In November of 2013, I got an email from Kris Spears who identified herself as a ND and ACN about a company called FG Express. She was promoting a product called Xpress Strips. Her LinkedIn page is here. I'm not sure what the ACN abbreviation means (I've been looking), but ND seems to be short for Naturopathic Doctor.
Before we go very far, I want to state that a respected medical journal write about Naturopathic Doctors:
"Their training, however, amounts to a small fraction of that of medical doctors who practice primary care. An examination of their literature, moreover, reveals that it is replete with pseudoscientific, ineffective, unethical, and potentially dangerous practices. Despite this, naturopaths have achieved legal and political recognition, including licensure in 13 states"
So I guess they are considered doctored in 13 states. However, there are numerous comparisons of it with quackery here.
Last August I received another email from a reader with the following:
A friend of mine has been roped into the world of FG Xpress Power Strips. He has been brainwashed into thinking that this is a miracle product different to the pills and options other MlM's are selling. Is there any way it can convince him that it is just a placebo too? Have you done any research on this company or product?
I had already had it on my list to write about thanks for Ms. Spears, so I put high up on my to-do list. Unfortunately there are a lot of scams to cover. I took the holidays off from covering them as uncovering fraud is not the most festive topic to cover.
A week or two ago, I got word that MonaVie's Randy Schroeder moved to FG Xpress. You'll remember that I exposed MonaVie as a scam as well as their MonaVie Mynt. I went as far as explaining why it appears to be a pyramid scheme according to the FTC's guidelines. Schroeder supported MonaVie the whole time while the scheme imploded as evidenced by Google Trends:
It looks like Schroeder left with a bang leaving MonaVie with quite a bit of explaining to do.
Of course, before he joined MonaVie, Randy Schroeder was with Agel, yet another pyramiding company.
Why the long introduction? Whenever I write about an MLM company their distributors flood the comments saying, "You are only trashing a good company to sell advertising on your website." No, I write because their distributor pitched me, a reader has had a friend brainwashed by them, and they seem to have hired a person who I knew from a pyramid company that I covered long ago.
With that out of the way let's dig in.
FG Xpress Power Strips: FDA Class One Medical Device?
One of the first things that Kris Spears tried to sell me on in her email is: "Our product is FDA Listed as a Class 1 Medical Device for Pain relief called Power Strips." The company is not shy about sharing that point. See the image on the right.
Sounds very impressive doesn't it? I have looked into more than a couple dozen different MLM companies and you never see them tie the FDA with their products.
In addition, we've become a world where we talk about our smartphones and tablets as devices. People refer to their Apple products as iDevices for example.
In fact, ForeverGreen (the FG) put out a press release stating: "ForeverGreen, in cooperation with the manufacturer of its PowerStrips product, has completed the tedious, time consuming and expensive process of listing PowerStrips on the FDA medical device list. As a listed Class 1 medical device, the FGX PowerStrips are unique."
Except that a Class 1 Medical Device isn't impressive or unique at all
If you look up the FDA's listing of FGX PowerStrips, you'll see that the classification is "PACK, HOT OR COLD, DISPOSABLE". The definition of this classification is on the FDA's website:
"A hot or cold disposable pack is a device intended for medical purposes that consists of a sealed plastic bag incorporating chemicals that, upon activation, provides hot or cold therapy for body surfaces.... Except when intended for use on infants, the device is exempt from the premarket notification procedures in subpart E of part 807 of this chapter subject to 890.9."
In other words, it is classified as a disposable heating pack... the kind of item that you can buy for 75 cents on Amazon. And if you think heating packs are particularly magical, here's how they work. It also seems you don't even have to tell the FDA you intend to sell products as it is exempt from the premarket notification procedures.
How many class one medical devices are listed? I couldn't find an exact number, but the the FDA's website lists 500 alphabetically and only gets to "CA". There might be as many as ten thousand products listed. It doesn't seem like a process that is very tedious at all.
As far as the cost involved it seems to be $2,575 for the fiscal year 2013. Expensive is a relative term, but if ForeverGreen thinks that $2,575 is expensive for critical marketing of their heating sticker, don't expect them to pay out more than "tens" of dollars to their salesforce.
Here's how classes are explained in plain language on the FDA's website:
"Using a risk-based classification framework, FDA places every medical device into one of three “classes” depending on the degree of regulatory control needed to provide reasonable assurance of safety and effectiveness. Devices posing the lowest risk, such as elastic bandages, are placed in Class I (General Controls). These general controls include the classification process itself, establishment registration and premarket notification, Quality System Requirements for manufacturing, provisions regarding adulteration and misbranding, recordkeeping, and reporting of adverse events. If general controls alone do not reasonably ensure the safety and effectiveness of a device, but FDA can identify an additional measure or measures that would provide that assurance -- “special controls” – FDA places that type of device into Class II (Special Controls), e.g., laparoscopes. Such Class II devices generally pose higher risks than Class I devices. They are then subject to the general controls that also apply to Class I devices, plus one or more of a wide range of special controls that the Agency may designate. These special controls may include performance standards, postmarket surveillance, patient registries, guidance documents, labeling, and/or clinical studies which, taken together with the general controls, are sufficient to provide a reasonable assurance of safety and effectiveness of the device. When FDA cannot be assured that the combination of general controls and special controls is sufficient to reasonably ensure safety and effectiveness of a medical device – generally higher risk devices – such devices are placed into Class III (Premarket Approval), e.g., the newer generation of global endometrial ablation systems. Premarket Approval (PMA) requires manufacturers to submit an application to FDA, which is then subject to careful scientific review to provide reasonable assurance of the safety and effectiveness of the device. FDA approval of a PMA application is necessary before a Class III device may be marketed. Once approved for marketing, Class III devices also remain subject to the general controls already described."
