MLMs sending people into debt and psychological crisis

[Darth Penguin]

Jamberry, nail wrap seller, shuts down leaves thousands of sales reps in a jam

Jamberry, a multilevel marketer of nail wraps and other beauty products, faces accusations of stiffing thousands of nonemployee salespeople after the company informed employees in a late-night email Wednesday that it was their "last official day" of work.
"Please come to the ... office at Noon on Thursday for a discussion on what this means regarding health insurance, 401K, and other benefits," Mark Brown, Jamberry's vice president of human resources, wrote in an email provided to CBS MoneyWatch.
The fate of Jamberry's more than 50,000 nonemployee sales consultants isn't clear. A memo sent to consultants Thursday afternoon confirmed that the Utah-based company is in "foreclosure" and that "any product, gift cards, swag, marketing or event purchases made prior to 11:59 p.m. MT on June 28, 2018, are ineligible for (a) refund from Jamberry." The company scrapped plans for an "International Conference" planned for the Gaylord Resort in Nashville, Tennessee, for later this year. It also scrapped "incentive trips" to Costa Rica and Thailand for top performers.

[Ciel]

What a hard way to find out that they are out of cash and trips. Says a lot about the management for keeping the news delayed so long from the consultants.

[Darth Penguin]

15 biggest lies about Multi level marketing companies you need to stop believing

You’ve probably seen some of your friends advertising MLM products on Facebook or texting you out of the blue asking if you’d be interested in a “unique business opportunity.” But are these MLM businesses legit, or are they pyramid schemes? And most importantly – is anyone getting rich from them?

Multi-level marketing, also known as direct selling or network marketing, has become a popular way for people to make extra money on the side. Amway is one of the oldest and most successful MLM businesses – but they also have several lawsuits pending and plenty of unhappy former sales reps.

There’s a lot of information out there about MLM companies, but not everything is accurate. Ahead, discover the biggest lies about multi-level marketing companies you need to stop believing.

[Darth Penguin]

The 10 ugly truths MLMs don't want you to know

Many MLM reps love to describe themselves as ‘business owners’ (or a #BossBabe) and will even emotionally blackmail family and friends into supporting them as a ‘small business’. But they’re not business owners – they’re unpaid sales reps.
Unlike a real business owner they don’t get to choose their own product range, and they can’t shop around suppliers for the best deals. Instead they’re stuck with the products and prices available from their MLM. They also can’t decide what profit margin they want to make – their commission level is decided for them.
It’s not even as if they’ve bought a franchise and have the exclusive rights to sell in a particular area. Instead, they’re often competing with any number of reps selling identical products at identical prices in a saturated market.
They also have no say on basic business decisions like returns and refunds, relying instead on what policy their MLM decide to adopt (and as we’ve seen with clothing MLM LuLaRoe, this can change overnight, with expensive consequences).
Reps are even often told what to post and how often on social media (and are told off if their personal social media posts don’t reflect the positive image the company wishes their reps to project).
In fact it’s hard to see in what way an MLM rep can possibly imagine they’re a business owner! They’re much more like unpaid sales reps with no guaranteed income, or employee benefits such as holiday pay.

[Darth Penguin]

Lularoe executive leaves suddenly as sellers claim company owes thousands of dollars in refunds

One of LuLaRoe's most senior founding executives, Patrick Winget, has suddenly left the women's clothing brand. Winget served as the head of design and production for the multilevel-marketing company since its inception in 2013. He is widely regarded as a sort of celebrity among the tens of thousands of people — mostly women — who sell LuLaRoe clothing online and at private parties across the US.
In hundreds of social media posts over the years, LuLaRoe sellers have gushed about meeting Winget in person at LuLaRoe events. They have asked him to sign their clothing and have praised him as the "brilliant" mind, "man genius," and "hero" behind the brand.
There's a LuLaRoe garment named after him — the "Patrick" t-shirt — and late last year, the company sold thousands of t-shirts and leggings with an image of his bearded face printed across them.

