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  • Report: #80221

Complaint Review: Global Online Systems

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  • Submitted: Thu, February 12, 2004
  • Updated: Sat, January 15, 2005

  • Reported By:Dublin California
Global Online Systems
Nationwide U.S.A.

Global Online Systems ripoff offer, requires money to get info pack that has no info Internet

*Consumer Comment: For Betty of Bethany - KNOWLEDGE IS POWER!!

*Consumer Comment: Thank You William and something for Carl

*UPDATE Employee: Herbalife and Metaleuca

*Consumer Comment: The Great Debate

*Consumer Comment: Diana, if you have disposable income, I say go for it, and keep us posted as to how you are doing.

*Consumer Comment: Still Curious

*Consumer Comment: So Tired

*Consumer Comment: So Tired

*Consumer Comment: So Tired

*Consumer Comment: So Tired

*Consumer Comment: Where, oh where, have the Herbalifers (Pyramid Participants) gone?

*Consumer Comment: Raymond...I do want to be fair and as objective as I can.

*Consumer Comment: Herbalife=GOS=Newest Way to Wealth=Verticle Skip Marketing=Pyramid Scheme

*Consumer Comment: Self Deception - Think about it !

*Consumer Comment: Self Deception - Think about it !

*Consumer Comment: Self Deception - Think about it !

*Consumer Comment: More stuff you may or maynot want to know.....

*UPDATE Employee: That's great information

*Consumer Comment: Top Ten Lies pertaining to MLM's

*Consumer Comment: Herbalife distributors are going by anyother name. They are now called THE ONLINE BUSINESS SYSTEMS or THE ONLINE BUSINESS= PYRAMID SCAM.

*Consumer Comment: Personal Experience

*UPDATE Employee: The freedom of choice and speech

*Consumer Comment: Thank you Kenny and Glenda

*REBUTTAL Individual responds: Global Online Systems and Herbalife

*Consumer Comment: Carl vs. William- what round is it? Thank you both =)

*Consumer Comment: Okay Carl, school me some more.

*UPDATE Employee: Well, seems I can't add, either

*Consumer Comment: Math correction.

*UPDATE Employee: Where would Bill Gates, the Hiltons, the Waltons, the Dells, the rich people be without the mass of people working their jobs.

*Consumer Comment: I'm not going away, and it seems Carl, neither are you (Contrary to your own post)

*UPDATE Employee: Thank You Crystal and Greg

*Consumer Comment: For the love of williams.

*Consumer Comment: Thank you Greg.

*Consumer Comment: Thanks William

*Consumer Comment: "Dr. Louis Ignarro", is he a Ph.D. Carl? More dirt on Herbalife.

*UPDATE Employee: CLOSING ARGUEMENT FOR THE DEFENSE...

*UPDATE Employee: ROBERT, THE CANADIAN IDIOT...BUY HERBALIFE

*Consumer Comment: Sorry to see you go Carl. I think that this debate has bee most helpful for people who may be considering signing up to be an Herbalife Distributor.

*UPDATE Employee: THIS IS LEADING NOWHERE.... SO GO ELSEWHERE... go get a job

*Consumer Comment: Still won't answer the questions Carl?

*Consumer Suggestion: Yes if McDonalds has 5,000 bad servers then McDonalds is a bad company.

*UPDATE Employee: AND FINALLY, MY FINAL RESPONSE TO WILLIAM and all...

*UPDATE Employee: MUCH BETTER, WILLIAM. What matters most is that people, hopefully, look at the pros and cons of anything to make their decisions.

*Consumer Comment: Just getting started I can never get straight answers to my questions.

*UPDATE Employee: Dear William in Texas

*Consumer Comment: Directed back at the snake oil salesman

*Consumer Comment: Directed back at the snake oil salesman

*Consumer Comment: Directed back at the snake oil salesman

*Consumer Comment: Directed back at the snake oil salesman

*UPDATE Employee: DIRECTED TO MARKET SATURATION EXPERT

*UPDATE Employee: OPINIONS ARE LIKE..... AND SOME PEOPLE ARE TOO

*UPDATE Employee: OPINIONS ARE LIKE..... AND SOME PEOPLE ARE TOO

*UPDATE Employee: OPINIONS ARE LIKE..... AND SOME PEOPLE ARE TOO

*Consumer Comment: Global Online Systems AKA-HERBALIFE

*Consumer Comment: Global Online Systems AKA-HERBALIFE

*Consumer Comment: Global Online Systems AKA-HERBALIFE

*UPDATE Employee: THIS REPORT IS ALL WRONG... $39.95 is a weeding out fee

*UPDATE Employee: THIS REPORT IS ALL WRONG... $39.95 is a weeding out fee

*UPDATE Employee: THIS REPORT IS ALL WRONG... $39.95 is a weeding out fee

*UPDATE Employee: THIS REPORT IS ALL WRONG... $39.95 is a weeding out fee

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Very nice looking WEB site. Asks for $39 to get Information Package. Package is a joke. No where in the CD, book, WEB site or video does it ever tell you what the product is.

A very obvious rip off!

WEB site claims refund if not satisified BUT THERE IS NO WAY TO CONTACT THEM. You get a letter wth some idiot's name & phone number WHO NEVER ANSWERS AND DOES NOT RETURN THE CALL IF YOU DEMAND A REFUND.

A little digging around has discovered some info indicating that this company sells herba-life. Crap that no one wants but they want a fortune from you for the opportunity to try and sell it.

Steve
Dublin, California
U.S.A.

This report was posted on Ripoff Report on 02/12/2004 03:00 PM and is a permanent record located here: http://www.ripoffreport.com/r/Global-Online-Systems/nationwide/Global-Online-Systems-ripoff-offer-requires-money-to-get-info-pack-that-has-no-info-Inter-80221. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.

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REBUTTALS & REPLIES:
0Author 59Consumer 1Employee/Owner
Updates & Rebuttals

#1 Consumer Comment

For Betty of Bethany - KNOWLEDGE IS POWER!!

AUTHOR: Mary - (U.S.A.)

My Dear Betty,

Do not do the math!!! It will be much better for your sanity if you don't. Do the Google
search as William suggested, you may be surprised to know that you are not alone in many ways. Be cool Betty, and always remember that

KNOWLEDGE IS POWER!!!!!!!!!!!!!!!!!!
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#2 Consumer Comment

Thank You William and something for Carl

AUTHOR: Frank - (U.S.A.)

William,

I just wanted to thank you for entertaining me for the past two hours. Reading this kept me up till 4:00 in the morning, and I must say it was well woth it. If not just for the humor of the whole post.

I am one of the many people who killed themselves just to make some one else rich. And the thank I got for my efforts was to lay me off. Now that I have been jobs searching for the past three months without success I find myself up all night trying to come up with ways to work for myself. Today I recieved an e-mail (Like many others)stating that they had the sure fire way of becomming wealthy working at home. I went to the web site (which pops up in a window as not to show you their URL)and had to read 20 minutes of info just to find out that they would not even tell me what I would be selling untill I paid them something. Now that they have my e-mail address just to get the luxury of waisting my time, I am sure I will be flooded with more e-mails. I guess my e-mail will also be "SOLD" to Herbalife dealers as a sales lead.

