One24 Responds to “The Scam”

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Today, I have either a treat or a punishment for readers. It all depends on the point of view. I had called a company, One24, out for having characteristics of being a scam and pyramid scheme (the FTC's guidelines were critical in making that call). It has recently come to my attention that One24 has responded to my One24 Scam article in one of their recent podcasts.

The result is an extremely long article combating the misinformation that they spread over their marketing channel. If you like soap operas that have a high potential to turn into public lawsuits, I invite you to grab a cold drink (or 3) and enjoy the show. If you like quick articles about learning how to save money as I typically write let me direct you here. I realize this article is targeted to a small minority of Lazy Man and Money readers. However, because it is possible to save that minority thousands of dollars, I feel it is one of the more articles I've written. If you aren't part of the minority, it might be best to just move on. You've been warned.

The One24 Podcast title "The Scam" can be downloaded here. I recommend you keep my article open for reference.

Before I go any further, I should mention that the company doesn't mention me or my article by name, but it's clear that they are address my article. They cover nearly every point point from beginning to end. I guess their lawyers realized that One24's threat to sue me for defamation had no legal ground. It seems this is their plan B. I think I irk them because I rank at the top of Google searches for "One24." It makes me a prime target for the company.

Finally, I want to thank the people reading and comment on such articles. If it weren't for one astute commenter, I would have missed the podcast and not been able to respond to it. Perhaps One24's plan was to address their PCs (product distributors) directly and not give me the chance for a rebuttal.

To help make this long article go a little easier on you, I've divided it into sections.

The Format of the Podcast

The format of this podcast alone should raise red flags about the company. As one commenter, CGC, put it, it is presented as "a scripted 'interview', infomercial." It is a podcast called "Inside One24" which is "exclusively produced" for One24 distributors. In the greeting of President Joe Perry, Phillip Gerogeson asks, "Have you run out of places to pinch yourself as to where this company has taken you in the last few months?" The answer from Joe Perry is, "It's been an incredible ride." This is the kind of scripted commentary from the company's PR person to the company's president.

You'll find other bits of marketing throughout the interview. At the end, they do a recap where the interviewer pats the interviewee on the back with comments like, "I think that was tremendously stated" and "Joe hit the ball right out of the park", "and I thought he really nailed it there."

It must be pretty easy to nail points in an scripted marketing piece directed to distributors of the company. Let's hope that those involved in One24 are smart enough to see this marketing for the scam that it is.

The Effect of "The Scam"

The first thing the podcast says is that:

"whatever is being misrepresented or said is not making one dent in the resolve of you our PCs. And I want to make sure that is first of all very clear."

Before getting to the slanderous use of "misrepresented", I would like to dispute that my article isn't making a dent.

First, the company doesn't have information on every PC to know if it is making a dent or a landslide. They aren't at every showing of the product and/or plan. This is clearly a piece of marketing. They have to say it isn't making a dent, because to say otherwise would cause panic.

Secondly, this appears to be a lie. If it wasn't impacting PCs they wouldn't have threatened me with a law suit. More importantly if it wasn't impacting PCs, they wouldn't have to create a podcast directed towards PCs on the topic. As they said, they "lined-up the top gun to handle this, and to meet this information head on, and that's our president, Joe Perry." Clearly getting the president to address the concerns is a sign that this is an important issue. In fact, Joe Perry hasn't been involved in any of the previous podcasts according his introduction in this podcast. Actions speak louder than words here.

Finally, there is nothing "misrepresented" in my article. If there is, the company is welcome to enter in the debate in my comments just like many of their PCs have. Those PCs have tried and all have failed, just like the company would. Getting back to why they don't have the guts to mention me by name - perhaps it's because they know that I'd be the one able to sue them for defamation for claiming that I misrepresented others.

Questioning the My Motives

Philip Georgeson says, "The next aspect that we have to discover or certainly analyze is why this is happening. And in most cases we can only speculate. But you do notice a pattern that in... not just One24, but in other growth companies where they begin to reach a successful mark in which attention is drawn to it because of their success your detractors will come out of the woodwork and purport misinformation in order to knock momentum, or take away from them or certainly keep them from impeding on them as competition."

Since the company is clearly targeting me and my article, I feel I should respond.

I have to ask here is what is their definition of "growth" companies. I love growth companies. In fact, I invest a lot of my money in growth companies. I don't know anyone that was against Groupon as a growth company, do you? This is a red herring fallacy.

