beachbody the entire period. Thus the data includes only experienced coaches who have been with Beachbody for a year. The growing pains of people new to Beachbody are excluded. This means that those who have put in a year in the business had a less than 50% chance of receiving a check of any kind.

Churn Rate in MLM

I Interrupt this analysis to talk about churn rate in MLM.

It’s important to note that there is a huge churn rate in MLM. It ranges from 60-90% from the few companies that have accidentally disclose it at one time or another. (It is never regularly reported by any MLM that I am aware of.) It’s not often that people will stick around in business when they aren’t earning a check. In fact, I go out on a limb and say that it is dumb to put a year in a business that isn’t paying you a check. It’s a crazy limb to go out on, I know.

There is a great article on Seeking Alpha that explains that the people at the top of the pyramid stay year after year while the people at the bottom quit when they make no money and are replaced by new people (i.e. churn).

Back to Beachbody IDS analysis

Getting back to the IDS analysis, all the people who got churned in under a year or were members from June to July (not qualifying for either IDS), are excluded from this analysis.

Here's what I would consider a more accurate representation of the Beachbody Income Opportunity. This chart has four "cases" depending on the churn rate that I don't believe is disclosed by Beachbody. It assumes 100,000 Coaches - I had to pick a number since I didn't see one disclosed. This is a nice round number to get an idea of the percentages... and in my experience it probably isn't too far off from the actual number of Beachbody Coaches in the United States.

From my experience with MLMs, "Case C" or "Case D" are the most likely cases accounting for the churn. So when you read this chart you'll see that somewhere between 4.59% (4,590 of 100,000 in Case D) and 18.36% (18,360 of 100,000 in Case C) of Coaches earn checks after accounting for typical churn for IDS 2012. From there you'll most of those (71%) are "Retail Seller" Coaches.

Beachbody Income Analysis

Beachbody Income Analysis (Click for Larger)

Beachbody Expenses

While Beachbody provides an Income Disclosure Statement, like all MLMs, it avoids any attempt to estimate expenses. Thus we are at a loss to figure out how much money a Beachbody Coach actually brings home.

The excuse they give is that the expenses vary with each person. They do, but many of them are consistent. Here are a few to think about:

  • Conference Fees - The Beachbody Coach Summit ranges from $99 to $295 depending on when you buy it. As I write this, 10/24/14, the price for the event on 7/16/15 (still nearly 9 months away) is $195. The early pricing was expired months ago (7/31/14).

The people who benefit from this early pricing are the people who are already in and already making good money… the people in the diamond ranks. It doesn’t seem right to me that the people who are making the most are going to end up paying the least. The new person who joins in 2015 is going to pay $245 or more.

This doesn’t count hotel, car, airfare, and food (restaurants are expensive), which reasonably add another $1500 in costs. Some will argue that conferences are optional. No doubt about it, they are.

However, the same people will talk out of the other side of their mouth saying that if you are serious about the business, you need to go. They’ll also say that the people who aren’t making money aren’t putting in the effort in doing stuff like this.

To those people, I’d say, “You can’t have it both ways.” Either going to the conference is a critical ingredient AND COST of doing the business or it is not. If it is not, then not going is not an example of something “not trying.”

  • Monthly Coach Fees - There is a monthly $15.95 fee to be a Coach. That pays for a website and a subscription to “Success.” I’ve covered this already when I wrote about the ViSalus scam, a similar MLM shake company, but it is worth mentioning here.

The “Success Magazine” is brainwashing material, more commonly known as propaganda, directed at the MLM business. If you look at the company that distributes it, they make it clear that their business is partnering with MLMs. Just go through all the partners at the bottom of the screen and you can see that they work (it appears 100% exclusively) with pyramid selling companies. If you’ve ever seen a copy of Success Magazine, you’d see that 90% of it is sound business advice designed to gain trust… but the other 10% of it is about legitimizing MLM. In contrast, pick up any other business magazine, Fortune, Entrepreneur, Inc. Fast Company, BusinessWeek, and you’ll see nothing about MLM being a legitimate business. In fact, Inc will tell you quite the opposite.

The problem is that most people buying into MLM are too brainwashed to see that “Success Magazine” is essentially an infomercial. You shouldn’t pay a monthly fee for propaganda… especially propaganda that sells advertisements. It is a combination of paying for the Metro and your company newsletter.

