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Reviewing a 6 Year War on MLMs

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A couple of months ago, a commenter named Capitalist left an interesting comment on my MonaVie article. Essentially he was saying that he didn't see a problem with MonaVie despite the fact that I made a substantial argument that: "MonaVie is a grossly overpriced product, with little nutritional value, wrapped in a poor business opportunity that appears to be illegal pyramid scheme, supported by nonsensical "scientific" studies and illegal medical claims."

His argument was three-fold:

  1. that the products aren't illegal (citing that it wasn't like "Meth").
  2. that if there are false claims someone should file a substantial lawsuit against them... but that he didn't feel there was substantial evidence. (He apparently never visited my MonaVie Scam website that documents extensive evidence of false and misleading claims by MonaVie and its distributors.)
  3. The fight against MLMs hurts the Salt Lake City economy, specifically noting, "there are entire industries in SLC supplying these companies, making money, and creating jobs. Accountants, bottle suppliers, box makers, construction for new buildings, label printers, marketing firms, networking companies, lawyers, etc... Say you succeed and tear down every MLM. What’s been done now? Basically, a crap load of people are out of work or hurting financially."

Clearly he was trying to troll me. However, I like to let everyone have their say because this discussion helps us learn.

I dismissed the first point. When the FTC shut down JewelWay they weren't saying that selling jewelry is illegal. It was using the product to hide a pyramid scheme that got it shut down.

The second point had a little more merit. In fact, MonaVie was sued by Joe Neal Oliver of Arkansas for the false claims. The two sides reached a settlement where MonaVie set-up a settlement fund of $4.5 million to pay those in Arkansas who bought the product. Maybe it is just me, but I don't think a company would pay $4.5 million unless there was substantial evidence against it.

In subsequent comments, Capitalist suggested that I sue the MLM companies making false claims. I'm not really a big fan of the legal system. There's a ton of red tape, it takes years to get anything done, and in the end it seems like the lawyers make the majority of the money, not the victims. Finally, it's difficult, maybe impossible to find a lawyer who will take on a case against these well-funded companies on contingency.

The third point about the economy of Salt Lake City had the most merit. I don't want to put people out of work. I'm all for bottle suppliers, box makers, label printers, etc. making money. However, I can make a strong case that each of the companies is an illegal pyramid scheme using the FTC's Guidelines. A pyramid scheme is not good for the economy. When people pay $40 for a bottle of MonaVie, a very, very small percentage is going to the bottle suppliers or label printers. These people make the same amount if they sell a bottle of $2 buck chuck. In fact, due to the extraordinarily high, and unjustified pricing, fewer bottles are purchased and these people make less than they could if the product was legitimately priced.

Since I can make a case that these companies are operating illegal pyramid schemes, I really don't care about the accountants and lawyers who are likely in on it.

These companies transfer money from those who need it the most, the low-income distributors desperate for any kind of income, to very few people at the top of the pyramid. The company's small ownership keeps the other big chunk. In any case, the economy of one small city is not worth the huge damage it does to the economy of the country. All the people saving their $2000 a year from avoiding MonaVie would likely put that money to work in other ways.

Finally, let's not forget that Enron employed a lot of people. No one said, "Hey let's ignore this fraud because it's good for the jobs of these people."

Capitalist seemed to get annoyed by all this logic and challenged me to do more, continuing to troll me saying that I'm not willing to do what it takes to shut down MLMs and that I'm a person of weak principles. He was asking if I'm really doing anything at all. He was in full troll-mode now. It's like going up to a police officer and saying, "Hey, crime is still being committed. You clearly are wasting your time." It simply doesn't make any logical sense.

However, one question that did stick with me is, "How much of an impact am I really having?" I can judge impact from a couple of things: 1) the number of emails I get thanking me for the articles (many) and 2) the number of threats of their lawyers. They aren't going to waste their time on someone who doesn't impact the business.

Beyond that, I thought it was worth looking at the companies I've written about over the years to see how they are doing. Since most of the companies are privately traded and don't release figures about their financial health, I decided to use Google Trends as a tool. I'll be the first to admit that isn't perfect, but it is very good at gauging "interest", and probably the best tool available.

What follows are Google Trend graphs of various MLMs roughly in the order of size/popularity. I've placed the dot in the graph at the month that I wrote about the MLM. As a disclaimer, I have never gone to seek out MLMs to write about... people email me with stories and ask me to look into them (or in the case of MonaVie, approach my wife with a ridiculously overpriced bottle of juice). Click the images to enlarge them.