Carl,

You say that this is a good way to stop working for some one else and making them rich. Isn't that what you are doing with Herbalife? The rough figures you would provide about how much you are making in my opinion are far from what I would consider as "Successfull". And isn't the real people who you are making rich are the people higher up this pyramid sceme?

Thanks again William for at least entertaining my this evening. And NO I did not fall for paying them for the info package.
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#3 UPDATE Employee

Herbalife and Metaleuca

AUTHOR: Betty - (U.S.A.)

Gee, I wish I'd found this site before I was seduced into joining these programs. I've been trying for over 3 months to get out of the Metaleuca auto-order and sales programs. Then, with a graduate degree, I was STUPID enough to join Herbalife. My monthly phone bills are over $130, leads are $300/batch (not counting product or advertising costs). I don't know if I can AFFORD to reach the upper levels of these racketeering schemes. I've also been constipated and gained weight on the Herbalife shakes and vitamins. The hidden costs are what really irritaes me. I asked my Herbalife supervisor how much it had cost from the time I enrolled till now. She would NOT give me an answer. Guess I'd better do the math myself.
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#4 Consumer Comment

The Great Debate

AUTHOR: Mary - (U.S.A.)

William and Carl,

I must thank both of you for a very enjoyable hour. A few years ago I paid the fee for the
"Decision Package", and when it came I was excited. Inside was a VCR tape with some lady
talking about how great this opportunity is.
By the way, she must be in the upper blocks of the pyramid because the background was a beautiful home with the pool and showed her new
cars and blah, blah, blah.

It was not revealed until the end of the tape
that it was Herbalife. I was not impressed.
Then I watched a few guys sitting at a table with
the chart behind them that showed the different
levels that a person could enter into this at.
Of course they stressed the 'importance' of getting in at the highest level. The cost $4000.
Well gee, I sort of had to scrape together the
money to get the info pack. I agree with Steve,
the author of the original report on this, in that there is no real info in the package. I
tried to get my money back on it and I never did.

I believe that most intelligent people who are looking for a home business just want the facts.
Nothing else. I do not need to see or hear testamonials about how well other people are doing in the said business. In any business, you get out what you put in.

It would be refreshing to see a business opportunity that just presented the facts. This
is who we are, this is the product or service
that we offer, this is what you will have to do
to be involved in this opportunity, and this is
approximately how much of an investment you will
have to put up to get involved. Just the basic facts. I am tired of getting info packs that do not give any real info. If anyone out there reading this knows of one please let me know. I
am going to include my email address at the end
of this post. I would appreciate any real opportunities.

Thank you William for the Google search tip. I
am going to check into it. And Carl, I am glad that you are doing well with Herbalife, but I do
believe that the products are over-priced. Mind now that is my opinion.

Just one last item. For the person who had the
derogatory things to say about Florida. Have you ever lived here?? Have you ever visited here?? Have you ever seen one of our classic sun-
sets over the Gulf of Mexico?? People live where
they live. You must not be very happy where you
are, or else you would not be so quick to downgrade.

CLICK here to see why Rip-off Report, as a matter of policy, deleted either a phone number, link or e-mail address from this Report. CLICK AND READ MORE..

Take care all.
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#5 Consumer Comment

Diana, if you have disposable income, I say go for it, and keep us posted as to how you are doing.

AUTHOR: William - (U.S.A.)

Diana -

That sounds good to me. If you have some disposable income available to join and work the biz, then do it, and keep everyone posted as to what all is required of you.

I think you could provide a great service to those, who might be considering joining Herbalife, as long as you keep your reports factual.

I, myself, have researched this particular MLM opportunity nine ways to Sunday. Most of the info that I've come across, shows Herbalife is nothing more than an illegal pyramid scheme.

Regards,
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#6 Consumer Comment

Still Curious

AUTHOR: DIANA - (U.S.A.)

William: Many thanks for keeping up this thread. I just spent some phone time with the Herbalife people after responding to an offer of a "free" DVD that described their business. I got the DVD for $7.95 shipping after hearing a radio ad new to our area. The DVD was quite thorogh and did mention that it was an Herbalife gig. I talked with an upper echelon Rep and a protege who listened in as part of her training.

While the video introduced all levels of involvement, the lowest being fairly affordable (@ $720.00 to start plus $149.00 "initiation fee", $29.00 per month to belong to the retail websites)--neither of them had started lower than the "supervisor" level--which costs @ $4000.00. They said the lower levels were not worth the time and couldn't really answer questions about them in terms of time or extra costs.

I did wonder how I'd get the business funneled to my Herbalife retail website and was told that there were many ways to do that--I could purchase name lists to call ($100 per 12 names, if I recall correctly) as well as other "Company plans" or do my own leafleting and other guerilla marketing. The upper echelon rep said she spent @ $3000.00 per month on advertising.

So that's what I know in terms of concrete numbers. I'm tempted still to join on the second level described above and see where it goes. I haven't decided yet. It might be interesting to "infiltrate" them and log my experiences here...
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#7 Consumer Comment

So Tired

AUTHOR: J. - (U.S.A.)

William,

Raymond is probably busy working his business. The debate is getting pretty old and we are So Tired of reading it. I personally have been at it for a couple hours now and I think my eyeballs are about ready to fall out. So I'm going to make my shake, take my tablets and call it a day. I use the products, I like them, they work for me. End of comment.
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#8 Consumer Comment

So Tired

AUTHOR: J. - (U.S.A.)

William,

Raymond is probably busy working his business. The debate is getting pretty old and we are So Tired of reading it. I personally have been at it for a couple hours now and I think my eyeballs are about ready to fall out. So I'm going to make my shake, take my tablets and call it a day. I use the products, I like them, they work for me. End of comment.
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#9 Consumer Comment

So Tired

AUTHOR: J. - (U.S.A.)

William,

Raymond is probably busy working his business. The debate is getting pretty old and we are So Tired of reading it. I personally have been at it for a couple hours now and I think my eyeballs are about ready to fall out. So I'm going to make my shake, take my tablets and call it a day. I use the products, I like them, they work for me. End of comment.
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#10 Consumer Comment

So Tired

AUTHOR: J. - (U.S.A.)

William,

Raymond is probably busy working his business. The debate is getting pretty old and we are So Tired of reading it. I personally have been at it for a couple hours now and I think my eyeballs are about ready to fall out. So I'm going to make my shake, take my tablets and call it a day. I use the products, I like them, they work for me. End of comment.
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#11 Consumer Comment

Where, oh where, have the Herbalifers (Pyramid Participants) gone?

AUTHOR: William - (U.S.A.)

Has Raymond already thrown in the towel?

Are there any Herbalifers who will take up the debate?

Can I assume that I am the winner by default?

Stay tuned in for the latest developments, as I am ready, willing, and able to lock horns with all Herbabots, when they decide to jump into the the fray.
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#12 Consumer Comment

Raymond...I do want to be fair and as objective as I can.

AUTHOR: William - (U.S.A.)

As you probably remember in one of my earlier posts, I had encouraged folks to come forward regarding this subject, whether they were successful or not.

