[Editor’s Note: This article is long and I hope you find the information you need to make an informed decision. Towards the end, I have a special gift for you. (If you want to cheat, click here to get it now.)]
A few years ago my wife was approached by someone to buy $45 bottles of juice called MonaVie. As a personal finance writer, I felt I had to research how this company could stay in business pricing the product at 10x more than competition with no proven benefits. Turns out the answer was that MonaVie is really selling people on a business recruiting others and requiring them to buy the juice as an ongoing expense to continue with the business opportunity. In the process, so much was about MonaVie was uncovered that I had to create MonaVie Scam. The website has provided tons of irrefutable evidence supported by reputable third parties that MonaVie is a grossly overpriced product, with little nutritional value, wrapped in a poor business opportunity that the FTC guidelines say is an illegal pyramid scheme, which is itself wrapped in illegal medical claims, supported by nonsensical “scientific” studies, and tied to a fraudulent charity. Fortunately there is now a class-action lawsuit against MonaVie as others have seen the evidence.
In that MonaVie discussion, another MLM distributor introduced me to LifeVantage Protandim. It turns out that is just as bad as MonaVie. You should simply read the article to learn more.
Lastly, a couple of distributors mentioned One24 – a company that bills itself as a way to retire in 24 months – as long as you recruit enough people. It’s a classic pyramid scheme according to the FTC guidelines. So I wrote an article warning people that One24 is a scam.
On that One24 article a distributor brought up the name of ViSalus and the performance of their distributors. The name was familiar to me, so I searched through my email. I had one back from June from an Aretus Smith who asked me if it was legit or not. I get a couple of these requests a month for various companies and I don’t have the time to research them, so my answer wasn’t very good. Then six weeks ago Troy Brian sent an spam email to about 250 people “involved” in MonaVie (somehow the person selling this list has added my name and bunch of others illegally) telling them about a ViSalus challenge. So when Todd Hirsch brought up ViSalus on the One24 thread, I decided to spend a few minutes looking into it.
It didn’t take me long to find a lot of deceptive marketing designed to take advantage of consumers.
The first place on ViSalus’ website that got my attention was the section of white papers. The section above says, “Our white papers are designed to share the science behind our breakthrough products, methods, and sales innovations in order to help you become a more informed consumer.” I looked through the white papers and all but were by one guy: Michael Seidman. This fits the MonaVie mold of using Alexander Schauss and LifeVantage using Joe McCord to create research to market their products.
This is probably the time to point out that Michael Seidman has a past history of selling the public on products that aren’t shown to work. Here’s a quote from ScienceBlogs.com about a foot detox system, Aqua-Chi:
“When you ask me, ‘Does it sound crazy?’ My answer is ‘Yes,’ ” says Seidman. “But my response is also that it doesn’t necessarily mean it’s wrong just because we don’t understand it.”
I did a little more digging and found the rest of his quote here:
“Seidman adds that there could be a psychosomatic element, that ‘if you believe that you’re going to feel better and reduce your stress, then you probably will.'”
In other words, “if I lie to you and tell you this is going to help it probably will due to placebo effect.” This is the same thing we’ve seen MonaVie and Protandim and here’s another “doctor” with a checkered past essentially spilling the beans about scams like these.
I looked at a random white paper sample: “Age-related Hearing Loss and its Association with Reactive Oxygen Species and Mitochondrial DNA damage*” and I couldn’t find anything in it where a ViSalus product was tested in any way. As best I can tell there’s no product between this white paper and any ViSalus product. I clicked on a couple more and glanced through them and didn’t see any connection either. If there are any white papers on the list that are related to any ViSalus products, I hope someone will use the comments to point out the connection to me. More importantly, I hope someone writes ViSalus and tells them to clearly explain the significance of these papers to the products.
Update: CBC News in Canada has looked into ViSalus’ deceptive marketing claims and Canada regulatory boards are looking into it.
The Value of ViSalus Vi-Shake
I also looked into the value of the ViSalus Vi-Shake product. ViSalus gives a comparison chart here. It looks pretty convincing, doesn’t it. ViSalus makes it look even more convincing with a chart comparing a ViSalus Shake to nutrients found in everyday foods. Not surprising, it would cost nearly $103 in various foods to match the $1.85 cost of Vi-Shape and milk. The point is emphasized with this video:
This reminds of those Total commercials where you have eat 20 bowls of another cereal to match the nutrition in one bowl of Total. This YouTube video explains with a spreadsheet the deceptive marketing in detail.