MonaVie

This was the graph that inspired me to write this post. The very month I wrote about MonaVie was the beginning of the collapse of the pyramid. Interest in MonaVie is about 25% of what it was at the time. That's a lot of consumers not spending $2000 a year (or $5000 for a family of 4) on juice. We'll swing back to how important this is later. For now we'll move to:

ViSalus

I was out in front with this one by a couple of months. This one collapsed to 25% of its peak pretty quickly. Unfortunately, a lot of distributors are on the hook for their BMW payments that Visalus saddled enticed them into. Many of ViSalus' distributors were college-age young adults (that's who they targeted), who learned an expensive lesson.

One24 Natraburst

I got to this one just before its peak. This was the easiest one to out as a pyramid scheme. Their pitch was to recruit one person a month for 24 months and you have financial freedom. They barely even pushed the idea of selling the product which is critical according to the FTC guidelines on MLMs/pyramid schemes. From the graph you see that the company lasted about two years before falling into the gutter... ironic dontcha think?

I've stopped following the company, but it seems like there was an internal lawsuit with its founders and One24 may not exist anymore. Their twitter account says to follow @NatraGood that has 39 people following it.

Interest in the company via Google Trends is just 5% of its peak.

ASEA Water

I missed the peak on this one. It had been mentioned in the comments of my MonaVie article roughly a year earlier, but I simply didn't have the motivation to write about it until my friend J. Money at Budgets Are Sexy took a guest post on it. Commenters on his site in droves pointed out it was a scam and he took down the post.

Since Asea was a well-known term before the product or company, I used the term "Asea water" to measure popularity. Interest has been up and down. It currently is 48% of its peak, which is where it has been for about a year. I can't say it's collapsed like the others. I'll have more to say on this later on in the article.

iJango

iJango barely got off the ground before collapse. There was a lot of interest for a couple of months. By the time I saw that the BBB was saying that it might be a pyramid scheme and wrote my article, interest was down to 9%. By 2010, less than a year after it launched it looks like the interest was zero... the company ceased to exist. The victims of the scam paid $150 upfront and $20 a month. It's sad to see that these victims in the comments were so adamant that it wasn't a scam.

Because the company went under so quickly the damage was limited. They weren't conned into paying month after month for very long. Sadly, that's the best-case scenario with MLM.

Jusuru

This company has been slowly going up for a while, a very sharp contrast to the others that show clear collapses. However, like ASEA, I've got more to say on this in the conclusion.

After I wrote the article their VP of Marketing, David Ciemny, engaged in conversation with me on my blog. When I explicitly pointed out flawed logic, he refused to respond. More than two years have gone by and nothing. I emailed him twice and just got silence. There's a reason why the company itself registered the domain JusuruScam.com. You don't see IBM and Microsoft registering the scam versions of their website.

Conclusions

To sum it up, we've got two companies, iJango and One24, that are, or appear to be, out of business. We've got two companies, MonaVie and ViSalus with collapsed pyramids interest. We have two companies, Asea and Jusuru, who seem to be holding steady or going up in interest.

As I mentioned above, I wanted to look into those last two. To get to my point with them, I think it is important to understand the size of these companies. I created a couple of graphs to show the relative size of them.

It turns out that there's a clear "Big 3" and a "Tiny 4." Here's the "Big 2", MonaVie/ViSalus, compared to each other:

As you can see MonaVie's average is probably a little more than twice of ViSalus. MonaVie was by far the biggest company (by interest) despite the fact that it has been collapsing for 6 years.

Let's look at the "Tiny 4" (iJango, Asea water, Jusuru, One24):

Here I compare the "Tiny 4" to another tiny company. You can see that they are barely a blip on the radar in comparison. So while Asea water and Jusuru might not be collapsing, they are insignificant.

[Note: I would have put these all in the same chart, but Google limits the terms to 5. Hence the double chart comparison. I hope I didn't lose you there.]

When I started writing this article, I wanted to be able to use all this data to say, "A ha! I'm doing something big here!" I could say that but it would be as dishonest as any of these MLMs, so I won't. Trying to draw any correlation from my coverage of these companies to their collapsing interest is useless. I can't show causation. For all I know interest would have collapsed anyway.

What I do have are the numerous emails of thanks from readers. The consensus seems to be that they've made a big difference in their lives.

Last updated on October 13, 2015.

This post deals with: ... and focuses on:

MLM

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One Response to “Reviewing a 6 Year War on MLMs”

  1. tom says:

    If it has a funny name and people approach me on an airplane to buy or sell, it’s an MLM.

    Most of these pyramid schemes seem to be health related. I’m sure that’s due to the fact that you can buy “doctors” to create “research” supporting your product. What about things like Essential Oils by Young Living, and these sticky nail things you see all over Facebook? These are clearly MLMs, but no one seems to be the wiser.

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