Herb Greenberg of CNBC On Selling The American Dream Inside Of MLM

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Herb Greenberg, wrote a comentary at Linked In, which was brought to my attention by Tom Haupt. I had already viewed Greenberg’s investigative report over at CNBC on the direct selling industry. After reading Herb Greenberg’s piece at Linked In, I decided to comment. Below you will find Greenberg’s piece and my comment.

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“In my nearly 40-year career as a journalist I’ve never come across a situation as bewilderingly bizarre as the Wall Street battle over multi-level marketer Herbalife.
It started with activist Bill Ackman laying out why he is short around 25% of Herbalife’s shares. (He thinks it’s a pyramid scheme.) He was countered several weeks later by a number of very smart investors, notably activist Dan Loeb, who have made it clear they’re betting against him. (They think Herbalife isn’t a pyramid)

No matter who wins, their mudslinging is little more than a sideshow.

Here’s what I know:

After 10 months of independently digging into Herbalife and the industry, culminating with the CNBC documentary, “Selling the American Dream,” I can say with a fair degree of certainty: Multi-level marketing, which has been dogged by the same legal questions and controversies for 65 years, needs to be cleaned up.

And this isn’t just about Herbalife or other companies like Amway, NuSkin, Usana, Mary Kay — all of which insist they’re not pyramids — but the hundreds of smaller private companies you’ve never heard of that fly and grow under the radar.

Multi-level marketing is a form of direct selling. It involves layers of salespeople who not only sell product, but sell a “business opportunity” geared to recruit salespeople who will recruit other salespeople.

One of my favorite lines from our “Selling the American Dream” is one top Herbalife distributor admonishing others at a sales event: “People, if you want to move your check, you need to recruit others….”

That’s because the more they recruit, the more money they make by sharing bonuses and commissions from their so-called “downline.”

Critical to the “pyramid scheme” question is the balance between recruiting versus product sales. While remarkable there are no firm rules defining pyramid schemes, the FTC has a general guideline: If more money comes from recruiting than product sales, then it’s probably a pyramid.

Yet (and this is where it becomes bewilderingly bizarre) the anti-Ackman bulls — including my friend, Australian hedge fund manager John Hempton, who uses the world “scumbag” to describe Herbalife and the industry — say it really doesn’t matter because the cops are politically muzzled and therefore won’t do anything.

What’s worse — in the year 2013 in the USA — they’re not kidding.

But despite their almost arrogant complacency, they’re also ignoring the risks that maybe this time will be different.

Based on my investigation, here’s what I believe they may be missing:

  • Having been muzzled for years, the FTC and/or other agencies may have little choice (thanks to the public brouhaha over Herbalife and the mockery being made of being on a politically charged short-leash) but to start scrutinizing a big company or two. They haven’t done that since the 1970s, when the FTC sued Amway. Amway won. Times are different.
  • Congressional staffers, looking for the next subprime lending or for-profit education, are likely to see multi-level marketing as red meat in predatory business practices. The industry tends to attract people down on their luck — either looking to get rich quick or just make a few extra dollars.
  • A crackdown in the U.S. on a big company (only a handful are public) should filter down to smaller companies — and could cause a domino effect around the world, where many of these companies are seeing their biggest growth.
  • The result, in the very least, is likely to be a rest of the industry’s business models. For large companies, like Herbalife, this could result in sharply slower growth.

This much is clear: While this story is likely to fade from the headlines, it isn’t likely to go away anytime soon.

Herb Greenberg

Troy Dooly’s Comment

@Herb, as a voice inside of Network Marketing aka MLM, and having watched your piece several times, I see two main focal points which should be addressed. First which is the smaller of the two, is the fact Herb, you only used Kevin Thompson (a proponent of direct selling) for a few minutes at the end. I think a more balanced coverage would have helped to better understand the real issues.

I agree that Direct Selling, specially the compensation structures known as MLM, do have issues. But to take the word “Recruiting” out of context and lump MLM to pyramids schemes, is what causes more questions than answers.

Case in point; all companies recruit! Starbucks recruits, Apple recruits, heck even CNBC recruits. They recruit customers, viewers, advertisers, and even show hosts. And they pay several layers deep for the recruitment of these individuals. Viable Direct Selling companies all recruit. They recruit more sales reps inside the network to buy and sell their products. Companies “posing” as viable MLM companies, push recruiting, and create compensation plans around the money flowing into the plan, not around the sales of products moving out of the warehouses.

Where it gets sticky is that people who do not make it in a traditional MLM, will take an prostitute the compensation plans, but finding an incidental product to push, knowing that all they are doing is pushing a Ponzi or pyramid scheme. And in some cases even these look legit because the product being pushed, without a compensation plan is a viable product.

I watched this happen in 2012 in the penny auction niche, and in 2013 we are seeing it happen in the mobile application niche. Both with viable business models. But when you place a compensation structure to them, throws the business into a possible Ponzi or pyramid situation. In 2012 one such business model, promoted penny actions, and I covered that story and at times praised the company for working to make changes that would provide a viable product mix. After regulators took over the business, it was disclosed that there was very little internal consumption and even less sales outside of the compensation structure. Yet, reps were paying up to $10,000 for “product” no one used. This is a far different business model, than what you will find at Herbalife or any viable direct selling company.

In these situations, most presentations lead with the money, not the product. Herb, I feel that if you had gone to the DSA, MLMIA or the ANMP the three associations known inside of the direct sales industry you could have received a little more understanding of the legit meaning of recruiting inside of direct sales, especially at the DSA (Direct Selling Association).

The second and far more important focal point I find in your review and your commentary here is the fact you do bring up a viable issue. One we inside of direct selling must face… We need very clear and defined best practices which are accepted at the highest levels of the regulatory chain, and ones that clearly provide the basis that all companies and independent representatives much abide by.

In most cases we have these in place; now we must now be willing to hold each other accountable to them. Where we are lacking is in clearly explaining and defining why high levels “internal consumption aka “wholesale” sales are as good as “retail sales.” And in making clear the “recruiting” other sales reps and product users and getting paid on those sales is just as viable inside of MLM as it is in any other industry driven by a recruiting/sales business model.  I have taught for 30 years, to never join a company, where you would not use the products with or without a compensation plan. My first company was A.L. Williams (not without its own controversy), today known as Primerica Financial Services. I am no longer a representative with that company (I do have stock), but I just renewed my life insurance policy with them for another 20 years.

I have found that some distributors are still using an antiquated 1980’s hype driven presentation model, of pushing the “American Dream of getting RICH!” when in reality the American Dream” is different for many people.

Because most of Middle America is looking for additional income, a way to lose weight, more money for healthcare coverage, healthier lifestyles etc., this allows ethically challenged folks to take advantage of the situation. Similar to what we heard in the media about Wall Street, bankers and mortgage brokers a few years ago. It was Wall Street greed, and the poor main street person, was the victim. Yet, no one forced Main Street into barrowing more than they could afford, or getting caught up in the “flipping houses” crave. From Wall Street to Main Street, Americans want a better lifestyle and to leave something folks will remember them by.  So whether it is Wall Street, Sports, Media, Politics, or MLM, we all face the ethical challenges of those who will prostitute the business model.

