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Lazy Man’s Scam Scale

October 7, 2018 by Lazy Man 4 Comments

When I was writing about why you shouldn’t trust the Better Business Bureau (BBB), I got an interesting comment from Contrarian about something else consumers should know: city specific magazines hire sales people to contact companies directly and sell their “Best of” rankings for a price.

I didn’t know that was true, and I don’t have any evidence to back it up, but Contrarian has been spot on with his analysis on any of things in the past. More important than that though, it simply makes sense. There are a lot of consumers that use those those “Best of” rankings to make their purchasing decision. It wouldn’t surprise me if Boston magazine realized that space in its Best of Boston was a valuable commodity and tried to capitalize on it as such. I’m not saying that they do that and again, I have no evidence, but I’m just saying that it isn’t just plausible, it seems probable to me.

Similar to that though, I heard two separate people who don’t know each either, tell me of businesses that have gotten what seems to amount to extortion from Yelp. They said that their bad reviews were at the top of the page and that for a fee (perhaps combined with an advertisement, I can’t remember), the company would feature some of the better reviews ahead. One person told me that they her friend wrote a $3000 check on the spot. The other business owner declined. One of the stories is at least a few years old now and I can’t say that Yelp as a publicly traded still works that way. Yelp’s site today says the default sort doesn’t take into account advertising.

I took Contrarian’s Best of [City X] example and applied it to the advertisements that you see in the airplane magazines for the best steakhouses and best doctors. It’s very clear to me that they are advertisements, they even have the advertisement size box on the page instead of a full article written by someone reputable. Rational Therapeutics has an article about being approached to be featured in such an advertisement. This is an obvious advertisement to me, even though the magazines claim to vet the paying doctors and steakhouses, but Energi Gal mentions that she falls for it occasionally and as a very successful pharmacist she’s pretty bright.

My argument was that this the airplane magazine/best steakhouse scam was pretty easy to spot and the BBB being untrustworthy was not. Then Contrarian suggested that MLM is a pretty obvious scam. I personally don’t believe it is quite obvious. If it were, I wouldn’t have 6,000 comments on my MonaVie article with people claiming that the fruit juice cured every medical condition under the sun. If it were such an obvious scam, you’d think there wouldn’t be 15 million Americans caught up in it.

This gave me an idea: we need to have a scam scale. I’m thinking something along the Mohs scale of mineral hardness, but it would clearly be more subjective and less objective. Maybe I could make it scientific by allowing people to vote. I get the feeling that it wouldn’t work, because people with a vested interest in MLM say that it isn’t a scam at all.

In developing this scam scale idea, I determined there are two main factors going into the scam:

  1. How devious / cleaverly disguised the scam is…
  2. … and how much the scam is going to harm you

While I’m personally very interested in the more devious scams, I have to admit that if they aren’t going to hurt you, they aren’t that bad. For example, if you go to one of steakhouses listed in the airline magazine as one of the best, you are most likely to still get a decent steak for your money. On the other end of the spectrum, if you gave your life savings to Bernie Madoff to invest, you may find that you lost it all. That’s a pretty harmful scam. (It’s devious too, since most people had no way of really knowing he was running a pyramid scheme.)

With that in mind, I’ve decided to rate a scam on a scale of 1 to 10 in deviousness and harmfulness. I take the deviousness score and add it to twice the harmfulness score and divide by three. This gives extra weight to the scams that are more harmful. I took a few of things that I consider scams and put a subjective ranking to them and put them in a nice table sorted by Scam Score:

Lazy Man Scam Scale
ScamDeviousnessHarmfulnessScam Score
X-Ray Specs111.0
Airplane Magazine/Best Steakhouses3.511.8
Male Enhancement Pills232.7
Best of [City X]612.7
Better Business Bureau723.7
Visalus787.7
One247.57.87.7
Jusuru7.58.28.0
Bidding Fee Auction8.588.2
MonaVie88.28.1
Bernie Madoff9.59.59.5

I put the old-fashion X-Ray specs that kids bought in the 1950’s as very small scam. I hope few adults actually thought they were getting glasses that could see through things. In the worst case you were out a few dollars and moved on with your life. I view male enhancement pills in the mold, I hope most adults know better than to expect them to work, but at least you aren’t typically out too much money. I thought the Best of [City X] is a little more devious, because it isn’t obvious to the consumer that sales reps may or may not have sold off the position for best BBQ restaurant in town.

You’ll see that in the 7.5 – 9 range, I have various multi-level marketing companies. I think they are particularly devious as they often pitch themselves as legit business opportunities when over 99% of people lose money in them and their products are often claimed to be of a higher quality than they are. Some of them like ViSalus will give people an incentive to take out a big BMW lease in their own name and then stick them with that burden if their sales drop… a very devious scam in my view. MonaVie is particularly devious in trying to convince consumers that two ounces of their juice is equal to eating 13 fruits and vegetables – I can’t tell you how many distributors fall for that.

