Is Herbalife a MLM pyramid scheme that markets ineffective supplements?

Illustration by Colin Livingstone

"You buy goods from the company and try to resell those goods to others whom you also try to recruit as sellers themselves to build what’s called a “down line.” You get money from the company based on orders placed by your down line, so, if you manage to recruit enough people into selling the products, you could make some serious money."
http://www.outsideonline.com/fitness/bodywork/performance-plate/The-Huge-Supplement-Scams-That-Arent-Going-Anywhere.html


This article highlights a few key points that I want to emphasise:

• It looks and behaves like an illegal pyramid marketing scheme but Herbalife insist it is a Multi Level Marketing scheme (MLM).  
• While the success of a MLM will benefit from selling products that actually work, this is secondary to the model.  You can sell anything from crap to top quality via a MLM.  The key to MLM success is the hype and the ability to pull in new recruits with fresh money into the bottom of the pyramid.
• The people who make the money are the ones at the top of the pyramid, or the agents who start a new territory (a new pyramid within a larger pyramid).  90% of those who are sucked into these schemes end up losing more than they will ever make.
• With regards to the vitamins being sold by agencies like Herbalife, a disproportionate percentage of the cost goes into the flash marketing.  The ingredients may end up being the cheapest synthetics available from wholesale sources and of dubious benefit.
• If you are going to take vitamins and other health supplements it is advisable to enlist the advice of a trained nutritionist and one that tests scientifically for nutritional status (sadly, very few do!).  Otherwise how do you know you need extra of this or that?  Its hardly any surprise then that most research shows that taking these supplements is usually without benefit.

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The advice in these articles is given freely without promise or obligation. Its all about giving you and your family the tools and information to take control of your health and fitness.

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Is Life Force Body Balance good for you and good value for money?

I was reading your website (found you on google when I searched MLM scams etc and found the comments on MLM very interesting. I have a traditional business model so I do not know much about these sorts of companies apart from the fact that the people that always approach me never seem to look well off .

I get approached most weeks for something to do with health and wellness usa companies by well meaning customers or colleagues and have declined so far

My dilemma is I want a product I can take each day to help me regain energy, and to rid myself of the aches and pains, plus to generally increase well being

I do a lot of physical work and now I am starting to suffer from all the accidents over the years and to many back strains etc

However I know all the MLM companies products are overpriced to pay everybody so do you have a recommendation of a daily supplement that will help me as above

There is one from a company (the latest approach) which caught my attention but as usual its $50 a bottle and they recommend you start with 8 per month ouch!!

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Gary comments:

On the face of it the product referred to looks as good as any others. Quality is not the issue. What is at issue is the business model and the price of the product. These products are priced to direct the customer into the eel trap that is the business model of multi level marketing (MLM) schemes.

These schemes do not work for the vast majority of participants. MIM schemes generate great wealth for those at the top of the pyramid while leaving countless thousands of people at the bottomwho have lost money. Due to the hard sell methods employed these schemes can be family wreckers. They have the potential to destroy workplace relationships and rub out community goodwill. Poeple have been so distracted their day jobs have suffered and some people have even lost their jobs.

As you read this you will gather that I am not on the Christmas card lists of multi level pyramid scheme marketers. Here are all my articles about these pyramid schemes so that you can get a better idea of what I am going on about.

So, take care and try not to get sucked in by the hype and the promise of overnight wealth. Even if the product is "endorsed by doctors" so was cigarette smoking at one time.

If you are suffering aches and pains and feel your health could generally be better than it is, it is better to develop a nutrition plan that is customised to your specific needs, rather than a one size fits all solution like a vegetable juice drink that costs $50 a bottle.

I do like the Active Elements programme to kick the ball off because it helps me to identify a person's health issues and specific needs. For a general supplement I quite like the Balance Sports Multi for active people. You could add Nutra-Life Fruitful Greens or Berry Brights. These are good value and can be added to smoothies. I like to add a couple of big spoons to a big bowl of fruit salad which we keep in the family fridge. It is delicious when had with my home made yoghurt.

