Speaker 1: Welcome back, fellow conspiracy realist. It is time for us
Speaker 1: to dive through our archives and discover a classic episode
Speaker 1: that it gave us some amusement, some gallows humor, and
Speaker 1: some rueful Facebook post. Actually, you guys remember this multi
Speaker 1: level marketing episode. I don't know about you, but I
Speaker 1: received some correspondence assuring me that their MLB was good.
Speaker 1: Oh man, and it's a great pairing for our recent
Speaker 1: episode about companies started by cults. Or we go quite
Speaker 1: into the cult like nature.
Speaker 2: Of MLMs, not to be confused with MMA, which is different,
Speaker 2: different cult, different cult different. I'm in it, by the way.
Speaker 2: I love it. I got a call from a friend
Speaker 2: who did well in essential oils a very similar thing, Ben,
Speaker 2: and had that call. That whole call about like.
Speaker 1: Nah, man, the essential to them. So let's check it out.
Speaker 1: From UFOs to psychic powers and government conspiracies, history is
Speaker 1: riddled with unexplained events. You can turn back now or
Speaker 1: learn this stuff they don't want you to know.
Speaker 2: Welcome back to the show. My name is Matt, they
Speaker 2: called me Ben.
Speaker 1: We are joined with our super producer mister Paul Act
Speaker 1: now decand and of course you are you friends and neighbors,
Speaker 1: and that makes this stuff they don't want you to know. Matt, Matt, Matt.
Speaker 1: This is something that's been on our mutual minds for
Speaker 1: some time, is that correct.
Speaker 2: Yeah. I've always wanted to, you know, start my own business,
Speaker 2: really get out there and just be my own boss.
Speaker 1: Yeah. Yeah, to bid ado to the endless drudgery of
Speaker 1: working for some other schmoe or a company, and become
Speaker 1: finally the captain of your own fate, the master of
Speaker 1: your own soul, to paraphrase Invictus, which is a great poem.
Speaker 2: It really is. So in light of that, let's let's see.
Speaker 2: I think somebody has an offer for us. So let's
Speaker 2: let's cut to him and let's see what he's got
Speaker 2: to say.
Speaker 1: Shoo, come on, man, the dreams you told me about,
Speaker 1: we can actually do them now. We don't have to wait.
Speaker 2: Man, it works, and I'm doing it, and I want
Speaker 2: to help you do it because it's so good. Joe,
Speaker 2: this is amazing.
Speaker 1: We can we can have vacations and sailboats, and we
Speaker 1: can have multiple homes, and you can give your wife
Speaker 1: the jewelry that she deserves.
Speaker 2: Then you're gonna be a hero.
Speaker 1: Come on, Joe, let's do it.
Speaker 2: Get up, Joel, get up before it's too let get up.
Speaker 1: Wow, Joe is getting the hard sell.
Speaker 2: Yeah, he really is. The part you can't see from
Speaker 2: that is that this man is on stage in front
Speaker 2: of hundreds of people, maybe a thousand people, and he's
Speaker 2: yelling at a tombstone of this gentleman.
Speaker 1: A tombstone that reads Joe nobody yep, born in what
Speaker 1: nineteen fifty five.
Speaker 2: Something like that.
Speaker 1: So the voice you just heard is one of the
Speaker 1: spokespeople for what's called a MLM or multi level marketing
Speaker 1: based company, a direct sales company, and in his performance,
Speaker 1: which is quite theatrical, he is gesticulating wildly in front
Speaker 1: of this styrofoam tombstone and begging this tombstone or the
Speaker 1: implied dead, worthless person beneath it, to rise up through
Speaker 1: the power of multi level marketing and discover his dreams.
Speaker 1: He names several things boats, multiple homes.
Speaker 2: Yeah, all the jewelry your spouse or loved one could
Speaker 2: ever want.
Speaker 1: Right, because of course every spouse defines success through jewelry.
Speaker 2: Of course.
Speaker 1: But before we get too critical, we played this clip
Speaker 1: which I think we all thoroughly enjoyed, and we ask you.
Speaker 1: If you have time to, you can check it out
Speaker 1: on YouTube. I think it's been featured in a number
Speaker 1: of places, one of which was Last Week Tonight.
Speaker 2: Yes, last Week Tonight with John Oliver. There's an entire
Speaker 2: thirty five minute episode or thirty one minute episode we
Speaker 2: however long it was, on this topic in particular.
Speaker 1: Right because it's a gigantic industry, and today we're going
Speaker 1: to learn just how enormous this industry is, how much
Speaker 1: of it is transparent, how much of it is hidden
Speaker 1: from the public, from the civilians, as well as from
Speaker 1: the adherents. Dare I say, the disciples or the recruits
Speaker 1: of these organizations. And the best way to start off is,
Speaker 1: of course, with the American dream. What this guy is
Speaker 1: doing when he's yelling at Joe. Nobody is tapping into
Speaker 1: this concept that's familiar to anyone across the planet. You
Speaker 1: don't have to be one of our listeners based in
Speaker 1: the US to realize this. I think everybody recognizes the
Speaker 1: idea two point five kids, a summer home and then
Speaker 1: a non summer home, a boat and your own business,
Speaker 1: or a Mercedes and a Mercedes, of course, an extra
Speaker 1: slow Mercedes, because you don't have to hurry, right, not
Speaker 1: at all. So this is an enormously appealing, if intimidating opportunity,
Speaker 1: the idea of going out there on your own, without
Speaker 1: a safety net and becoming your own means of income.
Speaker 1: There are a multitude of various programs, organizations, and institutions
Speaker 1: in the United States today that claim to assist people
Speaker 1: in pursuit of this dream. Some may be government supported,
Speaker 1: such as government loan programs that happen with would be
Speaker 1: small business owners or even incubators for certain types of companies.
Speaker 1: There might also be tax breaks, right.
Speaker 2: Yeah. You can even get nonprofit consultation services or even
Speaker 2: private companies that will just provide assistance in some other form.
Speaker 2: Yeah right, some assistance will give it will help you out.
Speaker 1: And today's episode centers on a genre of company in
Speaker 1: that private sphere. Today's episode is examining one of the
Speaker 1: more controversial types of phenomena in the world of entrepreneurship,
Speaker 1: the practice known as multi level marketing. It's got some
Speaker 1: other names.
Speaker 2: Direct sales. A lot of times comes into it. I'm
Speaker 2: trying to think there's one big one. It's it's like
Speaker 2: triangle shaped, triangle plan triangle, Yeah, that's it.
Speaker 1: Triangle scheme isasles strategy, Yeah, something to that effects on
Speaker 1: may people are on the edge of their seats. What
Speaker 1: are we really talking about, Matt.
Speaker 2: We're talking about currently legally functioning pyramid schemes.
Speaker 1: It's true, also sometimes called Ponzi's schemes. You might recognize
Speaker 1: them if you tuned into the television or the radio
Speaker 1: during the Made Off scandal. You may recognize various forms
Speaker 1: of con jobs that have existed in the past, in
Speaker 1: recent history and in older history. And you may wonder,
Speaker 1: what's the difference between these multi level marketing things and
Speaker 1: these pyramid schemes? Are they all the same? To answer
Speaker 1: that question, first we have to ask ourselves what multi
Speaker 1: level marketing or MLM. So that Matt and I don't
Speaker 1: kill ourselves trying to always pronounce that tricky phrase, we
Speaker 1: have to ask what these things are? How do we
Speaker 1: define them? So here are the facts.