Secondly, the podcast makes a point that the reason that I target them is because they are my competition. What competition is that? I'm not involved in any MLM companies. I do not make or sell or any products similar to One24.

Finally, One24 tries to spin this as a sign of success. They should step off their high horse. I got two emails in a couple of days because their distributors wanted to recruit me due to my connection of writing about MonaVie and Nerium. I didn't write about One24 due to their "success", I wrote about them because One24 distributors (PCs) claimed the business was a path to retirement. As a personal finance blogger that caught my eye. It's kind of humorous that a company like One24 judges its level of success by what I write. Perhaps other MLM companies should offer to pay me to write about their scams, right?

Intermission (at the 2:50 mark)

At the 2:50 mark there is a "commercial." I don't know what else to call a break to promote a product inside an infomercial about the very same product. A woman says, "Did you know that just one serving of NatraBurst contains more than 6 servings of fruits and vegetables? Did you know that same serving of NatraBurst contains the daily recommended antioxidant protection by the USDA, so what are you waiting for? Take the your burst of nature today."

Since this podcast is in the business of pointing out "misinformation", let's focus on the above. NatraBurst does not contain more than 6 servings of fruits and vegetables. As I pointed out in my original article, this is a lie. MonaVie has used this same lie to claim that drinking 4 ounces of their juice is the same as eating 13 fruits. It turns out that many government agencies got together to quantify servings of fruits/vegetables. The guidelines are very clear. Unfortunately for MonaVie, which is 100% fruit juice, 4 Ounces of MonaVie is 1 Serving of Fruit. It's worth noting that One24 is not 100% fruit juice (or anything close from its ingredients) and as a liquid can not claim to contain servings of fruit. I explained the difference in my original One24 article. One24 is misleading people into thinking that an ORAC score is the same as eating fruits/vegetables, which this completely false and extremely misleading.

Furthermore the company takes the extra step of saying that USDA has recommended an amount of antioxidant protection. I'll say there's a possibility that I'm wrong here, but I really don't think that the USDA has put out RDA of "antioxidant protection." Readers, if I'm wrong please correct me and cite a source from the USDA's official website.

Still doubt that this podcast is about me?

At the 5:45 mark company president Joe Perry claims that "these people have ulterior motives". "that they take it different directions to try to draw attention to themselves", and "Unfortunately that's what we've experienced and... I think its the reason for this show in some ways."

Phillip Georgeson then says, "You and I [company president Joe Perry] got together and it was predominant your idea to do this and I think it was a great one [pat on the back]." If there were any doubts this was staged that should be dispelled.

Georgeson continues, "Forget who is doing it we won't name, and forget why they may be doing it. Instead we're going to take what they are saying... and we're going to actually address it head-on."

It's interesting that Georgeson says to forget why they are doing it, when they've previously put out misinformation on the topic.

It's great that they are going to address things head-on, because you can see the parallels with my one24 article.

The podcast is intended to help distributors market the product.

At the 6:30 mark Phillip Georgeson says, "Let's create this resource if you will. This one more tool. This one more little piece of weaponry that you can take out and address."

The Naming of One24

Phillip Georgeson says,

"One of the first things and issues and topics that came up in some of the stuff that I've researched was that there's this charge that the concept and name of One24 emphasizes more of a recruiting of customers to a retirement program that leads to large profits by recruiting only and that should in some ways be some sort of a scheme."

I take some offense by the use of that "only" there. It paints a very "black and white" picture where there are many shades of grey. It's possible that there are some retail sales. As the podcast admits later on the real profits come from the recruiting aspect.

Company president Joe Perry says, "The name was really used because it represented a mantra that, you know, Mark and I got really excited about and that's the fact that if you take something and do it consistently, like you can One24, over a 24 month period some really neat things can happen. So obviously the optimum thing that can happen for someone is that in 24 months if they do everything consistently then we are really hoping they can kind of cinch up their future and not worry about their college fund and possibly their retirement. We're not saying that everyone that gets in One24 is going to retire in 24 months. But I think some people have taken that statement or that thought and pulled the string out and stretched it a little further than it should have been stretched."

So it would seem that my article is dead on with the company's focus. In the article, I very specifically quote an email that I received. It said, "The concept is [recruit] one member a month for 24 months (One24), then retire." I am happy to divulge this email in a court of law. One24 just needs to bring the lawsuit.