Where I agree with you in the review and here in your commentary is the fact, many small companies which call themselves MLM, network marketing or direct selling, are the bigger issue. They are underfunded, create cheap and at times dangerous products, or try a promote a product just to cover up the monetary shell game, and in the end do not fit anyone’s definition of a viable direct selling company.

In at least one case last year, a company took in $1.2 billion dollars and had 2 million people join. It did catch the eye of the regulators and we will see where it goes. But in most cases because the laws are not clear in some areas, or companies launch overseas these companies go under the radar, allowing folks to join for free or only $10 to $100 less to join until there is so much chatter on the net they catch the media or regulators eye. Although, $100 seems like no big deal, you get 2.2 million people to push a program like that, and before you know it the founders are rolling in the dough, and then the company is shut down.

I would like to see you and others really seem to care about your viewers, focus on the issues we face. I would love to invite you and your crew to the ANMP Convention (Association of Network Marketing Professionals) March 1st – 3rd in Dallas to get a firsthand experience of the direct selling profession, not just an individual company, or from critics who do not find anything positive about direct selling.

Herb, and others who read this, the direct selling industry has created some great products and services over the years, and in a few cases the companies have become well-known in their respective industries.

In closing, Herb although I do not agree with all you have written or shot in regards to direct selling, I do fully understand your points, and agree that the issues have to be addressed. We inside of the direct selling industry can self-police ourselves, or we can let the regulators do it for us.

Living An Epic Adventure,

Troy Dooly

MLMHelPDesk.com

MLM Editorial: Is Melaleuca A Scam, And Who Is The Real Frank Vandersloot?

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Yesterday I shared my perspective on a current legal issue surrounding Melaleuca and two of its former top distributors Terry Dorfman & Natalie Foeller and the Melaleuca policy 20. A couple of the responses I received did not have to do with the topic at hand, but were more directed as Frank Vandersloot and Melaleuca as a viable direct sales company. So my goal is to answer those concerns.

Melaeuca

Is Melaleuca A Scam Or Viable Direct Selling aka Network Marketing Company?

My short answer is Melaleuca is one of the strongest and most viable Wellness Companies, using the direct selling channel to move their products and services.

Melaleuca uses a “revenue share” most folks know as direct sales or network marketing to reward their independent sales force known as “Marketing Executives” to sell their products.

Now, one of the things Melaleuca still does is use the orignal business model of network marketing created by such legacy companies as Amway, Fuller Brush, Shaklee and Avon to cut out the middleman, and pay their network marketing sales force with some solid residual income based on product sales.

Since Melaleuca doesn’t use traditional advertising, they are able to thow those dollars into a compensation structure that rewards many levels personal sales activity and sales leadership levels. Melaleuca has paid out over $3 Billion in commissions since 1985.

Now unlike some wellness companies in direct sales, which promotes having a billion in sales in less than five years, and are really referring to cumulative sales. Melaleuca since 1985 has grown from a few hundred thousands in sales to over $1 billion in annualized sales in 2011. According to Melaleuca marketing collateral these sales come from 800,000 households per month.

Melaleuca has been given the Better Business Bureau Torch Award, and has been listed as one of Inc Magazine’s Fastest Grossing 500, five consecutive years! (you can read about the above by clicking here)

Now I am not going to dig deep into the compensation plan. But you can review the Melaleuca IDS (Income Disclosure Statement) for 2003, 2010 and 2011 below.

Melaleuca 2003 IDS

Melaleuca 2010 IDS

Melaleuca 2011 IDS

Melaleuca Full Compensation Plan – USA

 

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Who Is The Real Frank Vandersloot?

Now instead of me trying to articulate who the real Frank Vandersloot really is, I decided to show what others have stated are the two sides of Frank Vandersloot. Personally, I do not think there are two sides, I think there is just Frank!

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In Frank Vandersloot’s Own Words!!!

If you have investigated the various pages on this site, then you know that the writings of Frank VanderSloot are sprinkled throughout. As much as possible, I have tried to let Frank speak for himself. He tends not to blow his own bugle, though, so it has been necessary for me to interject a comment here and there.
Frank doesn’t know this, but he has become a mentor to me. His common sense, value-based philosophy has added to and sharpened my personal vision, and his dedication to hard work and helping others to reach their goals has inspired me to rededicate myself to my own ambitions.
If there is anything I am certain about, concerning Frank VanderSloot, is that he cares. Frank cares about this world and its people. He cares about you and he cares about me. I know that to be true from personal experience, and I have seen how he relates to others–going out of his way to acknowledge their contributions. (Click here to read the full article!)

But… What About What The Critics Have To Say About Frank Vandersloot?

Salon

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GlennGreenwald_writer

Billionaire Romney donor uses threats to silence critics

Frank VanderSloot is an Idaho billionaire and the CEO of Melaleuca, Inc., a controversial billion-dollar-a-year company which peddles dietary supplements and cleaning products; back in 2004, Forbes, echoing complaints to government agencies, described the company as “a pyramid selling organization, built along the lines of Herbalife and Amway.” VanderSloot has long used his wealth to advance numerous right-wing political causes. Currently, he is the national finance co-chair of the Mitt Romney presidential campaign, and his company has become one of the largest donors ($1 million) to the ostensibly “independent” pro-Romney SuperPAC, Restore Our Future. Melaleuca’s get-rich pitches have in the past caused Michigan regulators to take action, resulting in the company’s entering into a voluntary agreement to “not engage in the marketing and promotion of an illegal pyramid”‘; it entered into a separate voluntary agreement with the Idaho attorney general’s office, which found that “certain independent marketing executives of Melaleuca” had violated Idaho law; and the Food and Drug Administration previously accused Melaleuca of deceiving consumers about some of its supplements.

But it is VanderSloot’s chronic bullying threats to bring patently frivolous lawsuits against his political critics — magazines, journalists, and bloggers — that makes him particularly pernicious and worthy of more attention. In the last month alone, VanderSloot, using threats of expensive defamation actions, has successfully forced Forbes, Mother Jones and at least one local gay blogger in Idaho to remove articles that critically focused on his political and business practices (Mother Jones subsequently re-posted the article with revisions a week after first removing it). He has been using this abusive tactic in Idaho for years: suppressing legitimate political speech by threatening or even commencing lawsuits against even the most obscure critics (he has even sued local bloggers for “copyright infringement” after they published a threatening letter sent by his lawyers). This tactic almost always succeeds in silencing its targets, because even journalists and their employers who have done nothing wrong are afraid of the potentially ruinous costs they will incur when sued by a litigious billionaire. (Read On Here)

BoingBoing

Don’t let Mitt Romney’s anti-gay billionaire backer whitewash his intimidation of critics

Billionaire anti-gay campaigner and Mitt Romney campaign co-finance chair Frank VanderSloot is whitewashing his tarnished image with a public relations campaign. After years of trying to silence journalists critical of him and his record, all that’s left to do is dodge the difficult questions.

After a recent scathing commentary from Salon’s Glenn Greenwald, echoed nationwide on MSNBC by The Rachel Maddow Show, VanderSloot’s history of threatening critics was exposed. The game changed. But his efforts only highlight a long record of local campaigning whose dirty tricks and litigious tactics now deserve national attention.