The website is another area where the company shouldn’t be charging money. Facebook, Tumblr, and other similar websites don’t charge money. They make their websites available to you for free and you don’t even work for them. Why would you pay Beachbody money for a website to sell their products? Does your current office job charge you for the use of the company’s email system? Of course not.

The website that Beachbody provides has almost no incremental cost to add coaches. It is similar to the cost that iTunes incurs when you buy music there: it is fractions of a penny to send the music. The real costs are in producing the product the first time. Same thing with the Beachbody website. I don’t know how often they roll out new tools on the website, but for the most part it should be very basic, something with minimal costs to produce the first time and very few ongoing costs to update pricing and policies.

It may not seem like the monthly $15.95 fee is outrageous, but it’s a huge deal when Netflix raises rates from $7.99 to $8.99. Netflix is a good example of a company that provides product in unlimited quantities that is extremely expensive to produce… and it’s priced at nearly half of Beachbody Coach fees. It is interesting to see how the $190 in annual Coach Fees stacks up add up to the income that is being earned.

  • Weekly Club Fees - I’ll let this Beachbody Coach explain this: “There is also an option to be Club Member that costs $2.99 a week and is billed quarterly. I consider the Club Membership as a cost of doing business, because in order to qualify for the customer lead program, one of the requirements is for a Coach be a Club Member. Some Coaches don’t like this, but to me $2.99 a week is a small price to have customer placed in my business.”

This is Mindbloggling. It is an annual fee of over $155 a year. It is almost as much as the Coach Fees themselves, but it can be overlooked since it is such a small number. It’s billed more often though. I realize this is “optional”, but many, like the Coach above, consider “a cost of doing business”, simply because the Beachbody created a policy to makes this fee a requirement for the customer lead program.

The customer lead program is a hairy best of complexity. Good luck wrapping your head around this 5 part series. The gist of it is that if someone signs up at Beachbody who wasn’t referred by a Coach, Beachbody will place that customer with a Coach who has paid this $155 annual membership.

Breaking it down, Coaches make money by either selling product or recruiting people to be Coaches who buy product… but this system allows Coaches to make money for doing neither. Essentially Beachbody’s website is doing the Coach’s job. Sounds like a nice free lunch, until you realize that it isn’t free.

It should be obvious that it is a strange game Beachbody is playing. They charge Coaches for websites, but when the Beachbody.com website makes money they disperse the commission to Coaches.

Shouldn’t Beachbody keep those commissions that they earned without any Coach’s help and use it to pay for the websites? That would make sense. The only reason I can see to NOT do it this logical way is that there are very few leads, and it is more profitable for Beachbody to collect the annual $155 in Club Membership fees from Coaches to qualify to get one.

Profit Analysis

It’s business 101 that income minus expenses equal profits. Making money is earning profits, not income. Here’s some analysis from Beachbody’s own information.

The easy expense is coaching fees. The $15.95 monthly fee comes is rounded down to $190 a year. The “cost of doing business” weekly fee to qualify for leads is another $155 a year. That’s $345 and you haven’t gone to a conference. You didn’t put gas into your car to go a meeting. You didn’t buy any sample product to give away. This is pretty close to the bare bones minimum.

When you fall into the 50% that didn’t earn a check after a year, the Beachbody people are going to say, “It’s because you weren’t committed.” However, by “committing” yourself, you are guaranteeing yourself of only one thing: greater expenses. As we see, the odds of greater income are extremely slim and there are certainly no guarantees.

If you start adding some of the expenses I listed it isn’t trivial. It can be thousands of dollars.

Using “Case C” of the 2012 IDS in the above chart, we see that only 18% (18,360 of 100,000) earned any income at all… 82% (rounded) earned nothing. Of those lucky enough to make a check, 71.4% had an average income of $467 Combine those two stats and 95% of Coaches are below Emerald who either lose money or maybe break even… earning no real profit for their time spent.

Using “Case D” of the 2012 IDS in the above chart, it gets worse with only 1% of Coaches making it to Emerald or above… around 99% either lose money or break even.

And remember these expenses are incurred from the start of the business, while the income is measured of those who have been there for a minimum of a year.