However, much like those Total commercials when you dig a little deeper into Vi-Shape isn’t all that impressive. In fact, it looks like a poor purchasing decision. Take a look at the ingredients. It’s essentially a blend of protein (including soy, more on that later), the “fake” fiber that MonaVie adds, and a pretty good multi-vitamin.
As a personal finance writer, I want to get the most value for my dollar. So I was wondering if I could create something pretty close to the same for a cheaper cost. The price per serving of the ViSalus Vi-Shape mix is $1.50. Let’s look at what we can do for each of the main three areas (protein, fiber, and multi-vitamin):
- Protein – I was at Costco the other day and found this 6lb Bag of Muscle Milk for $37. It is 78 servings of 27g of protein. That’s a total of 2106 grams of protein in the bag. Vi-Shape has 12g of protein so this bag would provide you a little more than 175 servings of protein. If you have a Costco member, this amounts to $0.21 for the protein portion of the ViSalus. If you don’t have a Costco membership, the Amazon price is less than 28.5 cents for the same amount of protein in the Vi-Shape shake.
- Fiber – Doing a little more shopping on Amazon, I found Metamucil Clear and Natural Powder, which is a product that I have and use. It’s tasteless and can be added to just about anything. This 11.7 ounce bottle has 57 servings of 5 grams of fiber – the same amount in a ViSalus shake. The $11.84 price on Amazon boils down to 21 cents a serving – the same amount as the protein from Costco.
- Multivitamin – You can find multivitamins anywhere and they differ greatly in what they offer. You’ll almost never two that are exactly alike, so it is impossible to compare in the same way we compare 5 grams of fiber or 12 grams of protein. However, the body can only process so much of a vitamin at any given time and the rest goes out through the urine. I found a Centrum Multivitamin on Amazon for 7 cents a pill that has 30 vitamins and minerals compared to the 23 in a ViSalus shake mix. It’s worth noting what Consumer Reports says about vitamins: “But many people taking the pills don’t need to. Despite their popularity there’s virtually no evidence that they improve the average person’s health.”For all practical purposes, we’ll have to consider this equal, especially since they may be completely unnecessary to begin with. The same Consumer Reports article mentions that Kirkland (Costco’s brand) can bring the price down to under a nickel.
It’s very easy to mix the protein and fiber to make a shake mix. Get a gallon bag, pour the Metamucil Clear into it… then put 25 scoops of the Muscle Milk into it. You now have 57 servings of 12g protein and 5g fiber. Take a multivitamin with the shake… done. I answer to the name Lazy Man and not even I am that lazy. If you are a member of Costco, the homemade version will cost you $0.47 a serving ($0.21 + $0.21 + 0.05). If you are not a member of Costco and just want to buy off of Amazon it will cost you $0.57 ($0.29 + $0.21 + $0.07).
I’d rather pay about 50 cents a serving than $1.50 wouldn’t you? It may only seem like a dollar a day, but it adds up to $365 a year. That’s very little work for a large payoff.
The Value of ViSalus Vi-Crunch Cereal
In the comments below, Vogel did some good analysis on Vi-Crunch, the ViSalus cereal. In particular there was a comparison with Kashi GoLean cereal one that I brought on as I consider it to be a relatively healthy cereal with 9 gram of protein and 8 grams of fiber. Vi-Crunch has more protein (12g) and less fiber (5g), so I consider essentially a wash nutritionally. I will admit that Vi-Crunch has lower sugar and salt, so it probably takes like dirt… we’ll get back to this in a bit. For now, let’s leave it as a minor difference that at one serving per day isn’t going to make or break your diet. A serving of Vi-Crunch is 3/4 cup vs. a serving of Kashi that is 1 cup… so this is going to make Kashi seem like a lower calorie option, but it is simply less food.
Now let’s get a little “mathy.” Vogel breaks down the total weight of Vi-Crunch cereal noting that it is $50 (minus a penny) for 630g of cereal. A 23.1 ounce box of Kashi GOLEAN Crunch! Cereal is 604g and that’s going for $5.69 per box on Amazon (Vogel does similar math for Wal-Mart if that’s your store of choice). Doing the math it turns out that ViCrunch is 8.42 times more expensive than Kashi GoLean. Choosing Vi-Crunch is like going to the grocery store, seeing two similar products with similar nutrition, and grabbing the $25 one vs. the $3 one right next to it.