The many companies run by VanderSloot, a Mormon family-values man on his fourth marriage, include Riverbend Communications, which operates a number of radio stations in his home state. But he is perhaps most widely known as the CEO of Melaleuca, a multi-Level network marketing company that sells household and nutritional products.

In Feb. 2012, I received a letter from Melaleuca accusing me of making “repeated characterizations” of Frank VanderSloot and his company “as anti-gay” on my website. Among other claims, it said these references “are inaccurate” and “mislead readers.” It said my blog contained “infringing material,” “defamatory statements” and suggested that I would be held responsible for mainstream media coverage which was “increasing the unlawful reputational damage” sparked by my reportage. (Read on by clicking here)

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Frank Vandersloot Speaks Out About What His Critics Have To Say!!!

Extreme, far left blog sites have recently chosen to hammer Melaleuca and me personally because I had the audacity to support a conservative candidate for President of the United States. They chose to misconstrue the facts and post false and damaging data about us, and then criticized us for asking these sites to take down the false information. For those who are interested in the truth about us, we provide the following facts addressing the accusations:

ON BEING A “BILLIONAIRE”—I fear my financial status has been greatly exaggerated. I do own a majority interest in Melaleuca, a company we started 26 years ago. The company has done well. Some analysts have suggested that I could sell my share of the company for a lot of money. It’s hard to know how much. The problem is I would have to sell the company before I would ever see the cash. I’m not selling, so I will never be cash-rich. But that was never the intent.

That said, I’m paid a good salary and receive bonuses and residuals that are beyond what I deserve. In my youth, my family was poor, but we learned we didn’t need money to be happy. My father taught us to love manual labor. I grew up milking cows by hand and chopping wood for my mother’s cook stove. I never anticipated being wealthy. I never imagined it. I never desired it and I never even considered it as a possibility. But our little business has prospered and I have really enjoyed my business experience. The hardworking folks who have joined us have prospered with us. I am a strong advocate of the free enterprise system. Only in America could someone start out where I started and receive the kinds of opportunities I’ve had.

MY POLITICAL LEANINGS—I don’t consider myself either a Republican or Democrat. I’m quite conservative on most social and economic issues. And I’m pretty liberal on most environmental issues.

MELALEUCA’S BUSINESS MODEL—It’s unfortunate that someone would suggest that Melaleuca is something like Amway. It’s not. We started Melaleuca 26 years ago to market environmentally responsible products and to provide a business opportunity for folks who weren’t successful in climbing the corporate ladder and didn’t inherit wealth from their parents. We try to be champions of the little guy. My father was a little guy. And I still see myself as a little guy.

Contrary to those who do not know us, our business model is nothing like Amway or Herbalife. I challenge anyone to find any similarity whatsoever. There is no investment of any kind unless you want to call a $29 membership fee an “investment.” And anyone can get a refund on that by just asking.

We do offer a home-based business opportunity. But it is no “pyramid scheme.” We have long been critical of the many MLM/pyramid schemes operating in this country. I agree with those who say that typical MLM companies destroy people’s finances. Most are designed to attract people to “invest” in large purchases with the promise of “getting rich” quickly by getting others to invest. The guy at the top always wins and the guy on the bottom always loses.

In Melaleuca’s case there is no investment and no getting others to invest. We do pay commissions to those who have referred customers based on what those customers purchase. There is really no way to lose money on referring customers. And there’s no way for customers to lose either when they’re buying high-quality products at grocery store prices. Customers just order the products they use every month directly from the factory. We have hundreds of thousands of customers who buy from us each month. They don’t ever resell anything. They don’t invest in any inventory. There can be no pyramiding without some kind of investment. In 26 years, no one has ever complained that they lost money. It’s simply not possible. (Click here to read Frank Vandersloot’s full response)

So, my final conclusion is that Melaeuca is not a MLM or Network Marketing Scam, and although Frank Vandersloot some might believe Frank Vandersloot has two sides, I have found him to be straightforward and very opinionated… which is the exact same phrase some have used to describe me personally. 🙂

Living An Epic Adventure,
Troy Dooly

MLM Editorial: Regulators Turn A Blind Eye To 32 Yr Old, $3 Billion Dollar Pyramid, Herbalife According To Bill Ackman

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In this week’s network marketing news, I am covering the purported evidence that Pershing Square founder, Bill Ackman states proves regulators from the SEC to the FTC have turned a blind eye. Could such a successful and educated man be so hell-bent on profits and greed that he refused to fully investigate the facts of his team? Or is there something even more personal going on that is yet to be uncovered?

Bill Ackman is a well-respected and very successful Wall Street Advocate Investor. He is the founder of Pershing Square Capital Management. In December of 2012, Ackman publicly stated “I am 100% confident that Herbalife is a pyramid scheme.” He backed up his claim with a 334 page presentation and several T.V. appearances.

However… although Mr. Bill Ackman is a very well-educated investor, it seems he and his team relied heavily on supposition, supported by half-true, misrepresented facts, and in at least one case, the reports of a well-known convicted short seller and stock manipulator Barry Minkow.

I find it somewhat humorous, that Bill Ackman, who is so educated, does not seem to have studied much on what could happen to him and his firm if the SEC or other regulators, decide his report is correct, and Herbalife is a pyramid or worse yet a Ponzi. In that case, Mr. Ackman could find himself facing the same clawback situations as the promoters of Zeek Rewards are now facing.

I am not sure, the regulators will look kindly on Mr. Ackman and Pershing Square earning billions in “Blood Money” (Mr. Ackman’s term) off the backs of Herbalife distributors.

Here is the interview Mr. Bill Ackman did with Bloomberg TV, where he made it clear “I am 100% confident Herbalife is a pyramid scheme.” Click Here

Bill Ackman Calls Herbalife Pyramid

I want to look at some specific points raised by Mr. Ackman.

1. He is clear that Pershing Square Capital Management stands to earn close to $1 billion dollars if he can drive the price of the stock down at Herbalife, and he will personally earn $25 million in driving down the stock.

Although, it is mentioned that he is donating $25 million to Pediatric Cancer Research, based on the presentation and the reporter at Bloomberg Mr. Ackman was giving the $25 million anyway.

2. Mr. Ackman profiles the Herbalife distributors as follows…

“Low income or unemployed people who are losing their homes. Later he adds, these people could not even qualify for a sub-prime loan.”

I was somewhat surprised that an “Advocate Investor” such as Bill Ackman, would profile people he had never met in such a vile manner. First of all he either ignorant to the facts, or has decided to let the lure of easy money blind him to the facts.

According to the DSA Fact Sheet for 2011, the following are the demographics of their member companies which includes Herbalife.

PERCENT OF DIRECT SELLERS BY RACE 2010

White non-Hispanic 73.5
Hispanic 14.2
Black or African American 7.1
Asian or Pacific Islander 3.1
American Indian/Alaska Native 0.5
Other/unknown 1.6

PERCENT OF DIRECT SELLERS BY GENDER 2011

Female: 78.1
Male: 21.9

PERCENT OF DIRECT SELLERS BY TIME WORKED 2011

Part-time: 88.8
Full-time: 11.2

Now although, Herbalife doesn’t profile its distributors, based on the facts above, and the facts surrounding the weight loss industry, we can come to a logical conclusion that Herbalife distributors are going to fall very close to the above figures (not including specific Race.)