Speaker 2: Yeah, So a multi level marketing company or an entity
Speaker 2: that functions in that way. It's really a general term
Speaker 2: and it describes these strategies for marketing that these companies use.
Speaker 2: And they use these non salaried human beings. Their workforce
Speaker 2: is all non salaried and they sell a product or
Speaker 2: a service whatever the company is pedling, while the earnings
Speaker 2: of the participants are derived from a commission system that
Speaker 2: like most of the money that the people working for
Speaker 2: the company are not drived from the sales, they're derived
Speaker 2: from the commission that you get from the sales.
Speaker 1: Yeah. Yeah, this is where you hear the allegations that's
Speaker 1: something as a pyramid scheme. So specifically, a direct sale
Speaker 1: company might use this strategy to encourage existing distributors to
Speaker 1: recruit new distributors into this network, into this hierarchy, just
Speaker 1: like you had established, Matt. So let's say, let's read
Speaker 1: the room. We're gonna throw a look over at Paul.
Speaker 1: May we use you as an example in this hypothetical.
Speaker 2: Okay, he's nodding a little bit, just barely. Yep, there
Speaker 2: it is.
Speaker 1: Okay, he's he's so tired of these reindeer cakes. All right,
Speaker 1: So let's say Paul ActNow Decant is an existing distributor
Speaker 1: for we can make up any company.
Speaker 2: Okay, how about vintage jelly beans? Right?
Speaker 1: Sure, yes, they're aged vintage jelly beans. Are you tired
Speaker 1: of new jelly beans?
Speaker 2: Yeah? These are the ones you remember.
Speaker 1: So let's say that Paul is pitched on this idea
Speaker 1: of joining the Vintage Jelly Bean LLC or whatever it
Speaker 1: calls itself. So we can buy product then from vintage
Speaker 1: jelly beans from their factory and sell these jelly beans
Speaker 1: to our hearts content. Paul can do that, and he
Speaker 1: can make a profit of some sort based on the
Speaker 1: volume of sales.
Speaker 2: Okay, so how much he say, how much he sells,
Speaker 2: he gets a tiny bill, little.
Speaker 1: Piece, right right, he gets a bean. There you go,
Speaker 1: there you go, all right, And Paul is also told
Speaker 1: that he doesn't just have to sell jelly beans. He
Speaker 1: can make additional income and possibly quite a bit by
Speaker 1: recruiting his friends, his family members, his coworkers, and anyone
Speaker 1: else he can find, making them distributors of jelly beans
Speaker 1: as well.
Speaker 2: So they do the same thing that Paul is doing.
Speaker 1: But in the sense they work for him because in
Speaker 1: addition to the small cut of every bean sale that
Speaker 1: he makes, he also gets a cut of every jelly
Speaker 1: bean sale that his people make.
Speaker 2: WHOA okay, So that okay, So that means the people,
Speaker 2: as you're going down, if distributors are getting money and
Speaker 2: getting money and getting money and getting money on the
Speaker 2: way up that. Oh oh, this is already feeling like
Speaker 2: a pyramid scheme.
Speaker 1: Guys, I don't know, because if Paul recruits us in
Speaker 1: this story, then he stands to make more money than us,
Speaker 1: for sure.
Speaker 2: Yeah. And we recruit somebody and we get a little
Speaker 2: bit of their piece, but then Paul still gets a
Speaker 2: piece of our piece.
Speaker 1: Yeah, yep, and so it does. It does go up.
Speaker 1: You are right about the cognitive geometry. Hold on, Okay,
Speaker 1: so that's called a down.
Speaker 2: Line, right down line?
Speaker 1: Oh, the down line, not the down low, the down line,
Speaker 1: got it. And the incentive here is that once you
Speaker 1: or Paul or anyone has the new recruits hooked and
Speaker 1: working to sell these beans, you are making money not
Speaker 1: just off them, but off of everybody they recruit. As
Speaker 1: each of the distributors under you recruit more people under them,
Speaker 1: you get a percentage of those people's sales as well.
Speaker 1: And as those people recruit new people, you get Do
Speaker 1: you see how this is? This is exponentially growing?
Speaker 2: Oh yeah, the exponential growth is pretty apparent, and it
Speaker 2: feels like it could be quite a bit of cash
Speaker 2: coming into me if I'm at the top, or at
Speaker 2: least if I start in somewhere and get enough people.
Speaker 1: Below me, and let's pause here just for a second.
Speaker 1: I will I wanted to ask you this on air, Matt.
Speaker 1: Have you ever been approached by something some entity like
Speaker 1: this or do you know someone who has?
Speaker 2: I would say most people, and this is conjecture, but
Speaker 2: I would say most people who are on Facebook probably
Speaker 2: have at least one friend that has maybe either approached
Speaker 2: you or is consistently putting out feelers to be like anybody, anyone?
Speaker 1: Oh wow, Paul's nodding too.
Speaker 2: Yo, I got this essential oil. You got to get
Speaker 2: this essential oil.
Speaker 1: Work from home, change your life. Are you an active
Speaker 1: parent on the go and you don't have time to
Speaker 1: be locked down in a nine to five?
Speaker 2: Check out my mary Kay products.
Speaker 1: Saint John's wart, you know what I mean, various supplements.
Speaker 1: So you have seen it on Facebook. That and I
Speaker 1: have the dubious benefit of, at times in my college
Speaker 1: days being approached by people with a sure fire idea.
Speaker 1: And the weird thing was these would be people at
Speaker 1: career fairs. Wow, so they would be they would have
Speaker 1: you know, they would have a table or booth right
Speaker 1: next to say, Coca Cola or something like that there's
Speaker 1: an amway, etc. Right, And I'm not I don't know
Speaker 1: for sure whether that continues in the modern day on
Speaker 1: college campuses, but I know we would like to hear
Speaker 1: from you listeners right in a conspiracy at HowStuffWorks dot
Speaker 1: com and let us know if you have had direct
Speaker 1: experience with these organizations.
Speaker 2: Wait a minute, is that how how stuff works? Is
Speaker 2: that how you got picked up? Because the whole thing
Speaker 2: here is that if you come on and you start
Speaker 2: a podcast, then you get three other people to start podcasts,
Speaker 2: and then you get That's how it works here.
Speaker 1: Right for our down line? Right? Yeah, yeah, thankfully that
Speaker 1: is not the case so far as we are right.
Speaker 1: Maybe we're not far enough up in the pyramid though.
Speaker 1: That ohone man? All right, imagine just like the dark Tower,
Speaker 1: what if there's a room the very top.
Speaker 2: We got to climb this upline. We have to.
Speaker 1: Climb this upline. Man, We've got to convert people, proselytize
Speaker 1: and have them convert people, and then have those people
Speaker 1: convert people. What could go wrong?
Speaker 2: Yeah, there's definitely stuff that could go wrong, and we'll
Speaker 2: hear about it right after a quick word from our sponsor.
Speaker 1: Here's where it gets crazy. So much stuff can go wrong,
Speaker 1: plenty of stuff, a cartoonish amount of stuff can and
Speaker 1: does go wrong, so much so, in fact, that things
Speaker 1: going wrong becomes more of the rule than the exception
Speaker 1: in this industry, despite what its advocates may want you
Speaker 1: to believe. Again, it's very, very important. We are not
Speaker 1: saying that all of these things are bad. Multi level
Speaker 1: marketing itself is a strategy employed by a company, right.