But it gets worse. Remember the part about Vi-Crunch having lower sugar and salt and probably not tasting as well. Well ViSalus solves that by creating ViCrunch Fusions, a topping that you can add to make it taste better. They are $11 for 7 servings… or $1.57 per serving, and that’s extra.
To do a little more math, let’s say that you eat 50g of cereal per serving (a number between ViCrunch’s and Kashi GoLean’s serving size). Standardizing on a serving size allows us to compare apples to apples. A 50g serving of ViCrunch is going to cost you $3.97 while a 50g serving of GoLean is going to cost you $0.47. If you add the ViCrunch Fusion topping, you’ll get a little more food, but it pushes your cost up to $5.54, which is well over ten times the cost of GoLean now.
Eat that bowl of ViCrunch everyday for a year and you’ll spend $2,022. Eat a bowl of GoLean Crunch and you’ll spend $171.55. If you were thinking about buying ViCrunch, reading this article just saved you $1850 this year alone. If you are a family of four, it saved you $7,401. For most people, if their boss gave them a $10,000 raise today, they’d take somewhere around that $7,401 after taxes. Do you want to blow $10,000 of your salary this year on cereal?
Oh one more thing. Amazon will give you free shipping if you spend $25. ViSalus can’t match that… shipping is extra.
Visalus Distributor: “But Our Product is Higher Quality”
This is what every MLM distributor says to justify the artificially high price of the product (see the aforementioned $45 bottle of MonaVie juice). It’s one thing to claim a product is high quality, but it is another thing to prove it. The blog Living la Vida Low Carb takes an in-depth look – it is well worth reading before you try the product. ViSalus contains soy, which is a controversial ingredient, especially for men. The blog asks the doctor who literally wrote the book on soy and she says that ViSalus’ response to why it uses soy is completely wrong. Furthermore, ViSalus uses the artificial sweetener sucralose and the company’s response on the blog is ridiculously convoluted.
In addition to the point about soy, it is an even cheaper ingredient that the whey protein. So if you are a female and determine that soy is a better option for you, substitute that in the above shake and you’ll save even more money.
The blog Young and Raw examines the ingredients of ViSalus and comes to the conclusion that “this product is total crap.”
ViSalus’ Illegal Health Claims
As I’ve found with the other health-based MLMs that I’ve followed, it’s quite common for the company and/or distributors to illegal push their food/supplement as medicine, by saying that it helps with some health condition. This illegal and misleading marketing isn’t the kind of thing that you see from companies selling products in your grocery store or supplement companies selling at GNC.
I had thought that ViSalus was fairly safe from these things. After all, the products are mostly for weight loss. So any kind of health claim could be easily traced to a person losing weight, which, as a reminder, can happen with any number of products (ViSalus brings nothing special or unique to the table). However, in watching this YouTube video about ViSalus allegedly clearing up a person’s kidney problems in days, it is quite clear that ViSalus is marketing their product illegally. The video is an episode of The Pyramid Thing, which is a series of videos following ViSalus distributors including their co-founder Nick Sarnicola. (Keep reading and you’ll find that the video is accurately named as Sarnicola is running an illegal pyramid scheme according to the FTC’s guidelines.)
Lest you be tempted to try the product for any health condition, I caution you against it. After all MLM health products don’t work and if you think that’s just my opinion, a non-profit consortium of doctors asked me if they could republish my article on their site: You can read it here.
The ViSalus BMW Scam
Whenever you hear about the business of ViSalus, you’ll like come across three letters: BMW. Prospective distributors are getting pitches of “free BMWs.” However, that could be further from the truth. The BMWs are not free. If you were to qualify for a BMW from ViSalus, you’d be wise to refuse it. Why? I’ll get to that in a second. First, let me cover…
The ViSalus BMW Pitch
This is the pitch straight from the compensation plan:
“Since ViSalus™ knows our distributors are people who align themselves with only the BEST, and aspire to live the ‘Vi–Life’, it is only fitting that our producers be recognized in a way that echoes their commitment to excellence: The ViSalus Bimmer Club!
By reaching the level of Regional Director or higher, ViSalus Distributors qualify to join the prestigious Bimmer Club and become eligible for a monthly BMW Bonus that goes toward a ViSalus–branded black BMW.”
