WEBVTT - The Broken Promises of MLMs #254 0:00:00.080 --> 0:00:02.800 Welcome to How the Money. I'm Joel and I and Matt, 0:00:03.000 --> 0:00:06.160 and today we're discussing the broken promises of m l 0:00:06.320 --> 0:00:31.120 m s, the broken promises of multi level marketing companies. Joel, 0:00:31.320 --> 0:00:33.560 I feel like that's the perfect name for this episode, because, 0:00:33.680 --> 0:00:36.760 like we're going to talk about, not all MLMs are bad, 0:00:36.840 --> 0:00:38.599 you know, like there there definitely are some that are 0:00:38.720 --> 0:00:42.000 more pyramid scheme ish, but there are also some companies 0:00:42.000 --> 0:00:44.640 that are pretty legit companies that we've heard of. But 0:00:44.760 --> 0:00:47.000 what's often the cases that there are a lot of 0:00:47.000 --> 0:00:49.080 promises made, a lot of you know, people get their 0:00:49.120 --> 0:00:50.440 hopes up and they think they're going to be able 0:00:50.479 --> 0:00:53.680 to achieve something that they aren't actually able to achieve. 0:00:53.960 --> 0:00:56.320 Those are the broken promises. And so that's why we 0:00:56.360 --> 0:01:00.320 wanted to dedicate an entire episode two MLM's because pause 0:01:00.480 --> 0:01:02.560 of those broken promises. Yeah, there's a lot to talk 0:01:02.600 --> 0:01:05.400 about here, that's for sure. And like you said, like 0:01:05.560 --> 0:01:08.480 some of these companies, some people make money selling product 0:01:08.560 --> 0:01:13.360 for multi level marketing company, but most people don't. Most 0:01:13.400 --> 0:01:16.600 people experience the ill effects the the broken promise side 0:01:17.040 --> 0:01:18.920 of mlm s. And so yeah, we got a lot 0:01:19.000 --> 0:01:21.800 to talk about today on the show, Matt. Yeah, real 0:01:21.880 --> 0:01:23.520 quick though, before we get started, I wanted to to 0:01:23.520 --> 0:01:26.640 share a quick little tip for folks, especially as individuals 0:01:26.680 --> 0:01:29.959 are working from home more these days. I can't remember 0:01:30.000 --> 0:01:31.240 if we've talked about this on the show, but have 0:01:31.319 --> 0:01:33.600 we talked about my noise dot nets? I don't think 0:01:33.840 --> 0:01:36.200 that's like, so this is the site where I like 0:01:36.360 --> 0:01:40.120 Matt's noise dot net or my personal noise, But this 0:01:40.319 --> 0:01:41.960 is a site. This is a tab I keep open 0:01:42.000 --> 0:01:45.360 all my browser seven like. I use it every single day, 0:01:45.680 --> 0:01:48.400 and it is a white noise generator. And actually a 0:01:48.480 --> 0:01:50.760 listener can't remember their name, but someone wrote in and 0:01:50.800 --> 0:01:52.880 they shared the site with us because we were talking about, 0:01:53.160 --> 0:01:55.480 you know, finding ways to to keep from being distracted 0:01:55.520 --> 0:01:58.360 while we're working at home. And here's why I love 0:01:58.400 --> 0:02:01.040 this one specifically so much, man uh. Specifically, they have 0:02:01.120 --> 0:02:03.640 this one sound it's called Irish Coast and it has 0:02:03.760 --> 0:02:06.559 all these different sliders where you can adjust the different 0:02:06.600 --> 0:02:09.239 sounds on the Irish Coast, so you can adjust the 0:02:09.280 --> 0:02:14.000 amount of like wind noise, the babbling little water bagpipe rain. Yeah, 0:02:14.280 --> 0:02:16.839 there's no bagpipe. I guess i'd be the Scottish coast. 0:02:16.880 --> 0:02:19.120 Maybe that's true. But the Irish Coast made It's so 0:02:19.320 --> 0:02:21.519 stinking good, and I kind of realized how dependent on 0:02:21.600 --> 0:02:23.760 it I've become. It's just become so much a part 0:02:23.800 --> 0:02:25.400 of my day. You know, even when you're down here 0:02:25.440 --> 0:02:27.400 and we're both working, I just pop them in sometimes, 0:02:27.400 --> 0:02:28.679 but I don't want to hear you over there, like 0:02:28.760 --> 0:02:30.800 tapping on your keyboard, you know, double clicking with your 0:02:30.840 --> 0:02:33.120 mouse tap loudly. I'm sorry about that. I realized that 0:02:33.200 --> 0:02:35.400 any of those sounds