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How can I open my son's eyes to see the truth about MLM schemes and Monavie?

Really appreciate your comments about MLMs. I have tried to do some research on Dallin Larsen, the head cheese over at Monarch Health Sciences (Monavie)...so far, nothing. Are you aware of any legal action in the States or NZ regarding this company? My son is interested in selling the "berry juice" and I'm trying to open his eyes without being the discouraging father.

Regards
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Gary Moller Comments:
I have not looked into Monavie lately; but have had a number of approaches by various well-intentioned people recently to sell the bottles.

As one father to another, let me say that you are probably the last person to save your son from the clutches of yet another predatory pyramid scheme. Sadly, their methods border on brain-washing and your son must take care. Hopefully there is a mature and sensible person nearby who can keep an eye on him and assist him with making the best decisions for his career and financial security.

One thing about MLM adherents is their evangelic zeal. I am surprised that I have not had an MLM Fatwah taken out on me yet for my heretical comments.

There is always the same formula: A brilliant scientist makes a huge discovery; rather than allow the big multinationals to get hold of it, he forms a company that brings this miracle product direct to you. There is always the same sales pattern that focuses on a prospect's dissatisfaction with life, desire to be independent and to be wealthy and important. To be the head of their own business, to own a flash car and to be lauded by thousands for their business brilliance. The process bears a remarkable and disturbing resemblance with Christian fundamentalist brain-washing. The conferences and training programmes, the glitz, the glamour, the Armani suits and the flashy dental work are all designed to pull the new recruit in so tight and so deep that they can see nothing else. They hand over their money and work their butts off. Few ever get a profitable return, losing friends, families, workmates and even their regular jobs in the process.

"If you're tired of living paycheck-to-paycheck, knowing all your hard work is building someone ELSE'S bank account and not your own, here is a way you can change all that and finally begin working toward the kind of life and lifestyle you've always dreamed of having.

My own experience has shown me that having a business of your own is by far the best way to get out of debt and gain control over your TIME and your FUTURE."

Yeah right Mate! We have heard this spiel before! Same pitch, different product.

Mona Vie is nothing more than a slightly bitter tasting berry that can not claim to be any more nutritious than, say, a blueberry. At $70-90 a bottle, it sure must pack some nutritional punch! Not likely! Even if it does pack more punch than a blueberry, at $5.50 a half kg from Pak'n Save, I can buy a hell of a lot of blue berries for 70 bucks. So, if blueberries are not quite as good why not just eat more of them? Why invest in a product that comes from land that is clear-felled Amazon rain forest? Mona vie has got that covered by setting up charity for the now landless and the destitute peoples of Amazonia. Here is the link to what I regard as little more than a cynical conscience balm.

I have written about MLM's and Monavie before (please click on the key words below), noting that one becomes a nutritional expert by reading just a few pages of notes. In total, I spent the best part of $60k and several years on my university education and even then I think I barely know enough to advise on human nutrition. The fact about Monavie is it is not really about nutrition; it is a pyramid selling scheme that makes those at the top very rich. The fact there is a product of any kind at all is due to the need for something tangible to hang the scheme on and to make it technically legal in the eyes of the law. Whether any product is sold or not, the Suits at the top make a killing off the poor suckers at the bottom of the pyramid. When it collapses, the next wonder product is wheeled out by the suits under a new company. Mona vie is just one of a whole succession of near identical get rich quick pyramid schemes that have come and gone over the last 3 or so decades.

My advice to your son is to stay clear of such schemes and to stick to a good honest regular job and build a real career.

In the interests of fairness, the owners of Monavie are invited to respond by using the 'Comments" function below this posting.

Getting fleeced by Multi Level Marketing (MLM) schemes

I have warned people about pyramind schemes - oops! MLM (Sorry for the Freudian slip).
As a health and fitness professional, I receive approaches every week. USANA is one of the big movers and shakers. Read my earlier posting about these parasitic scams.