Take a minute and notice the language here: “the BEST”, the “aspire to live the ‘Vi-Life'”, “the prestigious Bimmer Club.” How could you not want to be a part of that, right?
So why should you refuse the BMW? The fine print shows that they’ll give you the $600/mo. only if you maintain the level of sales in your downline. If you understand the churn rate in MLM, you know that somewhere between 60% and 90% of your downline will drop out each year. Thus maintaining the level for the BMW is difficult. That itself wouldn’t be a problem, except for one little thing, The BMW is in your name.
If sales drop, you need to come up with the payments on the car. This can be especially difficult because, well, your sales have dropped so you are earning less. Distributors are finding that their credit gets ruined because the BMW got them saddled with an expense that they couldn’t afford. The alternative to the BMW is to take a $300/mo. bonus in cash. It isn’t the flashy BMW, but you avoid the strings attached.
It reminds me of the mortgage lenders in 2004 and 2005 offering people adjustable rate loans to give them low initial payments. Many people found that this allowed them to afford their dream house (i.e. “the BEST”, the “prestigious house”), but when the rates re-adjusted they had big financial problems. The people who were smart didn’t get seduced by the dream and made the wise financial decision with minimal risk.
If ViSalus was a reputable company looking to do the right thing for its distributors, they’d offer them the option to assume the lease if their sales don’t qualify. They don’t do that. Instead the plan seems to saddle distributors with an expensive BMW so that they have extra motivation to make sure that their sales don’t drop. Finally, you don’t have to drive around in a big advertisement.
The ViSalus Challenge
A lot of commenters have suggested that ViSalus creates a community with a common goal and that buddy helps people lose weight. They specifically point to the ViSalus 90-Day challenge. I don’t argue that point at all… but I have a better way.
There’s a free website called SparkPeople that is health community and it has challenges as well. Additionally you could also use another site StickK.com (my article on it: StickK to Your Goals) to keep you motivated.
There’s no need to overpay for product or be an accomplice in a pyramid scheme to reach your health goals.
Is ViSalus a Pyramid Scheme?
The answer, in my opinion, is yes! I realize this is a serious accusation, but follow me on this. First watch this video about the “ViSalus Refer 3, Get Next Month Free!” program:
Before I get to the pyramid scheme part let’s get to the false claim made in the first 20 seconds, “It allows everybody… do it at absolutely no cost.” It is mathematically impossible for everybody to do it at no cost. For every single person doing it at no cost, there must be at least 3 times the product paid for from others. There is no situation where everyone gets the product for free. Of course, it would put the company out business, so that’s not to be expected, but this false marketing shouldn’t be allowed.
If you understand how it works, you end up referring other people to buy product. In the video, the spokesman makes a special point of saying that you are referring “customers, not distributors” to buy kits. However, those “customers” are in fact distributors as they can do the same. At the 3:30 mark it is confirmed by the spokesperson saying (paraphrasing) “if one of your customers refers three customers and get their kit for free, you still get yours.” In other words, ViSalus has just confused the traditional definition of an MLM distributor with a customer in this video. It still hits what the FBI says about pyramid schemes:
“At the heart of each pyramid scheme is typically a representation that new participants can recoup their original investments by inducing two or more prospects to make the same investment.”
There’s also this from the FTC:
“Not all multilevel marketing plans are legitimate. Some are pyramid schemes. It’s best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products.”
In referring people you have not made a sale to someone outside of ViSalus, but recruited what amounts to a distributor who can refer others as well. This person is now considered “within ViSalus” rather than outside ViSalus. It is a very, very tricky thing for most people to understand without having experience in looking into these schemes.
The FTC has put out a lot of documentation on this. I’ve compiled it into a guide at MLMs Vs. Pyramid Schemes. The thing that dooms this ViSalus program to being a pyramid scheme is that sales aren’t to end customers, but to people who are essentially distributors since they too can refer others.
Update 1: From ViSalus’ IPO filing, CNBC found this beauty: “we do not believe that we are subject to laws regulating pyramid schemes… there is a risk that a governmental agency or court could disagree with our assessment…”
If there wasn’t a very real risk of ViSalus being a pyramid scheme, there would be no need to warn about it. Do you think IBM or McDonalds has such disclosures in their SEC filings? Hint: They don’t.
