Saturday, 22 July 2017

Will these schemes make you rich?

Last week it was Herbalife, the week before it was Amway. They’re two of the largest Multi-Level Marketing schemes in the world and they make a tremendous amount of money. Well, the people at the top of the pyramid do but that’s all. Their own published earnings statements show that the overwhelming majority, at least 90% and many experts think more than 99%, either make nothing or even lose money from joining them.

Maybe you’ll stand a better chance with one of the smaller schemes instead of these MLM titans?

No, they don’t work either.

What about World Ventures, or as it now calls itself, Dream Trips?

We’ve been warning people about the World Ventures pyramid scheme since 2009 when they took over an earlier pyramid scheme called Success University. World Ventures and Dream Trips promise fantastic holidays in exotic places but they’re rarely clear that none of these holidays are free. You have to pay to join the pyramid and then all you get are discounted holidays. You still have to buy the holidays, just at a slightly cheaper price. And here’s a thing. A discount isn’t a product, it’s a reduction in the price of a product but maybe that’s just me being pedantic. What World Ventures is really all about is paying to join a pyramid-structured scheme in which you do your best to recruit multiple layers of people beneath you, just like any other pyramid or Multi-Level Marketing scheme.

The interesting thing is that, like Herbalife, World Ventures publish an "Income Disclosure Statement" (124kb pdf download) in the USA every year and just like Herbalife their 2015 statement makes interesting but disappointing reading. Yet again the vast majority of the money is earned by a very small proportion of the people, the ones at the top of the pyramid.

Referring to what they call their “Independent Sales Representatives” (“IRs”), they report that "22.24% of all IRs earned a commission or override, while 77.76% did not". In other words, more than three quarters of all their American recruits made nothing from the scheme. Nothing at all.

Furthermore, more than two thirds of all the money is made by the 3.7% at the top of the pyramid. 84% is earned by the top 19%. To put it another way, 81% of the recruits who earn money have to share just 16% of the money.

So like the other schemes, if you're at the top of the pyramid you're doing very well. The 1 in 14,000 people at "International Marketing Director" level earned an average of $409,280. The 1 in 20,000 described as "National Marketing Director" have an annual income of $238,645.

Of the small proportion who made any money, the average income was just over $1,300 a year (about P13,000) but that's not a good indication of what the average recruit will earn because the figures are distorted by the tiny proportion at the top who earn a fortune. The median income level is a much better illustration of what you can expect to earn. That's a meagre $150 per year.

And yet again, these amounts refer to income, not profits. These figures are before the recruits took account of all the money they had to spend on travel, accommodation, electricity, internet access and the coffee and drink they had to buy when they did their best to recruit other victims into this scheme. The evidence suggests that most people earn less than they spend trying to make the money. So they lose money.

And don’t forget that less than a quarter of all the recruits earn anything. These figures just refer to the 22% of victims who earned anything at all.

So no, you won’t make any money from joining World Ventures or Dream Trips, you’ll just waste a lot of money, energy and time. Don’t take my word for it, their own figures say so.

Ok, what about Tupperware? They have real products, don’t they? Do people make money from them?

Again, no. The figures Tupperware revealed in their 2016 Income Disclosure Summary (39kb pdf download) in Canada were equally poor. To begin with, almost half of the 37,000 distributors were described as “Inactive, meaning that they were “participants that have earned some commissions from the sale of products, but have not achieved a minimum of $500 in personal retail sales”. Of the remainder, almost all of them, 94%, were in the lowest category of “Consultant”. They earned the equivalent of just P3,800 in a 10-month period. Again that was income, not profit, not taking into account the costs of selling all those plastic products.

Only 40 out of the 37,000 Tupperware distributors in the entirety of Canada earned more than the average annual wage. 97% of them made less than one-tenth of the average wage.

Tupperware, like Amway and Herbalife, is extremely top-heavy. 53% of all the money earned went to the top 6% of the people, leaving less than half of the money to be shared by the other 94%. You can see how uneven it all is.

Here’s the secret about Multi-Level Marketing schemes and their cousins, pyramid schemes. They’re all the same. They’re all based on a Get Rich Quick promise that’s actually a deception. While the people selling the scheme will promise holidays, exotic lifestyles and wealth this is all are lies. These promises are simply not true and many of the people doing the recruitment know this. They know they’re not making any money and that the only way they might do so is to recruit other people into their position, to suffer the way they do.

Over the years we’ve examined dozens of Multi-Level Marketing and pyramid schemes and they’ve all been the same. They’ve all, every single one of them, ended up with people poorer, more miserable and with a trail of alienated friends, relatives and colleagues who’ve been pestered into joining the scheme. Not once have we encountered a scheme that has made anyone money. Not once. So why would the next one be any different?

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