can distract me, and so I 0:02:35.440 --> 0:02:37.400 don't I wanted to share this with our listeners if 0:02:37.480 --> 0:02:40.639 they are having a tough time focusing while they're working 0:02:40.720 --> 0:02:42.320 at home. So you might be able to block out 0:02:42.400 --> 0:02:44.280 my sounds, but can you block out the faces I'm 0:02:44.280 --> 0:02:46.120 making at you from across the room. That's why we 0:02:46.200 --> 0:02:49.520 have a solid partition up between us. That's what you're 0:02:49.520 --> 0:02:52.280 gonna build next, I'm sure, said the office we're shunning 0:02:52.440 --> 0:02:57.840 up created barrier exactly. Sometimes it's necessary for me, I'm 0:02:58.240 --> 0:02:59.919 you know, I get excited and I just want to 0:03:00.320 --> 0:03:02.359 say hi, yeah, yeah. I wanted to mention that for 0:03:02.400 --> 0:03:04.560 our listeners. There's this other one I actually discovered two 0:03:04.560 --> 0:03:07.240 It's called uh seven forty seven I found this one 0:03:07.360 --> 0:03:10.280 on Amazon Music. You and I we both love Amazon Music. 0:03:10.840 --> 0:03:13.640 And if you if you google seven forty seven White Noise, 0:03:13.800 --> 0:03:15.760 it'll pull up this track and you can put it 0:03:15.840 --> 0:03:18.240 on repeat on loop. It sounds just like you're sitting 0:03:18.400 --> 0:03:21.160 on an airplane, like flying to the West Coast, you know, 0:03:21.480 --> 0:03:23.280 or vice versa. That would put me to sleep. That's 0:03:23.320 --> 0:03:25.240 the problem with some of those. Really. I like how 0:03:25.360 --> 0:03:27.600 it helps some people and and hopefully some people out 0:03:27.639 --> 0:03:30.440 there will you listen to your Irish Coast noise and 0:03:30.560 --> 0:03:33.040 it'll help them be more productive. For me, it would 0:03:33.080 --> 0:03:34.920 make me want to take a nap. I would I 0:03:34.960 --> 0:03:36.880 would need to be drinking like some coffee while I'm 0:03:36.920 --> 0:03:39.160 listening to that and working, because yeah, I would just 0:03:39.280 --> 0:03:41.000 kind of want to lay down on my keyboard and 0:03:41.280 --> 0:03:42.960 zonc out for a little bit. I will say, if 0:03:42.960 --> 0:03:44.640 I had a weighted blanket, you know, I could do 0:03:44.680 --> 0:03:46.520 the seven forty seven with a weighted blanket for the 0:03:46.560 --> 0:03:49.680 first fifteen minutes. Because for me, anytime I get on 0:03:49.760 --> 0:03:51.800 a plane, I always take that that quick power nap 0:03:51.840 --> 0:03:54.320 at the very beginning, like when you take off, because 0:03:54.360 --> 0:03:56.800 when you during lifts off, you feel that increased weight 0:03:57.040 --> 0:04:00.760 and something about that's for me, it's super comforting. Yeah, 0:04:01.120 --> 0:04:04.400 I pass out during take off and then about fifteen 0:04:04.400 --> 0:04:06.200 minutes later I always wake up. But but in the 0:04:06.240 --> 0:04:07.600 same way, I think there's a lot of folks who, 0:04:08.000 --> 0:04:09.720 you know, when they hear that sound of the seven 0:04:09.760 --> 0:04:11.960 forty seven jets kind of roaring in the background, it 0:04:12.120 --> 0:04:13.800 kind of puts them in that business state of mind. 0:04:13.800 --> 0:04:15.920 A lot of people actually aren't on planes these days, 0:04:16.279 --> 0:04:18.360 so they might even kind of miss that sound, you know. 0:04:18.520 --> 0:04:20.160 Good point. Yeah, we'll link to both of those in 0:04:20.240 --> 0:04:22.240 our show notes, by the way. Alright, cool, cool, alright, Well, 0:04:22.279 --> 0:04:24.040 let's get onto the beer that we're having on the 0:04:24.040 --> 0:04:27.000 show today, Matt. This one's called Double Up and it's 0:04:27.120 --> 0:04:29.480 a West Coast I p a by Monday Night Brewing 0:04:30.000 --> 0:04:33.160 in conjunction with Cascade Brewing, one of our favorite breweries 0:04:33.200 --> 0:04:36.280 on the West Coast. Speaking of West Coast, East Coast, exactly. 