I hope everyone had a good Fourth of July yesterday. It seems like the Wednesday holiday has put the whole week in slow motion. With that idea in mind, I figure it’s a good time to take short break from the typical personal finance articles and cover that another topic that interests me: multi-level marketing companies scamming people.

Over the last few weeks there have some interesting news about MonaVie. For newer readers, the Lazy Man community exposed the MonaVie scam which lead to the company to threaten me with frivolous lawsuits. Had I known about it at the time I would have hit them with the California Anti-SLAPP Project. I’ve spent some considerable time creating websites like MonaVie Scam in hopes of helping people avoid being scammed out of their hard-earned money.

Here’s some of the news that I found particularly interesting:

• Black Diamonds Leave MonaVie – The highest rank you can achieve in MonaVie is a Black Diamond. There are only a few people who reach this level and they make about a million dollars a year (according to the MonaVie Income Disclosure Statement). In short, these are dozen or so lottery winners in the millions who have joined MonaVie only to lose money over the years.

  So why would people who were so fortunate to make their millions with MonaVie decide to give it up and leave to go somewhere else? These are the same people who put out countless videos suggesting that people MonaVie saved them from some financial disaster.

  It’s MLM’s dirty little secret…. the product doesn’t matter. People have known and written about this for years. Still you see distributors actually pretend that they are interested they are interested in the product. In some cases of congitive dissonance perhaps they actually are… at least until someone offers them more money to pitch another “ground breaking” product.

  In this case another company that is growing, ZeekRewards (stay tuned for more on them next week), is offering these people a better deal to bring them over. Since these are independent business owners, you’d think they could sell juice and auction bids (that’s what they are going to do) at the same time like how Wal-Mart sells toothpaste and televisions, right? That would only make sense in the real world, not the MLM distortion field.

  These people who left MonaVie will sure push ZeekRewards and claim that it is a great business opportunity – despite the fact that they were gifted the top ranking position. This is what happened with many MonaVie Black Diamonds. They were gifted Black Diamond status after they moved from Amway with their followers. That’s the other dirty secret of MLM, the few people at the top who are making the big money, didn’t typically do anything with that company at all.

• MonaVie is going to start enforcing it’s Policies and Procedures – Before this news about the Black Diamonds leaving MonaVie, MonaVie President Randy Schroeder (who left the Agel, another MLM to join MonaVie) warned that MonaVie is going to have to enforce it’s policies and procedures. It’s about time, because over two years ago, I pointed out that Mitch Biggs Scams People and MonaVie Condones It. I couldn’t get MonaVie to enforce it’s Policies and Procedures and get rid of a high-ranking distributor who made illegal health claims about the products multiple times.

  In this letter to MonaVie distributors, Randy Schroeder admits that MonaVie has “endured a time of turmoil.” It’s interesting that they are releasing this information now, claiming that it’s passed. I noted in the past that Interest in MonaVie is Fading. Of course you don’t have to take my word for it. Here’s a Google Trends chart of MonaVie in the United States. It certainly doesn’t look to me like that time has passed for MonaVie. It looks like the decline is steady.

  Why is MonaVie enforcing their policies now? Here’s Randy Schroeder’s story:

  “Two days ago, I received a message that led to a telephone call. It became clear to me that the time to fully enforce MonaVie policies has arrived. A great member of our distributor force told me of her dismay at the following situation: After working diligently for some time to help her husband see the value of the MonaVie opportunity with no avail, this member was able to persuade her husband to join her in St. Louis. Suddenly, he became her partner in yet another way—he fully committed himself to the development of their MonaVie business! Then, last week, this same husband was contacted by a member of their upline, attempting to recruit the couple into a competing business, all the while asserting that such activity was within MonaVie policy and would not be perceived negatively. What occurred? A reversal of the confidence and belief recently gained by the husband in our company and opportunity. The outcome was an effective unwinding of the great St. Louis experience. This is not fair and must not be allowed to occur even one more time.”

  In other words, they had this guy scammed into the MonaVie business and another business came along and pitched another offer suggesting that he would be free to do both opportunities. This lead to MonaVie losing a distributor because they hadn’t fully been able to brainwash this person with their St. Louis experience. So rather than compete for distributors fairly and allow them to choose the best opportunity for their personal situation, MonaVie is going to pull out the cult tactics and restrict conversation about other opportunities.

  Randy Schroeder closes up with the cult-ish, “you are either with us or against us” mentality:

  “My message is very simple: It is time to decide. If you are involved with another company in our industry, decide today… will you commit yourself to success in our business or to another? At MonaVie, we are faithful and will remain faithful to the protection of the business that you build. Permanent income requires permanent commitment!”

  How faithful were you to Agel, Mr. Schroeder? Oops we know the answer to that one.

• MonaVie’s response to the top people leaving is amazing – Now that you’ve read about the Black Diamonds leaving and MonaVie drawing a line in the sand saying, “You are either our friend or our enemy… Choose!” They released this confusing memo about their “open door” policy. For a company with an “open door” policy they certainly have a very unusual way of showing it with ultimatums like the one above.

  In this letter Randy Schroeder says:

  “Unfortunately, as we all have experienced at some point in our lives, some relationships end in a less-than-positive or constructive manner. If you feel that the actions being taken through social media by Mick and Vick Karshner and Rob and Lisa Alwin are having a negative impact on you or the people in your organization, my simple suggestion is to log into your Facebook account and ‘unfriend’ the Karshners and Alwins. This will prevent distributors in your organization from being subjected to any disparaging posts and videos delivered to your Facebook news feed.”

  This is something that’s seen often in MLM, but it is rarely talked about. Distributors like to claim that MLM brings together a great community. In fact MonaVie uses the term “community commerce” quite a bit because people know that MLMs are a scam and “community commerce” sounds more positive. However, that only works until you decide to expand your horizons and explore another opportunities. If you do that, then MonaVie is going to tell people to “unfriend” you and the “negative” impact you have in showing them a competing opportunity. This is a whole new chapter to MonaVie and Negativity.

Someone sent me a link informing me that Randy Schroeder was arrested for drug charges in 2005. I’m not surprised.

I wish I could say that all these were unique situations to MonaVie, but I’ve seen it in too many MLM companies now. It is the norm, not the exception.

Lost in all this is the fact that Randy Schroeder essentially admits here that MonaVie is a pyramid scheme according to the FTC guidelines:

“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.”

Randy’s letters clearly state that this action to prevent people from leaving is about protecting distributor’s businesses. If these distributors are rewarded more for selling product to the public, this would be a good thing for distributors’ businesses… it would mean less competition from other others selling the same product to the public. However, if they are rewarded more for recruiting (a pyramid scheme) then losing the recruits would be damaging to their business and the pyramid scheme in general.

Some people wonder why I’m so against MLM companies and why I spend my trying to educate people to stay away from them. It’s not just the bad business opportunities. It’s not just the terrible products like $45 fruit juice. It’s that these companies can’t compete without preying on people’s desire for financial freedom, brainwashing them (see the St. Louis experience), and applying cult tactics of information control all to make a dollar at the expense of millions of distributors who often out of work and desperate… the people who can least afford that dollar.