Well it sure seems that you are one of the exceptions to the rule, and I am glad that you decided to post for all to see. Maybe you will take a little time to answer some questions for me, as after reading your rebuttles, some things have come to mind.

First of all, you made it a point that after reading the ongoing debate between Carl and I, you decided to give the program a try. Could you please let us know exactly when you signed up?

Secondly you have stated that you went big when you joined, and I take that to mean that you did whatever is required by GOS to make supervisor level, so that you could take advantage of some price breaks on the products, right? Now could you let us know in more detail, what it cost to go big (what all you get when you do..website, start-up kits, recruiting lit., etc...), and what kind of price break you get on the products as a result of your going whole hog?

Which brings me to the next question... Again according to your posts, you have been working the system for about 2 - 3 months, right? At what point was it that you recouped your investment, and how were you able to do that? Was it just selling product, or recruiting others into the program, or a combination of both? And please be as specific as you can. You don't have to specifically name anyone, but could you give us numbers sold to/how many signed up as distributors, etc...?

And finally, you seem to be a pretty smart guy, having majored in math, in college. So I was wondering if you did any serious research on Herbalife, before joining up, or did you just go by what Carl was saying in here? I have found alot of information on Herbalife, and none of it could be construed as anything positive, so I'm hoping that you can direct me to some independant studies that may show Herbalife in a more positive light. I will be most grateful if you would answer all these questions, and supply any additional information, which would be very helpful so that I may come to an unbiased opinion.

Thanks,
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#13 Consumer Comment

Herbalife=GOS=Newest Way to Wealth=Verticle Skip Marketing=Pyramid Scheme

AUTHOR: William - (U.S.A.)

Herbalife Marketers Plead Guilty to Pyramid Selling -- Global Online Systems Inc. Fined $150,000 for Operating Illegal Pyramid Scheme
OTTAWA, November 23, 2004 A Competition Bureau investigation into a Vancouver-based multi-level marketing firm has led to a $150,000 fine and guilty pleas on two counts under the deceptive marketing provisions of the Competition Act. The matter has been resolved with Global Online Systems Inc. (GOLS) voluntarily pleading guilty and signing a Prohibition Order filed today with the Federal Court of Canada.

An investigation by the Bureau revealed that GOLS was operating a scheme of pyramid selling. Participants in the GOLS multi-level marketing plan were selling health-related products marketed by Herbalife Canada Ltd.

Contrary to the Act, participants were compensated for the recruitment of new participants and had to buy specific quantities of products as a condition of joining the plan. In addition, GOLS and its participants through its Web sites and other promotional materials recruited new participants by exaggerating income expectations without disclosing the income of a typical participant.

"Those who join pyramid schemes are often enticed by promises of easy money, but only the very few at the top ever see any real benefit," said Raymond Pierce, Deputy Commissioner of Competition. "The Bureau is committed to pursuing these offences under the Competition Act and ensuring that Canadians do not fall prey to such scams."

According to the Prohibition Order, Global Online Systems Inc. and its directors, Deborah Jane Stoltz and Marilyn Thom, have agreed to:

pay a $150,000 fine;


disclose the average income actually received by all participants in GOLS;


inform all of its existing distributors and participants of the terms of the Order; and
not become involved directly or indirectly in any business operation engaged in a scheme of pyramid selling.

Consumers who suspect they have been the victim of deceptive business practices or who want information on the application of the Competition Act should contact the Bureau's Information Centre at 1-800-348-5358, or visit our Web site at http://www.cb-bc.gc.ca.

The Competition Bureau is an independent law enforcement agency which ensures that all Canadians enjoy the benefits of a competitive economy. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

For media enquiries, please contact:

Maureen McGrath
Senior Communications Advisor
Communications Branch
(819) 953-8982, or (613) 296-2187 (cell)

For general enquiries, please contact:

Information Centre
Competition Bureau
1-800-348-5358
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#14 Consumer Comment

Self Deception - Think about it !

AUTHOR: William - (U.S.A.)

self-deception
Ninety-four percent of university professors think they are better at their jobs than their colleagues.

Twenty-five percent of college students believe they are in the top 1% in terms of their ability to get along with others.

Seventy percent of college students think they are above average in leadership ability. Only two percent think they are below average.
--Thomas Gilovich How We Know What Isn't So


--------------------------------------------------------------------------------

Eighty-five percent of medical students think it is improper for politicians to accept gifts from lobbyists. Only 46 percent think it's improper for physicians to accept gifts from drug companies.
--Dr. Ashley Wazana JAMA Vol. 283 No. 3, January 19, 2000


--------------------------------------------------------------------------------

People tend to hold overly favorable views of their abilities in many social and intellectual domains....This overestimation occurs, in part, because people who are unskilled in these domains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it.
--"Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments," by Justin Kruger and David Dunning Department of Psychology Cornell University, Journal of Personality and Social Psychology December 1999 Vol. 77, No. 6, 1121-1134.

Self-deception is the process or fact of misleading ourselves to accept as true or valid what is false or invalid. Self-deception, in short, is a way we justify false beliefs to ourselves.

When philosophers and psychologists discuss self-deception, they usually focus on unconscious motivations and intentions. They also usually consider self-deception as a bad thing, something to guard against. To explain how self-deception works, they focus on self-interest, prejudice, desire, insecurity, and other psychological factors unconsciously affecting in a negative way the will to believe. A common example would be that of a parent who believes his child is telling the truth even though the objective evidence strongly supports the claim that the child is lying. The parent, it is said, deceives him or herself into believing the child because the parent desires that the child tell the truth. A belief so motivated is usually considered more flawed than one due to lack of ability to evaluate evidence properly. The former is considered to be a kind of moral flaw, a kind of dishonesty, and irrational. The latter is considered to be a matter of fate: some people are just not gifted enough to make proper inferences from the data of perception and experience.

However, it is possible that the parent in the above example believes the child because he or she has intimate and extensive experience with the child but not with the child's accusers. The parent may be unaffected by unconscious desires and be reasoning on the basis of what he or she knows about the child but does not know about the others involved. The parent may have very good reasons for trusting the child and not trusting the accusers. In short, an apparent act of self-deception may be explicable in purely cognitive terms without any reference to unconscious motivations or irrationality. The self-deception may be neither a moral nor an intellectual flaw. It may be the inevitable existential outcome of a basically honest and intelligent person who has extremely good knowledge of his or her child, knows that things are not always as they appear to be, has little or no knowledge of the child's accusers, and thus has not sufficient reason for doubting the child. It may be the case that an independent party could examine the situation and agree that the evidence is overwhelming that the child is lying, but if he or she were wrong we would say that he or she was mistaken, not self-deceived. We consider the parent to be self-deceived because we assume that he or she is not simply mistaken, but is being irrational. How can we be sure?

A more interesting case would be one where (1) a parent has good reason to believe that his or her child is likely to tell the truth in any given situation, (2) the objective evidence points to innocence, (3) the parent has no reason to especially trust the child's accusers, but (4) the parent believes the child's accusers anyway. Such a case is so defined as to be practically impossible to explain without assuming some sort of unconscious and irrational motivation (or brain disorder) on the part of the parent. However, if cognitive incompetence is allowed as an explanation for apparently irrational beliefs, then appeals to unconscious psychological mechanisms are not necessary even in this case.