0:04:36.320 --> 0:04:38.600 A nice little team up there on this one. We'll 0:04:38.600 --> 0:04:41.039 give our thoughts on this particular beer at the end 0:04:41.080 --> 0:04:42.920 of the episode, but for now, Matt, one of the 0:04:42.920 --> 0:04:45.800 subject at hand. We're talking about the broken promises of 0:04:46.120 --> 0:04:49.960 MLMs of multi level marketing companies not too long ago, Matt. 0:04:50.000 --> 0:04:53.080 We had an interesting chat with Ben Carlson about his 0:04:53.160 --> 0:04:55.200 book on the history of scams, and I feel like 0:04:55.240 --> 0:04:59.040 he shared some really fascinating stories of some really crazy 0:04:59.120 --> 0:05:01.760 scams that have happened in the history of our country. 0:05:02.160 --> 0:05:05.760 But but those rip offs aren't necessarily confined to prior decades. 0:05:06.080 --> 0:05:08.560 We're seeing a lot of like scams and and pyramid 0:05:08.600 --> 0:05:13.320 schemes proliferating now, and multi level marketing companies are actually 0:05:13.440 --> 0:05:16.280 like praying on people, I would say, in more severe 0:05:16.320 --> 0:05:18.720 ways right now, which means that people are often losing 0:05:18.760 --> 0:05:21.119 money they can't afford to lose because of a nifty 0:05:21.200 --> 0:05:23.160 pitch that sounds pretty great, And I feel like the 0:05:23.200 --> 0:05:25.480 people that are most at risk of signing up to 0:05:25.760 --> 0:05:28.320 to sell something for an MLM company are the people 0:05:28.360 --> 0:05:31.840 who oftentimes are financially suffering. Maybe they've lost a job, 0:05:31.880 --> 0:05:34.360 they've been furloughed, they're looking for ways to make extra income, 0:05:34.680 --> 0:05:37.520 and the MLM pitch comes along, and it's like, that 0:05:37.640 --> 0:05:40.320 sounds really nice. Maybe I can make some side income. 0:05:40.560 --> 0:05:44.159 Maybe signing up and selling stuff for this MLM company 0:05:44.200 --> 0:05:46.799 can actually help me with with some of the missing 0:05:46.839 --> 0:05:49.400 income from losing my job. Might even say, oh, this 0:05:49.520 --> 0:05:51.520 is a blessing in disguise. Now I can pursue my 0:05:51.720 --> 0:05:55.400 MLM dreams building my own business, right, yeah, exactly. And 0:05:55.720 --> 0:05:59.720 pyramid schemes they've always been bad. They're actually they're illegal, right. 0:06:00.000 --> 0:06:02.680 But at the same time, there are legitimate mL ms 0:06:02.760 --> 0:06:04.960 out there, but a lot of these end up taking 0:06:05.000 --> 0:06:07.480 a lot of your time and money and never actually 0:06:07.520 --> 0:06:10.120 giving people any sort of real income in return. Mat 0:06:10.200 --> 0:06:12.480 I think the most fascinating stat that I've ever read 0:06:12.560 --> 0:06:16.719 about MLMs, the FTC, the Federal Trade Commission, actually reports 0:06:17.000 --> 0:06:21.120 that less than one percent of MLM participants actually end 0:06:21.200 --> 0:06:22.920 up making money. And I feel like that says it 0:06:22.960 --> 0:06:25.040 all right there. If you're looking for the needle in 0:06:25.120 --> 0:06:27.360 a haystack, if you think you're the only one that 0:06:27.440 --> 0:06:30.080 can make money in an MLM, maybe it's true, but 0:06:30.680 --> 0:06:33.480 the chances, the statistics point to the fact that it's highly, 0:06:33.800 --> 0:06:36.920 highly unlikely. Dang dude. So if anybody is going to 0:06:36.960 --> 0:06:39.360 turn off the podcast, now you know, don't do that, 0:06:39.640 --> 0:06:41.240 But do know that you need to be in the 0:06:41.320 --> 0:06:43.920 one percent if you're gonna you know, make any money 0:06:43.960 --> 0:06:46.400 at all. Enjoy Like you mentioned, you know, these are 0:06:46.480 --> 0:06:48.320 companies that we're dealing with now, you know, like we're 0:06:48.360 --> 0:06:50.960 not just talking about companies from the fifties, you know, 0:06:51.160 --> 0:06:53.919 like Tupperware back when they used to have their Tupperware parties. 