Speaker 2: Yeah, And it really is marketing. I mean it's in
Speaker 2: the name multi level marketing. You're marketing your product by
Speaker 2: getting people to talk about it, mostly on social media.
Speaker 1: And it doesn't matter what you're selling. That's the other thing.
Speaker 1: It's product agnostic. Yes, it can be vintage jellybeans, it
Speaker 1: can be Adidas wind.
Speaker 2: Suits, skincare product.
Speaker 1: Skincare products is by far the most realistic thing on
Speaker 1: this list.
Speaker 2: At this point.
Speaker 1: So the place where it gets sticky is the definition
Speaker 1: between MLM multi level marketing versus what you mentioned earlier,
Speaker 1: a pyramid scheme, or, as it's been known in pejorative terms,
Speaker 1: a Ponzi scheme. So MLM multi level marketing as a strategy,
Speaker 1: a technique, or an approach is not in and of
Speaker 1: itself inherently illegal. In fact, there are some companies that
Speaker 1: practice strategies like this that quite well and are fairly reputable. Tupperware,
Speaker 1: for instance, Yeah, right, they sell they tend to sell
Speaker 1: products through parties and invite somebody over for a Tupperware party.
Speaker 1: Very American thing, right. I don't know anyone who has
Speaker 1: gone through a Tupperware party, but I'm reasonably certainly exist.
Speaker 2: Yeah, they do exist. Have you seen that show F
Speaker 2: is for Family? I have the Bill Burger Show. There's
Speaker 2: a whole this is just my I'm channeling nols for this. Okay,
Speaker 2: there's a whole side story where the main character spouse
Speaker 2: joins a group like that that sells tupperware specifically, and
Speaker 2: it's this way and her garage is just filled with tupperware.
Speaker 1: Oh, I'm so glad you mentioned garages. Oh yes, we
Speaker 1: have to get to that. So this strategy, while not
Speaker 1: inherently illegal or dishonest, becomes disingenuous at the very least
Speaker 1: when new recruits are promised scads of money only to
Speaker 1: find that there are hidden expenses that they are required
Speaker 1: to buy in as an investor, for instance, or that
Speaker 1: they are required to purchase x amount of these products,
Speaker 1: these jellybeans, skincare products, health supplements, what was Adidas tracksuits
Speaker 1: or windsuits whatever.
Speaker 2: And they're also extremely convoluted rules about what you have
Speaker 2: to do in order to get the money that you're
Speaker 2: allocated from all your other people, your downline or whatever.
Speaker 2: It gets pretty crazy.
Speaker 1: And it goes case by case. Yes, it is purposefullly
Speaker 1: ub touse. Well maybe it's maybe it is unfair. Maybe
Speaker 1: we are using a broad brush to paint these things.
Speaker 1: Maybe the people who have built these very elaborate rules
Speaker 1: for the distribution of money or products on the downline
Speaker 1: or the upline, maybe they feel that they have found
Speaker 1: the most efficient and most transparent way and perhaps the
Speaker 1: most fair way to distribute the money. Maybe that is
Speaker 1: clearly not true in every case, but maybe you have
Speaker 1: to give people the benefit of the doubt, right. So
Speaker 1: an additional issue with this is that let's say you're
Speaker 1: required to buy one hundred pounds vintage jelly beans, or
Speaker 1: x amount of cases cases cases x amount of cases
Speaker 1: of a miracle water or a skin rejuvenator wrinkle remover.
Speaker 1: What you may find is that the price you have
Speaker 1: to buy it at is going to be higher than
Speaker 1: it would have been if you went and bought X
Speaker 1: amount of cases at Target or at a supermarket. Right,
Speaker 1: and it may not be available in stores. That's another
Speaker 1: big thing. There's a lot of proprietary branding. But then additionally,
Speaker 1: you might find out these products are not what they're
Speaker 1: cracked up to be, they're not quality, they break, or
Speaker 1: the health claims, if they exist, are wildly optimistic and
Speaker 1: not research, not proven by anything other than long anecdotes.
Speaker 1: The Better Business Bureau describes several red flags that you
Speaker 1: may find when you initially begin conversations with one of
Speaker 1: these entities.
Speaker 2: Yeah, the first one should be a red flag for
Speaker 2: anyone at any time, and that's anytime someone is promising you, yes,
Speaker 2: you high earnings, especially without having to do much at all,
Speaker 2: just very little effort, very little time spent, or any
Speaker 2: real serious commitment money wise or other.
Speaker 1: The money just makes itself. It just frills in.
Speaker 2: Yeah, I mean, come on, why do you think I
Speaker 2: do this?
Speaker 1: You did the majority of the work you needed to
Speaker 1: do when you took this leap of faith, when you
Speaker 1: recognize this opportunity.
Speaker 2: Oh, Ben, have you ever thought about you could? I
Speaker 2: think you could recruit a lot of people.
Speaker 1: I think that I think that you and Paul and
Speaker 1: Nolan could all do an equally good job.
Speaker 2: What if we work together.
Speaker 1: This is dangerous territory. This is dangerous territory, especially because,
Speaker 1: as people will find out, we are ourselves already involved
Speaker 1: in a type of mL. But it's not it's not well.
Speaker 2: So let's get to the second thing. So the second
Speaker 2: thing is you're gonna do this. You're gonna make money
Speaker 2: super easy. You're not gonna have to do much. But
Speaker 2: the one thing you do have to do. You know,
Speaker 2: it takes money to make money. You gotta purchase a
Speaker 2: whole hell of a lot of inventory, a lot of stuff.
Speaker 2: You gotta buy it. That's just how you get started.
Speaker 2: You gotta have that in your possession so you can
Speaker 2: sell all the stuff.
Speaker 1: And got a prime. The pump can't sell what you
Speaker 1: don't have.
Speaker 2: Oh yeah, and we're also here's the thing. Look, you're
Speaker 2: you're on this. You're gonna make all this money. The
Speaker 2: one thing we can't do is guarantee that we'll buy
Speaker 2: back any unsold product that you have. Okay, we're just
Speaker 2: gonna you know, well, we might buy it back for
Speaker 2: like a percentage of what you bought it for. If
Speaker 2: we have to like a restocking fee, sure, but we're
Speaker 2: you know, we can't just we have faith in you
Speaker 2: as a distributor, and we we don't think we need
Speaker 2: to worry about it.
Speaker 1: We also don't take checks. That's gonna be another red flag.
Speaker 1: The money you're required to invest.
Speaker 2: That's the term we like to use just to get started.
Speaker 1: Yeah, that money must be paid in cash or a
Speaker 1: wire transfer or a money order.
Speaker 2: Hmm.
Speaker 1: Those are three red flags when yeah, when you see
Speaker 1: them waving. The consensus from most financial experts is to run,
Speaker 1: to leave, to remove yourself from the situation. And you
Speaker 1: would you know, it's easy for us now, all of us,
Speaker 1: all of us listening today, and for us exploring this
Speaker 1: in the safety of a re phones, yeah, in the
Speaker 1: safety of headphones in our Swell podcast studio, it's easy
Speaker 1: for us to say, well, I would immediately leave. I
Speaker 1: don't fall for that sort of flim flam, right. Yeah,
Speaker 1: But as we will learn, there are tried and true
Speaker 1: techniques that are used to make people feel obligated through
Speaker 1: some sort of psychological manipulation to buy into these things.
Speaker 1: It's similar to the way that somebody might win a vacation.