Fortunately, it is not necessary to know whether self-deception is due to unconscious motivations or not in order to know that there are certain situations where self-deception is so common that we must systematically take steps to avoid it. Such is the case with belief in paranormal or occult phenomena such as ESP, prophetic dreams, dowsing, therapeutic touch, facilitated communication, and a host of other topics taken up in the Skeptic's Dictionary.

In How We Know What Isn't So, Thomas Gilovich describes the details of many studies which make it clear that we must be on guard against the tendencies to

misperceive random data and see patterns where there are none;

misinterpret incomplete or unrepresentative data and give extra attention to confirmatory data while drawing conclusions without attending to or seeking out disconfirmatory data;

make biased evaluations of ambiguous or inconsistent data, tending to be uncritical of supportive data and very critical of unsupportive data.
It is because of these tendencies that scientists require clearly defined, controlled, double-blind, randomized, repeatable, publicly presented studies. Otherwise, we run a great risk of deceiving ourselves and believing things that are not true. It is also because of these tendencies that in trying to establish beliefs non-scientists ought to try to imitate science whenever possible. In fact, scientists must keep reminding themselves of these tendencies and guard against pathological science.

Many people believe, however, that as long as they guard themselves against wishful thinking they are unlikely to deceive themselves. Actually, if one believes that all one must be on guard against is wishful thinking, then one may be more rather than less liable to self-deception. For example, many intelligent people have invested in numerous fraudulent products that promised to save money, the environment, or the world, not because they were guilty of wishful thinking but because they weren't. Since they were not guilty of wishful thinking, they felt assured that they were correct in defending their product. They could easily see the flaws in critical comments. They were adept at finding every weakness in opponents. They were sometimes brilliant in defense of their useless devices. Their errors were cognitive, not emotional. They misinterpreted data. They gave full attention to confirmatory data, but were unaware of or oblivious to disconfirmatory data. They sometimes were not aware that the way in which they were selecting data made it impossible for contrary data to have a chance to occur. They were adept at interpreting data favorably when either the goal or the data itself was ambiguous or vague. They were sometimes brilliant in arguing away inconsistent data with ad hoc hypotheses. Yet, had they taken the time to design a clear test with proper controls, they could have saved themselves a great deal of money and embarrassment. The defenders of the DKL LifeGuard and the many defenders of perpetual motion machines and free energy devices are not necessarily driven by the desire to believe in their magical devices. They may simply be the victims of quite ordinary cognitive obstacles to critical thinking. Likewise for all those nurses who believe in therapeutic touch and those defenders of facilitated communication, ESP, astrology, biorhythms, crystal power, dowsing, and a host of other notions that seem to have been clearly refuted by the scientific evidence. In short, self-deception is not necessarily a weakness of will, but may be a matter of ignorance, laziness, or cognitive incompetence.

On the other hand, self-deception may not always be a flaw and may even be beneficial at times. If we were too brutally honest and objective about our own abilities and about life in general, we might become debilitated by depression.
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#15 Consumer Comment

Self Deception - Think about it !

AUTHOR: William - (U.S.A.)

self-deception
Ninety-four percent of university professors think they are better at their jobs than their colleagues.

Twenty-five percent of college students believe they are in the top 1% in terms of their ability to get along with others.

Seventy percent of college students think they are above average in leadership ability. Only two percent think they are below average.
--Thomas Gilovich How We Know What Isn't So


--------------------------------------------------------------------------------

Eighty-five percent of medical students think it is improper for politicians to accept gifts from lobbyists. Only 46 percent think it's improper for physicians to accept gifts from drug companies.
--Dr. Ashley Wazana JAMA Vol. 283 No. 3, January 19, 2000


--------------------------------------------------------------------------------

People tend to hold overly favorable views of their abilities in many social and intellectual domains....This overestimation occurs, in part, because people who are unskilled in these domains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it.
--"Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments," by Justin Kruger and David Dunning Department of Psychology Cornell University, Journal of Personality and Social Psychology December 1999 Vol. 77, No. 6, 1121-1134.

Self-deception is the process or fact of misleading ourselves to accept as true or valid what is false or invalid. Self-deception, in short, is a way we justify false beliefs to ourselves.

When philosophers and psychologists discuss self-deception, they usually focus on unconscious motivations and intentions. They also usually consider self-deception as a bad thing, something to guard against. To explain how self-deception works, they focus on self-interest, prejudice, desire, insecurity, and other psychological factors unconsciously affecting in a negative way the will to believe. A common example would be that of a parent who believes his child is telling the truth even though the objective evidence strongly supports the claim that the child is lying. The parent, it is said, deceives him or herself into believing the child because the parent desires that the child tell the truth. A belief so motivated is usually considered more flawed than one due to lack of ability to evaluate evidence properly. The former is considered to be a kind of moral flaw, a kind of dishonesty, and irrational. The latter is considered to be a matter of fate: some people are just not gifted enough to make proper inferences from the data of perception and experience.

However, it is possible that the parent in the above example believes the child because he or she has intimate and extensive experience with the child but not with the child's accusers. The parent may be unaffected by unconscious desires and be reasoning on the basis of what he or she knows about the child but does not know about the others involved. The parent may have very good reasons for trusting the child and not trusting the accusers. In short, an apparent act of self-deception may be explicable in purely cognitive terms without any reference to unconscious motivations or irrationality. The self-deception may be neither a moral nor an intellectual flaw. It may be the inevitable existential outcome of a basically honest and intelligent person who has extremely good knowledge of his or her child, knows that things are not always as they appear to be, has little or no knowledge of the child's accusers, and thus has not sufficient reason for doubting the child. It may be the case that an independent party could examine the situation and agree that the evidence is overwhelming that the child is lying, but if he or she were wrong we would say that he or she was mistaken, not self-deceived. We consider the parent to be self-deceived because we assume that he or she is not simply mistaken, but is being irrational. How can we be sure?

A more interesting case would be one where (1) a parent has good reason to believe that his or her child is likely to tell the truth in any given situation, (2) the objective evidence points to innocence, (3) the parent has no reason to especially trust the child's accusers, but (4) the parent believes the child's accusers anyway. Such a case is so defined as to be practically impossible to explain without assuming some sort of unconscious and irrational motivation (or brain disorder) on the part of the parent. However, if cognitive incompetence is allowed as an explanation for apparently irrational beliefs, then appeals to unconscious psychological mechanisms are not necessary even in this case.

Fortunately, it is not necessary to know whether self-deception is due to unconscious motivations or not in order to know that there are certain situations where self-deception is so common that we must systematically take steps to avoid it. Such is the case with belief in paranormal or occult phenomena such as ESP, prophetic dreams, dowsing, therapeutic touch, facilitated communication, and a host of other topics taken up in the Skeptic's Dictionary.