Mr. Ackman’s argument about low or unemployed people joining Herbalife, doesn’t seem to be based on conclusive evidence based on what he states throughout the presentation below and the interview above.

If the prospects had low or unemployed, then a new question is raised… How can they afford to become a distributor, and pay for the autoship order? Especially when we see Mr. Ackman claims that his team estimates that each Herbalife distributor loses $2,000 each. Although, he states these people are too embarrassed to make a stink about the purported Herbalife pyramid scheme, in other areas he states thousands of former “losing sales leaders” have sued Herbalife. These sure seem to be contradictory statements, to an already invalid argument.

Without a doubt, there are those who promote Herbalife, that may be doing it outside of the compliance policy of the company. However, this does not mean that Herbalife promotes unethical marketing to those who should not be in business or can;t afford their products. If this was a policy taught by the company, then sales would not be up in the USA around 20% for 2012 or 17% worldwide.

3. Mr. Ackman claims people “invest” in the herbalife business opportunity. Need I say more?

As educated as Bill Ackman is, he does not seem to understand the basic laws surrounding Direct Sales. When an independent distributor decides to join a network marketing company at any level, they do NOT invest anything.

They will purchase a distributor kit, and may even decide to purchase a specific pack of products and marketing collateral from the company. But all of this is seen by the IRS and regulators as an expense, not an investment.

Again, if Bill Ackman, doesn’t understand even the basic laws govern direct sales, then how ca he with “100% confidence” know that Herbalife is a pyramid?

4. Mr. Ackman claims that a distributor must be in the top fraction of 1% at Herbalife to earn over $90,000 annually.

Again, Bill Ackman and his team seem to have this desire to blow off the published facts. Although there is no law in place that demands a company to produce an Income Disclosure Statement, Herbalife does for all to see. By publishing an IDS, the company does away with the income claims and hype that does come with some companies. And it provides anyone in the public the chance to see the real numbers.

So does Mr. Ackman’s claim have any merit? I do not believe so, but we need to review the stats to get the real picture. First let’s look at the most current breakdown of why folks join any network marketing company.

According to the DSA, the following statistics were published in 2009.

DSA 2009 Distributor Figures

Based on the above we can see that 20.1% of those who join are currently building a business. And to fall on a more critical side of the equation, if I add back in the 30.9% non-purchasers, and assume that they at one time ALL wanted to build a business, that would still show that 49% of all who join a network marketing company did so for reasons other than building a business. But what are the Herbalife figures? And do Ackman’s figure come close?

According to the Morgan Stanley 3rd quarter Herbalife Report, 80% of those who join as distributors, never build a sales team. In other words, they are consumers of the products. So, we can take them out of the math for determining the real net figure of who is earning money in Herbalife.

Now, let’s look at some other figures as reported by Herbalife in the above mentioned Morgan Stanley Report. (These figures do exclude China due to different laws and marketing plan.)

52% Retention of Sales Leaders (2011)
56% Sales Leaders Activity Rate (2012)
24% Sales Leaders Advancing to 5K (2012)

So, of the 20% of Herbalife distributors who are builders (which is in line with the DSA stats), we can see that 56% are active and 24% are growing.

And according to the latest Income Disclosure Statement we can also see the following:

“Over 25% of Distributors reach the rank of Supervisor and above (“Leader”), qualifying them for additional compensation which is paid by Herbalife based upon their activities and those they have sponsored directly and indirectly. The annual gross compensation paid by Herbalife to all Leaders during 2011 averaged $2,900 (with a median level of $741). Over 39% of Supervisors are “Active” (defined as those who generated at least 2,500 points of volume in 2011 after becoming Supervisor). The annual gross compensation paid by Herbalife to Active Leaders during 2011 averaged $7,354 (with a median level of $637).

The amounts above do not include the income Distributors can earn from their retail or wholesale income, so the actual compensation can be somewhat higher, depending upon each Distributor’s personal-selling efforts. Also, the figures above are gross, not net income.”

But, what about the “fraction of 1%” making all the money as Mr. Ackman claims? False! Of the 20% of distributors who are actively building a Herbalife sales force 2.3% earn $97,000 or more. (see the IDS linked above)

5. Mr. Ackman, feels the regulators, specifically the FTC does not like Herbalife, and he claims that the information he has accumulated in the above presentation and at the website Facts About Herbalife will provide the FTC the information they need to bring action against Herbalife as a pyramid.

Well, I am not sure if Mr. Bill Ackman and his team realize that the FTC hates Barry Minkow far more than they do, anyone at Herbalife. I say this, because Mr. Ackman uses convicted short seller, and securities fraud felon Barry Minkow and his failed Fraud Discovery Institute as part of their evidence that Herbalife is a pyramid. Their other “expert is Robert L. FitzPatrick, who was a friend of Barry Minkow, and who MLM Advocate Len Clements has already proven is clueless about direct sales.

Then let’s not leave out the guess blogger over at MLM Attorney, Kevin Thompson’s blog, Robert Chapman. Chapman is the founder of Chapman Capital LLC. He totally disagrees with what Mr. Ackman is claiming all the way around. And of all folks he should know. In 2000 Mr. Chapman was an Advocate Investor against Herbalife.

6. Mr. Ackman states the reason he released the presentation and made the rounds at all the business news outlets was so he could save the Herbalife distributors who would be re-qualifying before January 31st for the new year.

Well, this doesn;t seem consistent with his above statement where he was clear that the target market for Herbalife distributors were low-income or unemployed people. In reviewing the demographics of the financial news outlets once again doesn’t seem consistent with Mr. Ackman’s statements:

CNBC

48.3 – Medium Age
43% – Attended College
76% – Own Home
$70K – Medium Income

Bloomberg

Bloomberg TV Viewer Profile

Income Level $150,000 and above
Education Level Bachelor’s and above
Occupation Level Top Management & C-Suite

FoxBusiness

57.1 Medium Age
$75,000 Medium Income
95% Own Home

msnbc

55.1 Medium Age
43% Attended College
70% Own Home
$55,000 Medium Income

(Stats come from Nation TV Spots)

So once again we see that Bill Ackman’s words do not seem to line up with the facts. But, many of people have been lured away from seeing the facts, with the payout is $1 billion dollars.

7. Mr. Ackman is in fear of his life because Herbalife CEO Michael Johnson stated “The world would be better off without Bill Ackman! Well let’s put that in context by watching the below interview…

So we can see that when heard within the context of the statement, Mr. Ackman doesn;t have to fear for his life. Well maybe his career life, if this stock play doesn’t bring him a home run!

You can review Mr. Bill Ackman’s full presentation by clicking here. Which might be good as I cover some of the slides…

Here are some additional resources you can review on the subject at hand.