0:06:54.080 --> 0:06:55.720 A lot of us have have had that pitch from 0:06:55.720 --> 0:06:57.520 my friend or even you know, a pitch on social 0:06:57.560 --> 0:07:00.400 media from someone we haven't talked to in years. There 0:07:00.440 --> 0:07:05.080 has been a recent resurgence of influencers pushing MLMs in 0:07:05.160 --> 0:07:06.840 a sense they've kind of modernized, you know, along with 0:07:06.880 --> 0:07:09.440 the technology that we have today. And you also mentioned 0:07:09.480 --> 0:07:12.280 as well that another reason that we are seeing these 0:07:12.320 --> 0:07:15.480 on the rise is because people are in more desperate times. 0:07:15.520 --> 0:07:17.200 You know, when you have lost your job or you're 0:07:17.200 --> 0:07:19.400 earning a lot less than used to, you're looking for 0:07:19.480 --> 0:07:21.640 any way to to make additional income. You're looking for 0:07:21.720 --> 0:07:24.480 ways to replace your income. And if you get an email, 0:07:24.760 --> 0:07:26.679 you know, saying that hey, if you you know, pitching 0:07:26.760 --> 0:07:29.440 some money to do this thing, or send this email 0:07:29.520 --> 0:07:31.240 or send this letter to a bunch of other people, 0:07:31.520 --> 0:07:32.800 that kind of get your hopes up. And so it's 0:07:32.840 --> 0:07:35.400 no wonder we've seen the spread. And so that's one 0:07:35.440 --> 0:07:38.280 of the ways we've seen MLMs grow due to the pandemic. 0:07:38.360 --> 0:07:41.640 But there have also been false health claims that different 0:07:41.680 --> 0:07:44.640 companies have made the FDC. They also stand out some 0:07:44.760 --> 0:07:47.960 letters in April to to tend different MLM companies that 0:07:48.160 --> 0:07:50.960 were making false claims in regards to how their products 0:07:51.000 --> 0:07:53.960 were going to protect people against the coronavirus. Right, And 0:07:54.040 --> 0:07:56.320 so not only is it false statements against how individuals 0:07:56.480 --> 0:07:58.200 might be able to earn a bunch of money, but 0:07:58.320 --> 0:08:00.200 they're taking advantage of people when it comes through this 0:08:00.280 --> 0:08:02.880 health crisis as well. And unfortunately a lot of the 0:08:02.920 --> 0:08:06.040 folks who we're seeing taken in by these MLM are women. 0:08:06.120 --> 0:08:09.440 Many MLMs are based around women's clothing and beauty products, 0:08:09.720 --> 0:08:11.440 you know. And this isn't to say that men don't 0:08:11.520 --> 0:08:15.040 also lose money through MLM involvements. Pretty Much everyone who 0:08:15.200 --> 0:08:17.520 is involved in MLM is losing money. And just like 0:08:17.600 --> 0:08:19.600 you said, one percent of folks are the ones who 0:08:19.600 --> 0:08:22.760 are making money. That means of individuals who are involved 0:08:23.080 --> 0:08:25.840 are losing money. And that doesn't even include the amount 0:08:25.840 --> 0:08:27.560 of time that they're putting towards us as well, just 0:08:27.640 --> 0:08:30.680 the money. Yeah, and all the extra Lulu Roe pants 0:08:30.680 --> 0:08:32.800 that are left over in the garage after the fact too. Right, 0:08:33.400 --> 0:08:36.160 So let's talk about kind of the definitions, But what 0:08:36.360 --> 0:08:38.920 constitutes an m l M versus a pyramid scheme, because 0:08:38.920 --> 0:08:41.240 we're gonna kind of be talking about both in this episode. 0:08:41.840 --> 0:08:43.800 M l M s are our organizations that are focused 0:08:43.880 --> 0:08:47.319 on selling a legitimate product, but pyramid schemes are actually 0:08:47.480 --> 0:08:51.439 solely focused on recruiting other members. And so MLMs and 0:08:51.480 --> 0:08:54.000 pyramid schemes they've got a lot in common. It's actually 0:08:54.080 --> 0:08:56.599 kind of hard to tell them apart, especially you know, 0:08:56.800 --> 0:08:59.160 on on their face. So when you're beating pitched something 0:08:59.240 --> 0:09:02.040 by a friend or a family member or uh, somebody 0:09:02.120 --> 0:09:03.599 that you used to know back in the day, and 0:09:03.600 --> 0:09:06.120 they've sent you a Facebook message, it's really hard to 0:09:06.240 --> 0:09:09.080 know what you're getting into. Are you getting into business 0:09:09.120 --> 0:09:12.000 with a company that is selling legitimate products or are 0:09:12.040 --> 0:09:14.520 you getting into a system that forces you to actually 0:09:14.760 --> 0:09:17.800 recruit more people