Speaker 1: I know, Matt Paul, I know you guys have both
Speaker 1: probably received those mailers that say, oh, it's a chance
Speaker 1: to win a vacation.
Speaker 2: Dude, No, you already won a cruise.
Speaker 1: That's what it is. You've already won. All you have
Speaker 1: to do is travel the book of Raton or something
Speaker 1: like that, and what you what happens is that you
Speaker 1: arrive at these places only to find that did win
Speaker 1: the cruise. But first we want to give you a tour. Yeah,
Speaker 1: of these condos.
Speaker 2: Yep.
Speaker 1: And you know, in the market today, real estate is
Speaker 1: the best investment.
Speaker 2: It really is. And can you imagine look here at
Speaker 2: the Windham Resort in Boca Raton. I've actually been on
Speaker 2: one of those recently. Yeah, yep, a.
Speaker 1: Cruise or one of those switch try to sell you
Speaker 1: a condo.
Speaker 2: Let's see if I can do this the right way.
Speaker 2: Some family members that I was with on a small
Speaker 2: vacation saw that there was at this mall an opportunity
Speaker 2: to have dinner paid for for our entire family. All
Speaker 2: we had to do is take a trip over to
Speaker 2: this condo and hang out for a while. Answer some questions,
Speaker 2: talk to some people, watch some videos, we did it.
Speaker 2: We had to like sit for a long time with somebody.
Speaker 2: They split us up into groups, into like husband and
Speaker 2: wife groups, and like my wife and I just had
Speaker 2: to calmly say, no, we really don't think we can
Speaker 2: afford it right now. Oh but what if you know,
Speaker 2: we could give you this platinum package and I'm sorry
Speaker 2: we can't. Oh but well, the double platinum I think
Speaker 2: you can really afford and it's an investment for your future.
Speaker 2: And it went on and on and on until we
Speaker 2: finally got to leave with our visa check card.
Speaker 1: Oh wow, so did you ultimately end up getting We.
Speaker 2: Got dinner, but it was like two hours out of
Speaker 2: our day, and if you calculate the money for all
Speaker 2: of that, you go, wait a second, are you sure
Speaker 2: we should have done this? Guys they're like, yeah, we
Speaker 2: do this all the time.
Speaker 1: And they all said no, no, they loved it.
Speaker 2: Because they some members of my family do that kind
Speaker 2: of thing a lot. Ah.
Speaker 1: Okay, I've never heard this story. Kudos to you for
Speaker 1: resisting the psychological pressure that might apply right.
Speaker 2: Well, I mean, how are they going to apply pressure
Speaker 2: if there's no money in my accounts? Ha ha? You think that.
Speaker 1: Now I'm picturing that internet meme where the guy's leaning
Speaker 1: in and touching his temple with his pointer figure. So
Speaker 1: it's true. What can happen is that maybe you were
Speaker 1: invited to a seminar for an MLM and you hear
Speaker 1: these very theatrical, very motivational speeches, right, and it's difficult
Speaker 1: to leave. It's sort of like standing up in the
Speaker 1: middle of church if you're religious and walking.
Speaker 2: Out the social pressure alone.
Speaker 1: Yeah, it's not a good look, right, and this becomes
Speaker 1: doubly powerful at the very least when you are there
Speaker 1: with a family member who was already active in this organization.
Speaker 1: You don't I mean, who wants to disappoint Aunt Linda
Speaker 1: or uncle Greg right, yeah.
Speaker 2: Or you know, yeah, your mother in law.
Speaker 1: Anyway, Oh man, that off air. I gotta follow up
Speaker 1: on this, okay. So another thing we find is that
Speaker 1: this all means, in the case of multi level marketing
Speaker 1: or PEERMID schemes, that initial recruits are essentially paying an
Speaker 1: organization for the opportunity to work for them. Let's let's
Speaker 1: sit in that just for a second, or think about it.
Speaker 1: Everyone listening. Imagine your last job interview. Let's see went
Speaker 1: to the job interview, you'd already submitted your resume or
Speaker 1: something online. The management of the company sits down with
Speaker 1: you and they say you're qualified. As a matter of fact,
Speaker 1: you're not only qualified, you are superb. You're the perfect
Speaker 1: person for this position. And for seven hundred dollars you
Speaker 1: can start today. And you know, everybody's initial assumption would be, oh,
Speaker 1: holy smokes, you're giving me seven hundred dollars to start today.
Speaker 1: But no, no, no, no, no, no, no, no no, you
Speaker 1: are paying this organization some amount of money.
Speaker 2: Yeah, in any other place or time or organization or
Speaker 2: job opportunity, that would be just ludicrous, that would be
Speaker 2: absolutely not. I'm out of here, right.
Speaker 1: And a multi level marketing strategy becomes an out and
Speaker 1: out pyramid scheme when the bulk of the actual profit
Speaker 1: you make comes not from selling your jelly beans. The
Speaker 1: bulk of it comes from converting other people in your
Speaker 1: social network to work for you, with the same carot
Speaker 1: extending for them that they have to actively recruit other people.
Speaker 1: This business model has several deeply disturbing aspects. And first
Speaker 1: there's that inherent bait and switch. You're not selling an
Speaker 1: herbal supplement, and those are very common in the world
Speaker 1: of multi level marketing. You are selling your friends, the
Speaker 1: idea of them selling their friends, on selling yet more friends.
Speaker 1: You are selling a borderline and arguably exploitative type of communicability. Right,
Speaker 1: so we should pause tumat and talk about herbal supplements.
Speaker 2: Oh really, yeah, just for a little bit. Now.
Speaker 1: I know this is controversial territory in many cases, and again,
Speaker 1: we don't want to paint with a broad brush. We
Speaker 1: don't want to paint with the wrong broad brush, which
Speaker 1: we'll get to, okay, But it's a common type or
Speaker 1: genre of product in the world of multi level marketing,
Speaker 1: and herbal supplement could mean anything from vitamin B twelve
Speaker 1: to a proprietary mix of vitamins to things that are
Speaker 1: supposed to help certain medical conditions. These are not held to.
Speaker 1: These claims. Erbal supplement claims are not held to the
Speaker 1: same level of rigor and research that out and out
Speaker 1: drugs are held to by the FDA. Absolutely, at least
Speaker 1: in theory, the FDA is supposed to do that. Yeah,
Speaker 1: we have an episode about the opio epidemic coming up
Speaker 1: as well. God all right, yeah, but so with an
Speaker 1: herbal supplement, the legal restrictions on what you can and
Speaker 1: cannot claim about any given thing, any pill or juice
Speaker 1: or paste, what have you. Those legal restrictions are much looser,
Speaker 1: you know, and you can you can have people come
Speaker 1: up and say all sorts of anecdotes all the livelong
Speaker 1: day about how it changed their life. But what they
Speaker 1: probably won't have, what they're much less likely to have,
Speaker 1: is a peer reviewed, reproducible study proving what they said
Speaker 1: is true.
Speaker 2: Absolutely. I've recently watched one where a person said this
Speaker 2: specific herbal supplement helped her to become pregnant when all
Speaker 2: these other ways did not. She kept trying to get
Speaker 2: pregny about this rble supplement helped get there. This one
Speaker 2: person was recovering from a cancer because of this herbal supplement.
Speaker 2: And that's when you get into that territory of like,
Speaker 2: how dangerous is this to allow this kind of thing
Speaker 2: to occur? But you know, the rules are the rules,
Speaker 2: and in a way they're following them.