FTC Staff Advisory On Internal Consumption

Direct Selling Association Facts On Internal Consumption

DSA On Legit MLM vs. Pyramid Schemes

MLM Editorial: Is The Empower Network The Next Zeek Rewards – What Does Your Network Marketing Company Say?

lawyers

Well, I am sure the title of this editorial “Is The Empower Network The Next Zeek Rewards?” caused you to pause and ask your own question… What is Troy Dooly talking about? Well first let me state right off the bat, I am not talking about the Empower Network being called a ponzi. No my thoughts go way deeper than legal issues, it’s about something far deeper… Behavior Issues… Behaviors of companies and distibutors!

Over the last few weeks I have heard from hundreds of folks via phne calls, emails, text messages and through my social profiles, asking me the same basic question… “Can my company terminate me for being in the Empower Network?” And folks this is the same question I heard from thousands of folks who in 2012 joined Zeek Rewards. It has caused me to pause and give this some thought.

I also reached out to some of the founders and executives of companies who have terminated independent business owners in their field force for ellegingly also promoting the Empower Network. After talking with both sides of this very hot issue, I have come to realize that here are some very strong simalarities to this current situation and those that Zeek Rewards affiliates faced not so many moneys ago.

First let’s look at the one common reason given by the company executives for terminating, subspending or sending threatening warning letters to their field force – Cross Recruiting! 

Now the majority of the time somewhere in the Policies & Procedures which more than likely you have not yet read is a policy governing being in another direct selling type of company. It might be in the same industry or niche, it might have a simaler compensation plan, it might not even look anything like your primary company. But based on the policy if you are in this type of company and you talk to ANYONE (well maybe not anyone, just anyone in your upline, crossline, or downline – except for your personals, or maybe even your personals) you can be TERMINATED!

Here are a few examples of some of these policies:

MLM Company #1

” MLM Company” conducts business in an ethical and credible manner, and expects all ID’s (Independent Contractors) to work ethically with their customers, with each other, and with the company. “MLM Company” permits no unethical activity and “MLM Company” will intervene when unethical behavior is evident. “MLM Company” reserves the right to use its best judgment in deciding whether certain ID activities are unethical and if determined so, are grounds for terminating or deactivating the ID position. 

If for any reason an ID violates any of the terms of the Agreement and/or these Policies and Procedures, MLM Company reserves the right to immediately deactivate or terminate the ID’s position. Such action by MLM Company will terminate any and all rights of the ID and any further payments of any kind and is effective at the time of said violation. Examples of unethical activity include, but are not limited to:

Cross-line recruiting (see below)

Cross-Line Recruiting:MLM Company strictly prohibits “crossline recruiting” which is the solicitation of any ID who was already referred by another ID. Directly or indirectly soliciting involvement of a referring ID, or assisting in the solicitation of a referring ID of any existing or pending ID into another sales  organization of which they are not currently an ID is also prohibited. Another policy IDs agreed to uphold when they joined this MLM Company…

“Non Interference and Exclusivity Policy:

During the term of this Agreement (and any renewals), I will not sell any other products for any entity competing with MLM Company. During the term of this Agreement (and any renewals) and for one (1) year thereafter, I will not solicit or recruit, MLM Company employees or Distributors, whether active or inactive, to participate in a network marketing program whether or not such marketing company offers products. I acknowledge that my violation of this provision will result in immediate termination of my Distributorship and payments of any kind.”

Troy’s Thoughts: Notice in the above policy, that the company “reserves he right to use its best judgement in deciding what is ethical or unethical behavior.” Not what I would call ID friendly, but hundreds of thousands of IDs agreed to the policy going in, and are not frustrated when it is used against them. Notice in the second policy the phrase “I will not sell any other products for any entity competing with MLM Company.” Although ambiguos in nature, the IDs signed that they agreed to this policy.  So the question that is not on the table is… What does “COMPETING” mean?

In the mind of independent distributors for this comapny, it means “selling competing products”, and I hear “But Troy, the Empower Network, doesn’t sell health and nutrition products, so I am not in violation!”

But, read the above statement again… “I will not sell any other products for any entity competing with MLM Company.” The phrase doesn’t same anything about “competing products” it clearly statesany entity competing with MLM Company. So when you join a different, direct selling company, MLM company, Network Markting Company, Affiliate Marketing Company… Be it the Empower Network, Ocean Avenue, ViSalus, Melaleuca, Zeek Rewards, or any one of two thousand companies who offer some form of multi-level compensation plan, the above MLM Company “reserves the right to terminate you!” Not because you are selling a “competing product” but because you are marketing an “income opportunity” for “competing inintity.”

Here is a more friendly Distributor Friendly Policy & Procedure covering the same issue of Cross-Sponsoring. But I want to add, that I doubt if many of distributors for this company have read it either, and although it is more distributor friendly, it does once again protect the company’s reputation first and formost.

MLM Company #2

“MLM Company AMBASSADORS are free to participate in other multilevel or network marketing business opportunities (collectively “Network Marketing”). However, during the term of this Agreement, AMBASSADORS may not directly or indirectly recruit other MLM Company AMBASSADORS or customers other than those they have personally sponsored for any other Network Marketing business.

Following the cancellation of an AMBASSADOR, and for a period of six (6) calendar months thereafter, with the exception of an AMBASSADOR who was personally sponsored by the former AMBASSADOR, the former AMBASSADOR may not recruit any MLM Company AMBASSADOR or customer for another Network Marketing business.

AMBASSADORS and the Company acknowledge and recognize that because Network Marketing is conducted through networks of independent contractors dispersed across the entire United States and the business is commonly conducted via the Internet and telephone, an effort to narrowly limit the geographic scope of this non-solicitation provision would render it wholly ineffective.

Therefore, AMBASSADORS and the Company agree that this non-solicitation provision shall apply to all markets in which MLM Company conducts business.” AMBASSADORS must not sell, or attempt to sell, any competing non-Ocean Avenue programs, products, or services to MLM COmpany AMBASSADORS or customers.For purposes of this provision, any program, product, service, or direct selling opportunity in the same generic categories as MLM Company is deemed to be competing, regardless of differences in cost, quality or other distinguishing factors.

If an AMBASSADOR is engaged in other non-MLM Company direct selling programs, it is the responsibility of the AMBASSADOR to ensure that their MLM Company business is operated entirely separate and apart from any other program. The following separation requirements must be strictly adhered to and include: (a) The AMBASSADOR shall not display MLM Company promotional material, sales aids, or products with, or in the same location as, any non-MLM Company promotional material or sales aids, or products; (b) The AMBASSADOR shall not offer the MLM Company opportunity or products to prospective or existing AMBASSADORS and customers in conjunction with any non-MLM Company program, opportunity, product or service; and (c) The AMBASSADORS may not offer any non-MLM Company opportunity, products, services, or opportunity at any MLM Company related meeting, seminar or convention, or within two hours and a five mile radius of the MLM Company event. If the MLM Company meeting is held telephonically or on the Internet, any non-MLM Company meeting must be at least two hours before or after the MLM Coompany meeting, and on a different conference telephone number or internet web address from the MLM Comany meeting.