All these MLMs are fairly harmful because month after month you lose money buying overpriced product in hopes of business opportunity that isn’t there. In the case of MonaVie, it is $1600 a year in just juice… and this doesn’t factor in other costs of running the business which can run 5 times that. In the case of MonaVie some people actually stop taking their medication, which is harmful in more than just a monetary sense.

Now it’s your turn. What other scams should I include on the scale? Do you agree with my ratings or not? Finally, feel free to point me to scam scale that already exists. That’s par for the course as most of my good ideas are already implemented elsewhere.

Filed Under: MLM, scams Tagged With: BBB, bernie madoff, jusuru, MonaVie, One24, ViSalus

One24 Responds to “The Scam”

October 13, 2015 by Lazy Man 39 Comments

Today, I have either a treat or a punishment for readers. It all depends on the point of view. I had called a company, One24, out for having characteristics of being a scam and pyramid scheme (the FTC’s guidelines were critical in making that call). It has recently come to my attention that One24 has responded to my One24 Scam article in one of their recent podcasts.

The result is an extremely long article combating the misinformation that they spread over their marketing channel. If you like soap operas that have a high potential to turn into public lawsuits, I invite you to grab a cold drink (or 3) and enjoy the show. If you like quick articles about learning how to save money as I typically write let me direct you here. I realize this article is targeted to a small minority of Lazy Man and Money readers. However, because it is possible to save that minority thousands of dollars, I feel it is one of the more articles I’ve written. If you aren’t part of the minority, it might be best to just move on. You’ve been warned.

The One24 Podcast title “The Scam” can be downloaded here. I recommend you keep my article open for reference.

Before I go any further, I should mention that the company doesn’t mention me or my article by name, but it’s clear that they are address my article. They cover nearly every point point from beginning to end. I guess their lawyers realized that One24’s threat to sue me for defamation had no legal ground. It seems this is their plan B. I think I irk them because I rank at the top of Google searches for “One24.” It makes me a prime target for the company.

Finally, I want to thank the people reading and comment on such articles. If it weren’t for one astute commenter, I would have missed the podcast and not been able to respond to it. Perhaps One24’s plan was to address their PCs (product distributors) directly and not give me the chance for a rebuttal.

To help make this long article go a little easier on you, I’ve divided it into sections.

The Format of the Podcast

The format of this podcast alone should raise red flags about the company. As one commenter, CGC, put it, it is presented as “a scripted ‘interview’, infomercial.” It is a podcast called “Inside One24” which is “exclusively produced” for One24 distributors. In the greeting of President Joe Perry, Phillip Gerogeson asks, “Have you run out of places to pinch yourself as to where this company has taken you in the last few months?” The answer from Joe Perry is, “It’s been an incredible ride.” This is the kind of scripted commentary from the company’s PR person to the company’s president.

You’ll find other bits of marketing throughout the interview. At the end, they do a recap where the interviewer pats the interviewee on the back with comments like, “I think that was tremendously stated” and “Joe hit the ball right out of the park”, “and I thought he really nailed it there.”

It must be pretty easy to nail points in an scripted marketing piece directed to distributors of the company. Let’s hope that those involved in One24 are smart enough to see this marketing for the scam that it is.

The Effect of “The Scam”

The first thing the podcast says is that:

“whatever is being misrepresented or said is not making one dent in the resolve of you our PCs. And I want to make sure that is first of all very clear.”

Before getting to the slanderous use of “misrepresented”, I would like to dispute that my article isn’t making a dent.

First, the company doesn’t have information on every PC to know if it is making a dent or a landslide. They aren’t at every showing of the product and/or plan. This is clearly a piece of marketing. They have to say it isn’t making a dent, because to say otherwise would cause panic.

Secondly, this appears to be a lie. If it wasn’t impacting PCs they wouldn’t have threatened me with a law suit. More importantly if it wasn’t impacting PCs, they wouldn’t have to create a podcast directed towards PCs on the topic. As they said, they “lined-up the top gun to handle this, and to meet this information head on, and that’s our president, Joe Perry.” Clearly getting the president to address the concerns is a sign that this is an important issue. In fact, Joe Perry hasn’t been involved in any of the previous podcasts according his introduction in this podcast. Actions speak louder than words here.

Finally, there is nothing “misrepresented” in my article. If there is, the company is welcome to enter in the debate in my comments just like many of their PCs have. Those PCs have tried and all have failed, just like the company would. Getting back to why they don’t have the guts to mention me by name – perhaps it’s because they know that I’d be the one able to sue them for defamation for claiming that I misrepresented others.

Questioning the My Motives

Philip Georgeson says, “The next aspect that we have to discover or certainly analyze is why this is happening. And in most cases we can only speculate. But you do notice a pattern that in… not just One24, but in other growth companies where they begin to reach a successful mark in which attention is drawn to it because of their success your detractors will come out of the woodwork and purport misinformation in order to knock momentum, or take away from them or certainly keep them from impeding on them as competition.”

Since the company is clearly targeting me and my article, I feel I should respond.