In addition, Mr. Perry, gives us a lot to address here. There is nothing magical about a 24-month period. Some "neat things can happen" if you start with a penny and double that investment everyday over a 30 day period... you'd have around 10 million dollars by my calculations. This doesn't mean that it is realistic. It doesn't mean that one can do it consistently. It's great that Mr. Perry and One24 "are really hoping" that PCs can cinch up their future. I'm really hoping you can double that penny's investment everyday. Point is, it's extraordinarily unlikely to happen. Mr. Perry and One24 requires you to buy their product to play that game. I'll let you play the double a penny game for free.

Mr. Perry makes the point that "We're not saying that everyone that gets in One24 is going to retire in 24 months." Once again, the podcast is trying to make it a black and white issue. In other words, "We are going to bombard you with images and talk of retirement. We are hoping you will get there. We know that not everyone is. We will not discuss the odds of success, because that might prevent you from buying our product and trying."

Am I exaggerating about the bombardment of images and talk of retirement? Here's what a standard PCs page looks like (they all look the same except for the name that I've blacked out):

Note the space devoted to NatraBurst vs. "the Opportunity"

Note the space devoted to NatraBurst vs. "the Opportunity"

Note that the marketing message on that page (and thousands like it) is centered around retirement and financial security. Perhaps the statement about retirement is being stretched because your marketing people are stretching. This is done to recruit more people to sell your product and make larger profits. It's worth noting that there's almost no focus on the product here, but I'll have more on that later).

One24 as a Pyramid Scheme

The next section (8 minutes into the podcast for those following along) is about "pyramid schemes". Phillip Georgeson says,

"Any time something like this company as successful as it is pops up the word 'pyramid scheme' comes up. It's obvious to you and I but let's go over that. How do you respond to the pyramid scheme because if you were to ... calculate out the natural progression of enrolling 24 people over one year that eventually you'd run out of people in the whole planet? We actually saw that and... you and I laughed about it but explain why it is so ridiculous.

Before we get to Joe's response, let's reflect for a minute on the question. Clearly companies are successful without the word "pyramid scheme" popping up. Here are a few examples, Facebook, Amazon, Ebay, Starbucks, and Google. I don't see anyone calling them pyramid schemes.

The other part of this question that is worth noting is that it is leading the answer, "It is obvious to you and I", "laughed about it" and "why it is so ridiculous." What is humorous about this is that in the recap of the interview at 24:20, Phillip Georgeson says, "... we would blow through the population of the world over time. You know on paper that is probably is true." It is not just "probably true", it has been mathematically proven to be true. You can see a depiction of it on Wikipedia's article of pyramid schemes. Clearly this argument "that is probably true" (according to Phillip Georgeson) is not "so ridiculous" or worth "laughing" about it.

Back to Joe's repsonse:

"I've heard it for more than 30 years... I reminiced that Mark and I, back when we started, a company called Slender Now that... ahh... went to 100 million dollars in sales in less than 3 years. What we did is we were holding meetings in different areas of Florida and we went to one meeting and we had gotten a lady involved as a distributor that was just really, really excited. She didn't know a lot about this industry. She's just excited about the product, excited about the opportunity, and her first goal, by the way, was to buy a dishwasher. And ahhh she got excited and enrolled and the next meeting Mark and I came back to and we were training and she had her husband with her and he was sitting in a chair and he a his pocket calculator and he happened to be a CPA and he threw that out in front of everybody just like you just said, 'Well you know Mark - Joe, if you enrolled 12 people who enrolled 12 people who enrolled 12 people... you are going to saturate the world in X number of months.' You know the reality is that we've been hearing that since back in the 50's when the first... MLM companies were birthed. And you know something, it's (MLM saturation) never happened. And by the way that lady continued to go beyond what her husband's logic was saying and she happened a year later to build a whole new house in Florida around that dishwasher."

Ahh, so Mr. Joe Perry and Mark Seyforth started Slender Now. I did a little Internet search on that company. I found an L.A. Times article, "Death and Denial at HerbaLife". Here's a quote from that:

"In 1976, Mark [Hughes] began selling Slender Now diet products for Seyforth Laboratories, a multilevel marketer, becoming one of its top 100 earners. After Seyforth collapsed in 1979, he sold exercise equipment and weight-control products for Golden Youth, another direct-sales outfit.

While the article is about Mark Hughes, who is not to be confused with Mark Seyforth, it does point out how well Slender Now really did. It may have went to a 100 million dollars in 3 years, but by 1979 it "collapsed." You know what else "collapses"? Pyramid Schemes. Take a read of Wikipedia's Pyramid Scheme article and look for the number of occurances of "collapse." Slender Now was an MLM company that started out really well but ended up collapsing like a pyramid scheme. That doesn't like the shining example you want to give when trying to convince your distributors (PCs) that they are not involved in a pyramid scheme.