Update 2: On January 28, 2013, the FTC Halted the Fortune Hi-Tech Marketing Scam Halted as a Pyramid Scheme. In doing so the FTC and three states listed a number of reasons why they went to a federal court to shut Fortune Hi-Tech Marketing (FHTM) down. Big thanks goes to Jeff who outlined a few the similarities using the documentation from the FTC (PDF) and what is publicly known about ViSalus (citations valid at time of publishing, ViSalus may move and/or change their marketing):
- FTC on FHTM: “Defendants target consumers with an entrepreneurial spirit, emphasizing that FHTM provides an opportunity to build a business which can rapidly provide financial independence”
ViSalus’s Rewards page (first video): “To be able to become financially free from just partying with our friends, there’s nothing like it.”
FTC: “FHTM routinely touts six and seven-figure incomes to new recruits, assuring them that they will be able to achieve these results as long as they are willing to work hard.”
ViSalus’s Rewards page (first video): “Challenge promoters can earn anywhere from a few hundred of dollars per month to hundreds of thousands of dollars per month… There’s opportunity here that you can make a lot of money and you can change your lifestyle in a big, big way… If it’s just to cut down at work or if it’s to leave your job altogether like I did, this business will allow you to do that.”
As we’ll cover below, the average ViSalus distributor barely makes $250 a month and those are best case scenarios. Given the skewed money at the top, the people at the bottom lose money.
FTC: “As with any pyramid scheme, FHTM’s defining characteristic is a compensation plan that is skewed heavily in favor of recruitment over sales.”
Visalus has 8 ways to earn money in the compensation plan. 7 of those ways require that you recruit people. Visalus’ “Getting Started Training” doesn’t focus on selling product, it focuses on becoming a “Director in 7 Days” which means you have to recruit 3 people.
FTC: “Plaintiffs have submitted overwhelming evidence demonstrating both FHTM’s deceptive earnings claims and its operation of a pyramid scheme—either of which alone is sufficient grounds… FHTM dangles the promise of riches in order to lure consumers into joining its scheme. FHTM makes these promises in a variety of ways—though in person presentations, pre-recorded presentations, webcasts, and live and pre-recorded conference calls—but no matter what the medium, the company’s rags to riches tales are patently false for nearly everyone who joins… At FHTM’s most recent national convention, FHTM paraded its top thirty earners on stage with mock-up of a $64 million check.”
Visalus does the big-check at their national convention and Nick and Ashley Sarnicola holding up a $1,000,000 big check here.
One more thing that FHTM marketing and ViSalus have in common… they both emphasized a free BMW as a promoter reward.
Recently ViSalus put out an interesting press release. It starts off with, “ViSalus… has added 10 new top industry professionals to the roster of Vi Promoters. Veteran heavy hitters Patrick Ashby, C. Anthony Harris, Ron & Tony Jarrah, Chris & James Levins, Tina Lewis, Steve & Yvette Mitchell, and Charles Monk all paved the way to success with ViSalus in 2014.”
It proceeds to list them and give a little profile. Here’s part of one example, “C. Anthony Harris attributes his success and attaining the rank of 2-Star Ambassador in just 45 days* to teamwork and his commitment to continuously challenging others.”
The “*” is an important disclaimer. In the press release it means, “* Results not typical. Achievement in rank and income depends upon many factors such as hard work, determination, financial resources and social contacts.”
Personally, I find the “hard work” and “determination” characteristics utter bullshit, when a person reaches one of the top levels in just 45 days. The fact is C. Anthony Harris was already a “Double Platinum Senior Vice President” in 5LINX. So it was the contact list that made him a 2-Star Ambassador at ViSalus.
Now do you think C. Anthony Harris’ money is based on him selling a ton of product to people outside of ViSalus? Keep in mind that’s a lot of product to sell in 45 days. I hope he’s got a really popular booth at a very popular sporting event, because he’s going to need it to make all those sales.
The bringing on “veteran heavy hitters” who quickly achieve the ranks that few long-time ViSalus distributors ever receive is yet another giant red flag that ViSalus is a pyramid scheme.
The Business of ViSalus
“The women I interviewed for “The Pink Pyramid Scheme” told me stories about struggling to patch together daycare or to survive high-risk pregnancies while working long hours scouting prospects and hosting parties without any guarantee of a sale. Debts mounted, marriages failed. They couldn’t have it all because Mary Kay’s business model (like that of any multilevel-marketing enterprise) is designed primarily to profit from, rather than enrich, its workforce.”