I have to ask here is what is their definition of “growth” companies. I love growth companies. In fact, I invest a lot of my money in growth companies. I don’t know anyone that was against Groupon as a growth company, do you? This is a red herring fallacy.

Secondly, the podcast makes a point that the reason that I target them is because they are my competition. What competition is that? I’m not involved in any MLM companies. I do not make or sell or any products similar to One24.

Finally, One24 tries to spin this as a sign of success. They should step off their high horse. I got two emails in a couple of days because their distributors wanted to recruit me due to my connection of writing about MonaVie and Nerium. I didn’t write about One24 due to their “success”, I wrote about them because One24 distributors (PCs) claimed the business was a path to retirement. As a personal finance blogger that caught my eye. It’s kind of humorous that a company like One24 judges its level of success by what I write. Perhaps other MLM companies should offer to pay me to write about their scams, right?

Intermission (at the 2:50 mark)

At the 2:50 mark there is a “commercial.” I don’t know what else to call a break to promote a product inside an infomercial about the very same product. A woman says, “Did you know that just one serving of NatraBurst contains more than 6 servings of fruits and vegetables? Did you know that same serving of NatraBurst contains the daily recommended antioxidant protection by the USDA, so what are you waiting for? Take the your burst of nature today.”

Since this podcast is in the business of pointing out “misinformation”, let’s focus on the above. NatraBurst does not contain more than 6 servings of fruits and vegetables. As I pointed out in my original article, this is a lie. MonaVie has used this same lie to claim that drinking 4 ounces of their juice is the same as eating 13 fruits. It turns out that many government agencies got together to quantify servings of fruits/vegetables. The guidelines are very clear. Unfortunately for MonaVie, which is 100% fruit juice, 4 Ounces of MonaVie is 1 Serving of Fruit. It’s worth noting that One24 is not 100% fruit juice (or anything close from its ingredients) and as a liquid can not claim to contain servings of fruit. I explained the difference in my original One24 article. One24 is misleading people into thinking that an ORAC score is the same as eating fruits/vegetables, which this completely false and extremely misleading.

Furthermore the company takes the extra step of saying that USDA has recommended an amount of antioxidant protection. I’ll say there’s a possibility that I’m wrong here, but I really don’t think that the USDA has put out RDA of “antioxidant protection.” Readers, if I’m wrong please correct me and cite a source from the USDA’s official website.

Still doubt that this podcast is about me?

At the 5:45 mark company president Joe Perry claims that “these people have ulterior motives”. “that they take it different directions to try to draw attention to themselves”, and “Unfortunately that’s what we’ve experienced and… I think its the reason for this show in some ways.”

Phillip Georgeson then says, “You and I [company president Joe Perry] got together and it was predominant your idea to do this and I think it was a great one [pat on the back].” If there were any doubts this was staged that should be dispelled.

Georgeson continues, “Forget who is doing it we won’t name, and forget why they may be doing it. Instead we’re going to take what they are saying… and we’re going to actually address it head-on.”

It’s interesting that Georgeson says to forget why they are doing it, when they’ve previously put out misinformation on the topic.

It’s great that they are going to address things head-on, because you can see the parallels with my one24 article.

The podcast is intended to help distributors market the product.

At the 6:30 mark Phillip Georgeson says, “Let’s create this resource if you will. This one more tool. This one more little piece of weaponry that you can take out and address.”

The Naming of One24

Phillip Georgeson says,

“One of the first things and issues and topics that came up in some of the stuff that I’ve researched was that there’s this charge that the concept and name of One24 emphasizes more of a recruiting of customers to a retirement program that leads to large profits by recruiting only and that should in some ways be some sort of a scheme.”

I take some offense by the use of that “only” there. It paints a very “black and white” picture where there are many shades of grey. It’s possible that there are some retail sales. As the podcast admits later on the real profits come from the recruiting aspect.

Company president Joe Perry says, “The name was really used because it represented a mantra that, you know, Mark and I got really excited about and that’s the fact that if you take something and do it consistently, like you can One24, over a 24 month period some really neat things can happen. So obviously the optimum thing that can happen for someone is that in 24 months if they do everything consistently then we are really hoping they can kind of cinch up their future and not worry about their college fund and possibly their retirement. We’re not saying that everyone that gets in One24 is going to retire in 24 months. But I think some people have taken that statement or that thought and pulled the string out and stretched it a little further than it should have been stretched.”

So it would seem that my article is dead on with the company’s focus. In the article, I very specifically quote an email that I received. It said, “The concept is [recruit] one member a month for 24 months (One24), then retire.” I am happy to divulge this email in a court of law. One24 just needs to bring the lawsuit.

In addition, Mr. Perry, gives us a lot to address here. There is nothing magical about a 24-month period. Some “neat things can happen” if you start with a penny and double that investment everyday over a 30 day period… you’d have around 10 million dollars by my calculations. This doesn’t mean that it is realistic. It doesn’t mean that one can do it consistently. It’s great that Mr. Perry and One24 “are really hoping” that PCs can cinch up their future. I’m really hoping you can double that penny’s investment everyday. Point is, it’s extraordinarily unlikely to happen. Mr. Perry and One24 requires you to buy their product to play that game. I’ll let you play the double a penny game for free.