Disciplinary Actions:

If you violate any of the Policies and Procedures, the Terms and Conditions of the AMBASSADOR Agreement, or engage in any illegal, fraudulent, deceptive, or unethical business conduct, we may, at our sole discretion, invoke any disciplinary action that we deem appropriate. Among the potential disciplinary actions are: Issuance of a written warning or admonition;

 Issuance of a written warning or admonition;

 Imposition of a fine, which may be imposed immediately or withheld from future Bonus or Commission Checks;

 Reassignment of all or part of your Downline organization;

 Adjustment of your AMBASSADOR status;

 Suspension, which may result in termination or reinstatement with conditions or restrictions; and

 Termination of your AMBASSADOR position. With respect to termination, the Founders Advisory Counsel, will have the final say with respect to any and all terminations.”

Troy’s Thoughts: Now although the second MLM Company has written out in deeper detail the policies, the end result is the same. If the Ambasador is found violating any of them, then the company “we may, at our sole discretion, invoke any disciplinary action that we deem appropriate.”

So, in both of these MLM Companies, if either one were to feel that the IDs or Ambassadors were violating any of the policies, they can take whatever actions they deem neccassarry to protect the MLM Companies Reputation and integrity of their field force.

NWM Company #3

Conduct of Household Members If any member of the Marketing Executive’s Immediate Household engages in any activity which, if performed by the Marketing Executive, would violate any NWM Company’s policy or any provision of the Independent Marketing Executive Agreement, such activity will be deemed a violation by the Marketing Executive. Non-Solicitation and Conflicts of Interest Marketing Executives are independent contractors and may be active in other business ventures while they are Marketing Executives for NWM Company. However, to qualify for compensation under NWM Company’s Compensation Plan, Marketing Executives have the ongoing responsibility to service, supervise motivate, train and assist the Marketing Executives in their Marketing Organizations. They also have the responsibility to promote NWM Company products and the NWM Compnay’s income opportunity.

NWM Company and its Marketing Executives have made a great investment in the establishment of organizations consisting of Customers and Marketing Executives. This constitutes one of NWM Company’s most valuable assets. NWM Company reserves the right to cease paying compensation to any Marketing Executive who recruits any NWM Company Customer or Marketing Executive to participate in another business venture. In order to protect the efforts of all Marketing Executives in building and maintaining their individual Marketing Organizations and Customer bases, and in order to protect NWM Company’s interest in the overall Customer base, Marketing Executives and all members of their Immediate Household are required to abide by the following policies: Non-Solicitation of NWM Company’s Customers and Marketing Executives:

(i) During the period that their Independent Marketing Executive Agreements are in force Marketing Executives and all members of their Immediate Household are prohibited from directly, indirectly or through a third party recruiting any NWM Company Customers or Marketing Executives to participate in any other business venture. (ii) For a period of twelve months after cancellation or termination for any reason of a Marketing Executive’s Independent Marketing Executive Agreement, the Marketing Executive and all members of his or her Immediate Household are prohibited from directly, indirectly or through a third party recruiting to participate in any other business venture any NWM Company Customers or Marketing Executives:

(1) who were in the Marketing Executive’s Marketing Organization or Support Team at any time during the term of his or her association with NWM Company;

(2) with whom the Marketing Executive had contact during the term of his or her association with NWM Company; 

(3) whose contact information (name, address, phone number or email address, etc.) the Marketing Executive or members of his or her Immediate Household has obtained at any time during the term of his or her association with NWM Company; or 

(4) whose contact information (name, address, phone number or email address, etc.) the Marketing Executive or members of his or her Immediate Household obtained at any time from another person who obtained the information because of any other person’s association with NWM Company.

The prohibitions under clauses (a)(i) and (ii) above include but are not limited to, presenting or assisting in the presentation of other business ventures to any NWM Company Customer or Marketing Executive or implicitly or explicitly encouraging any NWM Company Customer or Marketing Executive to join any other business ventures. It is a violation of this policy to recruit a NWM Company Customer or Marketing Executive to participate in another business venture even if the Marketing Executive does not know that the prospect is also a NWM Company Customer or Marketing Executive. It is the Marketing Executive’s responsibility to first determine whether the prospect is a MLM Company Customer or Marketing Executive before recruiting the prospect to participate in another business venture. (Please refer specifically to the definition of “recruit” in the Definitions of Terms at the end of these Policies.)

(b) During the period that their Independent Marketing Executive Agreements are in force, and for a period of twelve months after the cancellation or termination thereof for any reason, Marketing Executives and all members of their Immediate Household are further prohibited from the following:

(i) Producing any literature, tapes or promotional material of any nature (including but not limited to websites and emails) which is used by the Marketing Executive or any third person to recruit NWM Company Customers or Marketing Executives to participate in another business venture; 

(ii) Selling, offering to sell, or promoting any competing products or services to NWM Company Customers; 

(iii) Offering any non-NWM Company products, services or business ventures in conjunction with the offering of Melaleuca products, services or income opportunity or at any NWM Company meeting, seminar, launch, convention, or other NWM Company function.

(c)

(i) Violation of any provision of this Policy 20 constitutes a Marketing Executive’s voluntary resignation and cancellation of his/her Independent Marketing Executive Agreement, effective as of the date of the violation, and the forfeiture by the Marketing Executive of all commissions or bonuses payable for and after the calendar month in which the violation occurred. 

(ii) If NWM Company pays any bonuses or commissions to the Marketing Executive after the date of the violation, all bonuses and commissions for and after the calendar month in which the violation occurred shall be refunded to NWM Company. 

(iii) NWM Company may seek and obtain from the violating Marketing Executive both injunctive relief and damages for violations of this Policy 20. NWM Company, may, at its option, elect to enforce this Policy by lawsuit in a court of competent jurisdiction in Idaho rather than by arbitration. 

(iv) In addition to being entitled to a refund of bonuses and commissions and to damages as described above, in the event a person or entity violates this Policy 20, NWM Company and any Marketing Executive that experiences an adverse financial impact as a result of such person’s or entity’s violation of this Policy 20 shall be entitled to an accounting and repayment of all profits, compensation, commissions, remunerations or other benefits which the person or entity directly or indirectly receives and/or may receive as a result of, growing out of, or in connection with any violation of this Policy. Such remedy shall be in addition to and not in limitation of any damages, or injunctive relief or other rights or remedies to which NWM Company is or may be entitled at law or in equity.

(d) Violations of this Policy 20 are especially detrimental to the growth and sales of other Marketing Executives’ Independent NWM Businesses and to NWM’s business. Consequently, Marketing Executives who have knowledge that any Marketing Executive has violated this Policy must immediately report that information to NWM Company’s Policy Administration Department. The failure of a Marketing Executive to report such information to Melaleuca will also constitute a violation of this Policy. The names of those reporting violations of this Policy 20 will be held in confidence.

21. Proprietary Information and Trade Secrets By executing the Independent Marketing Executive Agreement, the Marketing Executive acknowledges that all information which is contained in the Marketing Executive’s Monthly Business Report, including names, addresses and telephone numbers of Marketing Executives and Customers, is NWM Company’s proprietary trade secret information. The Marketing Executive agrees not to disclose such information to any third party (except to existing or prospective NWM Company Marketing Executives or Customers for the purpose of promoting Melaleuca products and business opportunity) or to utilize such information for the purpose of promoting any other business opportunity at any time, whether during the term of his/her association with NWM Company or thereafter. The Marketing Executive acknowledges that such proprietary information is of such character as to render it unique and that disclosure or use thereof in violation of this provision will result in irreparable damage to Melaleuca and to Independent NWM Businesses. NWM Company and its Marketing Executives will be entitled to injunctive relief to prevent violation of this policy. If litigation or arbitration is required to obtain injunctive relief or to recover damages, the prevailing party shall be entitled to an award of attorney’s fees and expenses.