Speaker 1: Yeah, it's the letter of the law and if not
Speaker 1: the spirit.
Speaker 2: Right.
Speaker 1: Often, the hidden fees and the required buy ins of
Speaker 1: these various products put already financially disadvantaged people into some
Speaker 1: in some cases, life ruining debt, not to mention the
Speaker 1: emotional trauma you might experience of discovering that your friend
Speaker 1: either purposely deceived you or has misled both of you.
Speaker 1: You know. Yeah, that's a painful thing.
Speaker 2: Yeah yeah. And one of the biggest problems we see
Speaker 2: here with all of these people trying to recruit everyone
Speaker 2: else to get into this thing, whether they get hurt
Speaker 2: in it or not, is that you run up on
Speaker 2: a math problem.
Speaker 1: Yes, that is true, and you don't need a calculator
Speaker 1: for it. Let's do the math. The math comes to
Speaker 1: us courtesy of a fellow named Robert Fitzpatrick, a former
Speaker 1: business consultant and now a prominent opponent of pyramid schemes
Speaker 1: and multi level marketing strategies, which he pretty much equates.
Speaker 1: He says, they're the same thing, and it's a false dichotomy,
Speaker 1: and he explains the unsustainable math in pretty simple terms.
Speaker 1: We have a quote from it.
Speaker 2: The math is a distortion, a manipulation of what they
Speaker 2: call exponential expansion. Exponential expansion is two times two times
Speaker 2: two times two. And almost all of these schemes tell
Speaker 2: you that you can make money by just recruiting three
Speaker 2: or four or five let's say five. Then you let
Speaker 2: the five do their five, and that gives you twenty five.
Speaker 2: There you go. This is out the side of the
Speaker 2: quote right now. Yeah, we've got our twenty five people already.
Speaker 2: Right yeah, let's get back into the quote that right
Speaker 2: there is exponential expansion. That's the trick of the whole thing.
Speaker 2: What they don't show you is that you can only
Speaker 2: do that thirteen cycles, and then after that, he says,
Speaker 2: you would exceed the population of the earth.
Speaker 1: So thirteen iterations of this sort of growth will eventually
Speaker 1: reach a point of saturation such that there are no
Speaker 1: living people who are not part of this scheme.
Speaker 2: Yes, and most of them will be on the most
Speaker 2: bottom level.
Speaker 1: Right right, still required to buy in, depending on the
Speaker 1: specific case, still required to purchase a product or make
Speaker 1: some sort of initial investment.
Speaker 2: But at that point they literally have no one to
Speaker 2: sell any of it too, because everyone has a garage
Speaker 2: full of whatever it is.
Speaker 1: Yes. Yeah. In the most fundamental terms, this means that
Speaker 1: the business model as it is explained to new recruits
Speaker 1: is not meant to work. It literally cannot if everything
Speaker 1: goes well and every single member of this thing, or
Speaker 1: even if you know what, honestly even if sixty percent
Speaker 1: of the people are who are entering this sort of
Speaker 1: this sort of business, even if sixty percent of them succeed,
Speaker 1: then it still won't work over the long term. Additionally,
Speaker 1: there are several other important points that new recruits are
Speaker 1: not told. First is that, according to Fitzpatrick, something around
Speaker 1: the order of ninety nine percent, at least more than
Speaker 1: ninety percent of investors or distributors don't turn a profit
Speaker 1: full stop at all, just won't just won't happen. And additionally,
Speaker 1: there's no recognization that something will go wrong, that the
Speaker 1: market will sat rate, that it will not forever grow unbound.
Speaker 2: And that's kind of the problem we have with our
Speaker 2: economy in general, isn't it.
Speaker 1: Yeah, arguable, depending on which economic model we're talking.
Speaker 2: About, just exponential, constant.
Speaker 1: Growth, nothing will ever stop. The factories must expand yeah,
Speaker 1: you know what, let's start a planet Hollywood on Mars.
Speaker 2: Oh can we?
Speaker 1: I don't know, I haven't. They're gonna need one eventually,
Speaker 1: They've gone every every planet will need a planet Hollywood eventually.
Speaker 2: And it'll be all like Mars based celebrities.
Speaker 1: Right, and think of the food puns. Oh my god, Yeah,
Speaker 1: we gotta get Jonathan on just to drop in some
Speaker 1: food puns. That's Jonathan Strickland, the host of tech Stuff
Speaker 1: and several other fascinating shows. He is also as an
Speaker 1: active charity volunteer to be our complaint department if ever
Speaker 1: you feel that there's something that needs to be corrected
Speaker 1: on the show where if you have a complaint, please
Speaker 1: do not hesitate right to Jonathan Dott Strickland at HowStuffWorks
Speaker 1: dot com. But you know, joking aside, This shows us,
Speaker 1: This shows us a little something about the potential size
Speaker 1: of the problem. But what's the actual size.
Speaker 2: Well, it's big and we're gonna get into it after
Speaker 2: a word from our completely not multi level marketing sponsor.
Speaker 1: Why do that? I can't help but notice that you're
Speaker 1: panting with a skippy brush.
Speaker 2: Well, this is the only brush I had. I've got
Speaker 2: to do the fence and then the wall, and I
Speaker 2: just have so much to do.
Speaker 1: Don't waste time Like all, I'm in Macaroon rotting on
Speaker 1: this on my friend. What you need is a better brush,
Speaker 1: a bigger brush. I'll broad up brush.
Speaker 2: A broader brush really would get this done faster, and
Speaker 2: I could just paint the whole thing in one go.
Speaker 1: Maybe, why simply buy broad brushes when you can sell them?
Speaker 1: Why simply sell them when you can have your friends, neighbors,
Speaker 1: loved ones, naives, strangers on the street sell the broadest
Speaker 1: of brushes for you.
Speaker 2: This sounds like a plan. What do I need to do?
Speaker 1: Why You've already done the most important part, which has
Speaker 1: opened your eyes to a new world of economic opportunity.
Speaker 1: Your next steps are relatively small, easily handled, and we
Speaker 1: can take care of them today. All we'll need is
Speaker 1: a slight seed money investment. And of course you can't
Speaker 1: sell what you don't have, So with a minimum purchase
Speaker 1: of sixty eight broad brushes, you will be set to go.
Speaker 2: My friend, okay, I guess you know I've been meaning
Speaker 2: to sell my home so I could do that. I'm
Speaker 2: not sure where I'll put the broad brushes. They probably
Speaker 2: need a lot of space, don't they. All Right, well,
Speaker 2: I guess let me go ahead and sell my house
Speaker 2: and then I'll get back to you. I guess no.
Speaker 1: No, Now, listen, this is a tremendous chance to change
Speaker 1: the course of your life and the life of all
Speaker 1: your loved ones forever. All you need to do is
Speaker 1: imagine yourself ten years from now, would you rather be
Speaker 1: living in a sumptuous, opulent man or will you be
Speaker 1: a wash in mounting final notice bills, rotting in this dump,
Speaker 1: lamenting the chance you could have taken to save your
Speaker 1: own life.
Speaker 2: I guess I'll take the mansion. This message for broad
Speaker 2: Brushes International has been brought to you by Illumination Global Unlimited.
Speaker 1: And we're back. Uh. You know what, Matt, that last
Speaker 1: ad felt a little bit now. I don't want to
Speaker 1: go out on a limb here. Yeah, that last ad
Speaker 1: felt a little bit like a multi level marketing thing.