In 1979 when Slender Now collapsed I think that CPA had the opportunity to give the king of "I told you so"s to his wife. It's odd that Mr. Joe Perry claims that MLM saturation has never happened. If that were the case, he'd still be selling Slender Now and it would still be a growing company, right?

This story of this one successful person is another example of marketing. They aren't telling you about all the people who lost money when it collapsed. It is like telling the story of the one person who retired with One24 and ignoring the thousands of people who lost hundreds or more buying the overpriced product.

The most important thing here is that he never addresses the logic of the CPA's point... or the point about the unsustainability of pyramid schemes and MLMs in general. He just tells an isolated success story and glosses over the fact that Slender Now "collapsed" (according to the L.A. Times). It seems to me that the CPA was proven correct. Of course we wouldn't expect One24 and their marketing people in their marketing Podcast to admit such a thing.

Joe Perry continues,

"It can't happen. It's just human nature... it's never happened. There's been companies out there and some of the biggest in the industry who do billions of dollars of a year, have very aggressive international marketing plans out there... and it just won't happen... it's just not going to happen."

So Mr. Perry claims it's never happened which seems to be a lie using his own Slender Now example. In a span of 15 seconds he claimed following, it "can't happen", "never happened", "won't happen" and "not going to happen." That's extraordinary considering the example of "it happening" he just cited with Slender Now.

Finally, I should bring back a point from my original article... the FTC says that "Not all multilevel marketing plans are legitimate. Some are pyramid schemes". This is where the pyramid scheme nature comes into play. Remember that the FTC exists to help consumers and thwart scams.

NatraBurst as an Afterthought

The podcast (at 10:23) makes the claim that the product is not "an afterthought" as I claimed. Specifically Phillip Georgeson says:

"Some out in the cyberworld claim that One24's product NatraBurst is but an afterthought of the company and not a true focus and actually can be found at auction sites in some cases less at 50% below the retail."

I give Phillip Georgeson credit for not glossing over the 50% discount of the product on Ebay.

Joe Perry responds:

Natraburst was put together before Mark [Seyforth] and I even talked about One24 and the product was really targetted initially to go health professional marketplace which as you probably know has a pretty high level of scrutiny."

The first and most important thing you'll notice is that the "auction sites"... Ebay... with the cheaper productis never addressed. The claim is made that Joe Perry and Mark Seyforth were going to address the health professional marketplace, but as best I can tell, they've always done MLM (Joe Perry says he has 30 years of experience later in the podcast). So we are to believe that they weren't going to go with MLM with NatraBurst, but it turns out that they had this idea for an MLM company, after 30 years in the industry, and decided to switch the product's distribution method.

I'll let you the reader be the judge if the product is an afterthrough or not. When I searched Google for "One24", this was one of the first pages I found was this image that I referenced earlier:

Note the space devoted to NatraBurst vs. "the Opportunity"

Note the space devoted to NatraBurst vs. "the Opportunity"

It seems the focus is on the big photo with rotating pictures of various vacation and retirement destinations. Under that picture is the words, "Your Retirement Opportunity." To the right of that is the one part of the page devoted to the product. To the right of that is another box of testimonials about "financial freedom, security, prosperity." If you were to divide the above page up into 9 boxes like a tic-tac-toe board, you'd find that about 1/9th of the space is devoted to the product and 8/9s is devoted to "the opportunity." Sorry to cover this twice in the same long article, but I think it was worth it since it was indirectly addressed twice.

NatraBurst Nutritional Information as Proprietary Information

One of the claims that I made in my original article was:

"They don't mention how much of these ingredients is in a serving. I could take water from the Pacific Ocean that would surely contain a blend of all these things. The problem is that unless you know how much you are getting, it's not worth mentioning at all."

The Podcast made that point that because the product is a food and does not have to disclose its formula. In fact it made the comparison to Coca-Cola (at the 13:20 mark). I must have been extremely psychic because I wrote about MonaVie, Secret Formulas, and Coca-Cola in March of 2010. I'll repeat the basic points here:

  • Coke sells it's product on taste. It doesn't bill itself as a health product. We get all the nutritional information we need about the product from its label
  • NatraBurst claims to be a health product. Consumers are entitled to know how healthy the product is. Would you buy a multivitamin without knowing the quantity of vitamins in it? Of course not.