Mr. Perry makes the point that “We’re not saying that everyone that gets in One24 is going to retire in 24 months.” Once again, the podcast is trying to make it a black and white issue. In other words, “We are going to bombard you with images and talk of retirement. We are hoping you will get there. We know that not everyone is. We will not discuss the odds of success, because that might prevent you from buying our product and trying.”

Am I exaggerating about the bombardment of images and talk of retirement? Here’s what a standard PCs page looks like (they all look the same except for the name that I’ve blacked out):

Note the space devoted to NatraBurst vs. "the Opportunity"
Note the space devoted to NatraBurst vs. "the Opportunity"

Note that the marketing message on that page (and thousands like it) is centered around retirement and financial security. Perhaps the statement about retirement is being stretched because your marketing people are stretching. This is done to recruit more people to sell your product and make larger profits. It’s worth noting that there’s almost no focus on the product here, but I’ll have more on that later).

One24 as a Pyramid Scheme

The next section (8 minutes into the podcast for those following along) is about “pyramid schemes”. Phillip Georgeson says,

“Any time something like this company as successful as it is pops up the word ‘pyramid scheme’ comes up. It’s obvious to you and I but let’s go over that. How do you respond to the pyramid scheme because if you were to … calculate out the natural progression of enrolling 24 people over one year that eventually you’d run out of people in the whole planet? We actually saw that and… you and I laughed about it but explain why it is so ridiculous.

Before we get to Joe’s response, let’s reflect for a minute on the question. Clearly companies are successful without the word “pyramid scheme” popping up. Here are a few examples, Facebook, Amazon, Ebay, Starbucks, and Google. I don’t see anyone calling them pyramid schemes.

The other part of this question that is worth noting is that it is leading the answer, “It is obvious to you and I”, “laughed about it” and “why it is so ridiculous.” What is humorous about this is that in the recap of the interview at 24:20, Phillip Georgeson says, “… we would blow through the population of the world over time. You know on paper that is probably is true.” It is not just “probably true”, it has been mathematically proven to be true. You can see a depiction of it on Wikipedia’s article of pyramid schemes. Clearly this argument “that is probably true” (according to Phillip Georgeson) is not “so ridiculous” or worth “laughing” about it.

Back to Joe’s repsonse:

“I’ve heard it for more than 30 years… I reminiced that Mark and I, back when we started, a company called Slender Now that… ahh… went to 100 million dollars in sales in less than 3 years. What we did is we were holding meetings in different areas of Florida and we went to one meeting and we had gotten a lady involved as a distributor that was just really, really excited. She didn’t know a lot about this industry. She’s just excited about the product, excited about the opportunity, and her first goal, by the way, was to buy a dishwasher. And ahhh she got excited and enrolled and the next meeting Mark and I came back to and we were training and she had her husband with her and he was sitting in a chair and he a his pocket calculator and he happened to be a CPA and he threw that out in front of everybody just like you just said, ‘Well you know Mark – Joe, if you enrolled 12 people who enrolled 12 people who enrolled 12 people… you are going to saturate the world in X number of months.’ You know the reality is that we’ve been hearing that since back in the 50’s when the first… MLM companies were birthed. And you know something, it’s (MLM saturation) never happened. And by the way that lady continued to go beyond what her husband’s logic was saying and she happened a year later to build a whole new house in Florida around that dishwasher.”

Ahh, so Mr. Joe Perry and Mark Seyforth started Slender Now. I did a little Internet search on that company. I found an L.A. Times article, “Death and Denial at HerbaLife”. Here’s a quote from that:

“In 1976, Mark [Hughes] began selling Slender Now diet products for Seyforth Laboratories, a multilevel marketer, becoming one of its top 100 earners. After Seyforth collapsed in 1979, he sold exercise equipment and weight-control products for Golden Youth, another direct-sales outfit.

While the article is about Mark Hughes, who is not to be confused with Mark Seyforth, it does point out how well Slender Now really did. It may have went to a 100 million dollars in 3 years, but by 1979 it “collapsed.” You know what else “collapses”? Pyramid Schemes. Take a read of Wikipedia’s Pyramid Scheme article and look for the number of occurances of “collapse.” Slender Now was an MLM company that started out really well but ended up collapsing like a pyramid scheme. That doesn’t like the shining example you want to give when trying to convince your distributors (PCs) that they are not involved in a pyramid scheme.

In 1979 when Slender Now collapsed I think that CPA had the opportunity to give the king of “I told you so”s to his wife. It’s odd that Mr. Joe Perry claims that MLM saturation has never happened. If that were the case, he’d still be selling Slender Now and it would still be a growing company, right?

This story of this one successful person is another example of marketing. They aren’t telling you about all the people who lost money when it collapsed. It is like telling the story of the one person who retired with One24 and ignoring the thousands of people who lost hundreds or more buying the overpriced product.

