A couple of times over the last few months readers have emailed me asking about “It Works.” At first, I couldn’t even find what they were talking about. That’s a fundamental problem when you name your company a generic phrase. Fortunately (or unfortunately), it seems like they are easy to find nowadays.
I’m not going to beat around the bush, let’s dig in…
The Products of “It Works”
It Works has a few products, but their flagship product is a body wrap called the Ultimate Body Applicator. They often call it “That Crazy Wrap Thing.”
Is it any good? Well consumer advocate website Truth in Advertising (TINA.org) does the heavy lifting on It Works Ultimate Body Applicators. Specifically they cite:
- Hedge around claims – TINA found that claims on distributors sites danced around what they can say.
- Not Helpful for Cellulite – TINA found a document from Dr. Joel Schlessinger that stated, “There’s absolutely no data to say [wraps] help with cellulite or saggy skin.”
- Not Helpful for Toxins or Purification – TINA found a document from dermatologist Elizabeth Tanzi that stated, “There’s never been any real scientific evidence that body wraps pull out toxins or purify your body in any way.”
- Numerous Complaints – Specifically 362 complaints on the Better Business Bureau, including continued billing after cancellation and undisclosed $50 cancellation fees. It also notes how the Florida Attorney General has received several complaints including the company not honoring refunds.
That’s quite a bit to chew.
I did a little research on my own and I found this Ripoff Report on the company. As with all MLM companies, brainwashed distributors jumped to defend the company because any MLM or pyramid scheme falls apart if new people can’t be recruited.
And while “It Works” may not claim that the wraps will help you lose weight, I noticed a lot of distributors misinformed about it. Let’s expose that lie before it spreads. The FTC has a document that covers body wraps here and they reiterate it here.
Body wraps will not help you lose weight!
I’d like to think that with the money you’d save from the wraps ($700-1200 a year) you’d be able to do a lot to help lose weight. You could join a gym, buy some fitness equipment, invest in healthier foods… all sorts of things.
I just can’t buy into the idea that a temporary cosmetic enhancement without health benefits (even if it did work, which seems be very disputed) is worth investing in, when you can make choices for permanent cosmetic enhancement with health benefits (i.e. losing weight).
If you are looking for cosmetic improvement why not invest in a product that you can use over and over again like some SPANX? Yes, it’s not the same, but at least there aren’t doctors saying it doesn’t work. You don’t have to worry about throwing your money away on snake oil.
Let’s say that for some ridiculous reason, I ignore all the above red flags and decide, “Hey I want to try to sell this Crazy Wrap Thing.” Let’s look at the business of “It Works.”
The Business of “It Works”
Let’s pretend that you want to make money by “It Works” distributor. If that’s the case, you can either try to sell the product to friends, family, strangers at a mark-up, or you can recruit people in your downline/pyramid/team.
For the purposes of this presentation, it will be helpful to to have the It Works Compensation plan open to refer to.
Trying to sell the product at retail
If you are looking to just sell product friends and family, you make a sale which the It Works refers to as a Retail Customer… as illustrated on page 1.
You might be able to surprise people by telling them that you are having an event for a secret product, but people generally want to know what they are getting into. MLMs have tried to use that for decades and the public is wise to it.
So let’s say you are trying to be open and honest and say that you want to introduce them to “It Works” body wraps. Even if they show-up and love the product, they probably aren’t likely to be long-term repeat customers.
If you look at It Works’ Product page, a set of four Ultimate Body Applicators has a retail price of $99, but that’s hidden by a “Loyal Customer” price of $59 in big letters. The Loyal Customer has a minimum 3 month autoship requirement. So you could buy 4 applicators for $99 or $106 with shipping or spend $177 for 12 applicators with free shipping. Very few people are going to want to pay $26.50 vs. $14.75 per applicator.
However, what really makes the $99 a ridiculous farce is Ebay. This image is a little small, so you want to open to click it to make it larger:
This person on Ebay has sold over 500 Body Wraps Ultimate Applicators which includes an extra applicator (5 instead of 4) for a price that is trending at ~$45 thanks to Ebay’s helpful explanation. That’s $9 per application with free shipping.
Here’s where things get a little confusing. It seems like that product image is different and while the products seem to have the same names, it may be different than one I was comparing it to on the “It Works” website. So I did another search and found this Ebay listing. This person has sold over 2600 products and you can pay $69 or make an offer of even less money. That’s still $17.25 an applicator with no commitment.
There are even a lot of completed sales for $54-55.
No intelligent person is going to pay $106 when they can pay $69 or $55.
All this means is that you aren’t going to be able to make much money on such sales. You’ll have to price at around $55 to be competitive. That leaves you with very little profit. If you paid $99 for the business kit, you’ll be out $44 unless you can sell the half ounce sample gel and half fab wrap. Good luck with making your $44 back on that.
Many people don’t know this retail customer trap and get sucked into trying to sell the product. I’m unfortunate enough to have spent the time researching dozens of MLMs and know to look for this common red flag. In fact, there’s a great video about how hard it is sell products. It covers a lot more, so I will share it later.
Trying to sell the product at the Loyal Customer price
The Loyal Customer is again a pretty tough sell, because the price is $59 per package and there’s a requirement to buy three. No one wants to pay more money and commit to something when they don’t have to.