Troy’s Thoughts: Although the 3rd company which holds itself out to be a Network Marketing Company, and not a MLM or Multi-Level Marketing company, it has far stricter guidelines than the first two companies, and I want to state again that it is my professional opinion, than in all three cases that the minority or former and active Independent Disributors (IDs), Ambassadors and Marketing Exectutives read the Policies & Procedures before joining the company.

I will also contend that most of the former IDs, Ambassadors and Marketing Executives still have not read them. In the majority of cases, the only time the P&Ps get read is when an active field representive is terminated!

Now let’s take a look at how the terminated field representivie feels. 

Since I used the Empower Network & Zeek Rewards as my example because these two companies have caused the most contriverial terminations in 2012, I want to stick with them.

In reviewing thousands of communications, the common confusing issue, is that Independent Business Owners who join a primary company, and go find an online system with a compensation plan, do not beleive they are Cross-Sponsoring when in their business plan, the system is there to help them build the primary business. They do not see it as cross-recruiting when they find some other direct selling company that may offer fishing or hunting products and some independent distributor in their primary company contacts them about this hunting anf fishing comapny, or just joins.

I can totally see their point of view, as I can see the company’s point of view. The legal question is which view is legally binding? Let’s see what the best legal minds in Direct Selling have to say about these issues. 

Kevin ThompsonHow Should An MLM Leader Leave A Company?

Kevin ThompsonMaster Distributors – Good or Bad?

Spenser Reese Keep Your Hands Off My Downline

Jeffrey BabnerNoncompetition Agreements 0 Enforceable?

Jeffrey BabnerCross-Sponsoring Rules

Gerry Nehra & Richard WaakIndependent Contractors, Things To Think About

Gerry Nehra & Richard WaakThe Integrity Of The Lines Of Sponsorship

David EisensteinThe Perfect Storm of Company – Distributor Conflict

David EisensteinThe Perfect Storm Revisited

David EisensteinArbitrary Downline Moves By Companies a Signal of Lack of Integrity

David EisensteinMLM Couple Receives $650,000 In Wrongful Termination Case

Rod CookMLM Termination Pain – The Cost To Fight For Your Money

IRS Publication 911Independent Contractor .vs Employee (Currently not being printed)

Critics Use 2008 Forbes Article To Bash Orrin Woodward, T.E.A.M. and MLM, But Is The Article Unbiased Or Just A Hack Job?

OrrinandJohn

First off I want to be perfectly clear, I love and read Forbes consistently! However, in reviewing the Forbes article titled “Climb To The Top”, about Orrin Woodward, Amway, Monavie and Network Marketing aka Multi-Leval Marketing, I found it biased, and the information either provided to lead the readers to a predetermined outcome.

I will provide the complete article at the bottom of this editorial. In the mean time I want to take a specific look at the sections I found with the most blatant bias.

Forbes - Orrin Woodward - Climb To The Top

Orrin Woodward Article

According to the FTC General Counsel Debra A. Valentine a illegal pyramid is “They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. ” You can read her full statement for INTERNATIONAL MONETARY FUND’S SEMINAR ON CURRENT LEGAL ISSUES AFFECTING CENTRAL BANKS by clicking here.

Notice the Ms. Valentine is very clear “not based on the sale of goods to the public, and the reporters knew this fact.

Forbes Article - Climb To The Top - Orrin Woodward

What I find very interesting in the reporter’s comments is they make it sound as if this is some huge amount to pay to go to a sales, motivational or leadership conference. See below two of the organizations and see how much more their tickets are for an event. Then give some thought to the fact, neither Tony Robbins or Catalyst offer a compensation plan. Seems the ticket prices are very much being sold at fair market value. (See Below)

Unleash the Power Within - AnthonyRobbins.com

Catalyst East - Catalyst

 

Forbes - Climb To The Top - Orrin Woodward

Just like Tony Robbins, Zig Ziggler, Jim Rohn, Tom Hopkins, Chet Holmes and many others, Orrin Woodward and T.E.A.M. were and still do sell DVDs, CDs, Books, Conferences, training etc, through L.I.F.E. which help people in their perosnal and business lives. Yet the reporters make it sound as if this is not normal or legal.

Again the reporters lead their readers into coming to the conclusion that MLM/Network Marketing/ Direct Selling is some form of illegal pyramid. Yet, have you ever heard of any illegal organization with their own Trade Association?

Now I will agree that all hierarchies, religious, political, governmental, military, social, non-profit, sales, etc are shaped as a pyramid. Yet, when you add members or customers to the pyramid, it becomes a diamond shape. Illegal pyramid’s have NO customers, because they do not sell a product to consumers.

Forbes - Climb To The top - Orrin Woodward

In reality the sales pyramids are side by side. MonaVie unlike Amway, gave Orrin Woodward and T.E.A.M. their blessing to launch a stand alone network marketing company focused on successful living, personal development, and leadership development. After hiring Grimes & Reese one of the most respected law firms in direct selling, they were finally after years of legal battles with Amway, see their dream company true.

But, the reporters never took the time to find out the facts; or at least if they did they never reported them. Instead they decided to write their article in a biased manner in order to lead the reader to predetermined conclusion. Although I have come to find this a new norm in many media outlets, I expect more from Forbes reporters.

Sadly once again the reporters should know better than to write in such a biased manner. As you will see below they fully understand MLM/Network Marketing/ Direct Sales is nothing like a chain letter.

Forbes - Climb To The Top - Orrin Woodward

I found this to be some of the most disgusting part of the article. Here the reporters do not take into account if this relationship could be repaired. Instead they take the words of a hurt, and possibly angry husband, and make his wife out to be some brainless woman. I wonder if they took the time to find out if the husband was also a member of T.E.A.M., Amway or even MonaVie. I wonder if the wife was interviewed, if we would find some additional issues about the husband. At no time did these reporters seem to think about the ramifications of their reporting. How easy it would have been to NOT mention the name of the husband to protect this family.

Forbes - Climb To The Top - Orrin Woodward

Well, if you read this and are in sales of any kind, I sure hope you are investing in sales tools, conferences, to better yourself and your team. I have had the privilege of being successful in sales since I was 12 years old, and the one thing I have learned is personal development is the key to success. Unlike the reporters I have listened to hours of T.E.A.M. and L.I.F.E. DVDs and CDs. I have read every book Orrin Woodward and Chris Brady have written, and I have found value, priceless in some cases in what I have read and heard.

As someone who has bought over $10,000 dollars of personal development, team building, sales, marketing, better parenting, closer marriage, and how to be a better leader, plus another $5,000 to $10,000 dollars in sales, marketing, branding and business development conferences,  I can say with confidence, the tools T.E.A.M. and L.I.F.E. produce are worth the price. Especially since the majority of what they sell, has been written by main stream authors who are experts in their profession.