[snip]


A 2017 Business Insider report revealed quality complaints about its clothing, including claims that its pants "rip like wet toilet paper." Following the report, LuLaRoe launched a refund program for customers.
In the months that followed, thousands of consultants began fleeing the business by sending their unsold inventory back to LuLaRoe for a refund.
But the company has failed to refund many of those sellers, some of whom claim they have been waiting nearly a year for LuLaRoe to repay them, according to interviews with nine former consultants. LuLaRoe did not respond to requests for comment on the refund claims.
Ex-consultant Nicolette Fontenot told Business Insider that LuLaRoe owes her a refund check totaling $7,999.89. She sent the company her unsold inventory in December.
"I'm pretty confident I'll never see a dime," said another former consultant, who asked to be identified only by her first name, Ashly. She said she has been waiting since February for a refund totaling more than $4,000.

[Darth Penguin]

Lularoe lawsuit supplier sues for $49 million.

LuLaRoe's chief clothing supplier is suing the company for nearly $49 million in a lawsuit claiming the multi-level marketing company has failed to pay its bills for seven months.
The supplier, Providence Industries, said in the suit that it has reason to believe LuLaRoe is insolvent, and accused the company's founders, Mark and DeAnne Stidham, of hiding assets in "shell" companies to fund their "lavish lifestyle."
The lawsuit, filed in a California Superior Court on Thursday, identifies 17 limited liability companies that are tied to the Stidhams that were created between July and December 2017. The suit claims the Stidhams have used them to purchase cars worth at least $2.7 million, properties in excess of $7 million, private planes, and other assets.
The suit said the companies are part of a "scheme" to "hinder, delay,and defraud the creditors."

[Darth Penguin]

Amway cuts 45 management-level positions worldwide

Amway has eliminated 45 management-level positions across the world.In a statement, the company said it is “making investments to strengthen” business and that it is “reviewing (its) global operations to ensure investments align with (its) strategic focus,” which led to the elimination of the jobs.
“While these decisions are always difficult, the result of these actions will allow us to better serve Amway Business Owners and be more agile in a rapidly changing global marketplace,” the statement says.

Amway is the company started and still run by the DeVos family.

[Ciel]

I've noticed a few MLM reps are listed as attending a local Christmas market. One is for DoTerra essential oils. Yesterday I looked at the website and was in shock at the retail prices for some of the oils. $128+ for yarrow/pome oil. But I'd love to try a few Arbonne bars--I only know the brand for its skincare/makeup products and found about the bars recently through conversation.

[Darth Penguin]

LuLaRoe lawsuit: Judge denies supplier's request for asset seizure

A judge on Friday denied a LuLaRoe supplier's request to immediately seize nearly $34 million in assets from the multi-level marketing company. The supplier, Providence Industries, filed suit against LuLaRoe on November 29 for nearly $49 million, alleging that the company has failed to pay its bills for seven months.
Several days later, Providence filed a request for the immediate seizure of assets, alleging that LuLaRoe CEO Mark Stidham is a flight risk because of his access to a private jet and his alleged threats to "jump ship" with the company's riches.

In response, Stidham said in a sworn statement that he had no plans to abscond with the company's money.
"To be clear, I do not have, and have never had, any intention or plans of absconding abroad with money," he said.

[Ciel]

That supplier means business, going to court. That adds more money not available for business just to get legal argument heard to chase their merchandise.

[Darth Penguin]

Washington Stats sues Lularoe, alleges "illegal pyramid scheme"

The Washington State Attorney General has filed suit against LuLaRoe alleging that the multi-level marketing company is an illegal "pyramid scheme."
LuLaRoe CEO Mark Stidham and president DeAnne Stidham are among the defendants named in the suit, which was filed in King County Superior Court on Wednesday.
The suit accuses LuLaRoe of operating an "illegal pyramid," making misleading income claims, and encouraging its consultants to focus more on recruitment than selling clothes to customers, among other charges.
"Defendants market the LuLaRoe MLM as a transformational, empowering opportunity to achieve dreams and achieve financial freedom while providing a flexible and part-time alternative to traditional employment," the suit states, according to a copy of the 21-page complaint obtained by Business Insider.
"In reality, LuLaRoe's pyramid scheme business model and compensation plan, and its corresponding marketing activities dictated that during any particular time, a majority of Washington Consultants lost money."