Did you know:

• 67% of USANA distributors never make a cent from their wonderfull business
• 86% never make enough to cover their monthly minimum purchases.
• 72% of the compensation goes to just 2.6% of the agents

The fact is this: If you are not high in the food chain then you are sure to be sucked dry by the parasites above you.

These schemes poison relationships, ruin friendships, create tension at work and cost you money and damage your self esteem.

Disease Alert - Multi Level Marketing Scams

Women tennis players to get approved supplements
Last Updated: 2006-08-23 14:13:10 -0400 (Reuters Health)
By Pritha Sarkar
LONDON (Reuters) - "Players on the women's tour have been given the green light to take certain vitamins and health supplements without the fear of failing a drugs test, the WTA Tour said on Wednesday.
Tennis professionals have been wary of taking nutritional supplements ever since the men's tour was rocked over two years ago by a series of failed dope tests that were eventually blamed on contaminated supplies.
In order to ensure players on the women's circuit do not suffer a similar fate, the governing body WTA signed an agreement that will provide competitors with products that are guaranteed to be free of any substances prohibited by the World Anti-Doping Agency (WADA).
Products from USANA Health Sciences Inc., a leading globalvitamin and health supplement manufacturer, will help ensure that players who wish to take vitamins and supplements are able to maintain fitness required to compete at the professional level, without fear of violating the rigorous WADA standards."
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Gary Moller comments:
I wrote this article several months ago; but have held off publishing because it might cause a hostile backlash and get me offside with some influential sporting types. Well, here goes....

The tennis article above also appeared in a NZ Academy of Sport Newsletter which is unfortunate. It is unfortunate that a Multi Level Marketing (MLM) company had burrowed its way into professional tennis. Those in charge should know better. Worse, still is that this is being publicised by a NZ Government agency - the NZ Academy of Sport.

Because of my work, health website etc, hardly a week goes by that I am not subject to some kind of MLM proposition. It usually starts with a carefully pitched email with a slick video presentation, an invitation to attend a meeting at a friend's house or an invitation for an initimate coffee. Despite all the promises of wealth, lifestyle and independence, I seldom take up the invitation to attend and have steadfastly refused all approaches to join. Let me explain why:

Who gets the flash car?
It is reported in Australia that there are an astonishing 500,000 MLM participants selling $1.2 billion worth of goods and services each year. Interesting: This works out to $2,400 gross sales per year per participant. If the comission rate is a generaous 10% (It is actually works out to more like 2%, but let's be very generous) then the average real income is about $240 - hardly a living wage. My impression is that 99% of those who sign up for these schemes lose more money than they ever get out. I also suspect that much of those claimed millions of dollars of product sold through these schemes is gathering dust in the back of garages and basements or consigned to landfill.

MLM schemes are a disease:
They infect participants with MLM Blindness and they eventually suffer a fatal loss of family, community and friendships. MLM blindness means they can not see how they look from the outside. They are oblivious as friendships unravel, social and communuty groups are poisoned. They are unable to see that MLM is the reason why friends, family and work mates avoid them. Neighbourhoods are turned into market places that are open season for exploitation.

The Televangelism connection:
A common "Ra, Ra! Happer Clapper" theme runs common to most, if not all MLM schemes: It starts with the Founder, a self-awarded brilliant scientist who discovers the Elixir of Youth who then develops his own unique range of products. Articulate, jet black hair, brilliant white ivories, complete with brow-lift and Italian tailored suit make up the package. Unlike most scientists I know, he has the gift of the gab to make up the perfect promotional package. The pitch, the promises and the blind fervour all remind me of the exact same model that is modern religious fundamental evangelism marketing.