In How We Know What Isn't So, Thomas Gilovich describes the details of many studies which make it clear that we must be on guard against the tendencies to

misperceive random data and see patterns where there are none;

misinterpret incomplete or unrepresentative data and give extra attention to confirmatory data while drawing conclusions without attending to or seeking out disconfirmatory data;

make biased evaluations of ambiguous or inconsistent data, tending to be uncritical of supportive data and very critical of unsupportive data.
It is because of these tendencies that scientists require clearly defined, controlled, double-blind, randomized, repeatable, publicly presented studies. Otherwise, we run a great risk of deceiving ourselves and believing things that are not true. It is also because of these tendencies that in trying to establish beliefs non-scientists ought to try to imitate science whenever possible. In fact, scientists must keep reminding themselves of these tendencies and guard against pathological science.

Many people believe, however, that as long as they guard themselves against wishful thinking they are unlikely to deceive themselves. Actually, if one believes that all one must be on guard against is wishful thinking, then one may be more rather than less liable to self-deception. For example, many intelligent people have invested in numerous fraudulent products that promised to save money, the environment, or the world, not because they were guilty of wishful thinking but because they weren't. Since they were not guilty of wishful thinking, they felt assured that they were correct in defending their product. They could easily see the flaws in critical comments. They were adept at finding every weakness in opponents. They were sometimes brilliant in defense of their useless devices. Their errors were cognitive, not emotional. They misinterpreted data. They gave full attention to confirmatory data, but were unaware of or oblivious to disconfirmatory data. They sometimes were not aware that the way in which they were selecting data made it impossible for contrary data to have a chance to occur. They were adept at interpreting data favorably when either the goal or the data itself was ambiguous or vague. They were sometimes brilliant in arguing away inconsistent data with ad hoc hypotheses. Yet, had they taken the time to design a clear test with proper controls, they could have saved themselves a great deal of money and embarrassment. The defenders of the DKL LifeGuard and the many defenders of perpetual motion machines and free energy devices are not necessarily driven by the desire to believe in their magical devices. They may simply be the victims of quite ordinary cognitive obstacles to critical thinking. Likewise for all those nurses who believe in therapeutic touch and those defenders of facilitated communication, ESP, astrology, biorhythms, crystal power, dowsing, and a host of other notions that seem to have been clearly refuted by the scientific evidence. In short, self-deception is not necessarily a weakness of will, but may be a matter of ignorance, laziness, or cognitive incompetence.

On the other hand, self-deception may not always be a flaw and may even be beneficial at times. If we were too brutally honest and objective about our own abilities and about life in general, we might become debilitated by depression.
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#16 Consumer Comment

Self Deception - Think about it !

AUTHOR: William - (U.S.A.)

self-deception
Ninety-four percent of university professors think they are better at their jobs than their colleagues.

Twenty-five percent of college students believe they are in the top 1% in terms of their ability to get along with others.

Seventy percent of college students think they are above average in leadership ability. Only two percent think they are below average.
--Thomas Gilovich How We Know What Isn't So


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Eighty-five percent of medical students think it is improper for politicians to accept gifts from lobbyists. Only 46 percent think it's improper for physicians to accept gifts from drug companies.
--Dr. Ashley Wazana JAMA Vol. 283 No. 3, January 19, 2000


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People tend to hold overly favorable views of their abilities in many social and intellectual domains....This overestimation occurs, in part, because people who are unskilled in these domains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it.
--"Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments," by Justin Kruger and David Dunning Department of Psychology Cornell University, Journal of Personality and Social Psychology December 1999 Vol. 77, No. 6, 1121-1134.

Self-deception is the process or fact of misleading ourselves to accept as true or valid what is false or invalid. Self-deception, in short, is a way we justify false beliefs to ourselves.

When philosophers and psychologists discuss self-deception, they usually focus on unconscious motivations and intentions. They also usually consider self-deception as a bad thing, something to guard against. To explain how self-deception works, they focus on self-interest, prejudice, desire, insecurity, and other psychological factors unconsciously affecting in a negative way the will to believe. A common example would be that of a parent who believes his child is telling the truth even though the objective evidence strongly supports the claim that the child is lying. The parent, it is said, deceives him or herself into believing the child because the parent desires that the child tell the truth. A belief so motivated is usually considered more flawed than one due to lack of ability to evaluate evidence properly. The former is considered to be a kind of moral flaw, a kind of dishonesty, and irrational. The latter is considered to be a matter of fate: some people are just not gifted enough to make proper inferences from the data of perception and experience.

However, it is possible that the parent in the above example believes the child because he or she has intimate and extensive experience with the child but not with the child's accusers. The parent may be unaffected by unconscious desires and be reasoning on the basis of what he or she knows about the child but does not know about the others involved. The parent may have very good reasons for trusting the child and not trusting the accusers. In short, an apparent act of self-deception may be explicable in purely cognitive terms without any reference to unconscious motivations or irrationality. The self-deception may be neither a moral nor an intellectual flaw. It may be the inevitable existential outcome of a basically honest and intelligent person who has extremely good knowledge of his or her child, knows that things are not always as they appear to be, has little or no knowledge of the child's accusers, and thus has not sufficient reason for doubting the child. It may be the case that an independent party could examine the situation and agree that the evidence is overwhelming that the child is lying, but if he or she were wrong we would say that he or she was mistaken, not self-deceived. We consider the parent to be self-deceived because we assume that he or she is not simply mistaken, but is being irrational. How can we be sure?

A more interesting case would be one where (1) a parent has good reason to believe that his or her child is likely to tell the truth in any given situation, (2) the objective evidence points to innocence, (3) the parent has no reason to especially trust the child's accusers, but (4) the parent believes the child's accusers anyway. Such a case is so defined as to be practically impossible to explain without assuming some sort of unconscious and irrational motivation (or brain disorder) on the part of the parent. However, if cognitive incompetence is allowed as an explanation for apparently irrational beliefs, then appeals to unconscious psychological mechanisms are not necessary even in this case.

Fortunately, it is not necessary to know whether self-deception is due to unconscious motivations or not in order to know that there are certain situations where self-deception is so common that we must systematically take steps to avoid it. Such is the case with belief in paranormal or occult phenomena such as ESP, prophetic dreams, dowsing, therapeutic touch, facilitated communication, and a host of other topics taken up in the Skeptic's Dictionary.

In How We Know What Isn't So, Thomas Gilovich describes the details of many studies which make it clear that we must be on guard against the tendencies to

misperceive random data and see patterns where there are none;

misinterpret incomplete or unrepresentative data and give extra attention to confirmatory data while drawing conclusions without attending to or seeking out disconfirmatory data;

make biased evaluations of ambiguous or inconsistent data, tending to be uncritical of supportive data and very critical of unsupportive data.
It is because of these tendencies that scientists require clearly defined, controlled, double-blind, randomized, repeatable, publicly presented studies. Otherwise, we run a great risk of deceiving ourselves and believing things that are not true. It is also because of these tendencies that in trying to establish beliefs non-scientists ought to try to imitate science whenever possible. In fact, scientists must keep reminding themselves of these tendencies and guard against pathological science.

