Over the weekend a lot news about MonaVie came across my virtual desk. That's quite unusual, weekends tend to be a quiet time for news.
For those curious what MonaVie is I asked if MonaVie is a scam more than 3 years ago. I was surprised that company was selling bottles of juice at $45 and more surprised from a personal finance perspective that people were buying them. One of the pieces of news was related to that, but let's save the most interesting stuff for the end. First, I'd like bring up a couple of MonaVie blog posts that people pointed out to me recently.
MonaVie to Solve the Recession?
The first MonaVie blog post makes the claims that MonaVie is leading the industry to show that community commerce (or direct selling) is the only business model truly scalable enough to address the fact that 1 billion people globally will never be employed.". (That's their own use of bold, not mine.)
So many things come to mind from that statement. On the surface it seems like we can add a new term of "community commerce" to the DoubleSpeak of MLM vs. Network Marketing vs. Direct Selling. MonaVie is best described as multi-level marketing. It isn't direct selling. Direct selling doesn't necessary have a multi-level approach to it that the the FTC views as a potential for a pyramid scheme. MonaVie isn't "community commerce" either. Such a term would apply to an Ebay method of selling, which MonaVie prohibits.
Linguistics aside, let's get to the question of the billion people who never be employed. First, MonaVie doesn't cite where that number comes from. Second, as the blog post points out, that the situation is bleakest in third world countries. MonaVie is not available in most of them. The other thing that MonaVie doesn't mention - to be a distributor of MonaVie, you have to buy about $1700 of product a year. The very first person commenting on the post got the message, "...however not successful passing the message due to the high cost of the product, when people don’t have money they don’t buy a health beverage for $143 a case every months." Ignoring his grammar, the message is obvious, unemployed people shouldn't be paying $1700 a year for the juice. This can only be more true, when there are people in third world countries where $45 is a life-changing amount of money. How much rice can be bought for $45 to feed the hungry? Is 100 pounds an exaggeration (about 50 cents a pound when bought in bulk) or is that conservative? That will get you 25 ounces of MonaVie. Who are you going to get to buy your $45 juice? Every MonaVie distributor knows that first thing people cut when times aren't good are luxury items like the Rolex watches, Tiffany's jewelry, and $45 juices.
Many of the comments from MonaVie distributors on the blog post are interesting from a personal finance perspective. Here are a few:
- "People today are paying more than two cases of MonaVie juice a month to go to a job they hate! Add up the cost of gas, clothes, childcare and food monthly. MonaVie offers the greatest opportunity return for the 'COST' of my time and money!" There are costs associated with most jobs, but MonaVie is no exception. The $1700 in product is a big one. However, there are others such as gas, conference fees, hotel events, tools to sell the product, etc. As we'll find out 99% of people don't even make enough to cover the product.
- "It’s unfortunate, because long-term most will continue being broke for years to come wasting their money on cigarettes, alcohol, clothes, makeup, coffees, pops and other junk foods and fast foods, etc." MonaVie replaces none of these things. It is just one more expense to add to all the others.
- "...people will buy 6 and twelve packs of beer, $30 dollar bottles of wine and pay $10 a glass while eating at a restaurant all day long."
The distributors seem suggest that people give up things that they love, so that they can buy a $45 bottle of juice, which, by the way, lacks nutrition.
However, the worst of it are the ones that MonaVie published that make false and illegal claims. I made a point to keep a screenshot of the page, but I'm betting MonaVie takes down once I publish this. Joyce Schmitz comment:
"Cheaper than medication and much better for you too. It is a way to get your daily requirement of fruits and vegetables."
The FTC and FDA are quite clear that a comparison between a juice and medication can't be made.
As for getting our daily requirement of fruits and vegetables, here's a form from the CDC, Fruits and Veggies Matter website. According to it, I (a 35 year old male with moderate exercise) need 2 cups of fruit and 3.5 cups of vegetables. According to the same website, 4 ounces of MonaVie's 100% fruit juice counts as a 1/2 cup of fruit. At $1.43 an ounce, my fruit would cost $22.88 of MonaVie juice and the website is clear to point out that it would be less than ideal since it wouldn't have fiber that fruit has. MonaVie also contains no vegetables, so I'm out of luck there.
Commenter Dave W. Clark doesn't seem to understand this, "The Dietary Standards of the United States are changing to http://myplate.gov (50% vegi’s and fruits) on every meal. The cost and storage of vegatables alone is quite costly." Clearly MonaVie is much more expensive.
