I'm going for my double black diamond level.
I can see this is #3 in trending on youtube right now, so I may be wasting my typing. If this were an entertainment site or a snark site, I probably wouldn't bother.
I'm not a fan of snark that glosses over the facts with innuendo. This is pure snark with no facts. MLMs are an easy target because they're annoying, but glossing over facts is trolling.
The difference between legal pyramid schemes and illegal pyramid schemes are that legal "pyramid schemes" sell an actual product while illegal pyramid schemes lack products all the way down the line. There are multiple court cases on this. The fact that the organization is hierarchical in structure doesn't have a bearing on the legality of the organization and implying that it does is just pure snark tactics.
Many other organizations work on this same hierarchical structure, even in pay distribution such as insurance companies. Managers take a percentage of their sales agents' percentage of sales. The person at the top makes the most money.
He's trying to make a big point of the woman who said the word "pyramid schemes" in her talk. He doesn't mention that she put air quotes around those words when she said them. She was just satirizing the people who claim that MLMs are a pyramid scheme.
His point about the math doesn't make sense. All he's saying is that not everyone is guaranteed to make money under this plan if everyone decided to do it. The fact that some people are making money disproves that it's not possible. While it is true that all products will hit saturation, the fact that many of these companies have been around for decades proves that there's money in it. Not everyone will be successful in it, mostly because of the high turnover of people required to keep people selling the product below that person.
That's also the reason for the over-the-top sales presentations. Motivating people to do something voluntary isn't an easy task. Like commercials, there needs to be an emotional sales pitch. Appealing to people's desires (and sometimes guilt) is no different than motivating someone through an ad.
The next part where he tries to prove that it is a pyramid scheme based on one company and a grammatical non-distinction of the FTC spokesperson is really weak. If it's a pyramid scheme as a concept, then all those businesses would be under fire equally, not just Herbalife.
The difficulty is that there are two pieces to the concept. There's the piece where there are actual retail sales with very low margins. There's also the piece where recruiting people becomes key because you can lock them into retail buyers and sell them unrelated merchandise. That piece is more pyramid-like, but the two pieces are often inseparable.
All the testimonials are personal experiences. None of them made claims that it would work for everyone.
While it's sad (and that's where this pitch is playing on the heartstrings just as much as any pitch of a sales opportunity), almost any business opportunity has the potential for loss of time and money.
The funniest part is that this attempt only shows how ineffective it will be in changing any part of the MLM business plan. That only shows how low the viewership of youtube is compared to the reach of the business. If it does actually make a dent, I'll be surprised and interested.
I used to read a forum that tried to share this exact same message. It is now virtually gone. It was ineffectual. The business model got the last laugh over the satirists, who weren't actually that funny.
I'm surprised that these same arguments are getting rehashed when the business models of some online activities like youtube and blogging, among others, have some basic similarities. Not everyone is guaranteed success. Success is based on social reach. Upfront investment of time and money can be high. Some people will get burned by that. Some other people will have an investment in making the opportunity as attractive as possible.
I guess I should state here that I'm not in any MLM business.
Most of your criticisms to me come down to drawing a distinction without a difference, especially in terms of the legal definition of the pyramid scheme, or the fact that "none of them made claims that it would work for everyone."
These schemes aren't targeted at us, because we understand the risks. The whole point of consumer protection law is to recognize that some people may not be in a position to figure things out, and that it can be colossally expensive to protect yourself or to try to recoup losses after the fact. The one company he cites where only about 7% of its people receive anything is a perfect example. Yes, people shouldn't be quite as credulous, but that doesn't give these companies a free pass to prey on people's wishful thinking and/or ignorance.
I think we have to allow a degree of that, but the the difference is more in what the company's actions are, really. The idea, as I see it, is that we don't want to encourage businesses that deliberately try to fleece their employees/customers.
I mean, we could just decide to allow false advertising, too.
If it were as simple as showing that the company is fleecing its customers or employees, one would hope that the government would have already been successful in one of its many cases against the industry.
One of the reasons that it hasn't been successful is because MLM companies have very few employees and the products they sell are not any different than any other company, for the most part. They did regulate the claims about the herbal products, but that's just one company and one small segment of the company's product line.
The products that MLM companies sell are diverse and mostly unremarkable. Off the top of my head, there's cosmetics, plastic containers, phone services, supplements, skin care, cooking supplies, crafting supplies, etc. Most of these companies are not making any claims about these products that anyone else selling them wouldn't make.
Most of the problems come from the distribution side of the industry. But those are the same class of people you're trying to protect. Distributors are not employees. Distributors are people who buy the company's product and try to resell it for a profit.