Many people believe, however, that as long as they guard themselves against wishful thinking they are unlikely to deceive themselves. Actually, if one believes that all one must be on guard against is wishful thinking, then one may be more rather than less liable to self-deception. For example, many intelligent people have invested in numerous fraudulent products that promised to save money, the environment, or the world, not because they were guilty of wishful thinking but because they weren't. Since they were not guilty of wishful thinking, they felt assured that they were correct in defending their product. They could easily see the flaws in critical comments. They were adept at finding every weakness in opponents. They were sometimes brilliant in defense of their useless devices. Their errors were cognitive, not emotional. They misinterpreted data. They gave full attention to confirmatory data, but were unaware of or oblivious to disconfirmatory data. They sometimes were not aware that the way in which they were selecting data made it impossible for contrary data to have a chance to occur. They were adept at interpreting data favorably when either the goal or the data itself was ambiguous or vague. They were sometimes brilliant in arguing away inconsistent data with ad hoc hypotheses. Yet, had they taken the time to design a clear test with proper controls, they could have saved themselves a great deal of money and embarrassment. The defenders of the DKL LifeGuard and the many defenders of perpetual motion machines and free energy devices are not necessarily driven by the desire to believe in their magical devices. They may simply be the victims of quite ordinary cognitive obstacles to critical thinking. Likewise for all those nurses who believe in therapeutic touch and those defenders of facilitated communication, ESP, astrology, biorhythms, crystal power, dowsing, and a host of other notions that seem to have been clearly refuted by the scientific evidence. In short, self-deception is not necessarily a weakness of will, but may be a matter of ignorance, laziness, or cognitive incompetence.

On the other hand, self-deception may not always be a flaw and may even be beneficial at times. If we were too brutally honest and objective about our own abilities and about life in general, we might become debilitated by depression.
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#17 Consumer Comment

More stuff you may or maynot want to know.....

AUTHOR: William - (U.S.A.)

Herbalife: Sells but Weeds and Illusions
The Belgian consumer protection magazine: "Test-Achats" sues the company for multi-level-sales practices forbidden by the law.

Test-Achats/November 1, 2004

Herbalife, a well-known multinational specialised in the sale of slimming products and food supplements, benefits mainly from its far reaching network of hierarchically organised independent salesmen. As in the past, Test Achats draws the attention of consumers to the ineffectiveness of the slimming products of the Herbalife range. What is new, however, is that Test Achats has decided to sue this company for its practice of multi-level-sales which is illegal.

The diet products of Herbalife: expensive and not good - For various reasons (not enough proteins, low energy value, too expensive), "Test- Achats" was always very critical with regard to the diet products of the Herbalife range. Their usefulness in weight control is far from proven.

The reasons for the ineffectiveness of Herbalife's diet treatment are the following: no education to better food practices, products are systematically hypocaloric with health risks, a medicalisation of the way of life by the absorption of special products, disproportionate price compared to results obtained. All the indices of an inadequate approach of the diet coincide to create doubt as to the effectiveness of these supposedly miracle products.

Herbalife, a multi-level-sales network
These last months, "Test-Achats" has scrupulously analysed the techniques used by the firm. The principal objective of the Herbalife system is to recruit new distributors who must work with a statute of independent. No direct sales to the consumer occur. The methods of recruitment and distribution are varied. However, lately, and in a very aggressive way, disguised "offers of employment" (insofar as Herbalife does not appear as such) flower on the Internet and in the "employment" columns and in free for all letter box distribution. "Budget et Droits" recently carried out a fully fledged investigation (B&D 175, July 2004).

Once attracted, the interested people must take part in training courses which are real brain washing operations. During these courses a distribution contract and a basic parcel (Business pack) are proposed for a sum of 100. However, at this stage, the sale of these products is not of primary importance. The supervisors and other members of the "PRESIDENT'S TEAM" are quick to make the trainees understand that in order to rise within the hierarchy they may find it very beneficial to purchase large volumes of products and resell them to other new distributors whom they will have had the good taste to recruit. The higher the level one reaches in the hierarchy, the higher the commissions and the no-claims bonus and the cheaper the purchase price of the products. Regularly, consumers approached to buy products are in fact pushed to become distributors themselves, for example, to obtain reductions on the price of the products for themselves or their family. But obviously the market soon becomes saturated, and the promotion and recruitment campaigns then become increasingly aggressive.

"Test-Achats" wants to put an end to these dangerous and illegal practices! "Test-Achats" reckons that the sales system founded by Herbalife is an infringement of article 84 of the law on trade practices.

All the signs of pyramidal sales are cumulated: each member of the network grows rich primarily thanks to the purchases made by the new recruit in a completely closed sales circuit. The most important benefits are obtained not by the sale to the ultimate consumer or by the royalties obtained on the sales of the hierarchically low distributors but by the sales being carried out in a closed circuit. The benefit is mainly due to the extension of the system and this is expressly forbidden by the law. The consumers' organisation has therefore recently instituted Court proceedings against Herbalife, in the form of an action in ceasing of trading under the terms of the law on trading practices.

"Test Achats" thus wants the law to be respected in the interest of consumers. These latter are too often exposed to such harmful practices. They are unfortunately influenced by unrealisable promises, and this in a precarious economic context where more and more consumers are the faced with financial difficulties and unemployment.
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#18 UPDATE Employee

That's great information

AUTHOR: Raymond - (U.S.A.)

William,

That is indeed great information, but you can no more generalize all MLM's anymore that you can generalize the food industry. A mom and pop cafe will not bring in the amount of money that McDonald's Corp. will and it is foolish to think otherwise. This isn't a rebuttal based on MLM's in general, I will concede I don't know much about the industry. I don't honestly know what Amway is. I can tell you I've met a single mother of two who began in GOS and Herbalife in order to stay at home with her kids. Because of her tenacity and organizational skills, she moved up the ranks and now earns a considerable amount of money a month (read: >$15K). Do I know personally anyone who makes money, yes, me. Am I millionaire? No. I do however make enough money to pay for the things I need and to sustain my business. It does take capital to run a business, but the misconception about our company (I can't speak for every MLM, I don't know the others) is this IS NOT A JOB! I didn't sign up to work on my PC at home for a weekly pay check. I read what you and Carl had to say about the company and the system and decided I wanted to check it out. Yes, it's difficult to run a retail store. How many gas stations are in your town? How many corner markets? Now, how many fast food shops are there? What about Wal-marts, K-marts, et. al.? I signed up because I wanted to work for myself. I knew the risks and thought they were worthwhile for the amount of money I would have to invest. I could make it back, just selling the products to people I know. I don't have to keep investing in my business. I could take the 50% profit from being a supervisor and sell to 6 people a month. I could sell them 200 dollars of product (which is not that difficult) and pocket 50% of the profit or 600 dollars a month. I could do that for as long as I wanted. Does everyone need the product? Well, there really isn't a "need" for half the things we buy. Should people take the product? Emphatically, yes. I believe in what I do and the results of what I market. It's about being healthy. It's not about raping people of their finances. If I speak to some one who isn't in a position to take on a venture like this, then I don't sign them up. I do this primarily because I don't want some one in my organization that will have to struggle, it's not good for them and it's not good for me. You have to have integrity about things like this. It's not about ruling the world. Are there people in the company that are fabulously wealthy? LOL, yes, but by who's standards? I don't know of anyone in the business no matter how high up in the marketing plan they are that is what I would consider filthy rich. Herbalife had a 2 billion dollar revenue last year, Microsoft's market cap. is somewhere around 500 billion. Gates is filthy rich. There are people in Herbalife that are comfortably living and earning a comfortable income. That's where I'd like to be. My mother was a chemist and had a great job. I was raised around wealth and comfort and it's something to which I strive. I'm willing to work. Herbalife is not a "get-rich-quick" scheme. We leave that to dot.com start-ups and pop/hip-hop musicians. When you come into this company, you are given the knowledge that you've got to work. No one anywhere in our organization is sitting around not working. That's not how it works. In order to move up the marketing plan, you have to have personal volume, meaning you have to have sales from "your store." It's not all about bringing people in. That sounds very nefarious and it's not about that at all. You want people in your organization because you receive production bonuses but is that a pyramid-scheme? NO. You're bonuses are still contingent on your monthly sales volume.