[Darth Penguin]

'Gifting circle' pyramid scheme may have involved 500 people in Alberta,B.C., Saskatchewan

A southern Alberta man is accused of playing a key role in a "gifting circle" pyramid scheme that could involve millions of dollars and hundreds of people in Alberta, B.C. and Saskatchewan.
Steele Cameron Tolman, who is from just east of Lethbridge in Coaldale, faces one count each of fraud over $5,000 and possession of the proceeds of crime over $5,000.
Police allege Tolman, 57, is the "main presenter" in the scam.
Investigation by members of the force's economic crimes unit found that between September 2018 and May 2019, "gifting circles" were introduced in Lethbridge, Calgary and Edmonton.
"The scheme promises 'no risk' and guarantees a 'gift' of $5,000 will result in a return of $40,000," Lethbridge Police said in a news release issued Monday.
"Once funds have been paid, the person is then responsible for recruiting two more people to 'gift' money. This model requires the recruitment of new members to pay for existing members and eventually leads to a loss of funds by those who have paid in when new recruits cannot be found."

[Darth Penguin]

RCMP advisory

This pyramid scheme targets law-abiding citizens who have no idea they are breaking the law.
The Gifting Pyramid Scheme usually targets groups of law-abiding citizens who are convinced to recruit their friends or acquaintances. New members have to pay their recruiter a $5,000 ‘gift’ to join. In turn, each member is expected to recruit new people so everyone can end up with $40,000.
Recruiters try to legitimize the buy-in payment by calling it a ‘birthday gift,’ a ‘transaction,’ or ‘a gifting circle’ and insisting that the payment is not taxable or illegal because it’s only a gift. Participants are advised to use false names and to keep the gifted money in cash form, to avoid drawing suspicion from financial institutions.
The sad truth is that pyramid schemes always fall apart and the people at the bottom- your friends and family- lose their money.
You might be reluctant to talk to police because your friends are involved or you feel ashamed but the RCMP need your help to spread the word and prevent more people from being victimized.
People should understand that, not only could they suffer a personal financial loss for their involvement in gifting circle or similar pyramid schemes, but they could face tax implications through the Canada Revenue Agency, and/or criminal charges.
Additional information about pyramid schemes and how to avoid them, can be found at Canadian Anti-Fraud Centre, toll free at 1-888-495-8501 or the federal Competition Bureau toll free at 1-800-348-5358.

RCMP

After exactly one year of repeated warnings from police that the popular ‘cloud’ gifting pyramid scheme is illegal, formal charges have been laid against two suspects.
Whether you call it a ‘gifting circle,’ a ‘birthday gift,’ a ‘cloud,’ ‘people helping people,’ or ‘New Boss Life,’ the essential element of expecting a much higher payment in return makes this an illegal pyramid scheme, says Corporal Michael McLaughlin with Coquitlam RCMP. People who buy in to this scheme are putting themselves at risk of criminal charges.
Two people are currently facing charges in Coquitlam:

1. Chrystal Lee Lyons, a 44-year-old resident of Maple Ridge, is facing four counts of ‘conducting a lottery’ under section 206 of the Criminal Code. Police allege that Lyons went by the pseudonym of ‘Purple Shadow.’
2. Esther Ayshia Vandenbrink, a 56-year-old who is also from Maple Ridge, is facing one count under section 206 of the Criminal Code. Vandenbrink is suspected of using the alias ‘Party Girl.’

Variations of this pyramid scheme often encourage people to use pseudonyms, says Corporal McLaughlin. The organizers also regularly change small details of the scam, or claim that they’ve found a legal loophole, or claim that their scheme is endorsed by a police officer or tax official. However, no matter what you call them, pyramid schemes are illegal.
The gifting pyramid scheme has been evolving for years. In general, new members are recruited, or ‘invited,’ by friends or acquaintances and pay a ‘gift’ of between $1000 and $5000 to join. Each new member is then expected to recruit more people to pay in to the bottom of the pyramid until they reach the top and get (or share in) a $40,000 ‘birthday gift’ payoff.
If you are approached by someone who wants to get you involved, call your police of jurisdiction. In Coquitlam, call the non-emergency number at 604-945-1550 and ask for the Economic Crime Unit.