That same page gives you the great information that a condom is a class II medical device. So essentially FG Xpress Strips are actually less impressive than a piece of latex that I can buy for 33 cents on Amazon.
I think that puts the marketing of a "Class I Medical Device" in perspective.
On the basis of that alone, I'd say that FG Express PowerStrips count as a "scam" going by definition at dictionary.com of it being a "confidence game." The highlighting of a class one medical device and marketing from distributors certainly seems to inspire more confidence in the "uniqueness" of the product than one should have.
I have no problem with ForeverGreen getting the FDA listing. I have a problem with ForeverGreen using the FDA's designation of heating packs as marketing that the product is in any way special.
Is FG Xpress a Pyramid Scheme?
There's a lot of discussion about MLMs and pyramid schemes nowadays. Just last week there was an article in the NY Times about whether Herbalife is a pyramid scheme. Interestingly the author couldn't get the FTC to respond with a clear definition of what a pyramid scheme is. The closest I've seen an official definition from the FTC is this set of guidelines on their website. It includes the following:
"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."
So if the money you make is based on sales to the public, it might be legitimate. If it's based on recruiting and sales to them it IS an illegal pyramid scheme. Note that the FTC doesn't hedge their bets with language such as "might." It is definitive.
Recently the multi-billion dollar company Pershing Square created an easy to understand video primer on pyramid schemes and how they defraud consumers out of their money:
Now that we know what a pyramid scheme is, let's look at FG Xpress and a video found on it's "opportunity" page:
I'm hoping you noticed the similarities in the videos.
The FG Xpress video begins by saying that you become active by purchasing and order to get 50 or 100 volume points. At the 1:05 point in the Pyramid Scheme primer video it is explained that in order qualify as a distributor you have buy a minimum amount of product from the company.
The next section of the FG Xpress video covers how you recruit 4 people who each have purchased 100 QV worth of products themselves and explain that an X-Tribe is a two layers with at least 1000 QV in the group. At the 45 second mark of the FG Xpress video, it explains how it is a duplication model.
As the Pyramid Scheme primer video says at the 2:00 mark, the constant emphasis on recruiting is a tell-tale sign of a pyramid scheme. If you look back to the FTC document that we cited above, recruiting was also cited as the defining characteristic of a pyramid scheme.
It should be obvious by now that FG Xpress' video explaining its business is exactly what defined a pyramid scheme in the primer and in the FTC document.
At the 1:30 mark of the FG Xpress video they even explain that your bonus is based on how much product you buy from them. It also encouraged people to spend more to get the 100 QV to qualify for the larger bonus. A pyramid scheme would want people paying as much into the system as possible each month.
At the 2:00 mark of the FG Xpress video, it says, "while your enrollment tree continues growing..." At this point I'd like to point out that recruit and enroll are synonyms and tree and pyramid are synonyms in how they explain how it works. The video continues to explain that you only get paid from the lower leg. So if you recruit a lot active people on one side, but have duds on the other side, you are not going to get credit from good side. Even if FG Xpress wasn't a pyramid scheme, this is clearly seriously unfair.
At the 2:30 mark of the FG Xpress video, they say that the team bonus can pay you "up to $20,000 a week." They even write that number down and color it in to draw attention to it. Do the math on that. It is essentially baiting you with a potential of a million dollars a year (52 x $20,000 = $1,040,000), from just this aspect of the compensation plan.
At the 2:25 mark of the pyramid scheme primer, it explains how companies will tell you that you'll make a lot of money. Hmmm, just like FG Xpress did in their explanation.
The FG Xpress continues on for another minute or two explaining other bonuses they pay. They don't really give good examples with numbers behind them and instead use percentages and ranges of money you could make for rank advancements.
The biggest thing missing from the video... no mention of selling any product to anyone. There's no mention of selling product to the public which the FTC says "might" be an indication that it is legit. In fact, if you look at the entire FG Xpress opportunity page (as I write this), there is no mention of selling product to the public. In the whole opportunity video, the rewards were all based on recruiting, not sales to the public.
At this point, I think any reasonable person would conclude that FG Xpress is clearly a pyramid scheme based on the FTC guidelines above.
However, we can continue with the pyramid scheme primer video and see what else applies to FG Express. We left off at the 2:30 mark where it warned of promises of big money. At the 2:45 mark, it is mentioned that pyramid schemes will make "grand claims about the products back by extensive research and awards and have the ability to do amazing things... like cure illness." Anyone else flashing back to the "Class One Medical Device" section above?
At the 5:00 mark the primer offers a checklist of 6 things to look for in a pyramid scheme:
1. Promise large monthly income
2. Require investing your money by buying product
3. Strongly emphasize recruiting others
4. Complex commission structure
5. Lacks retail sales outside the distributor network
6. Sounds too good to be true
In my opinion you could almost take this list and use it to make the FG Xpress video. It satisfies all 6 points.
The marketing of PowerStrips seems designed to mislead people that the product is somehow more advanced that a cheap heating pack. The FG Xpress business opportunity appears, in every possible way I look at it, a pyramid scheme. Either one alone should be enough to send you running away. The combination of the two is simply inexcusable fraud in my view.
As the pyramid scheme primer says, help your community by spreading the word.
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