That’s from a Harper’s Magazine report on Mary Kay, one of the most “respected” MLMs. I highlighted the key point as this article is about ViSalus and not Mary Kay.
A Former Distributor Busts Some ViSalus Myths
We had the fortune of a “successful” former distributor, Joy, has given us some insight.
Money Back Guarantee is Bogus – According to her, “the ‘money back guarantee’ that means nothing and here is the reason why. If you lose 1 pound you can not get your money back. So if you are a little bloated the first day you weigh in or maybe constipated then you weigh in at losing 1LB you in fact have not lost anything but yet you are out of you money.”
An Imploding Business – “I was ‘smart’ enough and ‘worked hard enough’ to get to RD and continued to ‘follow the system,’ ‘force my calender’ and be at challenge parties almost every night. I had over 900 active customers in the beginning of June (2012), by September I had less then 40!! So how was that my fault, when I followed the system to a T? I use to (unknowingly) tell people the same lie you are currently telling others.”
Getting Product for Free – “I should also mention that out of 900 customers I only had about 10 getting theirs free.” – January 30, 2013 at 8:08 am
ViSalus’ Imploding Business
The commenter’s story above about ViSalus’ imploding business is backed up by their own press releases.
“At the end of the first quarter, qualified independent North American Promoters totaled more than 70,000 versus more than 92,000 Promoters at the end of the prior year’s first quarter.”
“ViSalus had over 57,000 qualified independent promoters in North America at the end of the second quarter compared to over 70,000 promoters at the end of the first quarter. The Company also has nearly 4,000 qualified promoters internationally. Prior year second quarter ending promoter count was over 114,000.”
For those following, that’s exactly a drop in half in one year (>114K to >57K).
“At the end of the fourth quarter, qualified independent North American promoters totaled approximately 35,000 versus 76,000 promoters at the end of the prior year’s fourth quarter.”
For those still following, that’s ANOTHER more than half drop in one year (>76K to >35K).
ViSalus and their representatives make it sound like it easy to
build your own pyramid scheme recruit a team, but with many more people leaving than joining, clearly getting people to join is a very difficult task. If everyone in was able to recruit only one person, distributors would double, but instead it is going in half. They can’t even keep the people they have, much less grow. What are the odds that you are going to be able to recruit 3 who will also recruit 3 who recruit 3, etc.? Remember that their “plan” illustrates you building a pyramid team of HUNDREDS to earn a full-time income and most ViSalus people can’t even maintain their pyramid team.
Vi-Net Pro and Vi-Net Swipe
When you become a ViSalus distributor you are automatically enrolled in Vi-Net Pro subscription for $29 a month… unless you choose to upgrade that to Vi-Net Swipe for $39 a month.
Lets look into Vi-Net Pro’s value. Vi-Net Pro consists of a website and a magazine. The website is a place where you can send prospective ViSalus buyers to. ViSalus maintains it and updates it with videos, a way to capture contact information, and a few other features. I won’t say that this has zero value because it clearly is useful, but ViSalus shouldn’t be charging distributors for it. Remember that MLM distributors are commissioned employees. This is like your company charging you to use their corporate email system to work for them. Websites are incredibly cheap to produce (get a free Tumblr or WordPress blog for instance), and the development of the tools they are providing appears to be minimal. WordPress blogs can do all this for free with little or no programming.
With the Vi-Net Pro comes a magazine called Success. Like ViSalus’ business opportunity it is a sheep in wolves clothing. Success pitches MLM in the most positive light and never mentions the negatives. The reason for that? Success Magazine is owned by VideoPlus. The title of the VideoPlus website is “VideoPlus was founded as a media and marketing communications company offering innovative, turnkey solutions for the direct selling industry.” (Note: Direct Selling is falsely used as a replacement for “MLM” by MLM distributors because “MLM” has a bad connotation: MLM vs. Network Marketing vs. Direct Selling.) A large percentage of VideoPlus’ clients are indeed MLM companies (some examples: Usana, HerbaLife, Noni, Shaklee, Nu Skin, Ambit Energy, Monavie, Amway, Vemma, and yes, ViSalus).
In short the Vi-Net Pro subscription for nearly $350 a year gives ViSalus distributors a website that should be free and monthly propaganda paid for by ViSalus. Remember that Harper’s quote above about MLMs being designed primarily to profit from, rather than enrich, its workforce. If you do an Internet search, you can learn how to cancel Vi-Net Pro and go to Vi-Net Lite.