in order to make the majority of 0:09:17.880 --> 0:09:19.959 your earnings. And if that's the case, you're involved in 0:09:20.000 --> 0:09:23.959 a pyramid scheme. And and that's because recruiting in in 0:09:24.080 --> 0:09:26.400 many of these systems is actually how the big money 0:09:26.520 --> 0:09:28.240 is made. You might be able to make a little 0:09:28.280 --> 0:09:30.880 bit of money if you work really really hard selling 0:09:30.920 --> 0:09:33.840 the product, but you're gonna make way more by recruiting 0:09:34.000 --> 0:09:37.640 more people to be underneath you, to start paying fees, 0:09:37.679 --> 0:09:40.160 and to start buying more product. It's important to know 0:09:40.280 --> 0:09:42.760 that that it's just incredibly hard to tell the difference 0:09:42.880 --> 0:09:45.079 when you're receiving that pitch. And that's why, you know, 0:09:45.120 --> 0:09:47.320 we're not fans of either. Obviously, pyramid schemes are illegal, 0:09:47.440 --> 0:09:51.040 but MLMs are close enough for the most part that 0:09:51.160 --> 0:09:53.480 we think it's a bad idea to participate in m 0:09:53.600 --> 0:09:56.360 l m s pretty much altogether too. And so maybe 0:09:56.400 --> 0:09:58.400 a good question for us to answer, right, uh, is 0:09:58.679 --> 0:10:01.839 why do people participate in these MLMs. There are some 0:10:01.960 --> 0:10:05.200 benefits and promises that MLMs make do make them attractive, 0:10:05.520 --> 0:10:08.079 and one of the biggest promises is huge returns with 0:10:08.320 --> 0:10:10.880 minimal efforts. I'm a big fan of minimal effort, you know, 0:10:11.000 --> 0:10:13.199 Like what's more enticing than that just doing nothing and 0:10:13.280 --> 0:10:15.440 perceiving a lot of money. You know, I'd be all 0:10:15.440 --> 0:10:17.439 about doing that if if I could. But there was 0:10:17.440 --> 0:10:19.839 a recent thread in our Facebook group and listener Jill 0:10:19.960 --> 0:10:23.320 she mentioned that it has been quote seriously, blood, sweat 0:10:23.320 --> 0:10:26.640 and tears unquote to make an average of two thousand 0:10:26.679 --> 0:10:29.000 dollars a month. You know, like that's what you don't 0:10:29.080 --> 0:10:32.360 hear in these different presentations, these these pitches, these videos 0:10:32.400 --> 0:10:33.559 are are in a chat that you have with a 0:10:33.640 --> 0:10:36.439 friend who is trying to get you involved. You know, 0:10:36.480 --> 0:10:38.800 imagine if Jill had taken the standard approach and just 0:10:38.920 --> 0:10:41.920 tossed up some social media posts, you know, she wouldn't 0:10:41.920 --> 0:10:43.800 be making any money, which is the case for the 0:10:43.880 --> 0:10:47.400 vast majority of MLM participants, and she'd probably be in 0:10:47.520 --> 0:10:50.040 debt too, because typically you gotta buy the stuff up 0:10:50.080 --> 0:10:52.319 front in hopes that you're gonna sell it right and 0:10:52.400 --> 0:10:54.280 hopes that you're gonna make some sales and start generating 0:10:54.320 --> 0:10:56.880 that business, when many people don't exactly. Yeah, that's one 0:10:56.880 --> 0:10:58.800 of the red flags to look out for. So you know, 0:10:58.840 --> 0:11:01.400 we're gonna get into a little MLM history and we're 0:11:01.400 --> 0:11:03.559 gonna cover some of the specific ones to watch out for, 0:11:03.840 --> 0:11:06.200 and then later on we're we're going to discuss alternatives 0:11:06.240 --> 0:11:08.000 to m l m's and we'll get to all of 0:11:08.080 --> 0:11:20.240 that right after the break. All right, Matt, we're back 0:11:20.240 --> 0:11:22.760 from the break. And I think anybody that's been listening 0:11:22.840 --> 0:11:24.880 so far can tell that you and I were not 0:11:24.920 --> 0:11:27.959 a big fans of MLM. We're not, uh and It's 0:11:28.000 --> 0:11:29.520 something that kind of keeps coming in my mind when 0:11:29.559 --> 0:11:32.520 I think about MLMs and pyramid schemes. You've seen Garden State, 0:11:32.679 --> 0:11:35.400 of course, remember that one. It's been a long time, 0:11:35.440 --> 0:11:36.880 a long time ago, but you know that scene where 0:11:36.880 --> 0:11:38.680 they go in the store and they see like an 0:11:38.679 --> 0:11:41.199 old friend from high school and he's like, hey, I 0:11:41.240 --> 0:11:43.440 would like to talk to you both about a great 0:11:43.480 --> 0:11:46.320 opportunity you and your loved ones. That's when you run 0:11:46.400 --> 0:11:50.240 away or when someone says you're a naturally energetic person, 0:11:50.400 --> 0:11:52.640 I feel like you do great in this small business 0:11:52.720 --> 0:11:54.360 that I'm a part of, Like I'd love to talk 0:11:54.400 --> 0:11:57.079 to you about these opportunities available to us. That's when 0:11:57.080 --> 0:11:59.640 you know you're getting pitched right exactly. And and I 0:11:59.760 --> 0:12:02.480 can anybody make money in an MLM? Sure, Like I 0:12:02.559 --> 0:12:06.439 think a small, small, probably one percent of people can 0:12:06.520 --> 0:12:09.319 make money in an MLM, And especially if you have 0:12:09.480 --> 0:12:11.760 kind of some natural tendencies, if you've always been a 0:12:11.840 --> 0:12:15.079 good salesperson or just naturally great at starting up conversations 0:12:15.120 --> 0:12:18.800 with strangers, you can potentially make money in an MLM. 0:12:19.080 --> 0:12:21.320 Even if that's the case, though, there's still a lot 0:12:21.400 --> 0:12:23.760 of downsides too to watch out for, and some things 0:12:23.800 --> 0:12:25.480 to be wary of before you decide to go the 0:12:25.559 --> 0:12:27.960 route of an MLM as opposed to a traditional business, 0:12:28.040 --> 0:12:30.480 because those skills can make you money inside of a 0:12:30.600 --> 0:12:33.120 traditional job. With those skills in m l M isn't 0:12:33.120 --> 0:12:35.160 necessarily going to make you more money than you can 0:12:35.240 --> 0:12:38.040 make elsewhere. But Matt, let's talk about the history of 0:12:38.320 --> 0:12:39.640 m l m s, and let's talk about some of 0:12:39.679 --> 0:12:42.640 the more predominant ones that people might hear about or 0:12:42.920 --> 0:12:45.480 might be asked to join. Maybe right now, all right, 0:12:45.559 --> 0:12:48.160 time for a little history. Man. You mentioned Ben Carlson 0:12:48.200 --> 0:12:50.520 at the beginning of the episode our interview with him 0:12:50.640 --> 0:12:54.360 a few weeks ago. He called Charles Ponzi the godfather 0:12:54.600 --> 0:12:58.360 of the financial scams genre. In the Ponzi scheme and 0:12:58.480 --> 0:13:02.000 in pyramid schemes today are incredibly similar. About a hundred 0:13:02.080 --> 0:13:05.680 years ago, he promised returns on your money in ninety 0:13:05.800 --> 0:13:09.319 days by investing in foreign stamps. That sounds kind of weird, 0:13:09.400 --> 0:13:11.600 but you know this was the early nine hundreds, uh, 0:13:11.679 --> 0:13:13.679 and it was a different time back then. If someone 0:13:13.720 --> 0:13:15.360 were to pitch me something saying I was gonna make 0:13:15.440 --> 0:13:17.400 lots of money on postage stamps right now, I look 0:13:17.440 --> 0:13:19.360 at him like they were crazy because they probably would be, 0:13:20.160 --> 0:13:22.800 but people believed them, you know. Uh, And ultimately people 0:13:22.840 --> 0:13:26.280 send him millions of dollars based on these promises alone. 0:13:26.600 --> 0:13:28.559 And you know what getting involved in that. That scheme 0:13:28.600 --> 0:13:32.160 of his was open to everyone. He didn't discriminate. Rich 0:13:32.240 --> 0:13:36.720 politicians and poor immigrants alike lost their money. The Boston 0:13:36.760 --> 0:13:39.880 Post ended up running the math and they uncovered the 0:13:40.000 --> 0:13:42.800 impossibility of his claims. And so that's how pyramid schemes 0:13:42.960 --> 0:13:46.520 got started and how they happened today. Uh, someone promises 0:13:46.720 --> 0:13:51.520 incredible and impossible returns to unsuspecting victims, and they almost 0:13:51.559 --> 0:13:54.480 always spend the money to build up their own lavish lifestyle. 