One of the initiatives I've seen is to create training for distributors about their claims and their practices. But who would be responsible for maintaining this training? It's a huge liability for anyone to undertake. Making it mandatory for the company would be like making it mandatory for any business who sells a product to instruct someone else how to resell it properly.
I think there is a difference, but I'm not sure if the difference matters. The cliche about how you can't cheat an honest man is true of most old school scams, they depend on the victim thinking they're taking advantage of the victimizer or of someone else. Card sharps are the former, more conventional pyramid schemes are the latter. MLM, like the social engineering feats behind a lot of big data breaches, are different; they depend on you naively doing what you think you're supposed to do. Of course if you want to be financially independent you become an entrepreneur, you're encouraged to worship heroic capitalists right and left, and here's an easy chance to become one of them! It's a con, but it's a different kind of con, and I'm not sure you can condemn it without condemning, say, the Silicon Valley startup scene, which victimizes people in nearly the same way as MLMs do, by letting them think there's a clear path to freedom if they just play the game right.
>I'm not sure you can condemn it without condemning, say, the Silicon Valley startup scene, which victimizes people in nearly the same way as MLMs do, by letting them think there's a clear path to freedom if they just play the game right.
Who says I don't condemn the latter?
How far would you go with that?
It's not the MLM companies who prey on people's wishful thinking. The MLM companies just provide (sell) the products and the compensation plan. It's the distributors who prey on people's wishful thinking. The MLM companies are sellers of a retail product.
The idea that anyone should get money selling their product isn't really the thing they're advertising. The company is selling a product and giving an opportunity for others to sell it for them as another distribution outlet.
It's somewhat similar to bloggers who blog about making money. Most of those bloggers make money by selling hosting services. Are the hosting services responsible for how the bloggers sold those services, by offering people the idea they too could make money blogging?
Affiliate marketing also comes to mind with this same concept. People put out a product and allows other people to advertise for them and make a portion of the proceeds. It's a very tiny percentage. There are other people who then claim that people can make a living doing affiliate marketing so they'll buy the product from them. Is it the responsibility of the person who puts out the original product to foresee that some people are going into affiliate marketing based on the claims of people distributing their product and might not make much money doing it?
If you're claiming that the seller of a product knows or should know how its retail product is being sold, where do you draw the line that voluntary distributors of that product need to be protected that they may not make a living doing it?
How would you distinguish these businesses from businesses that also sell retail products and pay people to distribute those products for them, which is pretty much any product you see on any store shelf? Any distributor of any product has the potential to lose money buying a physical product and not being able to sell it.
Edit: I just looked up consumer protection in wikipedia because I wondered if distributors of product are still consumers. According to wiki, consumers are -
- A consumer is defined as someone who acquires goods or services for direct use or ownership rather than for resale or use in production and manufacturing.
I don't know whether the protections of the consumer protection laws work in the same way for distributors.
The difference to me lies in the frequently misleading claims about earnings, the social pressure on a susceptible segment of society to spend money they don't have, etc.
John Oliver showed the disclosure of the company about the claims about earnings, the one about the average distributor making less than $10. That's a company disclosure. The company is not the one doing the misleading. If it happens, it happens at the distributor level.
There are people making money from their distribution business. Those people aren't necessarily making claims either, but people see that and think they can emulate it. It's very similar to looking at someone with a successful blog or youtube channel and thinking they can emulate it.
There's always social pressure on people to spend money they don't have. You would have to eliminate advertising to do away with that. Those people who are saying that they spent thousands of dollars got actual products that they can't resell. But they did buy actual products.
My question is, how would you regulate this industry without affecting any other industry? The government has been making attempts for a long time.
The only unique thing about an MLM company is that they allow distributors to purchase and resell product on a very small scale. It might be possible to put more regulations on distributors, but as you've seen, they're not the most knowledgeable. Putting more regulations on them would just be more burdensome to the people you're trying to protect.
Keep in mind that if you eliminated this multi-billion dollar industry, you'd be eliminating a lot of people's livelihoods for the people who are successful at it.
John Oliver's solution is to tell people not to join it. MLMs have a bad enough reputation in his demographic audience that I doubt that the people watching it will be changed in their position. I looked at the comments yesterday and was surprised to not see it filled with people giving their experience of losing money. I looked at it today, and there's a bit more of that. He's not saying anything new to his demographic audience.
The reason I replied to this OP was because not only does his solution seem ineffective, he also created misleading information about the industry in his attempt to mock it. Neither helps clean up the industry.