Is Beachbody a Pyramid Scheme?

That’s the question that people are going to ask when looking at MLM. Many people just jump to the conclusion that it is a pyramid scheme. That’s not a bad instinct and let’s look at why:

The Federal Trade Commission (FTC) is the authority on pyramid schemes and put together this document to help consumer tell whether an MLM is legit or if it is an illegal pyramid scheme. I’ll quote some important lines, but it is worth reading the whole document:

”Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money…

… Avoid any plan where the reward for recruiting new distributors is more than it is for selling products to the public. That’s a time-tested and traditional tip-off to a pyramid scheme…

One sign of a pyramid scheme is if distributors sell more product to other distributors than to the public — or if they make more money from recruiting than they do from selling.”

In three separate places in one small document they’ve made it very, very clear… selling product to the public (people not in the MLM) is legit, making money recruiting people is a pyramid scheme. That’s consistent with every legal definition of a pyramid scheme that focuses on endless chain recruiting.

To summarize in caveman language: “recruiting hierarchy (”building a team”/pyramiding/[call it what you want]) is very bad. Selling to public (friends, family, etc.) is good.”

So with the FTC guidelines in place, I have to conclude that Beachbody is indeed an illegal pyramid scheme. I’m sure Beachbody’s lawyers are drafting their cease and desist letters now. To them I’d say, this is my constitutionally protected opinion based on the FTC’s guidelines and the information that I am going to (and have already) presented. While you may choose to conclude differently, I think your opinion would not be based on any evidence, so you might as well conclude the world is flat.

Before we Get started. Let’s debunk the pyramid scheme myths

To start I have to debunk the three pyramid scheme myths that MLMers always come to me with:

  1. A pyramid scheme doesn’t have a product or service. It seems this is part of a definition on Wikipedia. It simply isn’t true. Otherwise the FTC wouldn’t have put out the document on MLMs that I referenced above. MLMs clearly have products and services yet they can be pyramid schemes. Also, the FTC wouldn’t have shut down this MLM which was selling Dish Network products for being an illegal pyramid scheme.
  2. You can earn more than the person who recruited you, so it can’t be a pyramid scheme. That’s another common myth. Go through the FTC guidelines again and tell me where you see that. It’s a story that MLMers tell each other to convince themselves that they are legal. It’s not based on any case law or regulatory body that I’ve ever seen.
  3. Your company is a pyramid. This is the most common one. These people are confusing legal hierarchical organizations not based on recruiting with pyramid schemes that are based on endless chain recruiting. Think of it this way... A software engineer at Microsoft can make 6 figures a year without ever recruiting a single person. Typically zero percent of his annual salary is based on him recruiting others. If we go back to the FTC guidelines, this income is not based on recruiting, and clearly it is very legal. So no, Microsoft, nor your typical company, is not a pyramid scheme.

Here are some Beachbody Coaches spreading these myths (and a couple of others):

Coach 1 - Spreads "doesn't have a product" and "a company is a pyramid" myths.
Coach 2 - This Coach doesn't use any of the above pyramid scheme myths, but instead uses Donald Trump who licenses his name to MLM companies and sells books to MLMers. Of course Trump isn't a distributor or Coach with any MLM company.
Coach 3 - Spreads the trifecta: "doesn't have a product", "a company is a pyramid", and "you can earn more than the person above you" myths.
Lindsay Matway via YouTube video - Says a pyramid scheme is "making money not by selling product, but signing up people below them", which is an accurate definition of Beachbody, at least in the Gimenez case study above. She spreads, "no real product being consumed" myth. The example of the FTC shutting down a company used Dish Network TV service, which is certainly a real product and consumed by viewers. The rest of the video is fluff unrelated to definition of pyramid schemes.
Coach 5 - Spreads "You can earn more than the person who recruited you" myth. Doesn't address any of the key things that may make an MLM a pyramid scheme.
Coach 6 - Spreads "doesn't have a product" and "a company is a pyramid" myths. Documents the money that Beachbody pays him, despite misleading people with these myths.
Coach 7 - Spreads "bogus product" myth.
Coach 8 - Spreads "doesn't have a product" and "a company is a pyramid" myths. Creates a whole chart of misinformation such as legal MLM is generated ONLY by product sales which ignores the key difference of selling to recruits vs. selling to the public. Chart has a myth about the presence of a training program making a difference. Chart makes up a "get rich scheme" vs. "true work" myth. The only thing really accurate about the chart is the overpriced product being a sign of a pyramid scheme. As covered earlier, this points to Beachbody being a pyramid scheme. Spreads a myth about the BBB not accepting Beachbody as a member if it were a pyramid scheme, but the BBB page clearly says, "BBB accreditation does not mean that the business' products or services have been evaluated or endorsed by BBB." Spreads a myth about the DSA not accepting companies that pyramid schemes, but the DSA spreads a definition of pyramid schemes that doesn't match federal regulators.
Coach 9 - Spreads "doesn't have a product" myth. Doesn't cover any of the points brought up by the FDA.
Coach 10 - Spreads "a company is a pyramid" (via image), and "you can earn more than the person above you" myths.