[Darth Penguin]

AdvoCare revises business model

On May 17, AdvoCare International announced a revision of its business model from multi-level marketing to a direct-to-consumer and single-level marketing compensation plan. AdvoCare has been in confidential talks with the Federal Trade Commission (FTC) about the AdvoCare business model and how AdvoCare compensates its Distributors. Based on more recent discussions, it became clear that this change is the only viable option. The planned change will impact Distributors who have participated in the multi-level aspect of the business, but it will not affect Distributors who sell directly to customers. Those who currently sell only to customers will not be impacted and there will be no impact on Preferred Customers or retail customers’ ability to purchase products.
The new single-level distribution model will take effect July 17, 2019, and will begin paying compensation based solely on sales to customers. The Retail and Preferred Customer programs will remain intact with discounts ranging from 20 – 40 percent.
AdvoCare remains committed to providing high-quality products to people looking to live healthier lives. Our customers, Distributors, and the AdvoCare product endorsers, know the AdvoCare products make a difference in their health, wellness and performance. AdvoCare is proud of the products we bring to market and the supplemental income opportunity offered to our Distributors when they sell AdvoCare products to their customers.

Looking round social media sites, lots of huns are offering places in their down-line to people who are thing of bailing out of AdvoCare. Frying pan/ fire deal.

[Darth Penguin]

They have you in a cultish grip

When a Facebook friend told Lindsay about a “genius” business opportunity in January 2015, the Manchester-based NHS laboratory assistant was already struggling for money. She had spent the last two years caring for her elderly father, and the stress meant she frequently missed shifts at work. Unwell with chronic fatigue syndrome and struggling to pay the household bills, Lindsay was instantly curious about her friend’s offer. “I hardly had any money coming in, and I was looking at everything, doing all the maths, and there just wasn’t enough,” Lindsay says now from the red brick terraced house where she lives alone with her dog, Freya. The Facebook friend – who Lindsay has never met, but added on social media because they were both fans of the musician Jean-Michel Jarre – told her she could earn between £50 and £500 a month if she signed up to a beauty sales business called Younique.


“I thought even if I make £100 a month, that’s something… I don’t have a big appetite, so my food only costs £20 a week at most, if I’m splurging out a bit,” Lindsay says. Though she is just 36 years old, she walks with a cane and has a full head of grey hair. Her illness – which is characterised by extreme tiredness and joint pain – means she struggles to maintain her home. Paint is peeling from the walls, and an old mattress sits in the hallway.
After receiving her monthly paycheck, Lindsay clicked on the link sent over by her Facebook friend and signed up to become a “Younique presenter”. Founded in September 2012 by an American brother-and-sister team, Younique is a direct sales beauty company. Presenters sign up via the website and purchase products that they then sell on, earning a cut of the profits. Though there is no membership fee, members must regularly buy stock to retain presenter status. Lindsay paid £69 for a starter kit, and then another £125 to become a “yellow status” presenter. Younique has eight different presenter statuses – whites, the people at the bottom, earn a 20% commission from their sales, while yellows, the next up in the scale,earn 25%.
This commissions-based model is somewhat similar to Avon, the 133-year-old company that recruits “Avon ladies” to sell beauty products door-to-door. Yet unlike Avon ladies, Younique presenters buy and sell through social media – usually Facebook. “We are the first direct sales company to market and sell almost exclusively through the use of social media,” Younique’s website reads, adding that its founders, Derek Maxfield and Melanie Huscroft, created the business to “uplift” their members. “Derek and Melanie firmly believe that all women [the company targets women] should feel valued, smart, and empowered through opportunities for personal growth and financial reward!” the website says. But in her three years as a Younique presenter, Lindsay lost roughly £3,000.
From 2015 to 2018, Lindsay spent £40 to £60 every month on stock to retain her yellow presenter status. Though she initially made some sales at the hospital where she worked, Lindsay was let go from the NHS in spring 2015 because of missed shifts caused by stress. She had been caring for her parents since 2011 – her mother passed away from cancer in 2012, while her father had Parkinson’s and suffered from three strokes before his death in 2018. Though she stopped making Younique sales after losing her job, Lindsay wanted to retain her presenter status because she was planning to go to university and hoped to be able to sell to fellow students. Meanwhile, Younique kept encouraging her to buy stock.