A distributor in the comments raved about Vi-Net Pro Swipe saying that the ability to take credit cards right from a smart phone was worth $39 a month. If you watch this ViSalus promotional video you’d think they’d have been working on this technology for some time and that it is true innovation. However, like every MLM “innovation” I’ve come across (see MonaVie Perks), it’s a white label solution – a product that ViSalus didn’t develop. ViSalus Swiper is simply a branded solution from Roam Data, where they ” outfit everything from the app, to the swipe, to the collateral for you.”
The $10 a month extra that ViSalus charges is actually a fair price. That’s what this this merchant charges (see monthly plan fee). You could get your own Swiper without ViSalus. The value in Vi-Net Swipe for ViSalus is two-fold. First, they deceive distributors into thinking they are doing all this work. Second, in order to get the $10 Swiper technology, a distributor has to pay for the $29 Vi-Net Pro, that ViSalus should give distributors for free.
If ViSalus was looking to increase it’s sales of product and help distributors, they would give you all the website tools for free, switch the propaganda magazine to a nationally recognized brand like Entrepreneur, and offer Swiper at a maximum of $10/mo. Ideally, they would completely cover, or at least split that cost with distributors and make up the difference increased sales.
How Much Money Does the Average ViSalus Distributor Make?
Thanks to some great sleuthing by commenter Brandon, we can crunch some numbers and find out how much the average ViSalus distributor makes. According to ViSalus’ May 4th, 2012 press release, ViSalus brought in $136.7 million with “over 92,000 distributors” in the most recent quarter. That’s $1485.87 per distributor. Since a quarter is three months, it comes out to about $495 a month per distributor. That’s Visalus sales.
The commissions paid out to distributors has to be a fraction of that since ViSalus needs money to produce the product and pay corporate. If we were to be extremely generous and presume that ViSalus pays out half of the $495 number to distributors, each distributor would average around $250 in revenue a month… not profit. The distributors themselves have to buy $125 worth of the product per month unless they sell $200 worth of product per month (cue the unnecessarily complex compensation plan intended to confuse the average distributor) or else they sacrifice their commission. Because selling $200 a month is hardly guaranteed, most buy the $125 a month and use it themselves.
The $250/mo. revenue is $3000 a year. However, they give up $125/mo. The actual profit is much lower after spending $125 for the product, the Vi-Net Pro subscription, tools such as brochures, and travel costs for conferences like the recent one in Miami.
It’s worth noting that if those 92,000 are all on the default Vi-Net Pro (I expect a small amount will be on Swipe and Lite, balancing them out a bit), ViSalus is booking some $32 million ($348 * 92,000) of it’s $136 million in sales of websites and Success magazine just to its distributor base.
Finally, there’s this bombshell… the founder of ViSalus “generates” more than 50% of the sales and make money than all other distributors:
ViSalus supporters claim that Nick Sarnicola (the founder in question) resigned from the company to be a distributor and show that anyone can be successful in ViSalus. Unfortunately, ViSalus just poached other MLM company downlines getting many high ranking distributors to each bring over thousands of distributors under Sarnicola. How did Sarnicola recruit all these people? MLMs often offer private signing bonuses to those who have created a substantial pyramid. Nick Sarnicola admitted to putting together some “investors” to lure Robert Dean to Visalus. Of course he only admitted this behind the scenes deal because Robert Dean took the money and then left ViSalus. It’s speculation on my part, but the most logical explanation for how these people got recruited to ViSalus was a signing bonus as well.
So sure you could have the same success as Sarnicola in ViSalus, but only if you are given both the means and the connections to poach top people from numerous MLM downlines. Don’t think that you can recruit all these people one-by-one from talking to your friends, family, or even your social groups. Also, according to the FTC guidelines on MLMs and pyramid schemes Sarnicola would have to be selling quite a lot of product to people not involved in ViSalus or else his “business” is running a pyramid scheme:
“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 tip-off to a pyramid scheme.”
When you read that ViSalus is paying out a majority of commissions, keep in mind that it’s keeping a good portion of the money itself and of the portion that it actually pays out, a good chunk goes to Nick Sarnicola, who still owns millions of dollars worth of ViSalus shares
when it goes public at a $175 million value. Update: ViSalus canceled their IPO citing market conditions… which seems disingenuous because the Dow Jones was at a 4-year at the time and ViSalus was claiming great growth. I’m not sure they could ask for better market conditions.