That's 10 Beachbody Coaches I found in just a few minutes simply by going to Google and searching "Beachbody Scam" and "Beachbody Pyramid scheme." Not one of them had a legitimate reason that I could see why Beachbody is not a pyramid scheme. Not one of the coaches addressed the point about making more sales to the public than through its downline of distributors.

Some of them are making significant money. It is gross negligence on Beachbody's part to not sufficiently police the misleading of consumers. At a very minimum, Beachbody could put an official page on its site and tell distributors to not address the topic at all simply point to the website.

I just solved Beachbody's massive compliance issue in under an hour. This stuff isn't rocket science and any reputable company would have been all over it.

So How is the Money being Made in Beachbody?

The Kellie Gimenez case

Kellie made it clear in the Side Hustle Nation podcast that she makes $4000-4500 a month and that $500 comes from direct sales. The rest comes from commissions from her downline. Here is what she says at the 17 minute market of the podcast:

”A majority of your income isn’t going to be coming from the products. The majority of your income, as you grow a team, is going come from your Coaches and the volume they sell. Because you can only sell so many workouts a month… If they aren’t drinking Shakeology every month, I mean, they can buy one workout and never buy anything else from you.

… When I first started as a coach and didn’t have a team underneath me, I was making about $500 selling products. That’s not bad. It paid for our groceries. It paid for gas. It was a good income, but it’s definitely not something that could be a successful side hustle.

She’s clearly making more from recruiting than from sales to the public. Kellie is essentially saying this is how it is designed. She even is negative on making sales to public.

This fits the FTC’s definition of an illegal pyramid scheme exactly. Any reasonable person would have to conclude that using the FTC’s guidelines and definition, Gimenez is running a pyramid scheme. She may not even realize it, because of the myths of pyramid schemes that I presented above. She might be a fantastic person… certainly sounds like it on the podcast.

As a reminder Kellie is a Diamond level Coach in Beachbody. This is in the 0.4% or 0.1% of Coaches depending on “Case C” or “Case D” of the my IDS analysis chart above. If anyone in the organization should know the rules and is abiding by them, it should be diamond Coaches. Beachbody corporate should be "coaching" their distributors about the FTC's guidelines regarding pyramid schemes and at the very least look at its top distributors and see if they are making their money from the downline vs. selling to the public.

Let’s Look Back at Shakeology’s Pricing again

Ms. Gimenez’ quote in the previous section about which products are being bought is significant. If someone buys a workout, the commission is earned one time and then maybe never again. However, Shakeology is different as a customer spends consistently on it month after month. It seemed like Nick cut her off before she could say it, but it certainly sounded like she was ready to say that the emphasis is on selling the shakes.

In fact, if you go back and listen to the podcast, at the 11:30 mark, Kellie says that she tries to get everyone to buy the shakes.

Given what we saw with the Pen Pyramid Scheme analogy in the section about Shakeology, it fits the mold to be a pyramid scheme. Get people using vastly overpriced pens/shakes regularly and reward a fraction of the money back to the people at the top pyramid.

It might not be a smoking gun of a pyramid scheme, but it is another major piece of evidence against Beachbody. They could very easily offer an affiliate program that rewards Coaches for selling product without the pyramid of rewards for recruiting more Coaches. Such an affiliate program would quickly end any questions as to whether it is a pyramid scheme.