The One24 podcast becomes a little wordy so I'll just quote the summary of this point at 25:50 point of the Podcast.

"this is categorized as a food and gives it that advantage of proprietary content. The reason why is that other dietary supplements must divulge the level of nutrients..."

This makes a mockery of the One24 consumer. There is no advantage for a potential One24 consumer to have this information hidden from them. This is critical information for any "health" product and is necessary to make an informed buying decision about the product. If the company doesn't want to disclose any more than what's on its nutritional label, consumers are better off buying Carnation Instant Breakfast for a fraction of the money. Carnation Instant Breakfast does disclose its information.

One24's Manufacturing Facility

At the 13:45 mark, Joe Perry gives away a more information than I ever hoped he would have:

"There's people for example that say we want to see your manufacturing facilities and go there for a tour. There are many companies that do that and when we get to our next level of manufacturing we may be set up to do that. But on the other side of it, I've been in this industry for 30 years, and Phil it has taken me some time, months upon months to find viable manufacturers who can really trust to do what they are supposed to do. So by me telling everyone exactly where we get everything done, then there's a lot of people out there who love One24, not by being PCs, but being potential competitors. We are holding this near and dear not because we are trying to be secretive, but because there are some trade secrets..."

Where do I begin here? It seems that "there are few viable manufacturers out there." How are we supposed to trust that One24 has chosen the viable ones? Is it because they were so straight-forward about the Slender Now story... ignoring the fact that it failed? Is it because they completely ignored the math that such schemes can't succeed... and that the very CPA who questioned their story was proven to be right? Is it because the question was dodged about the product being available on auction sites for 50% below retail? Is it because this entire podcast focuses on every point that I brought up... except for the most important one about the FTC guidelines of MLMs and pyramid schemes?

It turns out that Joe Perry's reason for lack of willingness to not give tours of the manufacturing facility is a smokescreen. One24 could enter in an exclusive agreement with that facility which would prevent competitors from getting that advantage. It's business 101 - clearly someone with 30 years of industry experience should know about. Mr. Perry mentions that "when we go to our next level of manufacturing we may be set up to do that." This is a little vague... what changes then? You are going to get a better manufacturer that you can have tours at? Perhaps you are going to get the exclusive relationship at your own manufacturer as I suggested before. If so, at least come clean and say that you are working on it rather than being vague about it.

Finally, if there are many manufacturing facilities that are not reputable out there (from Mr. Perry's comments), and One24 is not willing to disclose their factory... well as a consumer, why have trust in it?

Podcast claims that One24 is something new and not an MLM

At one point in the podcast (14:30) tried to make a point that One24 was not an MLM. Philip Georgeson says:

"One of the objections are that this is another multi-level marketing company, another MLM. And although some of the comp plan may have the feel of an MLM, we know that it is not. Speak if you would for a moment as to what makes this unique and apart from an MLM and why it is not classified as such."

Joe Perry responds:

"It is hard to classify something that is new. I've been involved in [the MLM] industry so long that it's kind of like the DNA and I look at my grandson and I see parts of his mom and parts my son-in-law... There are piece of many things in One24 commission program"

It's interesting that now Mr. Perry refers to it as a "commission program" and not a "compensation plan" or "comp plan" as Phillip Georgeson referred to it. A "Commission program" is for those salesmen who make retail sales, not recruiting others.

Mr Perry continues to call it a "hybrid" or "combination" of an affiliate or referral program, like Amazon has. Specifically he says:

"In some ways it is MLM, because if someone considers MLM multiple tiers which almost people do then our Incentived Refferal Program (IRP) does have multiple tiers which almost all people do..."

He then laughs at the point of describing MLM as having multiple tiers. It seems this is because he's realized that in defining MLM he has painted himself into a corner. However, he continues to dig himself deeper and deeper into that corner:

"The only way you can ever get people to make money and build security is by..."

From there he goes into a franchise argument, specifically mentioning Kentucky Fried Chicken. He says that Harland Sanders wouldn't have probably been a famous and wealthy man if he only had one chicken store. Mr. Perry makes the point that he uses the process of duplication. The key point here is that KFC is not an MLM. That concept is outside the scope of this article, but it's not hard to prove that if KFCs didn't sell product and made most of their money recruiting other KFCs, it would collapse as well. Imagine if KFC made most of its money by recruiting other KFCs... you'd get to that over-saturated point fairly quickly.