0:13:54.520 --> 0:13:57.400 You know, we're talking about yachts, sports cars, fancy trips, 0:13:57.480 --> 0:13:59.240 that kind of stuff. Ponzi was no different. You know, 0:13:59.320 --> 0:14:01.520 he bought a main and as well as the fanciest 0:14:01.600 --> 0:14:04.800 car of this day. So just because Ponzi was a scam, 0:14:04.840 --> 0:14:08.800 owners doesn't mean that all MLM offerings are scams. Though. 0:14:08.880 --> 0:14:11.360 So let's make sure we discuss some of the you know, 0:14:11.440 --> 0:14:14.439 more popular MLMs that are actually you know, kind of 0:14:14.520 --> 0:14:17.920 legitimate businesses. Lets do it, yeah, Um and Matt, there 0:14:17.960 --> 0:14:20.880 are certainly a few that people are familiar with. Although 0:14:21.200 --> 0:14:22.960 before we get to kind of some of the more 0:14:23.040 --> 0:14:26.440 popular ones, there's kind of like a scheme playing on 0:14:26.560 --> 0:14:28.960 some of these principles that's going around right now that 0:14:29.000 --> 0:14:31.480 people seem to be falling forward. It's called the Susu method. 0:14:32.000 --> 0:14:35.480 And sometimes the Susu is done with friends or family, 0:14:36.000 --> 0:14:39.160 and it can be if it's done in a particular way, 0:14:39.440 --> 0:14:41.920 just kind of this forced method of savings. But it's 0:14:41.920 --> 0:14:43.920 an odd way to do it. It's where people pull 0:14:43.960 --> 0:14:47.120 their money and a different group member receives that payout 0:14:47.160 --> 0:14:50.000 each month. Even when you're doing that with trusted friends 0:14:50.040 --> 0:14:51.440 and family, I don't think it's a good way to 0:14:51.520 --> 0:14:53.480 do things. I think there are better ways to save 0:14:53.560 --> 0:14:55.680 your money. You don't have to pull it trusting that 0:14:55.800 --> 0:14:57.360 that money is going to come back to you at 0:14:57.400 --> 0:15:01.320 a future date. Right. But just like so many other MLMs, 0:15:01.640 --> 0:15:05.320 people are using personal relationships to exploit others for profit. 0:15:05.440 --> 0:15:08.560 Under the su Su scheme, they're using trust to leverage cash. 0:15:08.800 --> 0:15:11.040 And and here's kind of how it works. In the 0:15:11.120 --> 0:15:13.480 more nefarious ways. You put in a set amount of 0:15:13.560 --> 0:15:16.240 money every month along with maybe like ten to fifteen 0:15:16.320 --> 0:15:19.520 others in this SUSU group, let's say it's five bucks 0:15:19.880 --> 0:15:22.920 and you all venmo or PayPal. The ringleader who is 0:15:22.960 --> 0:15:24.800 promising that you're gonna make a heck of a lot 0:15:24.880 --> 0:15:26.960 more in returns in the coming months than what you're 0:15:26.960 --> 0:15:29.040 putting in. You're told that oftentimes it's gonna be eight 0:15:29.080 --> 0:15:31.880 to ten times your initial investment. And then you see 0:15:31.920 --> 0:15:35.480 the testimonials those promises, right, the promises that will soon 0:15:35.560 --> 0:15:38.400 be broken, saying that it's gonna be gravy and you're 0:15:38.400 --> 0:15:40.440 gonna make good money, and that this is the best 0:15:40.560 --> 0:15:43.480 method to see a return on your money. And and 0:15:43.560 --> 0:15:45.800 then it never appears and people are out the money 0:15:45.840 --> 0:15:48.480 they put in. And yeah, the rising popularity of this 0:15:48.640 --> 0:15:50.640 one in particular is something that that we wanted to 0:15:50.680 --> 0:15:52.440 mention because a lot of people are falling for it 0:15:52.680 --> 0:15:55.560 assuming that because they're invited by a friend or family 0:15:55.640 --> 0:15:57.680 member that they can't lose money and that everything is 0:15:57.720 --> 0:16:00.320 gonna be okay, and most people are losing all the 0:16:00.400 --> 0:16:02.560 money that they put in. Yeah, and and so by 0:16:02.600 --> 0:16:06.000 that definition, this isn't necessarily MLM. This isn't, you know, 0:16:06.080 --> 0:16:09.520 multi level marketing company. This is pretty much a Ponzi scheme. 