Beachbody’s own words on their Income Disclosure Statements

I thought that Beachbody’s own words in its Income Disclosure Statement interesting.

”Many of our Coaches have chosen not to build a business, but rather join for the opportunity to purchase our programs at wholesale and to be able to earn extra income by helping their friends and family purchase our programs. For this period, 33% of our Coaches decided to take advantage of the bonuses available for those who help the company recruit and enroll other Coaches and retail Beachbody® products to customers. This activity is rewarded through a binary compensation plan which pays bonuses at the Development and Leadership Ranks of Emerald Coach and above.”

First Beachbody makes the fundamental mistake that most MLMs make and have Coaches “join the [business] opportunity” to earn a discount. Many MLMers describe it like being a member of Costco. There’s fine, but Costco conflate a business opportunity with a discount.

The discount earned by joining is 25% according to Kellie in the podcast. That is a hefty chunk on the monthly price of Shakeology. The question becomes, who is left to buy the products at a retail price… the “public” mentioned in the FTC guidelines?

Next, the Coaches who join “to be able to earn extra income by helping their friends and family purchase our programs” are building a business contrary to the opening sentence of that quote. If selling product to family and friends doesn’t count, then it looks even more like a pyramid scheme when evaluated through the FTC’s guidelines.

The final two sentences of that quote are confusing at best. It makes it sound like earning a bonus is a decision that someone makes such as ordering a cheeseburger at McDonalds. It then bonuses are earned by recruiting and enrolling other coaches as well as retailing Beachbody products to customers. However, according to the first sentence retailing Beachbody products to friends and family are not running a business. So unless there’s some distinction of what a friend/family/customer is (and the FTC doesn’t seem to make this) apparently we can exclude retailing Beachbody products in the later part.

That leaves us with earning bonuses for recruiting and enrolling. As you can see, this is where the majority of money is earned. That’s hits the FTC’s guidelines for being a pyramid scheme on the nose.

Beachbody Bummer is a great resource

I stumbled upon Beachbody Bummer which lists federal warnings about pyramid schemes and MLMs. I would have like him/her to link to the SEC's guidelines, but nonetheless she/he does a great job at highlighting some of the important things like inappropriate pricing (as mentioned earlier).

The Beachbody Scam

As we’ve seen actual profits are very, very rare in Beachbody. Yet it doesn’t distributors from recruiting. They can’t see the “business opportunity” for what it is… a wolf in sheep’s clothing.

Here’s a great quote from Harper's Magazine on Mary Kay and MLM schemes:

“The women I interviewed for ‘The Pink Pyramid Scheme’ told me stories about struggling to patch together daycare or to survive high-risk pregnancies while working long hours scouting prospects and hosting parties without any guarantee of a sale. Debts mounted, marriages failed. They couldn’t have it all because Mary Kay’s business model (like that of any multilevel-marketing enterprise) is designed primarily to profit from, rather than enrich, its workforce."

Think about those recurring expenses in relation to the average income. Suddenly the Coaches fees and Club Membership fees make sense.

Think about the high margins the company is earning on distributors buying Shakeology… even when distributors buy it wholesale Beachbody makes a substantial profit. It’s essentially the Pen Pyramid Scheme, but with (slightly) less exaggerated margins and purchased much more regularly. The Pen Pyramid Scheme doesn’t become less of pyramid scheme if they give distributors the right to buy pens for $80 instead of $100. A 20% savings looks good, but it is minimal when the pricing is so absurd.

Do the Ends Justify the Means?

Beachbody Coaches may argue that in the end people are getting healthy, so who cares about all the scammy stuff that goes along with it. If you are really interested in people’s health, then I suggest you simply coach them without Beachbody. Form a buddy system and keep each other in check.

There are countless other tools available. The free website SparkPeople is a health community. Additionally you could also use another site StickK.com (my article on it: StickK to Your Goals) is a way to keep people motivated.

I have no problem with Beachbody workouts, but there are numerous options available. Workout videos have been around for decades.

Just a few minutes of research can give you all the value of the “ends” without all the problems associated with the “means.”

My Gift to You

If you've read this far, I appreciate your dedication. Whether you found what you were looking for or not in the article above, I want to help you with your financial situation. It's what I do.

