Is Disrupt (Life Disrupted) a Scam?

Update (7/1/2015): This article was originally written about WakeUpNow. However, it seems like the products have been rebooted to a new company called Disrupt/Life Disrupted. I hope to update the article in the near future, but I believe it is some of the same people running it, with many of the same products, which makes this relevant, even if there are changes.

Update (2/19/2015): It looks like WakeUpNow is out of business. As TruthInAdvertising writes:

“But we at TINA.org are left wondering why the company hired a CEO that was entangled in lawsuits and had a well-known history of questionable business failings and bankruptcies in the first place. And how prosperous a company could be that sold a bunch of stuff you could get for free on the Internet and which admits that the majority of its customers were its own affiliates — about 99 percent of which never made much money from their WUN efforts.”

So in short, the company was selling products that people could get for free. They hired a CEO who seemed to defraud people in the past. And it appeared to be a pyramid scheme as they had few customers beyond its own salesforce.

Any one of these things, should easily kill a company. There was no chance it would survive all three.

—- Start of Original article —-

A few weeks ago, I had someone ask me what I thought about the MLM, WakeUpNow. Actually, Bill Kutras asked me about it in August of 2012. Two months earlier Russell Birtwistle tried to sell me on how it was “going to be a billion dollar company quickly.”

I wasn’t very interested in looking at the company at the time. It looked like a mess of a half-dozen products that don’t fit well together. They offer vacations, personal finance products, energy drinks, tax products, identity theft protection, and of course, language training. If there was ever a company that lacks focus it is Wake Up Now.

The closest thing WakeUpNow has to focus is promoting an energy drink, Awaken. It’s front and center as the first product listed. The Awaken energy drink comes in a Thunder flavor that should probably get them sued by Aldi who has a Red Thunder energy drink. I am fairly sure that Aldi’s energy drink was around first.

It seems like every MLM wants to sell an energy drink nowadays. It seems like Verve! is a core component of Vemma’s scam. Not to be left behind MonaVie’s Mynt is pushing their EMV energy drink. It makes sense. Energy drinks are expensive (even if you know how to save money on them), which are perfect for MLM, which I’ve found charges 10-20 times what similar products cost elsewhere.

My first stop in researching the company lead me to WakepNow’s press release on lower pricing for Thunder, which amazingly enough avoids stating any prices. Fortunately, Amazon has Awaken Thunder Energy Drink for a few cents less than $60 (as of the time of this writing) or $2.38 a can. I’m seeing many distributors state the retail price is $79, which will be important in a bit.

Getting back to the press release, the company wrote the following:

“Packed with essential vitamins, minerals, green tea and the super fruit aronia berry, Thunder packs benefits that other energy drinks don’t. Some of the benefits may include *:

– No-crash energy boost
– An increase in your body’s ability to burn fat
– Boosting of your metabolism
– Assistance in reducing blood pressure
– Reducing inflammation
– Supporting healthy eyes
– Shortened muscle recovery time after workouts
– Help regulating blood sugar
“

The “*” goes to a reference section listing the following: http://home.ueb.cas.cz/COST926/Naruszewicz2008.pdf, http://www.foxnews.com/health/2013/06/07/aronia-north-american-super-berry-with-cancer-fighting-benefits/, http://www.ncbi.nlm.nih.gov/pubmed/20047267, http://www.bodybuilding.com/fun/mohr75.htm.

I’m trying to analyze the section of: “Thunder packs benefits that other energy drinks don’t. Some of the benefits may include:” and I’m at a bit of a loss. It seems that they are certain that Thunder packs benefits in the first sentence, but in the second sentence, they seem to leave it up to the reader to guess which ones from a list. They also seem very certain that no other energy drink has the things in the list. I find it interesting because Google lists any number of products that make that claim.

The most interesting part of the quote though is the list of things that the product “may” help. Some will say that it only claims “may” and not “will.” To that I would respond that they might as well say that it “may” give you the ability to fly. Such a claim would be ridiculous and illegal, as it would be intended to deceive consumers, even if using the word “may.”