The most important thing here is that he never addresses the logic of the CPA’s point… or the point about the unsustainability of pyramid schemes and MLMs in general. He just tells an isolated success story and glosses over the fact that Slender Now “collapsed” (according to the L.A. Times). It seems to me that the CPA was proven correct. Of course we wouldn’t expect One24 and their marketing people in their marketing Podcast to admit such a thing.

Joe Perry continues,

“It can’t happen. It’s just human nature… it’s never happened. There’s been companies out there and some of the biggest in the industry who do billions of dollars of a year, have very aggressive international marketing plans out there… and it just won’t happen… it’s just not going to happen.”

So Mr. Perry claims it’s never happened which seems to be a lie using his own Slender Now example. In a span of 15 seconds he claimed following, it “can’t happen”, “never happened”, “won’t happen” and “not going to happen.” That’s extraordinary considering the example of “it happening” he just cited with Slender Now.

Finally, I should bring back a point from my original article… the FTC says that “Not all multilevel marketing plans are legitimate. Some are pyramid schemes”. This is where the pyramid scheme nature comes into play. Remember that the FTC exists to help consumers and thwart scams.

NatraBurst as an Afterthought

The podcast (at 10:23) makes the claim that the product is not “an afterthought” as I claimed. Specifically Phillip Georgeson says:

“Some out in the cyberworld claim that One24’s product NatraBurst is but an afterthought of the company and not a true focus and actually can be found at auction sites in some cases less at 50% below the retail.”

I give Phillip Georgeson credit for not glossing over the 50% discount of the product on Ebay.

Joe Perry responds:

Natraburst was put together before Mark [Seyforth] and I even talked about One24 and the product was really targetted initially to go health professional marketplace which as you probably know has a pretty high level of scrutiny.”

The first and most important thing you’ll notice is that the “auction sites”… Ebay… with the cheaper productis never addressed. The claim is made that Joe Perry and Mark Seyforth were going to address the health professional marketplace, but as best I can tell, they’ve always done MLM (Joe Perry says he has 30 years of experience later in the podcast). So we are to believe that they weren’t going to go with MLM with NatraBurst, but it turns out that they had this idea for an MLM company, after 30 years in the industry, and decided to switch the product’s distribution method.

I’ll let you the reader be the judge if the product is an afterthrough or not. When I searched Google for “One24”, this was one of the first pages I found was this image that I referenced earlier:

Note the space devoted to NatraBurst vs. "the Opportunity"
Note the space devoted to NatraBurst vs. "the Opportunity"

It seems the focus is on the big photo with rotating pictures of various vacation and retirement destinations. Under that picture is the words, “Your Retirement Opportunity.” To the right of that is the one part of the page devoted to the product. To the right of that is another box of testimonials about “financial freedom, security, prosperity.” If you were to divide the above page up into 9 boxes like a tic-tac-toe board, you’d find that about 1/9th of the space is devoted to the product and 8/9s is devoted to “the opportunity.” Sorry to cover this twice in the same long article, but I think it was worth it since it was indirectly addressed twice.

NatraBurst Nutritional Information as Proprietary Information

One of the claims that I made in my original article was:

“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.”

The Podcast made that point that because the product is a food and does not have to disclose its formula. In fact it made the comparison to Coca-Cola (at the 13:20 mark). I must have been extremely psychic because I wrote about MonaVie, Secret Formulas, and Coca-Cola in March of 2010. I’ll repeat the basic points here:

  • Coke sells it’s product on taste. It doesn’t bill itself as a health product. We get all the nutritional information we need about the product from its label
  • NatraBurst claims to be a health product. Consumers are entitled to know how healthy the product is. Would you buy a multivitamin without knowing the quantity of vitamins in it? Of course not.

The One24 podcast becomes a little wordy so I’ll just quote the summary of this point at 25:50 point of the Podcast.

“this is categorized as a food and gives it that advantage of proprietary content. The reason why is that other dietary supplements must divulge the level of nutrients…”

This makes a mockery of the One24 consumer. There is no advantage for a potential One24 consumer to have this information hidden from them. This is critical information for any “health” product and is necessary to make an informed buying decision about the product. If the company doesn’t want to disclose any more than what’s on its nutritional label, consumers are better off buying Carnation Instant Breakfast for a fraction of the money. Carnation Instant Breakfast does disclose its information.

One24’s Manufacturing Facility

At the 13:45 mark, Joe Perry gives away a more information than I ever hoped he would have:

“There’s people for example that say we want to see your manufacturing facilities and go there for a tour. There are many companies that do that and when we get to our next level of manufacturing we may be set up to do that. But on the other side of it, I’ve been in this industry for 30 years, and Phil it has taken me some time, months upon months to find viable manufacturers who can really trust to do what they are supposed to do. So by me telling everyone exactly where we get everything done, then there’s a lot of people out there who love One24, not by being PCs, but being potential competitors. We are holding this near and dear not because we are trying to be secretive, but because there are some trade secrets…”

Where do I begin here? It seems that “there are few viable manufacturers out there.” How are we supposed to trust that One24 has chosen the viable ones? Is it because they were so straight-forward about the Slender Now story… ignoring the fact that it failed? Is it because they completely ignored the math that such schemes can’t succeed… and that the very CPA who questioned their story was proven to be right? Is it because the question was dodged about the product being available on auction sites for 50% below retail? Is it because this entire podcast focuses on every point that I brought up… except for the most important one about the FTC guidelines of MLMs and pyramid schemes?