ViSalus IPO Filing
Though I mentioned it above in the pyramid scheme section, this article from CNBC warning Beware the Get Rich Quick IPO has a lot of great information about ViSalus. In addition to the pyramid scheme stuff ViSalus says its “marketing system depends upon the successful recruitment, retention and motivation of a large number of individual promoters to offset frequent turnover.” In other words, due to the high churn rate in MLM, they have to resort to motivation techniques like the crazy cult seminars in Miami.
ViSalus’ Project 10 Kids
I received a comment about Project 10 Kids. The idea behind this program is to give overweight or obese children 30 ViSalus meals when a ViSalus distributor or customer loses 10 pounds or gains 10 pounds of muscle.
This is a very classic MLM charity scam. It’s designed to make people feel good through self-licensing, so that they continue to stay in the scam, paying month after month. The commenter made the point that the kids are getting kid-sized shakes that are half the already diminutive shakes mentioned above… 45 calories. Using the above numbers of it costing a consumer about 50 cents per Vi-Shake serving, the kids shake, at half size, would be 25 cents. That amounts to the donation being $7.50 of consumer cost and probably close to $3.75 for the cost to ViSalus.
So if you lose 10 pounds on ViSalus products, ViSalus will kick back around $4 to help an obese child. I’m all for helping obese children. When you read this article and realize that you can save $2000 a year by substituting Vi-Shakes and Vi-Cereal for essentially equivalent options, won’t you please donate $50 to help the fight against child obesity? You’ll still be saving over $1950 a year, you’ll be putting between 5 and 10 times more money to work, and most importantly, you can rest easy knowing that the organization will teach the kids nutrition from real food (not a shake), all while avoiding what appears to be a pyramid scheme. That’s what I call a win-win-win-win.
ViSalus Bottom Line
The title of this article made the point that ViSalus was a scam. ViSalus distributors and supporters take exception of the use of the word scam with ViSalus. Wikipedia defines scam as a confidence trick. At a minimum, the marketing around ViSalus Vi-Shape Shake is clearly designed to deceive… to a level that the Canadian regulator boards are looking into it.
Beyond the deceptive marketing (which should be enough) there’s:
- ViSalus Vi-Shakes have some very questionable ingredients from soy protein to artificial sweeteners.
- ViSalus’ “Free BMW” program (which isn’t free) uses tactics similar to the mortgage lenders that got people locked into payments they couldn’t afford. The ViSalus IPO filing of noting the “frequent turnover” makes it especially dangerous as the bonus relies on a consistent downline of people.
And let’s not forget:
A “business opportunity” that appears to be a pyramid scheme. Not only that, but it also charges ~$30 a month for a cookie-cutter website that should be free along with a propaganda-based magazine disguised as a legitimate business publication. The business opportunity on average grosses people very little money and likely puts people at a loss when accounting for buying product, website costs, and other marketing materials. The ViSalus IPO filing cites the marketing system is dependent on recruitment (yet another sign of a pyramid scheme according to the FTC)
My Gift to You
If you’ve read this far, I appreciate your dedication. Whether you found what you were looking for or not in the article above, I want to help you with your financial situation. It’s what I do.
Here are two things you can do to put yourself in a better financial position:
- Create an Emergency Fund – Dobot squirrels small amounts of money from your checking account to its FDIC-insured account. It’s 100% free. You simply have to create a goal of having an emergency fund. You don’t have to think about it and you’ll likely never notice the small amount of money being moved. I’ve squirreled away more than $1100. You can read my Dobot review here.
- Track Your Money – Over the years, I’ve gathered so many financial accounts. Banks, Brokerages, Loans, I got multiple of them all. The best software for tracking them all is Personal Capital. You can’t get to your destination if you don’t know where you are to start. Personal Capital gives you that… and, like Dobot, it is completely free.
For more visit my five minute financial fixes article. If neither of the above is helpful, I’m sorry. I appreciate you for just being here. The person recruiting you has a financial incentive to present only one side of the story. Kudos to you for searching for more information to make an informed decision.
ViSalus Additional Viewing and Reading
Here’s a great, humorous video, explaining many of the issues with ViSalus:
In addition to that, this investigative report from SIRF Online about ViSalus is not to be missed. Outstanding investigative work!
I also liked this article: Pill Power – ViSalus has taken root in Silicon Valley. Is it a brave new world of health and success, or just a pyramid scheme?