It's sad to think people are so automatic in their response to the idea of MLM. I know the door-to-door sales person (men, mostly) is outdated, but is it gone? Would you rather walk into a GNC and have the 19 year old kid tell you what products they carry that is good for prostate health or would you rather hear that for some one who is of a comparable age and station who takes said product? The need for word of mouth retailing will not ever go away. I do believe it's the increasing distrust of conventional medicine (did ya read about the FDA's latest scandal involving potentially dangerous drugs and the infighting it's caused in the organization?) that will always allow for word of mouth.

If some one comes up to you with a headache, what do they ask for? I would ask (before herbalife, mind you) for Tylenol. If you didn't know what it was, would you be willing to go off that person's recommendation? Of course you would. Why, well because you can go into any drug store, or supermarket and get a bottle of the stuff. Does that make it safe? Depends on the person. I personally could die from taking over-the-counter ibuprofen. I have a severe allergy to it. If I were to die from Advil, say, would you want to remove the stuff from the market? Of course not. You would say, well, that was one person's bad experience. Simply put it's not the products or the company with which people have a problem. It's frankly the work involved in maintaining a direct marketing business. People feel that if they work at home, they should be able to watch soap operas, sleep in and get paid for it. That's not it at all. I've owned a "direct marketing" business for quite sometime before becoming involved in this business and now I have 2. Yes, they both make money. Yes, I have the utmost integrity in business and with selling my products. No, it's not my place, wish, desire, whatever, to "take your money." If a person joins my organization, I would do everything I could to help them succeed. I make money if they make money. How many attorneys do that? The ones that do (not all, mind you...don't want to generalize), take about 40% of your settlement. It's proper compensation in their eyes for their time and effort. Do we argue, not really. We are grumpy and fuss about it because we'd like to have the entire settlement, but we understand. In my business, I don't do that. I get paid based on my organization from HERBALIFE, not my downline. Remember HERBALIFE the publicly traded company with the 2 billion dollar revenue? This was just released last week:

WASHINGTON -(Dow Jones)- Underwriters for Herbalife Ltd. on Tuesday set the terms of the company's pending initial public offering at 14.5 million shares with an estimated price range of $14.50 to $16.50 a share.

On Oct. 4, Herbalife filed an IPO to sell up to $345 million in common stock but didn't detail the terms of the offering. Herbalife filed the registration under the name WH Holdings Ltd.

See, William, I like that...about the rip-offs, I used to work for a very high profile investment firm (name with held to protect the innocent...lol) and I was there during the time of the Enron fiasco. I personally know people who made in excess of 200K a year in salary who lost EVERYTHING...and I mean EVERYTHING. I have friends with MBAs who had to start over. How safe is the work place? Well, that depends on where. The company I worked for is still recovering from FCC troubles. I thankfully, had gone back to grad school already but my department no longer exists at that company. If all of your investments were put into your employer, then if something happened to the company, you're SOL. At least with Herbalife, I know hard facts about what I'm selling and how I'm getting paid. Most times, the money touches my hand as the receipt is leaving it. Period. You can expose all the faults of MLMs that your heart desires and then link them all into one big corrupt balloon. That is your prerogative. I think, though, it is wholly unfair to attack an organization or a company purely based on the industry that it happens to be under. Enron was bad. Real bad. But are all energy/communications to be considered as bad? That's not fair. There are honest people in the world, William, one of which I consider myself. It's not fair to judge all companies the same without knowing each and every one. It's certainly safer to do that, and I'll grant you that. If you're looking to be safe, that's is totally understandable and irrefutable if that's your purpose. But to force everyone else to play by your rules because you are convinced every MLM is the same is simply not fair and ignorant. The MLM business model does have it's flaws and faults. As far as the mathematical principal goes for it's growth, well it's not a nigh impossible or unstable as you would like to believe. If the PC with which you're responding is not and Apple product then your a whole heartedly supporting the portfolio of a friend of mine in Seattle. He's in trouble for it now, but no one thought Bill Gates would put his product in the home of every person with a computer. Well, he just about did it. There are a lot of people angry with him for doing it, but admist all the cries of "that's impossible" and "that's not sound thinking," he did it. Will HERBALIFE take over the world? I don't know. I sure hope so. The product offers a way to help you maintain your health. HOW IS THAT BAD? McDonald's is killing our kids. We have an incredible number of obese children who only turn into obese adults. If I have to go door to door from Massachusetts to California selling my products to people to help them be healthier, then I will. If there are other products out there with the same aim in mind, I say good for you. I know from PERSONAL use, HERBALIFE works. It does. I took the product, one week later, the scale says something different. No it wasn't a diuretic weight loss. I drink more H20 than most people. Have been for more than a decade and been pretty consistent with my water intake. My waist has gotten smaller and I weigh less. Is it dramatic? For me yes. I was healthy to begin with, but given the minimal amount of weight I had to lose, I lost it. For me that's dramatic. For me that's all it takes to tell people about the products I have to offer. Just like if I had a headache and took Tylenol and recommended it to some one I knew who had a headache too.

Dude, we could do this all day (I would actually do this dance in the evening when I had more time...days are for business...gotta eat and pay rent ya know...) but it's no use. You're not willing to see past your blind hatred and disgust toward the MLM industry and frankly, that's on you. It's your right and I support that right. I will say it's really difficult to argue a point unbiasedly when you're so biased in your view points. I would thank you again, though, for expressing them since it's your banter with the guy in FL that caused me to invest my time and money. For me that was the best decision I could have made when I made it and I haven't regretted since. Incidently, I've more than made back my initial investment in the company, and I went BIG when I began...lol...I'm originally from SE Texas, so you know what they say...things are bigger in Texas...I went whole-hog and haven't looked back...best thing I could have done...talk to ya...time to make more money...and help more folks get healthy...you should check us out...
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#19 Consumer Comment

Top Ten Lies pertaining to MLM's

AUTHOR: William - (U.S.A.)

Raymond -

Thought you might like to read this, but then again, you probably wouldn't.

Ten Big Lies of Multilevel Marketing

1. Robert L. Fitzpatrick
The multilevel marketing (MLM) field grows, and its member companies multiply. Solicitations to join seem to be everywhere. Its promoters would like you to believe that it is the wave of the future, a business model that is gaining momentum, growing in acceptance and legitimacy, and will eventually replace most other forms of marketing. Many people are led to believe that success will come to anyone who believes in the system and adheres to its methods.
Unfortunately, the MLM business model is a hoax that is hidden beneath misleading slogans. Calling it a "great business opportunity" makes no more sense than calling the purchase of a lottery ticket a "business venture" and winning the lottery a "viable income opportunity for everyone." MLM industry claims of distributor income potential, its glorified descriptions of the "network'" business model, and its prophecies of dominating product distribution have as much validity in business as UFO sightings do in the realm of science.