It turns out that Joe Perry’s reason for lack of willingness to not give tours of the manufacturing facility is a smokescreen. One24 could enter in an exclusive agreement with that facility which would prevent competitors from getting that advantage. It’s business 101 – clearly someone with 30 years of industry experience should know about. Mr. Perry mentions that “when we go to our next level of manufacturing we may be set up to do that.” This is a little vague… what changes then? You are going to get a better manufacturer that you can have tours at? Perhaps you are going to get the exclusive relationship at your own manufacturer as I suggested before. If so, at least come clean and say that you are working on it rather than being vague about it.

Finally, if there are many manufacturing facilities that are not reputable out there (from Mr. Perry’s comments), and One24 is not willing to disclose their factory… well as a consumer, why have trust in it?

Podcast claims that One24 is something new and not an MLM

At one point in the podcast (14:30) tried to make a point that One24 was not an MLM. Philip Georgeson says:

“One of the objections are that this is another multi-level marketing company, another MLM. And although some of the comp plan may have the feel of an MLM, we know that it is not. Speak if you would for a moment as to what makes this unique and apart from an MLM and why it is not classified as such.”

Joe Perry responds:

“It is hard to classify something that is new. I’ve been involved in [the MLM] industry so long that it’s kind of like the DNA and I look at my grandson and I see parts of his mom and parts my son-in-law… There are piece of many things in One24 commission program”

It’s interesting that now Mr. Perry refers to it as a “commission program” and not a “compensation plan” or “comp plan” as Phillip Georgeson referred to it. A “Commission program” is for those salesmen who make retail sales, not recruiting others.

Mr Perry continues to call it a “hybrid” or “combination” of an affiliate or referral program, like Amazon has. Specifically he says:

“In some ways it is MLM, because if someone considers MLM multiple tiers which almost people do then our Incentived Refferal Program (IRP) does have multiple tiers which almost all people do…”

He then laughs at the point of describing MLM as having multiple tiers. It seems this is because he’s realized that in defining MLM he has painted himself into a corner. However, he continues to dig himself deeper and deeper into that corner:

“The only way you can ever get people to make money and build security is by…”

From there he goes into a franchise argument, specifically mentioning Kentucky Fried Chicken. He says that Harland Sanders wouldn’t have probably been a famous and wealthy man if he only had one chicken store. Mr. Perry makes the point that he uses the process of duplication. The key point here is that KFC is not an MLM. That concept is outside the scope of this article, but it’s not hard to prove that if KFCs didn’t sell product and made most of their money recruiting other KFCs, it would collapse as well. Imagine if KFC made most of its money by recruiting other KFCs… you’d get to that over-saturated point fairly quickly.

It’s worth mentioning that all MLMs have a component of Amazon’s affiliate or referral program to them. It simply means that if I refer a product to you and you buy it, I get a commission. Mary Kay and Amway have done this for decades. In fact the FTC says that this is the way sustainable, non-pyramid, non-illegal MLMs, should work… here are the FTC’s guidelines once again. Note the focus on retail sales.

So when Mr. Perry claims that One24 has features of an affiliate program and features of an MLM, he really could have said that it has features of an MLM, since they are all “hybrids” in the sense of having the affiliate side of the business.

Joe Perry (16:40-ish) continues:

“One of the neat things… about One24 is that really anyone can get involved with minimum amount of exposure and risk…. you talk about pyramid schemes earlier is one of those things they really look for is ‘how much inventory do I have to buy?’ or ‘what’s the initiation or enrollment fee to get in this deal?” Well if you start comparing apples and apples after awhile you look at One24 and you go oh my gosh, ‘What is the risk?’ There’s very little risk and that’s the way it’s been designed…

This is the way many MLMs have been designed. One24 isn’t unique or special. Having to buy inventory and/or paying an enrollment are traditional issues that the FTC has brought up with MLM companies. These points were brought forward years ago, MLM companies have dealt with them by now. Many companies, including One24, get away by requiring their distributors get their expensive product auto-shipped. This can be more expensive in the long term. In a lot of ways it is a lot worse for consumers like paying to rent their cable box month after month and year after year. As for not having to buy inventory – again distributors are required to buy the product to earn commissions from recruiting others. Perhaps one of the reasons the product can be found cheaply on Ebay is that people are forced to buy the product as a fee to be “in the business.”

Philip Georgeson says (17:40):

“If someone were to go into this 3, 4, 6, 10 years out they would have the level of potential success as the person who started from the beginning. Is that a fair assessment?