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For more visit my five minute financial fixes article. If neither of the above is helpful, I'm sorry. I appreciate you for just being here. The person recruiting you has a financial incentive to present only one side of the story. Kudos to you for searching for more information to make an informed decision.

Note to lawyers looking to send a frivolous lawsuit my way.

Most companies are smart enough to realize that such lawsuits trigger a Streisand effect that makes them look much, much worse. It invites media coverage. It's probably not a good look to threaten a consumer advocate, his military wife, and 1 and 2 year old that they are going to be homeless after a huge judgment. I maintain open communication channels via my contact form and this comments on this article, which is a far better way to resolve any differences in opinion your client may have.

Last updated on February 17, 2016.

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551 Responses to “Is Beachbody’s Shakeology a Scam?”

  1. Chrystal says:

    Thank you! I feel so much better about passing up this “opportunity” and j have to say it is really hits moms – particularly stay at home moms – into this because sadly there is a lot of isolation when you stay at home, plus 24/7 busyness, and exercise/eating well takes the back burner. Setting personal goals seems futile sometimes! It is hard to ignore the amazing results people are getting yet it comes at a cost. Almost all my close friends and family I told about bb coaching were like NOO!! Thank you for all your suggestions on how to make steps to improve my health and find like minded community support. I am wondering how long this scheme will continue? It’s pretty rampant in my area.

  2. Katie says:

    Chrystal you are so right, I live paycheck to paycheck and got sucked in by an old high school “friends” yet she has a high paying ft job so does hee husband and I think its really crappy that they target struggling housewives. I will say I do love shakeology it does help w a list of things n the workouts and eating plans do work. But I spent 2yrs as a coach and made 130 dollars total…and once u don’t make any $$ ur coach won’t talk to u anymore. Like i said in previous replies I had friends who just bought the workouts and lost just as much weight if not more than ppl drinking shako. I would love to see this company investigated bc its a pyramid thru and thru. ..and how convenient that their top top coach is an ex lawyer and her and her sister make 6-7figure incomes. I should have listened to my family bc they all said the exact same thing as yours…”Noooo” lol…they’re always right and I’m a sucker for these kinda things

  3. h0pe says:

    Beachbody bummers website requires a login / password to view.

    Years ago I got a bag of shakeology that actually had a metal part in it. I took a picture and sent it to my coach; I requested an emergency phone call to discuss this. She didn’t honor my request. I lost all respect for her. I have been looking for a good substitute for shakeology for husband. He really likes shakeo and can tell a huge difference if he misses his daily shakeo but I hate giving money to scam artists.

    • Lazy Man says:

      If memory servers, Beachbody Bummer’s website didn’t used to require a login/password.

    • Katie Fox says:

      Hope, here is the # for coach relations. Even tho ur not a coach you can ask for a supervisor and complain about your “coach”

      [Editor’s note: Phone number redacted as I can’t verify it at this time. I recommend that people refer to Beachbody’s official website for support information.]

    • Trish says:

      You do not need any of these gimmick shakes to get healthy. Just buy a juicer and start juicing fresh produce (veggies and fruits) It is pure nutrition and heals so many ailments. Weight loss is also a benefit too! Just put in ‘juicing’ into any search engine and find info. There are many documentaries to guide you as well. Fat, Sick and Nearly Dead was the one that started me. I went from pre-diabetic, high BP and cholesterol to normal blood work in months.

    • Amanda says:

      I too got a login/password message too when I clicked the link. If it didn’t require one before, it appears to now. At least from mobile.
      Thank you for this. I have been side-eying my acquaintances who are
      coaches because I suspected as much, but glad to be vindicated.

    • Lazy Man says:

      When you clicked which link? Websites can change over time and this is a fairly old article.

  4. Beth says:

    I figured that out in 2 days. They know their strategic marketing and they sell it good! I’ve seen the coaching BS . They claim it’s not a pyramid through their choice of words. If anyone has a lick of common sense and see the writing on the wall IT is! Clearly spells and looks pyramid. Now I did one challenge for yes I am a stay at home mom for the convince of the workouts at home. But shakeology heck no… $130.00 a month for me only ummm red flag there. I bought my first bag on eBay ( cheaper ) yes, you have to doctor it up. But! Like all other shakes too… but not all of them either! Lost 10lbs. The first month. Now,
    This month I went to GNC and spent $60.00 bought powder, with lower sodium and more protein than shakeology for my leaner muscles. And I bought a water boost … still using my workouts from bb putting my theory to test. So trust me I’m so anti shakeology and I’m going to prove this with my Dailey videos on not using shakeology and going to show my hard work on a non shakeology budget. But for real the workouts are amazing and it’s cheaper on demand!!! Just workout without all the wasting of money!!!