By writing about MLM in this way I know that I am going to be subjected to criticism on a par with what one would expect from religious extremists. Actually, there is little difference, nor is the brain-washing methods involved in building the MLM armies of disciples, most of whom end up working for nothing other than to increase the profits of those at the top of the scheme.
Overcoming the guilt factor of exploitation by doing good works:
The slick marketers who devise these schemes have every base covered. Selling over-priced products that probably don't work to your family, workmates and neighbours site better on one's conscience if the seller knows some of the profits go to homeless orphans in a 3rd world country that has had its indigenous agricultural base and rain forests destroyed to make way for the foreign owned plantations that produce these so-called health products. Some even go a step further and urge participants to donate to their charity!
MLM friends are of the shallow kind:
They are your friend for as long as you are a tempting prospect. The friendship is fleeting. Glad-handing and vacuous smiles do not endure.

MLM schemes are callous business models:
MLM schemes are based upon the ultimate failures of others. This is a callous business model that has no controls on expansion or any care if it exceeds market saturation. The only ones to profit are those at the top of the pyramid (Did I mention the unmentionable "P" word?) These schemes are doomed by design; to profit you must be in early. Those in late, will lose their money to those above. Its all about profiting off the failures of others.

Where does the money come from?
Sure, money can be made from these schemes, but where is the money coming from? Is it coming from the product sales or from the recruitment of others below? We all know that the real attraction of MLM is the pyramid. The product, be it vitamins, cleaning agents or telephone calling cards, is merely an over-priced technicality, there to only avoid being labeled an illegal scheme.

Here's the maths:
MLMs work by geometric expansion, the same way that one female mouse can produce a thousand offspring within a year. You sponsor ten who sponsor ten and so on and so it goes. However, there is a problem and that is rapid and inevitable market saturation. At just three levels deep this would be 1,000 people. At six levels deep, that would be 1,000,000 people believing they can make money selling a product that is over priced and not really needed. A small country like New Zealand is quickly saturated and there are inevitably many losers. These schemes are doomed by design. Go onto some internet sports nutrition forums and you will discover that many correspondents are selling a scheme. At the time of writing, USANA was King of the MLM nutrition schemes here in NZ. It will soon be replaced by the next scheme such as this one: http://www.mymonavie.com/StephenBell/opportunity_payplan.asp This is an outrageously over-priced fruit juice with some very slick marketing. Be wary of it.

MLM and professional ethics:
What about the ethics of health professionals like doctors being involved in MLM schemes? Being part of a MLM health supplements scheme compromises professional judgement to pick and choose which supplements to recommend a client, if any, and to supply them at the best price and quality.

There are no magic elixirs of youth, supplements that cure cancer or turbo charge sporting performance (Legal ones anyway!). Supplementation should be carefully considered as part of a number of measures to improve or maintain health, including a careful analysis of lifestyle, diet and training methods, if an athlete.

Furthermore, the Dr-patient relationship threatens to become most unhealthy the moment she or he enters a MLM scheme - parasitic in fact. The way the MLM supplements are priced, the patient can only afford them if he or she becomes an agent and brings friends, family and workmates into the scheme.

As much as possible, the health professional should remain above commercial influences, able to provide impartial advice that is based on evidence - and the best prices.

Who do you get your health and nutrition advice from?
Would you have your neck manipulated by a person who learned by attending a weekend course in a luxury resort, or would you go to somebody who trained for 6 years in a university under the watchful eye of a learned professor of chiropractic medicine? The choice is easy. On matters of health, including nutrition, consult a qualified health professional, rather than a self-appointed expert who had no assignments to hand in for marking and no exams to pass. Their only requirement to ply their products is to hand over $200 for the MLM marketing kit and buy a crate of product samples.

MLM schemes are all the same
Same breed of wolf - different disguises. The only difference between them is the name on the building, stationery and the dubious products they ply to gain a facade of technical legality.

They leave behind them a trail of disapointed people who are out of pocket, feeling lonely, angry and cheated.

Omega Trend, Amway, Nu Skin, USANA etc, etc and now we have Monavie