Joe Perry (17:55) continues:

“Oh yeah, and I think any fair plan… you know a pyramid is something that pays people at the top that started first. And when you look at One24… I watch the numbers each month… I’ve looked at new people that are coming in that came in 6 months after … and 6 months sounds probably pretty small, but we’re less than a year old. I look at some the most recent PCs that are doing extremely well and they are going to be passing the guys that got in 6 months prior to them if they keep doing what they are doing pretty quickly if they keep doing what they are doing…. that’s an excellent point.

Mr. Perry makes a great point that they are less than a year old. How can they speak to whether someone would have the same success 3-10 years? Note that they never said you’d have the same odds of success, just a “level of potential success.” From the Slender Now experience we know that similar companies tend to dry up pretty quickly. Also note that Mr. Perry says “some of the most recent PCs.” There is a wide chasm between possible and probable and the company isn’t willing to give any numbers or statistics on it.

One24 as a New MLM / Network Marketing / Direct Selling

At the 18:35 Philip Georgeson says “You and Mark have created the 21st century direct marketing company….”

Joe Perry doesn’t argue it. In the podcast they don’t tell people this, but “Network Marketing” and “Direct Selling” are just terms that are used to hide the bad publicity behind the term “MLM.” Clearly establishing a network and marketing does not have to be multi-level… I have a network of readers here and I don’t make money from what my readers (my network) recommends. Additionally, there’s nothing in “direct selling” that implies multi-level marketing… if you at the top of the pyramid in any MLM companies, they don’t typically don’t “directly sell” any product at all. It seems like they are just moving the ball again by calling it “direct marketing.”

At the 20:59 Mr. Perry says,

“I was just talking to one of our PCs right before this call and the guy is just so excited so thankful and it’s just changing his life.”

I’m having a flashback to that woman who wanted to by a new stove with Slender Now. I’m betting she was excited and thankful until it collapsed. People exhibit the same emotions when they join a pyramid scheme and get their first taste of the money rolling in.

One24 Scam Podcast Recap

At 22:30 Philip Georgeson tries to sum up the “interview” with points to for the PCs (distributors) to jot down.

The points he makes are:

  1. “One24 is an idea that has found its time. We have seen the evolution of what has happened in this industry and One24 represents the new path of the whole direct marketing industry.” In other words, One24 is indeed in the MLM industry and hence is an MLM. So much for being something “new.”
  2. He makes a point that is not “a recruiting-driven tool based on the financial aspects and retirement aspect…” The response to this charge about the company being “a recruiting-driven tool” was that One24 was derived “by doing one thing… that one green ticket, referring one person to become an auto-ship ofa product NatraBurst and repeating that.” His point continued “When you do that over time, repeat that over and over, great things happen.” Sounds like One24 agrees with me that NatraBurst is a recruiting-driven tool and that these “great things” are the potential financial rewards from such recruiting. We said the same thing, just used different choices of words. The Podcast didn’t even try to make a distinction.
  3. Next up is a recap of the section that I talked about in One24 as a Pyramid Scheme area. My favorite part is that he admits that One24’s policy of recruiting 24 people would blow through the world’s population “is probably true on paper.” However, he tries to make the distinction that “It can’t happen”, based solely on the evidence that it is has never happened. He neglects to mention that it’s because enough people are too smart to fall for such scams and PCs (distributors) drop out when they find that recruiting people isn’t a sustainable business.
  4. Philip Georgeson then tries to slander me for bringing such a logical argument that he agreed is “probably true.” He says that to compare One24 to a pyramid scheme, “I think speaks to the level, or lack there of, of education and intellect of what they know in the industry itself.” It short he’s attacking my intelligence for applying The FTC guidelines about the MLM industry to One24. Nowhere in the Podcast do they address the FTC or their stance.
  5. He says that the product, NatraBurst, was developed well before One24 was established. The timing of when the product was created is irrelevant in such schemes. The product could be gallons of milk for all it matters. What One24 is really pitching here is the business. Otherwise they wouldn’t have stress the “great things” that can happen from recruiting others into the scheme. This is what makes the product an afterthought. You could plug in just about any kind of consumable. Philip Georgeson says that One24 had this product, a “superfood”, already prepared and then the concept of One24 came in. I would need to see a lot of evidence backing this up, because these are people who, in their own admission “spent more than 30 years in the MLM industry.” People in MLM industry always seem to stumble upon these “super-products”, which just happen to be perfect for their scam.
  6. I covered NatraBurst Nutritional Information as Proprietary Information fairly well. The point is that NatraBurst is health product and, as such, should disclose all information necessary to the consumer to determine if it is healthy. For good measure, Philip Georgeson takes something that I didn’t say and suggests that I lack knowledge. He goes on, “So you [PCs/distributors] get to turn that table and spin that because whoever puts that out there is not understanding the categorization of what NatraBurst really is.” You have to love with a company tells its sales force to “spin” things, especially when consumers try to get necessary information to make an informed purchase.
  7. Philip Georgeson, then recaps and says that it One24 an MLM. However, a number of times, they’d talked about being the direct marketing (MLM) industry. Mr. Georgeson tries to spin it into being a hybrid between an affiliate program and “of course the successful tiered element of Multi-level Marketing (MLM), which gives you the wealth, which gives you the foundation and the only ability to capitalize on the efforts of others.” It’s interesting that they tie the MLM opportunity to the wealth proposition here, but previously they said that One24 should not be categorized for its financial and retirement aspects. This company can’t seem to make up its mind. This is what happens when the FTC says you can’t make these of claims and you need these kinds of claims to keep the sales force motivated in expanding the scheme. As for the One24 not being a MLM, it seems like their plan is to take the MLM and try to dress it up as something different. It’s putting lipstick on a pig and calling it Scarlett Johanson.

