Update: One24 has put together a podcast for its distributors in response to this article. I respond to One24’s “The Scam” Podcast. For those considering whether One24 is a scam or not this is a MUST read.]
Ever since I started writing about MLM scams such as Monavie, Nerium, and iJango, I have received lots of email asking my opinion on new MLM scams. In the past couple of days I’ve received a couple of emails about One24:
Love your website, would you review One24 for me. I got sucked into Monavie and love the juice but hate the business and just recently heard about Protandim and am glad to read your comments. Just started with One24 a protein powder/superfood. Not a get rich quick scheme, at least I don’t think so…would just like your opinion.
You’re supposed to build your business slowly by recruiting one new member a month but the problem is once a month they have a “Gold Rush” when you can take people off your waiting list and put them in the business and I think a few people have gone too crazy and the company was not ready for the growth. The concept is one member a month for 24 months (One24), then retire. Of course though people want to grow their business too fast and the site keeps crashing. Still a little skeptical about the whole concept, I hope they decide to limit the amount of people allowed in the Gold Rush. I’m just looking for a home based business that is not a scam or where I have to chase family and friends. I do like Monavie but it is so expensive for one bottle of juice. I was on autoship for about $140 a month and I don’t feel right asking anyone for that amount of money with this economy. I’m going to take some time to read more articles on your site, I found it very interesting, thanks!
I got in a conversation with this person and gave her much of the information that will be in this post. I had decided it wasn’t worth writing an article about. If I wrote about every MLM scam that comes across my email inbox, this site would be really boring. Plus, I didn’t start Lazy Man and Money to write about MLM scams – I wrote it to catalog my journey with money.
However, as I like to say, “Sometimes your destiny chooses you.” The very next day, Saturday, I received the following email:
“Hey There, You probably haven’t heard of One24. It’s a brand new company that is allowing people to retire after 24 months. I began in October of 2010 and have been documenting my progress on YouTube. Check it out.”
Why I Believe One24 is a Pyramid Scheme (Using the FTC’s Words)
One of the biggest misconceptions in multi-level marketing is that if there is a product involved it isn’t a pyramid scheme. I truly wish there was a way to get people to understand how false this is. I usually offer a couple of quotes straight from the FTC website:
“Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. However, they all share one overriding characteristic. They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure.”
“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.”
The links to those quotes are here and here respectively.
For those who are not aware, pyramid schemes are illegal in the United States.
Perhaps at this point, you see where I’m going with this. I was shocked at the audacity of this company. They have specifically named their company in such a way as to promote recruitment as a way to retire. It makes me wonder if One24 was their second choice after they realized they couldn’t get the domain PyramidScheme.com. This flies in the face of the FTC’s quotes of “[Pyramid Schemes] promise consumers or investors large profits based primarily on recruiting others to join their program.” and, well, just the whole second quote in general.
Of course there’s a far easier reason to explain why I believe this to be a pyramid scheme. The concept of having to recruit 24 more people is simply unsustainable like all pyramid schemes. Let’s start off with a company of 4 founders. They each recruit their 24 people to retire. That leaves 96 (24*4) looking for another 24 people to recruit. Let’s pretend that they each find their 24 people. Now you have some 2304 looking for 24 people. If they find their 24, then you have 55,296 looking for 24 people. If they have the amazing fortune to find their 24, then 1,327,104 people are left looking for their 24. In three more iterations you have 18 billion people – 3 times the population of the earth. As you can see it doesn’t take too many iterations before it reaches saturation. People already involved in pyramid schemes ignore this detail and suggest that there is no such thing as saturation. They ignore not only the math, but also the fact that few people are really looking to become distributors or salespeople for these products. These distributors erroneously claim that it due to lack of effort on the part of the distributors. One of my readers disputed that wonderfully with his article: It’s Not a Matter of Effort, it’s a Mathematical Certainty.
One24’s NatraBurst Product
Since it seems that One24 considers its product, NatraBurst, an afterthought to what appears to be a pyramid scheme from the FTC definition, I thought I would treat it as an afterthought in the article. However, this website is about personal finance and thus it does make sense to evaluate the value of the product. Before I get started, I’m going to entice you to read through by letting you know that I can save you 50% on NatraBurst (hint: look on Ebay). No matter how slice it, that’s a better value than paying the company’s suggested price.
Back to NatraBurst, it turns out that I had someone ask me about the product back in October. Here’s a little of what I found:
The promotional materials claim that each serving of NatraBurst contains the equivalent of 6 servings of fruits and vegetables.
Those who follow MonaVie know that this is a common lie in these MLM programs use. See: Drinking MonaVie is Not Equal to Eating 13 Fruits. In reality, it turns out 4 Ounces of MonaVie is 1 Serving of Fruit. The same is true of NatraBurst – except that it isn’t even a serving a fruit, since it contains no actual fruit or fruit juice.
Most of the seller pages make a mention of a “Protein Blend”, a “Greens Blend”, a “Antioxidant Blend”, and a “Digestive Blend”. Each of these blends has some ingredients that one may recognize such as Tomato/Lycopene, Broccoli, Tumeric, etc. Here’s the catch though: They don’t mention how much of these ingredients is in a serving. I could take water from the Pacific Ocean that would surely contain a blend of all these things. The problem is that unless you know how much you are getting, it’s not worth mentioning at all. What you are left with is a bunch of marketing, which of course makes sense, because it looks like the product is being used to hide the pyramid structure.
Some people have come here to defend the product as a worthwhile product. At $70, I believe the product is much more expensive than similar products. However, if you feel that NatraBurst is a great product, I can save you money. As of May 7, 2011, there appears to be many people selling NatraBurst on Ebay for between $30 and $40 as a Buy It Now price. Now take that $30 savings and invest it towards a reputable retirement plan.
Update: One24’s Finances Reveal it is a Pyramid Scheme
A tipster got me some very credible and detailed information on One24’s finances. I’ve chosen not to publish too much of it to protect individual distributors’ privacy, but here are two notable pieces:
- One24 Sales Data from May 2011 and Feb 2012 shows that One24 sales has shrunk in half during that time. It also shows that sales are almost entirely to distributors meaning two things: 1) One24 isn’t complying with the FTC guidelines and Focusing on Sales to Outside Participants and 2) One24 distributors (or PCs) are leaving the company at much faster rate that One24 can bring them in.
- Secret One24 Commissions Show it is a Pyramid Scheme. We already knew this from the information above, but this give greater detail to the declining One24 business as well as shows that they sell almost zero product to people outside the One24 network.