It's worth mentioning that all MLMs have a component of Amazon's affiliate or referral program to them. It simply means that if I refer a product to you and you buy it, I get a commission. Mary Kay and Amway have done this for decades. In fact the FTC says that this is the way sustainable, non-pyramid, non-illegal MLMs, should work... here are the FTC's guidelines once again. Note the focus on retail sales.

So when Mr. Perry claims that One24 has features of an affiliate program and features of an MLM, he really could have said that it has features of an MLM, since they are all "hybrids" in the sense of having the affiliate side of the business.

Joe Perry (16:40-ish) continues:

"One of the neat things... about One24 is that really anyone can get involved with minimum amount of exposure and risk.... you talk about pyramid schemes earlier is one of those things they really look for is 'how much inventory do I have to buy?' or 'what's the initiation or enrollment fee to get in this deal?" Well if you start comparing apples and apples after awhile you look at One24 and you go oh my gosh, 'What is the risk?' There's very little risk and that's the way it's been designed...

This is the way many MLMs have been designed. One24 isn't unique or special. Having to buy inventory and/or paying an enrollment are traditional issues that the FTC has brought up with MLM companies. These points were brought forward years ago, MLM companies have dealt with them by now. Many companies, including One24, get away by requiring their distributors get their expensive product auto-shipped. This can be more expensive in the long term. In a lot of ways it is a lot worse for consumers like paying to rent their cable box month after month and year after year. As for not having to buy inventory - again distributors are required to buy the product to earn commissions from recruiting others. Perhaps one of the reasons the product can be found cheaply on Ebay is that people are forced to buy the product as a fee to be "in the business."

Philip Georgeson says (17:40):

"If someone were to go into this 3, 4, 6, 10 years out they would have the level of potential success as the person who started from the beginning. Is that a fair assessment?

Joe Perry (17:55) continues:

"Oh yeah, and I think any fair plan... you know a pyramid is something that pays people at the top that started first. And when you look at One24... I watch the numbers each month... I've looked at new people that are coming in that came in 6 months after ... and 6 months sounds probably pretty small, but we're less than a year old. I look at some the most recent PCs that are doing extremely well and they are going to be passing the guys that got in 6 months prior to them if they keep doing what they are doing pretty quickly if they keep doing what they are doing.... that's an excellent point.

Mr. Perry makes a great point that they are less than a year old. How can they speak to whether someone would have the same success 3-10 years? Note that they never said you'd have the same odds of success, just a "level of potential success." From the Slender Now experience we know that similar companies tend to dry up pretty quickly. Also note that Mr. Perry says "some of the most recent PCs." There is a wide chasm between possible and probable and the company isn't willing to give any numbers or statistics on it.

One24 as a New MLM / Network Marketing / Direct Selling

At the 18:35 Philip Georgeson says "You and Mark have created the 21st century direct marketing company...."

Joe Perry doesn't argue it. In the podcast they don't tell people this, but "Network Marketing" and "Direct Selling" are just terms that are used to hide the bad publicity behind the term "MLM." Clearly establishing a network and marketing does not have to be multi-level... I have a network of readers here and I don't make money from what my readers (my network) recommends. Additionally, there's nothing in "direct selling" that implies multi-level marketing... if you at the top of the pyramid in any MLM companies, they don't typically don't "directly sell" any product at all. It seems like they are just moving the ball again by calling it "direct marketing."

At the 20:59 Mr. Perry says,

"I was just talking to one of our PCs right before this call and the guy is just so excited so thankful and it's just changing his life."

I'm having a flashback to that woman who wanted to by a new stove with Slender Now. I'm betting she was excited and thankful until it collapsed. People exhibit the same emotions when they join a pyramid scheme and get their first taste of the money rolling in.

One24 Scam Podcast Recap

At 22:30 Philip Georgeson tries to sum up the "interview" with points to for the PCs (distributors) to jot down.

The points he makes are:

  1. "One24 is an idea that has found its time. We have seen the evolution of what has happened in this industry and One24 represents the new path of the whole direct marketing industry." In other words, One24 is indeed in the MLM industry and hence is an MLM. So much for being something "new."
  2. He makes a point that is not "a recruiting-driven tool based on the financial aspects and retirement aspect..." The response to this charge about the company being "a recruiting-driven tool" was that One24 was derived "by doing one thing... that one green ticket, referring one person to become an auto-ship ofa product NatraBurst and repeating that." His point continued "When you do that over time, repeat that over and over, great things happen." Sounds like One24 agrees with me that NatraBurst is a recruiting-driven tool and that these "great things" are the potential financial rewards from such recruiting. We said the same thing, just used different choices of words. The Podcast didn't even try to make a distinction.
  3. Next up is a recap of the section that I talked about in One24 as a Pyramid Scheme area. My favorite part is that he admits that One24's policy of recruiting 24 people would blow through the world's population "is probably true on paper." However, he tries to make the distinction that "It can't happen", based solely on the evidence that it is has never happened. He neglects to mention that it's because enough people are too smart to fall for such scams and PCs (distributors) drop out when they find that recruiting people isn't a sustainable business.
  4. Philip Georgeson then tries to slander me for bringing such a logical argument that he agreed is "probably true." He says that to compare One24 to a pyramid scheme, "I think speaks to the level, or lack there of, of education and intellect of what they know in the industry itself." It short he's attacking my intelligence for applying The FTC guidelines about the MLM industry to One24. Nowhere in the Podcast do they address the FTC or their stance.
  5. He says that the product, NatraBurst, was developed well before One24 was established. The timing of when the product was created is irrelevant in such schemes. The product could be gallons of milk for all it matters. What One24 is really pitching here is the business. Otherwise they wouldn't have stress the "great things" that can happen from recruiting others into the scheme. This is what makes the product an afterthought. You could plug in just about any kind of consumable. Philip Georgeson says that One24 had this product, a "superfood", already prepared and then the concept of One24 came in. I would need to see a lot of evidence backing this up, because these are people who, in their own admission "spent more than 30 years in the MLM industry." People in MLM industry always seem to stumble upon these "super-products", which just happen to be perfect for their scam.
  6. I covered NatraBurst Nutritional Information as Proprietary Information fairly well. The point is that NatraBurst is health product and, as such, should disclose all information necessary to the consumer to determine if it is healthy. For good measure, Philip Georgeson takes something that I didn't say and suggests that I lack knowledge. He goes on, "So you [PCs/distributors] get to turn that table and spin that because whoever puts that out there is not understanding the categorization of what NatraBurst really is." You have to love with a company tells its sales force to "spin" things, especially when consumers try to get necessary information to make an informed purchase.
  7. Philip Georgeson, then recaps and says that it One24 an MLM. However, a number of times, they'd talked about being the direct marketing (MLM) industry. Mr. Georgeson tries to spin it into being a hybrid between an affiliate program and "of course the successful tiered element of Multi-level Marketing (MLM), which gives you the wealth, which gives you the foundation and the only ability to capitalize on the efforts of others." It's interesting that they tie the MLM opportunity to the wealth proposition here, but previously they said that One24 should not be categorized for its financial and retirement aspects. This company can't seem to make up its mind. This is what happens when the FTC says you can't make these of claims and you need these kinds of claims to keep the sales force motivated in expanding the scheme. As for the One24 not being a MLM, it seems like their plan is to take the MLM and try to dress it up as something different. It's putting lipstick on a pig and calling it Scarlett Johanson.

That's pretty much the end. After more than 6500 words, it's about time, right?

This post deals with:

,

... and focuses on:

MLM, One24

Last updated on October 13, 2015.

One24 Threatens to Sue Me for Defamation

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Stop me if you've read this one before. I write about a multi-level marketing (MLM) scheme and their lawyers send me an email that I'm going to be in trouble. This happened with MonaVie twice. Yesterday, a lawyer claiming to represent One24 contacted me about my article: One24 Scam. In it, I explained that the FTC has said that some multi-level marketing are actually pyramid schemes. I then showed how the FTC's guidelines for pyramid schemes apply to One24.

The Lawyer's Email

I received an email from Charles McMurry, corporate attorney for 124 LLC. In it he "strongly suggested that [I] remove any comments about 124 on [my] web site." He claims that my comments are defamatory. McMurry takes exception with my implication that One24 is illegal because it is a pyramid scheme. He defends this by saying that I'm clearly wrong because it would mean that numerous large companies in the US would be under investigation. He then informs me that there is no law against MLM companies. Then he says that each state has separate statutes that govern these businesses and that there is no scam or illegal activity. For good measure he says that the 124 "sells a good product" and that it "returns a large percent of sales to its members in the form of commissions." He then suggests that I should look more closely at the laws of regarding defamation. He then said that they "need me to remove all my negative comments about our company with the next 24 hours." If I fail to comply he said he will pursue "legal remedies." He closed the email by inviting me to email him or leave a phone number to call and urging that I "govern [myself] accordingly."