Speaker 2: It was kind of pushy. I noticed that in the end,
Speaker 2: the one guy really seemed to want the other guy
Speaker 2: to do whatever he had to do to sell those things.
Speaker 1: It's really, you know, it's eerily in line with what
Speaker 1: we're talking about, but sometimes those strange coincidences happened.
Speaker 2: I still have issues with the size of the brushes,
Speaker 2: the way they were described, like, I don't understand. I
Speaker 2: feel like that's more industrial strength brush situation. I'm not sure.
Speaker 1: I did appreciate how the other guy in the ad
Speaker 1: did ask how he would possibly wield these, But you know,
Speaker 1: let us let us know if you have experience with
Speaker 1: broad brushes, or of course our returning sponsor Illumination Global Unlimited.
Speaker 1: Just let us know how those products shake out, because look,
Speaker 1: we're not gonna knock a brush a broad brush.
Speaker 2: If it works, right, Yeah, absolutely, speaking.
Speaker 1: Of broad and expansive things, what's the size of the
Speaker 1: problem when we're talking about multi level marketing.
Speaker 2: Well, let's go back to mister Fitzpatrick. He has a
Speaker 2: book called False Profits, Seeking Financial and Spiritual Deliverance in
Speaker 2: Multi Level Marketing and Pyramid Schemes, And in this book
Speaker 2: he speculates that the just the size, the full scope
Speaker 2: of these various companies that make up this industry of
Speaker 2: multi level marketing is currently unknown. Oh wow. There Essentially,
Speaker 2: there are so many functioning right now that it may
Speaker 2: be impossible to know.
Speaker 1: And those entities certainly wouldn't want you to know the
Speaker 1: full nature of their financial transactions or their techniques. So,
Speaker 1: according to Fitzpatrick, this goes back into just the sheer
Speaker 1: amount of money that is involved. So in this quotation,
Speaker 1: he says made Off Bernie Madeoff cond a relatively small
Speaker 1: number of people with investment money. Multi level marketing, he argues,
Speaker 1: is using a different system instead of taking a million
Speaker 1: dollars from ten people, you take ten dollars from a
Speaker 1: million people. That is the way the system works. I'm
Speaker 1: just using that as an analogy, but the numbers add
Speaker 1: up to staggering amounts year upon year upon year, and
Speaker 1: this leads Fitzpatrick and other experts to believe the amount
Speaker 1: of money involved in this industry overall ranks in a
Speaker 1: billions with a b wow.
Speaker 2: And here's the thing there are it's not just the
Speaker 2: problem of setting up something like this that ultimately benefits,
Speaker 2: you know, the person that started it. Like in all
Speaker 2: of these there is some group or a person at
Speaker 2: the very top that gets all of the downline. Every
Speaker 2: single person sends money up to that one person, right,
Speaker 2: the founder, right right right, And in some cases there
Speaker 2: are allegations of these people taking advantage just fully and knowingly,
Speaker 2: taking advantage of everyone working for them.
Speaker 1: So not making an honest mistake, not getting the accounting wrong,
Speaker 1: or acting out of negligence.
Speaker 2: Correct.
Speaker 1: Yeah, Unfortunately, there are numerous multiple cases in which founders
Speaker 1: are members of these types of companies have been found
Speaker 1: guilty of fraud, of conspiracy to commit various financial crimes,
Speaker 1: and more. For instance, there was a guy named Paul
Speaker 1: Burks here in the US who was convicted of conspiracy
Speaker 1: and fraud during his time heading up a company called
Speaker 1: Zeke Rewards, and in the course of his trial it
Speaker 1: was characterized as one of the largest Ponzi schemes in
Speaker 1: US history, bilking more than one million investors across the
Speaker 1: world out of eight hundred million dollars. Later that amounted
Speaker 1: to be about nine hundred million dollars.
Speaker 2: Wow.
Speaker 1: He was sentenced to around fifteen years in jail, and
Speaker 1: he got off relatively easy because going into trial his
Speaker 1: penalty could have been as much as sixty five years
Speaker 1: in jail, and he's an older man, so fifteen years
Speaker 1: even maybe a death sentence. But what they did essentially
Speaker 1: was old school Ponzi schemes. Stuff. They made extravagin promises
Speaker 1: and they got people to invest money with the with
Speaker 1: the assumption that that money would later be paid off.
Speaker 1: As these as these schemes, this penny auction site began
Speaker 1: to deliver the mail, deliver the goods yea. And for
Speaker 1: a while, for the earlier investors it seemed like this
Speaker 1: was happening because of what they were doing is they
Speaker 1: were taking the money that later investors put in and
Speaker 1: using that to pay off their old investors.
Speaker 2: Oh wow.
Speaker 1: So it just kept growing, passing the buck, passing the buck,
Speaker 1: and then eventually it created under its own numerical success,
Speaker 1: not financial, but just the sheer amount of people who
Speaker 1: bought in.
Speaker 2: Dang. So that was Zeke rewards.
Speaker 1: Zeke rewards.
Speaker 2: All right, I need Yeah, that's a whole thing. I'm
Speaker 2: just going to go down that rabbit hole later. Thanks Ben,
Speaker 2: thank you.
Speaker 1: So what what next? What's another example?
Speaker 2: Oh, another huge issue that some of these founders have
Speaker 2: come into is tax evasion. And that's specifically when these
Speaker 2: multi level marketing companies expand into various countries. So like,
Speaker 2: you're not just starting out in the US or wherever else, Malaysia,
Speaker 2: maybe Australia. Now you're in all of these countries and
Speaker 2: all these people are paying money to you, but you're
Speaker 2: in one location and now you've got a whole lot
Speaker 2: of taxes you got to pay. And this one couple,
Speaker 2: Thomas E. Moher and his former wife Leslie D. Mower,
Speaker 2: they founded a company in what Springville, I believe it
Speaker 2: was called New Ways or Knee Ways Nways, And yeah,
Speaker 2: they didn't pay personal income tax to the tune of
Speaker 2: about three point two million dollars. And it's it's money
Speaker 2: that they owed for their companies, for this new A's
Speaker 2: company in several in several countries Malaysia, Australia, and in
Speaker 2: the United States. I mean, that's that isn't necessarily a
Speaker 2: big problem specifically for multi level marketing companies, like not
Speaker 2: paying taxes. That's just something that this couple decided to.
Speaker 1: Do, right. That is not a necessarily multi level marketing
Speaker 1: only crime. Yes, and we can provide more examples you
Speaker 1: very well. Fellow conspiracy realists may have some examples of
Speaker 1: your own that you remember, and a simple cursory search
Speaker 1: online will turn up dozens and dozens and dozens of
Speaker 1: things like this. But let's you know, we should also
Speaker 1: mention that the inner workings of these organizations can also
Speaker 1: get very weird. We talked a little bit about the
Speaker 1: psychological manipulation involved in making people feel obligated to do
Speaker 1: something which is not restricted to time shares or Amway
Speaker 1: or anything like that. A lot of advertising is built
Speaker 1: on the idea that it is possible to make people
Speaker 1: feel obligated to do something, they have to do it right.
Speaker 1: Not your life will be better, but your life.
Speaker 2: Depends on it.
Speaker 1: It depends on this. Yeah, and we did a video
Speaker 1: that you and I were thinking about off air as
Speaker 1: we were working on this episode. We did a video
Speaker 1: that had some eerie parallels. It's our old YouTube video
Speaker 1: about the techniques that colts use. Yeah, so there's isolation.
