Archive for the 'MLM' Category

When is a Scam NOT a Scam?

Tuesday, August 12th, 2008

I had a sort of ‘Scam Immersion’ therapy recently. I was taking care of the administrative duties for a new WAH website that reposts carefully reviewed job opportunities. I am so glad that we got a kind of blacklisting system installed. Before I got the blacklist configured, the site was pulling in around 7000 postings a day for me to review. That was impossible.

I was pretty ruthless with my keywords for the blacklist. I used words like ‘cash’ and ‘legitimate’ in addition to the web addresses and company names that I had identified as scams.

There have been a few business models that made for a tough call. There are multilevel marketing situations where recruiting down-line salespeople is more lucrative than selling the actual product or service. I am repulsed by these situations because they involve pressuring people to lie and exaggerate about how easy and lucrative the potential sales are in order to earn referral money. That being said, they are often selling actual products and some people are actually making money as salespeople/recruiters.

Longstanding MLMs appear to have people working hard to refute online criticism. I saw at least on person claim that he had a paid job spreading misinformation about an MLM on the scam-watch sites.

Independent distributors ALWAYS conceal the identity of the company when advertising WAH opportunities. I have decide to avoid reposting anything associated with Herbalife. They have been in business for over 20 years and are a publicly traded company. I am assuming, based on the information that I could find, that the vast majority of people who buy into the scheme end up losing money or at the very least wasting their time.

AmeriPlan is another very big MLM. The thing with both of these companies is that they are set up to have a logarithmically increasing number of salespeople serving a finite market. Ameriplan also has a dubious product. It sells discount health and dental plans that less thoughtful people might confuse with actual insurance. Salespeople who find out that the plan is under-served by doctors in their region have to make an ethical choice about whether or not to sell people something that is of little use to them.

What both of these MLMs have in common is a plethora of conflicting information on the internet coming from detractors and defenders who each have their own axes to grind. They are also instigated by companies that operate well within the bounds of the law while tacitly encouraging independent salespeople to act in ways that are legally and ethically questionable. I continue to debate myself about whether or not these are scams. I think the only people who will assure you that they are not scams are either making money from them or still hoping to make money from them.

Check out this site the investigates Herbalife.

Craigslist Item of the Day

Monday, August 11th, 2008

Note: I am not promoting this website, I am reviewing it. Here is an example of a very optimistic sales pitch on Craigslist:

Are you tired of the Daily Commute?

Are you tired of the Corporate “Rat Race”?

Are you tired of making everyone else Rich?

Finally, take control of your life and start living
the way you and your family deserve. This is a
legititmate $250,000 first year opportunity. Please
visit my website for all the life changing details:

The website includes a loud annoying audio sales pitch and a picture of the Internet Millionaire’s old rusty car beside a picture of him in a nice suit leaning against his new luxury car. I have to wonder if either of these cars are actually his. The old car photo looks like a typical Auto Trader photo.

He misspelled the word legitimate in his ad. It would have never appeared in my feeds if he had spelled it correctly because I filter out legitimate jobs. Seriously, I administer a site that pulls thousands of postings a day for me to review and every single one that ever uses that word is a scam.

FTC Advice…

Monday, July 28th, 2008

pyramid-scheme.JPGMulti-level Marketing is a perfectly legal business model. Pyramid schemes are illegal. The FTC and similar bodies around the work draw a clear distinction between the two. Some marketers use very inventive strategies to blur that line.

Both types of marketing can chug along making many people lots of money for an indeterminate period of time. They can both potentially fall apart when the limits of a finite market are reached or when people have their confidence shaken, leaving the vast majority of people in a losing situation. The illegal ones can come to a VERY abrupt end leaving the vast majority of people in a losing situation.

The FTC has a fact sheet advising people on how to identify and avoid Pyramid Schemes.