In much the same way, the company can not legally make many of these claims. The FTC fined a company heavily because they didn’t have proof of the product increasing metabolism. Saying that a product reduces blood pressure appears to be an illegal disease claim according to the FDA (operative phrase: “but a claim that a product promotes low blood pressure would be considered a disease claim”). Also the FDA seems to say that “reduces inflammation” is an implied disease claim.

I checked with an expert about the claim that it helps regulate blood sugar. He said that it was technically correct for any product that contains sugar. According to the press release Thunder is “sugar-free”, so we can throw out that claim as well.

The references are laughable. Everything under the sun has been said about vitamin C and vitamin E… that doesn’t mean that supplement companies can market the products with those claims.

WakeUpNow’s Corporate Standing

WakeUpNow is publicly traded OTCMKTS:WORC and it is a penny stock… worth about $57M as of this writing… clearly a far cry from being a billion dollar company. As of this writing (7/8/2014) it trades at $2.95 a share, but earlier this year it traded at 1.7 CENTS a share. It looks like there are days in which no one trades the stock at all.

Give the company a little credit, it seems they made a million dollars in gross profit over the last three years. However, when deducting sales and other expenses they’ve lost millions each year (see Net Income at the bottom).

WakeUpNow looks like a pyramid scheme

The FTC has an article about MLMs that are pyramid schemes. The article says:

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.

Remember that $79 retail price that I mentioned before? Distributors are putting this on their website. However, everyone seems to have it discounted to $48. I went through the buying process on many distributor websites and each time it asked me to join to get the $48 price. I can’t seem to find anyway to buy the product at retail price without joining. This tells me that people are almost making their money from people they recruit. There’s zero reason why anyone would pay the $79 retail price if everyone gets it for $48 by joining for free. Thus, I can’t imagine there are significant sales to the public.

WakeUpNow has an Income Disclosure Statement on its website. It lists 14 ranks, 9 of which are all “<1%" of distributors. Is it 5 people, 30 people, or 7,000 people? You can't tell. It makes it seem like it is just as easy to get to Founder 4 as it is to Diamond. According to the chart 82% of distributors make ZERO dollars annually. The next 14% (82-96%) make $1213.05 a year.

That $1200 a year is notable. The WakeUpNow Quick Start Guide says: “We recommend you start with our Platinum subscription.” This subscription costs $99.95 a month, or $1,199.40 per year and gives something called 90 PV (Personal Volume) points which qualifies you to earn commissions. You can also make PV by selling products/services, but again that’s not the recommendation. The recommendation would leave this 14% tier (Director 3) making $13.65 in profit over the year. Doesn’t seem like a lot of money, does it.

The next 4% (96%-100%) make $7,605.13 in income. That’s nice, but we’ve just used up 100% of people and no one is making any kind of “dream” money. They are making “poverty” money. There was probably some rounding up percentage, but it tells you something when the next 9 ranks are essentially round-off error.

Here’s the thing that is really going to blow your mind though. The top 5 ranks of the distributor chain, Executive, Pearl, Ruby, Emerald, and Diamond all have the same monthly low, average, and high income. This means that multiple at the level makes the same amount (almost mathematically impossible) or that the entire rank consists of a single person. These 5 people combined make an annual average income of $1,926,090. Remember that 82% of people that made ZERO annually?

Finishing up

I think I’d finish this article with a link to a much, much more detailed article on Wake Up Now. The author has put together some putrid material supporting MLM in the past, but when some MLM competitors paid the author to expose WakeUpNow as a scam, he did a pretty thorough job.

In addition, there’s a lot more material on Wake Up Now by Truth In Advertising. There are many BBB complaints, FTC complaints, an admission by the company that it might go out of business due to the huge debt, and distributors spreading faked FTC emails saying that it is legitimate. That’s just the tip of the information available on that site.

In any case, I see very little reason why anyone would think this is a legitimate company. Typically it is the distributors that make the illegal claims, but when the company does it on public press releases, well I simply don’t know what else to say. I’d suggest that maybe one can make money shorting their stock, but their shares do so little trading, I doubt that it is even possible.