Speaker 1: There are long speeches you're forced to listen to. There's
Speaker 1: a lot of jargon. Right, A specific type of lexicon
Speaker 1: or terminology arises such.
Speaker 2: That only you can talk about this with other people
Speaker 2: that know what you're talking about, or else it's just
Speaker 2: gobbledegook coming out of your mouth.
Speaker 1: You can find this, for instance, in the ranks or
Speaker 1: the names that are given to levels. Right. There may
Speaker 1: be there may be a hierarchy of sales or position
Speaker 1: in the pyramid that is described by any number of
Speaker 1: imaginative phrases. Yes, specifically, I think we're both thinking of
Speaker 1: a company called Youngevity, Yes, that has levels based on
Speaker 1: precious stones.
Speaker 2: Yeah, it's pretty awesome. But some of the other ones
Speaker 2: are even more abstract and strange than that, and you
Speaker 2: just kind of gotta look through them. There is one
Speaker 2: in that John Oliver episode that we played where this
Speaker 2: guy is discussing its specifics about how you get paid
Speaker 2: for people on your down line and the things the
Speaker 2: requirements you have to meet on your upline, and just
Speaker 2: I just it made my brain want to explode.
Speaker 1: Yeah, it's something along the well, maybe saying along the
Speaker 1: lines is a poor phrase here, but it's something to
Speaker 1: the tune of a vertical series of dots labeled A
Speaker 1: two G going down. And then the guy is attempting
Speaker 1: to or appears to be attempting to helpfully explain how
Speaker 1: one actually gets cash in your pockets or in your
Speaker 1: wallet or your purse or the empty mannaise jar in
Speaker 1: your backyard by the body, you know, like wherever you
Speaker 1: store money. What he does is the following. He says, Okay,
Speaker 1: you're a So let's say that B buys four thousand
Speaker 1: points at forty two percent.
Speaker 2: Yeah, value point levels, and.
Speaker 1: That goes that would go up to count as your
Speaker 1: qualified commission. But it's under it's an encumbered line, and
Speaker 1: that's remember you need one thousand unencumbered point value points. Right.
Speaker 1: And this this may again to be completely fair. This
Speaker 1: may be that specific word organization's best good faith attempt
Speaker 1: to simplify the distribution process. It sure does not sound
Speaker 1: like it. It sounds our kine. And that's just one example.
Speaker 2: Well, yeah, and one of the like we said, one
Speaker 2: of the effects of having something like that, is that
Speaker 2: you have a more insular.
Speaker 1: Group, right, right, they're outsiders and insiders, And just like
Speaker 1: some some cults do you know, it's a sensitive word,
Speaker 1: but just like some cults, you may also be taught
Speaker 1: that you have a mission beyond a financial goal. You
Speaker 1: have a mission to free people that you care about or.
Speaker 2: To save them with this supplement. They need this.
Speaker 1: So not only are you helping yourself out financially, you
Speaker 1: are helping these other people out medically. You're helping them
Speaker 1: out by providing them opportunity because you care about them.
Speaker 2: Yeah, and if they won't join up, then there's something
Speaker 2: wrong with them.
Speaker 1: What gives? What gives? Right, So we're being a little dramatic,
Speaker 1: but there is a lot of truth in those statements.
Speaker 1: Here are some examples of companies currently being accused of
Speaker 1: functioning as pyramid schemes. Amway probably all heard about. Amway
Speaker 1: was big in what the eighties maybe, Oh yeah, And
Speaker 1: my only encounter with it was hearing it referenced in
Speaker 1: comedy and for a long time, is it. Yeah, for
Speaker 1: a long time as a kid, I think I confused
Speaker 1: Amway and Amtrak. Oh, and they kept wondering, why are
Speaker 1: people making fun of Amtrak for things I don't understand?
Speaker 1: Is Amtrak so broke that the people have to also
Speaker 1: sell like dish detergent.
Speaker 2: It's been around for so long that I honestly don't
Speaker 2: even know what Amway sells. Do they It's like bath
Speaker 2: and body stuff, beauty products, oh and nutrition?
Speaker 1: Uh huh, so this is like activated water.
Speaker 2: This is a shipping company. Essentially, it's like an Amazon,
Speaker 2: but it's an MLM. Yeah, this is wow.
Speaker 1: Now again, neither of us and Paul and Noell also
Speaker 1: none of us have actively participated in this stuff. So
Speaker 1: it is quite possible that there's something to it, you know,
Speaker 1: that we have missed. But these are the facts. These
Speaker 1: are the legal cases we found, and these companies are
Speaker 1: for their part, they say that they're very transparent with
Speaker 1: the claims they're making and they are pretty pretty responsive,
Speaker 1: you know, if mass media reaches out to them and stuff.
Speaker 1: But that doesn't mean problems still on't occur. Next to Amway,
Speaker 1: another really popular or well known company employing the strategy
Speaker 1: would be erbal Life.
Speaker 2: Yes, this is erbal Life, the supplements, right like herbal Life.
Speaker 2: Almost with its Herbal Life.
Speaker 1: In twenty seventeen, they were forced by the FTC to
Speaker 1: pay nearly three hundred and fifty thousand people back some
Speaker 1: amount of money.
Speaker 2: And the final settlement that they came to was Herbal
Speaker 2: Life had to pay two hundred million dollars. And then
Speaker 2: not just pay that fine, which is generally what happens
Speaker 2: with a company. You get your handslapped, you pay a fine,
Speaker 2: it becomes a cost of business. Well, in this case,
Speaker 2: they had to fundamentally this is a quote, fundamentally restructure
Speaker 2: its business.
Speaker 1: Right, that's a quote from the FTC itself, specifically from
Speaker 1: Jessica Rich, who at the time was the director of
Speaker 1: the agency's Bureau of Consumer Protection. And that sounds like
Speaker 1: a good thing. Yeah, And so the company continues. The company,
Speaker 1: for their own parts, said that they had not done
Speaker 1: anything wrong and that they didn't need to make any
Speaker 1: substantial business change. And there were also some people who
Speaker 1: said that this company was being unfairly targeted, Yes, from
Speaker 1: from some other entity or individual who had an ax
Speaker 1: to grind. So you'll hear from both sides. We'll hear
Speaker 1: the government side and you'll hear the company side, and
Speaker 1: those those sides just aren't going to agree. Yeah, it's
Speaker 1: really it's up to you to decide what what you
Speaker 1: think is the the straight poop, the genuine article. There's
Speaker 1: also Avon, that's one of the more famous ones, right.
Speaker 1: There's also young Jevity.
Speaker 2: Yes, Youngevity, one of the companies that I was gonna
Speaker 2: say pedals. They sorry, that's not right. They sell products
Speaker 2: that will help people feel and look younger. There are there.
Speaker 2: That's another big theme that occurs in a lot of these.
Speaker 1: And in each of these cases, the organizations mentioned will
Speaker 1: typically prefer a description. They don't want to just be
Speaker 1: called MLMs. They certainly don't want to be called pyramid schemes.
Speaker 1: Who prefer a term like direct sales. There's something similar.
Speaker 1: It's what you said at the top of the show.
Speaker 1: And you know, Avon has been around long enough for
Speaker 1: the idea of the Avon lady quote unquote to be
Speaker 1: a cultural trope, you know, and that means that on
Speaker 1: some level people have succeeded working with or for Avon.
Speaker 1: Same thing with Tupperware. So we can't say that in
Speaker 1: every case this has been terrible for people.