It makes very little sense to be a Loyal Customer, even with the discounted price.
Trying to recruit people
It is no accident that the bulk of the It Works Compensation plan is about recruiting people.
There are 16 pages on how you make income from recruiting and only a couple of paragraphs on making money selling the product. That’s important later on.
Even worse 10 pages are devoted to how it works when you are at the Diamond level. Since 99.5% of MLM distributors lose money, this is like trying to sell a fry cook at McDonalds on the separate compensation levels of CEOs in Fortune 500 companies. It simply doesn’t make any sense. It may be possible for the fry cook to become a CEO someday, but it certainly isn’t useful information for him now.
If you review the “It Works” Income Disclosure Statement, there are only 2.4% of people who rank Diamond or above.
I do have to give “It Works” credit for the disclosure of, “Expenses for Distributors can be several hundred or thousands of dollars annually.” This is how the 75% of people in the distributor ranks making an income of $752 a year on average can lose money. Of course, I have to take that credit away, because the company hasn’t put up the 2014 numbers and it is past the midpoint of 2015. That’s simply irresponsible… I’m not even that Lazy.
In any case, It seems obvious to me that the focus of the compensation plan is on a very small percentage of people. I believe that is an attempt to get people thinking about how much money they can make if they get there. That’s deceptive in my opinion because, mathematically, the Diamond level is always going to be around the same 2.4%. For the next person to move up, they’ll have to have recruited more people below which keeps the proportions in check.
Is “It Works” a Pyramid Scheme?
Whenever anyone asks me if an MLM company is a pyramid scheme, I defer to the the FTC guidelines on MLMs/pyramid schemes. Here are a few quotes:
“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.”
It seems very clear to me in many places that making a majority of your money from your downline/recruiting vs. selling to the public is a pyramid scheme. As I explained before, it appears to be very difficult to make money selling to the public.
That leads me to that video I mentioned above when I said it was hard to sell the products. The video is actually an informative video for spotting pyramid schemes. Here it is:
This is an important video because it covers many of the aspects of pyramid schemes. When I review the “It Works” compensation plan and other material that I see, it seems to match up very closely with the video.
Lastly there is this Steps to Success PDF that shows a recruiting plan along with a deceptive “GUARANTEE” that makes it seems like you’ll make the money. You only make the money if you recruit other people. It’s like being “guaranteed” income if you show up and work at McDonalds… there’s no real reason to write that guarantee in there unless they are trying to deceive you into thinking that the steps themselves are guaranteed. Even worse, if you look at the small print, you have to recruit people within a certain timeline. Notice that there’s no mention of retailing the product by selling it to the public.
Given this marketing, the video above and the FTC guidelines, it is my opinion that “It Works” is indeed a pyramid scheme that should be avoided by consumers and entrepreneur.
Miscellaneous Stuff about “It Works”
Sometimes some parts of MLM companies just don’t fit into nice categories. I like to use this section as a way to just throw my other thoughts out there.
The Name “It Works”
What’s up with the name? It doesn’t describe the product, like say, “SuperWraps” would. It certainly doesn’t describe anything relating to an MLM compensation plan which features 99.5% failure rates.
What’s worse about the name: The lady doth protest too much, methinks. You try too hard to sell it with the name choice, that it instantly leads people to the conclusion that it doesn’t work. You don’t see a car manufacturing claiming, “It works!”
Would you seriously buy a cell phone from a company that seems shocked that its product “works?”
Now if you can imagine my voice like this, I’ll say, “What’s your middle name? ‘Doesn’t?’ It is! You can’t even be grammatical.” (Yes, comedy isn’t exactly my thing.)
Secondly, what are you talking about with “That Crazy Wrap Thing?” It reminds of the show that ViSalus put on called The Pyramid Thing. It was little surprise that just a little investigative work on my part showed that Visalus was an illegal pyramid scheme by the FTC’s guidelines.
I think there are serious questions surrounding the products, customer support, and legality of the business model. A single red flag would be enough to scare me away. When you combine them all, I can’t see anything positive here.
“It Works” distributors may say that I’m being negative, but helping consumers should always be viewed as a positive thing. If they take the time to read my site, I’m very much in favor of entrepreneurism. I’m just not in favor of wolves’ in sheep’s clothing preying on people.
Finally, I’d like to make a special pleading for the FTC (SEC or other government agency) to look into “It Works” and ensure all its practices are legal. In my opinion, they should have a statement page stating how they comply with with this FTC guidance. In the past I’ve found that the FTC simply works too slow in catching MLM/pyramid scheme fraud. For example, it took a decade and millions of lost dollars for the FTC to catch Fortune High-Tech’s MLM pyramid scheme. More recently it took nearly a decade for the FTC to halt Vemma for being a pyramid scheme which claimed to be a legal MLM. Finally, it took decades for the FTC to help Herbalife victims.
In each case, consumers found out years later that they were scammed out of hundreds millions of dollars (in aggregate). I agree with Former FTC Economist Peter Vander Nat, Ph.D. in calling for a federal pyramid scheme rule as the status quo is not effective in eliminating pyramid schemes. The damage is already done