Forbes - Climb To The Top - Orrin Woodward - TEAM

I am not going to dig to deep into this right now. In a future article I will cover in detail what happened between Orrin Woodward and Amway, based on personal interviews, court records and documentation I have reviewed.

Forbes - Climb To The Top - Orrin Woodward

Above I mentioned the reporters were fully aware that Orrin Woodward was not leading some pyramid scheme, or that MonaVie or Amway were illegal pyramid schemes. Well based on the fact they knew the Federal Trade Commission had already covered this issue. In the article the FTC General Counsel made the following statement.

“The Commission took its first concerted action against pyramid schemes in the 1970’s during a boom in home-based business and MLM or direct selling. One-on-one marketing became common for many consumer items — from cosmetics to kitchenware, and Tupperware™ parties became an icon of the era. Unfortunately, the rise in legitimate multilevel marketing was accompanied by a surge in pyramid schemes. Those schemes played off the popularity of MLM or network sales but paid more attention to networking than to selling actual goods. “

“In In re Amway Corp.,(19) another landmark decision from the 1970’s, the FTC distinguished an illegal pyramid from a legitimate multilevel marketing program.”

Read the full statement here!

The reporters are not rookies, they were pros. Their intent in writing the article as they did was a deliberate attempt to mislead their readers it seems.

Forbes - Climb To The Top - Orrin Woodward

I added this small clip because after reading it I came to the conclusion, these reporters really do not understand how many people are seeking hope in their lives. If they had, they might not have used the names of a family who were already having marriage issues.

Without a doubt, no organization, company or leader is perfect. Throughout life we all make mistakes, sin, and if we are the leaders we claim to be, will ask for forgiveness and continue our own path of growth.

But, when outsiders write articles without doing the deep due diligence, I think it is an injustice to everyone involved.

One parting thought Orrin Woodward was in the middle of a multi-million dollar lawsuit against Amway at the time this article was written. Amway founders are some of the largest donators to the Republican Party… Steve Forbes is a former Republican Presidential Candidate and long time friend of the family. Plus Amway has been a long time client of Forbes Magazine.

Forbes – Climb To The Top – Orrin Woodward

Zeek Rewards And Their Affiliates Seem To Have Been Hit By International Cyber Crime Gangs & Bloggers With Possible Hidden Agendas

ZeekRewards - The Rewards Program of a Lifetime!

Over the last few weeks I have been researching some of the blog reports from around the country, and comments written by Zeek Reward affiliates. What I have been able to narrow down is what seems to be an attack from Cyber Crime Gangs operating out of at least six counties known as honey-pots for credit card fraud.

However, some bloggers seem to have decided to exploit the situation which could cause harm to Zeek affiliates. I wonder if some of these bloggers have a hidden agenda or may be working for a Zeek competitor. In any case, if this can happen to Zeek Rewards, and Zeekler, then it can happen to any reverse penny auction company in business today.

Oz, over at Behind MLM has been the hardest on Zeek Rewards over the last few months, putting up articles which at first glance would lead the readers to wonder if Zeek Rewards is the one perpetrating the fraud. This type of blogging in my opinion is for sensationalism only, and doesn’t provide solid facts or solutions to affiliates or potential affiliates looking into the Zeek Rewards business model.

I do want to be very clear, I think Oz is a fantastic blogger, who the majority of the time provides rock solid reviews and information. I personally review everything he writes even when it doesn’t have anything to do with the U.S.A., but the last few articles written on Zeek, in my opinion fall below the quality I have seen come from him.

In the latest article he titled it “Zeek Rewards banning members due to politics?” Now without a doubt he added the “?” at the end of the title, yet when reading his article it is clear he is leading his readers to assume Zeek Rewards banded certain countries because of politically differences. This is totally FALSE!

Although I have never met Paul Burke, I can say that in researching his past, he is a strong believer in the U.S. Constitution, giving people the freedom to voice their position to any political disciple. Even though he seems to be very patriotic, he is also seems to be a firm believer in the spread of capitalism worldwide.

I have met Dawn Wright-Olivares and Alex de Brantes personally. In interviewing them, and in researching their pasts one can come to the solid conclusion, they do not believe in censoring anyone’s Right to Expression, be it in politics, or anything else.

As I read Oz’s editorial, I was able to quickly realize what seems to be happening. (I have an extensive background in fighting cyber-crimes at all levels)

Understanding that the average person may not realize the magnitude of the rise of international organized crime organization and the countries they operate out of I figure now is as good as any to give some additional information. It doesn’t matter whether you are in Zeek Rewards, BidiFy, Co2 Rewards, DubLi Network or any other online international auction, mall or gaming site, you may be at risk as well as the company.

In the case of Zeek Rewards, they seem to be taking proactive measures to STOP the fraud and to protect both their reputation, and the financial security of their affiliates. We all know they have publicly made it clear, these cyber-crime credit card fraud rings, have hit them in the last few months, and each time, these cyber-terrorists attack, Zeek Rewards, tightens their security net.

I have already suggested to Zeek Rewards, that they partner with some of the following organizations to help bring these cyber-crime organizations to justice.

FBI Cyber-Crime Unit
U.S. Secret Service Electronic Crimes Task Force – The majority of the top ten most wanted are cyber-criminals.

I have no clue if Zeek Rewards will make it on their own as a viable business model. But I do know they deserve the same chance as any other business. I may not fully understand the business model, and even when I do, my professional opinion may still question its viability. But, I do believe the people who have become affiliates deserve to know the facts, not propaganda, so they can decide if the risk is worth the rewards.

I am going to provide some links, images and videos to show that the credit card fraud Zeek Rewards has experienced is not isolated to their business model. But, it is something that all Zeek Reward affiliates need to be aware of, and must help the company fight against. I’ve seen first hand the financial devastation people go through, when these international cyber gangs steal hundreds of thousands of dollars from unsuspecting people.

Now, some of you may want to use this article to show that Zeek has security issues. Well before you start counting all the raiding you can do of Zeek affiliates to your company, you may want to watch this video. Your company may be next!

Oz, in his editorial listed the following six countries as countries Zeek Reward’s has closed off from access to their system:

Serbia
Slovenia
Belarus
Egypt
Croatia
Macedonia

Each of the above countries link to information on the activity of cyber crime in their respective countries.

I have also heard that some affiliates are concern because they have not received their commission’s. If commissions have been held, I can state with confidence, it is because the company is weeding through some of the outside fraud that has occurred to determine how much is going back in chargebacks to the merchants. If I were an affiliate, I would rather wait on my net commissions, than to get a chargeback myself down the road.

Below I will show a couple of examples of how Organized cyber Crime Organizations work.

I will be going to Zeek Rewards later this month to talk with the founders and executives of the company. When I return, I will share what I learn.

MLM Editorial: MLM Is About Giving People A Second Chance In Life

MLM Haters will tell you MLM is just a bunch of money hungry scammers, talking unsuspecting people out of their hard earned cash. And where as without a doubt this has happened, just like it has on Wall Street, this is not the normal business model, not is if the heart of the network marketing community.

Take a few minutes and what this video, it will show you what the heart of the Network Marketing community is all about!