0:16:09.560 --> 0:16:11.400 You know, this is a pyramid scheme and it's also 0:16:11.520 --> 0:16:14.600 known as a blessing loom or a gifting circle. But 0:16:14.720 --> 0:16:17.320 because there are no products involved here, it is straight 0:16:17.400 --> 0:16:21.200 up something you want to avoid. Yeah, and basically to participate, 0:16:21.240 --> 0:16:23.800 I feel like you have to suspend your belief in reality, right, 0:16:24.200 --> 0:16:26.920 that what you put in is going to come out 0:16:27.280 --> 0:16:29.200 tenfold or something like that. I mean, that's just not 0:16:29.320 --> 0:16:31.600 how things work. But oftentimes the people that are hurting 0:16:31.600 --> 0:16:33.400 the most, they want to believe in something like this, 0:16:33.520 --> 0:16:36.360 and that's why people participate, and that's why some of 0:16:36.400 --> 0:16:39.480 these schemes are are so bad. Yeah, that's right, And 0:16:39.560 --> 0:16:42.240 so let's let's talk about an actual MLM. Let's talk 0:16:42.240 --> 0:16:44.760 about lu La Row. There's a podcast that only talks 0:16:44.800 --> 0:16:47.640 about MLM is called The Dream and they actually go 0:16:47.800 --> 0:16:51.520 pretty hard after lu La Row and rightly so. They 0:16:51.560 --> 0:16:54.600 are a woman's apparel company that is known for colorful 0:16:54.640 --> 0:16:57.960 patterns and prints. But for women to get started selling 0:16:58.160 --> 0:16:59.960 lu La Row, you need to come up with closest 0:17:00.000 --> 0:17:03.080 six thousand dollars in order to buy inventory. You know, 0:17:03.200 --> 0:17:06.280 there are lawsuits right now, you know, from customers claiming 0:17:06.320 --> 0:17:08.560 that the clothing is defective and that the returns aren't 0:17:08.600 --> 0:17:11.480 being accepted. Uh. This is always a warning sign of 0:17:11.560 --> 0:17:15.399 an unhealthy MLM UH and returning unsold inventory is almost 0:17:15.400 --> 0:17:18.720 impossible or it comes with some insane fees if you 0:17:18.800 --> 0:17:21.800 are participating. There are actually quite a few lawsuits pending 0:17:21.840 --> 0:17:24.159 right now against lu La Row. And so while lu 0:17:24.240 --> 0:17:27.600 La Row isn't necessarily a pyramid scheme right like, technically 0:17:27.680 --> 0:17:30.680 it is an MLM because they actually do sell products, 0:17:30.880 --> 0:17:33.640 but because of the insane fees, the upfront costs involved 0:17:33.680 --> 0:17:37.359 with purchasing inventory, just the poor business model, it's something 0:17:37.520 --> 0:17:40.399 that we would completely recommend for folks to stay away from. 0:17:40.720 --> 0:17:42.480 And historically we've seen a lot of their customers be 0:17:42.600 --> 0:17:45.360 like homemakers, a lot of military wives as well are 0:17:45.680 --> 0:17:48.160 or used to be at least big into lu La Row. Yeah, 0:17:48.280 --> 0:17:50.840 lu La Row one of the worst. Uh. Matt Mary 0:17:50.920 --> 0:17:53.639 Kay is another big name in the MLM world. It's 0:17:53.680 --> 0:17:56.960 actually the sixth largest MLM company out there. And Pink 0:17:57.040 --> 0:17:59.240 Cadillacs were kind of their calling card. They kind of 0:18:00.000 --> 0:18:02.240 bond a generation of people who got interested in selling 0:18:02.320 --> 0:18:05.280 makeup from their home. That to me, that just sounds 0:18:05.280 --> 0:18:07.159 like the nineties. I remember just like riding around in 0:18:07.200 --> 0:18:09.359 the car with my parents you know, and Augusta and 0:18:09.440 --> 0:18:11.880 there's like, you know, these pink little Cadillacs driving around 0:18:12.000 --> 0:18:13.840 or you know, big Cadillac spement and you know what 0:18:13.920 --> 0:18:16.680 those people are up to. Those beauty consultants were making 0:18:16.720 --> 0:18:20.239 money selling products to their friends and neighbors and as 0:18:20.320 --> 0:18:22.439 well as as they're making a cut of the sales 0:18:22.560 --> 0:18:25.800 from their recruits. So has these elements of direct sales, 0:18:25.840 --> 0:18:28.760 but also this element of recruiting in order to make 0:18:28.880 --> 0:18:33.119 profit too. Again, whether people were successful or whether people 0:18:33.560 --> 0:18:35.720 got burnt in a big way, it's really easy to 0:18:35.800 --> 0:18:39.200 find people writing or making YouTube videos about their experience, 0:18:39.640 --> 0:18:42.000