  5. LM says:

    Diet-shakes does seem to attract a lot of scams.

    If you want a diet-shake that’s decently priced and with scientific documentation. (And I mean really documented by real doctors in a hospital setting and with publicly availiable documentation)

    Then you should try [Editor’s Note: This isn’t the place to advertise competing products. I’ve removed the product name.]

  6. Kayla Graves says:

    Shakeology is not meant to be told for someone to drink this instead of food. We market it as a great way to add value into your day. Nutrition. Dense nutrition. I tell people how and when to include/add it into their day depending on their diet and lifestyle. Most people do eat 3 meals a day. And its my job as a coach to help people understand that 5 is better. I teach meal ideas snd snack meal ideas. Getting them in the routine of eating meals correctly. And what they should consistent of. Some people over eat and snack too much, consuming way too many calories in a day. Having shakeology as part of your breakfast or a snack, or a post workout can benefit someone greatly. As a coach, we offer monthly accountability groups to teach and motivate into an overall healthier more fit lifestyle. The conferences are not mandetory. Some ppl never go. Ever. The women in my challenge groups grow into such positive, healthier people. Nor do they have to have the club membership. Coaches do not have to have it either, but its one hell of an easy way to have access to a ton of full workout programs all from your phone (of which you can choose to stream onto you tv). As a mother of a toddler, its been a blessing to work from home and help others with the nutritional knowledge ive gained and help to push them, all while furthering my own mental and physical strength and growth. The products are truly CLEAN quality and great for anyone to have. The workouts have gotten me in the best shape any gym could have done w me wandering around and eventually just hoppin on the treadmill. We need more than a treadmill. And we need support and learning and accountability; a coach and monthly group to participate in. As I mentioned, being a mother of a young child, it was the only way I could get any workouts in; at home. And as for shakeology goes, it’s been a great, easy way to add in vitamins and superfoods I never get on the daily. It would take over 2500 calories in a day in whole foods to get what we ‘need’ everyday. Shake this shit up in a shaker cup and go. 9/10 ppl love the taste! Ive never had a single complaint w consumers. Consumers love It so much that they want to become a coach and inspire others w their newly found healthy journey and help others become healthier as well. Its been a positive, uplifting community to surround myself in. Instead of paying $90 for my old boxing membership doing the same hour long workout at a gym, and buying protein powder and fruits and amino acids to make a decent shake, ill pass that up. Ill pay $100 for shakeology and workout at home w my amazing programs, run my challeng groups where I guide people how to really eat well and right and let them enjoy their nutrient dense, yummy, filling, clean, quality drink thats easy to shake up and consume. Nor have I ever been told to never take no as an answer. I help people with their struggles and weaknesses and light a fire under their asses in my groups. Most people do not know how to make a correct meal. Nor what a snack consists of. They have no idea that carbs arent The enemy and dont know what good or bad carbs even are. They have no idea how to go about clean foods and shopping and prepping. Thats what we offer. Bye Felicia.

    • Lazy Man says:

      Why aren’t you teaching people to use the cheaper products with dense nutrition. As the article covered in the podcast, the salesperson and her friend didn’t have kind comments for the taste.

      I can’t really follow the rest of what you wrote because it isn’t divided up into paragraphs.

    • Elizabeth says:

      Where did you go to get your degree in order to practice nutrition? Surely you have one because you tell people when and how to consume their Shakeology?

      Sounds like you are acting as a dietician. Aside from the points in this article, it’s sad that anyone can call themselves a “coach.” It’s misleading and annoying.

    • Kayla says:

      I am actually very knowledgeable with FOOD. Assessing someones diet and what they’re not getting enough of or getting too much of isn’t rocket science. Therefore im helping tons of people. I am training for a fitness competition, so dont tell me I dont know my shit. Maybe I could help you! Hah. There’s a reason people have a 6 pack. Its because they know the science behind food and fitness. (Me). Bye hun.