Speaker 2: Yeah, it's not all bad, and you could be really
Speaker 2: good at it. If you're an amazing salesperson, then maybe
Speaker 2: this is the you know, a way for you to
Speaker 2: make some money.
Speaker 1: I guess it just all depends on when you get
Speaker 1: in at the pyramid. Right. And despite the massive controversies
Speaker 1: and the various convictions for conspiracy, literally for conspiracy, these companies,
Speaker 1: many of them thrive in the modern day people who
Speaker 1: are opponents of these practices or techniques. The biggest question
Speaker 1: is this, why is this still legal? How? According to Fitzpatrick,
Speaker 1: we have no law in the US explicitly defining a
Speaker 1: pyramid scheme or explicitly defining multi level marketing. They didn't
Speaker 1: as of twenty thirteen. But there is one thing that
Speaker 1: might help us out, and it is an article from Skeptoid.
Speaker 1: According to Brian Dunning over at Skeptoid.
Speaker 2: I always love reading what he has to say about
Speaker 2: these topics.
Speaker 1: According to him, he says that network marketing plans, which
Speaker 1: is another euphemism or synonym for this, they differ from
Speaker 1: illegal pyramid schemes in one important way. Commissions can only
Speaker 1: legally be paid on sales of a physical product. If
Speaker 1: commissions are offered on recruitment of new distributors, then it's
Speaker 1: defined as an illegal pyramid scheme. But the out and
Speaker 1: out illegal plans are pretty rare, according to Dunning. Instead,
Speaker 1: most companies are smart enough to stay just on the
Speaker 1: right side of the law.
Speaker 2: Wow, literally on the edge.
Speaker 1: Living on the edge of the law. There we go. Yeah,
Speaker 1: and he's got some really interesting statistics about this stuff too.
Speaker 1: It's illuminating, it's not particularly inspiring. According to the rather
Speaker 1: poultry financial records that have been released. Newsweek, for instance,
Speaker 1: found that fewer than one percent of distributors for an
Speaker 1: outfit called Mona VI ever qualify for any commission at all.
Speaker 1: Un Less than one in one thousand recovered the cost
Speaker 1: of their required monthly purchases. Oh weish you put that in.
Speaker 1: It's not a one time purchase. Yeah, you gotta keep buying.
Speaker 2: Yeah, you gotta keep buying because you got to keep selling.
Speaker 2: That's the whole point. And again, like I said, if
Speaker 2: you're a great salesperson, right and somehow you're just unloading Mona,
Speaker 2: then you are that one percent, that one in one thousand.
Speaker 1: And so the FTC is still working to create policy
Speaker 1: or business guidance concerning these MLMs as we record, and
Speaker 1: you can find their various fact sheets. They have a
Speaker 1: great thing available on tips and trick well, I don't
Speaker 1: want to say tricks, tips and advice, okay for MLMs,
Speaker 1: And if you're considering one, we do we do ask
Speaker 1: you to read that in conclusion. For us, at least,
Speaker 1: if something sounds too good to be true, well, there's
Speaker 1: a reason we call them cliches. Yep. And the reason
Speaker 1: you've heard that phrase so many times is because if
Speaker 1: something sounds too good to be true, there is usually
Speaker 1: something hidden behind the curtain. And this isn't to say
Speaker 1: that these MLMs have no ever worked for anyone. It's
Speaker 1: just in most cases, the majority of people lose much
Speaker 1: more money than they make, and they lose much more
Speaker 1: than they were led to believe was possible.
Speaker 2: Yeah, but they made so many friends in a whole
Speaker 2: new family while they were doing it.
Speaker 1: No, boy, are you saving that one. And the people
Speaker 1: who make the cat the most cash, overwhelmingly are going
Speaker 1: to be the same people who founded the company.
Speaker 2: Yep.
Speaker 1: So please please please be extremely careful when you were
Speaker 1: approached by MLMs and when you hear a pitch from
Speaker 1: your friend's family or innocent strangers. Remember, there's probably something
Speaker 1: that company doesn't want you to know, and it's probably
Speaker 1: something that they don't want the person who's talking.
Speaker 2: To you to know either, or the people you're talking to.
Speaker 1: The people you were talking to, or the people that
Speaker 1: you convinced to talk to other people. Kind goes on.
Speaker 1: It's like two mirrors facing each other.
Speaker 2: Yeah, if you are facing one of those mirrors and
Speaker 2: you find yourself in that position, all we can say
Speaker 2: is we hope you get out if you can. If
Speaker 2: it's a problem, if you're in some kind of debt
Speaker 2: due to this and it becomes a cycle, there are
Speaker 2: places you can go online to start getting some help,
Speaker 2: and hopefully maybe you can go the way of the
Speaker 2: Herbal Life lawsuit and get your money back at some point.
Speaker 2: Just knowing that that lawsuit occurred or at least was
Speaker 2: finalized in twenty seventeen, that gives, I think, or should
Speaker 2: give everyone hope.
Speaker 1: And if you have an example of a positive experience
Speaker 1: that you have had with one of these companies or
Speaker 1: these types of entities, we would like to hear that too.
Speaker 1: We want to see, we want to see provable positive stuff.
Speaker 2: Absolutely.
Speaker 1: In the meantime, we are going to head out. It
Speaker 1: looks like we've been getting blown up with emails from
Speaker 1: this broad brush LLC act Now, folks.
Speaker 2: I believe they're coming in already. We just put this
Speaker 2: episode out right right.
Speaker 1: It's Illumination Global Unlimited works and mysterious ways really dog
Speaker 1: just like the rules of cricket. Yep, no, that's terrible.
Speaker 1: I should just try to learn how cricket works yet
Speaker 1: of lamenting it.
Speaker 2: If you if you know how cricket works, you can
Speaker 2: find us on Facebook and Twitter where we're conspiracy Stuff
Speaker 2: on Instagram where Conspiracy Stuff show. You can call our
Speaker 2: number right now, stop what you're doing, pullover call one
Speaker 2: eight three three std WYTK tell us a story about anything.
Speaker 2: We want to hear it. We just want to hear
Speaker 2: your voice.
Speaker 1: And our compatriot Nol will be returning. He's f on
Speaker 1: an adventure. A lot of us wear many different hats
Speaker 1: and disguises. We're kind of like the people in that
Speaker 1: show the Americans, except we don't work for the KGB.
Speaker 2: No, we work for Illumination Global Unlimited. So if you
Speaker 2: don't want to do any of those things, oh.
Speaker 1: No, wait, wait, oh, what why the Americans didn't work
Speaker 1: for the KGB necessarily the USSR.
Speaker 2: But did they?
Speaker 1: Though we but did they?
Speaker 2: I don't know.
Speaker 1: Oh, let us know, let us know. We want to.
Speaker 2: And that's the end of this classic episode. If you
Speaker 2: have any thoughts or questions about this episode, you can
Speaker 2: get into contact with us in a number of different ways.
Speaker 2: One of the best is to give us a call.
Speaker 2: Our number is one eight three three stdwy TK. If
Speaker 2: you don't want to do that, you can send us
Speaker 2: a good old fashioned email.
Speaker 1: We are conspiracy at iHeartRadio dot com.
Speaker 2: Stuff they Don't want you to Know is a production
Speaker 2: of iHeartRadio. For more podcasts from iHeartRadio, visit the iHeartRadio app,
Speaker 2: Apple Podcasts, or wherever you listen to your favorite shows.