That’s pretty much the end. After more than 6500 words, it’s about time, right?

Filed Under: MLM, One24 Tagged With: One24, scam

Amazon Outage, One24 Legal, Boston Sports get an Easy A

April 24, 2011 by Lazy Man 6 Comments

Those of you who visited my site this Thursday may have been disappointed to find my site unavailable. Well, Amazon had a huge outage for it’s hosting services. Just a month ago I moved to using Amazon. As usual, I have the worst timing.

I received a follow-up email from One24’s lawyers regarding their threat to sue me for defamation. It was a little unusual. In it, it made the assumption that I “know” One24 is not a pyramid scheme and that I’m trying to hurt their business for my own gain. It’s as if they didn’t read the article. It consisted of extensive evidence from the FTC explaining how MLMs in some cases can be pyramid schemes along with analysis of how One24 fits these FTC guidelines. I think it’s clearly a scare tactic and will treat it as such. I did offer to correct my article if they point out any specific statements that have been proven to be false. I am a reasonable person trying to educate consumers. Read my One24 article here.

I saw Easy A on DVD with the wife the other night. I had seen it in the theater and liked it just as much on DVD. One part that I found particularly interesting was how Emma Stone’s character, Olive, received a greeting card that plays Natasha Bedingfield’s Pocketful Of Sunshine. She makes a face like, “What a horrible song!” when she firsts opens it. However, over the weekend she’s fallen in love with it, singing along. I’m living this in real life with Katy Perry’s Firework. I mean it has some of the most imperfect rhymes imaginable and yet, it has wormed its way into my head.

The Boston Red Sox started off the season 2-10 – a shocking start for a team that 42 of 45 ESPN analysts predicted would win the World Series. This put more of a damper on the month for me than getting my taxes done. However, they’ve won 7 of their last 8 games behind incredible starting pitching. In addition the Boston Celtics have started the series 3-0 against the Knicks. As I type this both teams are playing and leading in the stages of their game today. Both teams have really ignited that light and let it shine. You can watch a game without going “Oh, oh, oh” at their colors bursting.

Enough with the off-topic stuff, here are some personal finance articles from the last week.

Money Writers:

  • Brip Blap on chinese water torture.
  • Digerati Life explains what to do when you’ve got too much debt.
  • Frugal Dad asks anyone planning to downsize car because of gas prices?
  • Generation X Finance explains how to keep eating well on a budget.
  • Million Dollar Journey posts children and capital gain in cottage country.
  • Money Smart Life presents 12 steps to improve your credit score.
  • My Dollar Plan blogs about eliminating preexisting conditions in health insurance.
  • The Sun’s Financial Diary says seek wise counsel to save.

Top PF Posts:

  • The Smarter Wallet discusses the negative effects of social media on your job.
  • My Journey to Millions writes be careful when picking a mutual fund based on its name.
  • Free Money Finance goes over how to decide whether to drive or fly.
  • Get Rich Slowly talks rebalancing your investment portfolio.
  • Money Ning shares how you can get your concert tickets for a steal.
  • Simple Dollar on financial stress and how to plan against it.
  • Scott on MONEY posts how to get a loan following bankruptcy.
  • Mighty Bargain Hunter shares two keys to spending financial windfalls wisely.
  • Money Crush says successful people are in it for the long haul.
  • Saving Advice shares the truth about Extreme Couponing.
  • Not Made of Money gives three tips to maximize your retirement plan.
  • Budgets Are Sexy asks should only poor people shop at thrift stores?

Filed Under: Links Tagged With: Amazon Web Services, easy a, katy perry, One24

One24 Scam?

October 7, 2018 by Lazy Man 656 Comments

[The article below has garnered the attention of One24 and their lawyers. They are trying to whitewash this information. For more details see One24 Threatens to Sue Me for Defamation.

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.

natraBurst

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.

Update: Other One24 Scandals

  • One24 Vice President Cherri Hoffman is Cherri Seyforth
  • Bob Hoffman, Husband of Cherri Seyforth-Hoffman is One24?s #2 distributor
  • One24 Awards $25,000 Sweepstakes to CEO Mark Seyforth’s High School Classmate

Filed Under: scams Tagged With: NatraBurst, One24

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