    • bob says:

      Agree. The term “Coach” is incredibly misleading. It’s a worthless, purchased title that BB markets to make people feel important. Most of them know nothing at all about nutrition or fitness. Total sham. Even worse are the people that fall for it. Giant pyramid scheme…

  7. Jake says:

    Sounds like you are a failed disgruntled BB coach. Work harder and don’t be so fucking “lazy.”

  8. bob says:

    BB banned my account for questioning their pricing on Shakeology on forums. I then created another account and posted to the old thread questioning why they banned my account and challenged them to come out from hiding behind their delete key and defend their pricing and banning my account. Guess what? They banned that account and deleted that post in under 15 minutes and now the entire thread has been deleted!
    How can a company who’s mantra is “challenge” be so afraid of a challenge themselves and not step up to the plate? Is it because they can’t defend such tactics?
    Why were they so afraid to reply? They were obviously reading these posts. Were they afraid of a possible ground swell of come backs? Well that is life! Embrace the challenge as they like to state. What a cowardly act of hiding behind the scenes, secretly deleting posts that they are to afraid of, without so much a word? Did they offend other readers? I think not! After my first post I had 5 buddy invitations!
    How about advising on the reason you banned my accounts and deleted my posts?
    What type of person or company does cowardly acts like that?

    • Katie says:

      Bob, it’s the type of company that knows their time will be up soon enough. When I left BB (after 2yrs of making no money and spending 120/month on shako & website) all the other “coaches” who were supposed friends; begged me not to give up that it takes time. Yet when I 1st joined I was told I’d have my shako paid for in a few short months. You know by scamming other ppl to buy on auto ship. When I called to cancel I was told I had to fill out an online form w an electronic signature bc of “security purposes”…it was really so they could charge me for another whole month of shako. I filled out the online form was given, a confirmation code and I was charged for another month. I called a supervisor and was told “oh ya we have your form but your signature didn’t come thru so it was voided” and they refused to give me my $$ bk for the bag of shako they fraudulently charged. Thank God I cancelled 3wks before the ship date bc my credit card reversed the charges. They made it so difficult for me to “quit” and then all these “motivational, in it to help the ppl ‘coaches’ all deleted me from their groups . Some of these ppl were life long friends/acquaintances. Some of them are still very nice but they have no desire in helping me on my health and fitness journey anymore. I guess if I’m not making them $$ in their pyramid I’m no longer useful to them. When I 1st started and asked, “isn’t this a pyramid” I was told NO NO NO it’s network marketing. I said its the same thing except u offer a product. I was told to talk to the top leader (won’t say name) but she’s a 5 star diamond coach and quit her 6figure career as a lawyer to be a BB coach full time. Her, & her husband and her sister are ALL the millionaire coaches. So they say..but i was told to talk to this person bc she’s a lawyer and a lawyer wouldn’t get involved in a criminal pyramid!? I would love for karma to come bk on these ppl living the high life off of struggling house wives that put all their $$ & faith into this “company”

    • Marcia says:

      Yeah, I think the time is coming to an end, soon. I like shakeo, it did help me lose the 2nd baby weight (no small feat at 42). But I’ve never attempted to sell it, and I do think it’s overpriced.

      There are quite a few coaches in town, and a friend recently started. I’d given her a BB program as a gift (the one that helped me lose the weight), and one of her other friends got her into it. I like the workouts. I like the emphasis on health but…how many people, really, can you sell on shakeo and new programs? That’s the only way to make money.

      When BOD came out I saw the writing on the wall. I held off for a few months but now – for $100-150 a year I have access to dozens of full programs and online materials. Why would I need shakeo or to be a coach? As far as I can tell, the only people buying anything are coaches. It’s like a club. Yeah, sure I’m going to spend $120 on a new program…why do that when I can just get T25 or P90X3 or whatever.

  9. Bob says:

    This is typical response of most “Coaches”. they THINK they know. they only know what Beachbody programs them to learn. That fact that this “Coach” is pushing, and undoubtedly recommending to many others, this over priced ShakeO product proves it. There are many other meal replacement / protein shake products that provide the same results.

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