[Update: Since I was asked in the comments to post the email, here's a screenshot from my Gmail account. As you can see it is nearly a year old and One24 has not responded to my latest email. Charles McMurry was unable to put forth any specific part of my article that was deemed incorrect and resorted to trying to attack me because he couldn't defend One24's practices. It appears that One24's the large law firm of Grimes and Reese agrees with me since they took no further action. I tried my best to work with Mr. McMurry, but it seemed like he was only interested in preventing the consumers from obtaining important information about the company, not correct any kind of injustice.]

What is defamation?

When in doubt, one of the first places I go to is the Electronic Frontier Foundation's Blogger's Guide. The EFF is one of the best known and reputable sites I know. They even have a whole FAQ devoted to defamation, which comes in handy in times like these.

One of the first things the guide makes clear is that defamation is against a person. At the bottom of the page you get to a question about trade libel, which as it says, "Trade libel is defamation against the goods or services of a company or business. For example, saying that you found a severed finger in you're a particular company's chili (if it isn't true)." So one of the first things to note is that One24 wouldn't have a defamation case, they'd have a potential trade libel case (if any case at all).

Let's put the question of trade libel vs. defamation aside for a minute. Suppose that it is defamation as Mr. McMurry claims. According to the EFF's guide:

"The elements that must be proved to establish defamation are:

  1. a publication to one other than the person defamed;
  2. a false statement of fact;
  3. that is understood as
    • a. being of and concerning the plaintiff; and
    • b. tending to harm the reputation of plaintiff.
  4. If the plaintiff is a public figure, he or she must also prove actual malice.

"

The most important thing that I see here is that there has to be "a false state of fact." So if I were to say that One24 is a pyramid scheme, One24 would need to prove that is not a pyramid scheme. This would be an extraordinary difficult thing to do considering the FTC's statements as I showed in my original One24 post.

Getting back to trade libel for a second, the burden of One24 proving that it is not a pyramid scheme is backed up by this post about trade libel: "A second difference is that plaintiff is required to plead and prove that a disparaging statement is false in regard to trade libel, whereas in a cause of action the plaintiff is NOT required to plead that the statements are false in most cases."

Furthermore I found this information about the false statements with regard to trade libel:

"3. The defendant must have made the communications knowing they were false or with reckless disregard of the truth. (Leonardini v Shell Oil Co. (1989) 216 CA3d 547.) Reckless disregard of the truth is determined on a case by case basis but essentially means that no reasonable person would have considered the defendant’s fact finding as acceptable practice prior to publishing the untrue statements. A typical situation is that the defendant claims the product is unsafe without either testing the product or investigating the claims of lack of safety in any verifiable manner."

In this regard, not only would One24 have to prove that it isn't an illegal pyramid scheme. It would have to prove that it wasn't reasonable for me to suggest it was a pyramid scheme which would be extremely difficult considering this article from the FTC about MLMs and pyramid schemes.

Analysis of the Rest of the Email

The rest of the email is interesting. I should point out that the email has a few typos and grammatical errors. I wouldn't typically point this out, because as a blogger, my posts are filled with them. However, as an official communication from a lawyer, this seems very unusual.

It also makes the common error that all pyramid schemes are investigated promptly. Bernie Madoff was operating his for more than a dozen years. There's even a book about it. It is also worth noting that in many cases, there is no one to bring these cases to trial. The one organization that could do it, is the FTC. However, the FTC doesn't have the budget to fight against one company, FreeCreditReport.com - it's hard to imagine it could bring cases against every MLM company that it felt was a pyramid scheme. Furthermore, Pyramid Scheme Alert has an article about politics and why the FTC lets MLM run wild in America. I'm not a political scholar so I'll leave that as an exercise for the reader.

Is One24 just trying to Whitewash Justified Criticism?

The final part of the email essentially demanding that I take down "negative comments" looks to me like they are trying to squash criticism. It's important to note that the email didn't state that I should remove "false negative comments", but all negative comments. I'm pretty sure that I'm legally allowed to criticize a company.

My Response to One24

I returned an email to them that I don't believe there is any defamation case to be had here.

I then strongly suggested that they consider the consequences of bringing legal action against me. There is a well-known phenomenon called the Streisand effect. Wikipedia describes it as, "primarily online phenomenon in which an attempt to hide or remove a piece of information has the unintended consequence of publicizing the information more widely." If One24 is looking to keep the negative comments quiet, the approach they are taking has a history of backfiring.

What are you thoughts? Let me know in the comments.

This post deals with:

... and focuses on:

MLM, One24

Last updated on August 9, 2016.

 
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