Here's the ad that they put in USA Today that the blog post was referring to:
You'll have to click it to see the larger version, but one thing you'll find is that MonaVie claims that "direct selling employs 75,000,000 people" (notice that they emphasize all the zeros rather than just say million). That's an odd phrase. First when they talk of "direct selling" do they mean the MLM type or the traditional type (like a door-to-door salesman or an Ebay sale). Typically with "direct selling" they mean MLM, but if they are including non-MLM businesses then MonaVie has no business conflating the two very separate enterprises. The other thing odd about the sentence is the term "employs." It is well-known that distributors are Independent Business Owners (IBOs) and are not employees, which is how MonaVie can get away with paying less than minimum wage (on average), providing them with no benefits (such as health, eye care, or dental for example), and require them to buy product to earn their income.
You'd think that would be the most interesting part: attempting to solve a lack of employment, by offering a solution that DOESN'T employ people. However, it gets worse. We found that over 95% of participants must lose money MonaVie's compensation plan - and that's the best case scenario. In terms of the practical, real world case, over 99% of MonaVie distributors lose money!
MonaVie is offering a solution to the recession that is worse than going to casino and putting your money on the roulette wheel.
MonaVie and Layoffs
Another reader pointed me to another MonaVie blog post Never Worry About Layoffs Again. Once again MonaVie makes the claim, "Many are saying goodbye to their 9-5 work (horse) jobs and embracing the only scalable model to address the global concerns related to unemployment and underemployment – community commerce."
While it is surprising that MonaVie would continue to harp on its "solution" where most people lose money, that's not the big irony here. The irony is that MonaVie's corporate entity has experienced layoffs themselves over the last year. An anonymous tipster forwarded me an email from MonaVie's Dell Brown to employees in August of 2010 announcing the layoffs. In it was the following choice quote:
"This week we will be announcing our restructuring plans, which will include the elimination of jobs. This has been a painful process. We have devoted employees who have sacrificed for the sake of the company and our distributors. Some of you will find that your positions have been eliminated. I am sorry for the pain and disruption that this may cause in the lives of those who are affected. Many of the positions that have been eliminated belong to strong, capable, and hard-working employees who have performed well in their posts."
The tipster also said the following, "This was the first major round of layoffs to occur. The most recent round of layoffs occurred last week, resulting in the loss of fifty or so employees."
When you match up the timeline from the tipster and the publishing of this post, one has to wonder how a company could be more insensitive. More important though, how can being a MonaVie distributor be a global solution for unemployment or underemployment, when the company itself can't scale to support the few number of actual employees it has?
MonaVie's Scheme Comes Under Fire in a Class Action Lawsuit
The final piece of news is that MonaVie was hit with a class action lawsuit in Arkansas. You can read the a PDF of the complaint on MonaVie's website.
The complaint makes a very compelling argument that "MonaVie is marketed and sold to vulnerable customers at an outrageously inflated price because defendants [MonaVie] and their 'independent distributors' create false hopes for preventing and treating illness by generating false and misleading advertisements and claims about the health benefits of drinking Mona Vie juice."
The 40 pages go into great detail and yet only cover about 1/5th of the information that's available on MonaVie Scam. I'm glad that pointed out that Lou Niles dressed up in surgical scrubs and pretended he was an oncologist in a famous video that been seen on YouTube tens, maybe hundreds, of thousands of times. The suit also makes a point to compare MonaVie to the CEO's Dallin Larsen's previous juice company, Royal Tongan Limu, where the Department of Justice and FTC raided the warehouses and destroyed the product due to the level of illegal claim. The comparisons are shocking.
This back to the comments that I highlighted on the blog post above. You see distributors making a case that the juice can cheaply replace fruits and vegetables. That's because MonaVie, LLC (the defendants in this complaint), made the misleading claim that drinking 4 ounces of MonaVie is equal to eating 13 fruits and vegetables. Of course, drinking MonaVie is not equal to eating 13 fruits... 4 Ounces of MonaVie is 1 serving of fruit. Actually I need to update the last article because new guidelines say "½ cup (4 fluid ounces) of 100% fruit juice does count as ½ cup of fruit in meeting your requirements."
The lawsuit in Arkansas is dead on about every point. Think about Joyce Schmitz comment above of "Cheaper than medication and much better for you too." These are the comments that MonaVie is allowing to be published on their very website. The comment has been there for over a month too. The only thing that I found disappointing in this lawsuit is that Joel Neal Oliver, nor his lawyers contacted me so I could give them even more information.
If you are involved in MonaVie, thinking of getting involved, you owe it to yourself to read the complaint. If you know someone involved, I hope you will forward this post to them before it's too late. If MonaVie goes out of business the distributors lose their income too.
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