The very legality of the MLM system rests tenuously upon a single 1979 court ruling on one company. The guidelines for legal operation set forth in that ruling are routinely ignored by the industry. Lack of governing legislation or oversight by any designated authority also enables the industry to endure despite occasional prosecutions by state attorneys general or the FTC.

MLM's economic scorecard is characterized by massive failure rates and financial losses for millions of people. Its structure in which positions on an endless sales chain are purchased by selling or buying goods is mathematically unsustainable, and its system of allowing unlimited numbers of distributors in any market area is inherently unstable. MLM's espoused core business -- personal retailing -- is contrary to trends in communication technology, cost-effective distribution, and consumer buying preferences. The retailing activity is, in reality, only a pretext for the actual core business, which is enrolling investors in pyramid organizations that promise exponential income growth.

As in all pyramid schemes, the incomes of those distributors at the top and the profits to the sponsoring corporations come from a continuous influx of new investors at the bottom. Viewed superficially in terms of company profits and the wealth of an elite group at the pinnacle of the MLM industry, the model can appear viable to the uninformed, just as all pyramid schemes do before they collapse or are prosecuted by authorities.

The growth of MLM is the result of deceptive marketing that plays upon treasured cultural beliefs, social and personal needs, and some economic trends, rather than its ability to meet any consumer needs. The deceptive marketing is nurtured by a general lack of professional evaluation or investigation by reputable business media. Consequently, there is widespread belief that MLM is a viable business investment or career choice for nearly everyone and that the odds of financial success in the venture are comparable or better than other employment or business ventures.

MLM's true constituency is not the consuming public but hopeful investors. The market for these investors grows significantly in times of economic transition, globalization, and employee displacement. Promises of quick and easy financial deliverance and the linking of wealth to ultimate happiness also play well in this market setting. The marketing thrust of MLM is directed to prospective distributors, rather than product promotions to purchasers. Its true products are not long distance phone services, vitamins, or skin creams, but the investment propositions for distributorships which are deceptively portrayed with images of high income, low time requirements, small capital investments, and early success.

Here are ten lies I have identified during more than 20 years of observing the MLM marketplace:

Lie #1: MLM offers better opportunities than all other conventional
business and professional models for making large amounts of money.

Truth: For almost everyone who invests, MLM turns out to be a losing financial proposition. Fewer than 1% of all MLM distributors ever earn a profit and those earning a sustainable living at this business are a much smaller percentage still.
Extraordinary sales and marketing obstacles account for much of this failure, but even if the business were more feasible, sheer mathematics would severely limit the opportunity. The MLM business structure can support only a small number of financial winners. If a 1,000-person downline is needed to earn a sustainable income, those 1,000 will need one million more to duplicate the success. How many people can realistically be enrolled? Much of what appears as growth is in fact only the continuous churning of new enrollees. The money for the rare winners comes from the constant enrollment of armies of losers. With no limits on numbers of distributors in an area and no evaluation of market potential, the system is also inherently unstable.

Lie #2: Network marketing is the most popular and effective new way to bring products
to market. Consumers like to buy products on a one-to-one basis in the MLM model.

Truth: Personal retailing -- including nearly all forms of door-to-door selling -- is a thing of the past, not the wave of the future. Retailing directly to friends on a one-to-one basis requires people to drastically change their buying habits. They must restrict their choices, often pay more for goods, buy inconveniently, and engage in potentially awkward business relationships with close friends and relatives. In reality, MLM depends on reselling the opportunity to sign up more distributors.

Lie #3: Eventually all products will be sold by MLM. Retail stores, shopping malls,
catalogs and most forms of advertising will soon be rendered obsolete by MLM.

Truth: Fewer than 1% of all retail sales are made through MLM, and much of this is consists of purchases by hopeful new distributors who are actually paying the price of admission to a business they will soon abandon. MLM is not replacing existing forms of marketing. It does not legitimately compete with other marketing approaches at all. Rather, MLM represents a new investment scheme couched in the language of marketing. Its real products are distributorships that are sold through misrepresentation and exaggerated promises of income. People are buying products in order to secure positions on the sales pyramid. The possibility is always held out that you may become rich if not from your own efforts then from some unknown person ("the big fish") who might join your "downline."
MLM's growth does not reflect its value to the economy, customers, or distributors, but the high levels of economic fear, insecurity, wishes for quick and easy wealth. The market dynamics are similar to those of legalized gambling, but the percentage of winners is much smaller.

Lie #4: MLM is a new way of life that offers happiness and fulfillment.
It provides a way to attain all the good things in life.

Truth: The most prominent motivational themes of the MLM industry, as shown in industry literature and presented at recruitment meetings, constitute the crassest form of materialism. Fortune 100 companies would blush at the excess of promises of wealth, luxury, and personal fulfillment put forth by MLM solicitors. These appeals actually conflicts with most people's true desire for meaningful and fulfilling work at something in which they have special talent or interest.

Lie #5: MLM is a spiritual movement.

Truth: The use of spiritual concepts like prosperity consciousness and creative visualization to promote MLM enrollment, the use of words like "communion" to describe a sales organization, and claims that MLM fulfills Christian principles or Scriptural prophecies are great distortions of these spiritual practices. Those who focus their hopes and dreams upon wealth as the answer to their prayers lose sight of genuine spirituality as taught by religions. The misuse of these spiritual principles should be a signal that the investment opportunity is deceptive. When a product is wrapped in the flag or in religion, buyer beware! The "community" and "support" offered by MLM organizations to new recruits is based entirely upon their purchases. If the purchases and enrollment decline, so does the "communion.'"

Lie #6: Success in MLM is easy. Friends and relatives are the natural prospects.
Those who love and support you will become your life-time customers.

Truth: The commercialization of family and friendship and the use of"'warm leads" advocated in MLM marketing programs are a destructive element in the community and very unhealthy for individuals involved. People do not appreciate being pressured by friends and relatives to buy products. Trying to capitalizing upon personal relationships to build a business can destroy one's social foundation.

Lie #7: You can do MLM in your spare time. As a business, it offers the greatest flexibility
and personal freedom of time. A few hours a week can earn a significant supplemental income
and may grow to a very large income, making other work unnecessary.

Truth: Making money in MLM requires extraordinary time commitment as well as considerable personal skill and persistence. Beyond the sheer hard work and talent required, the business model inherently consumes more areas of one's life and greater segments of time than most occupations. In MLM, everyone is a prospect. Every waking moment is a potential time for marketing. There are no off-limit places, people, or times for selling. Consequently, there is no free space or free time once a person enrolls in MLM system. While claiming to offer independence, the system comes to dominate people's entire life and requires rigid conformity to the program. This is why so many people who become deeply involved end up needing and relying upon MLM desperately. They alienate or abandon other sustaining relationships.

Lie #8. MLM is a positive, supportive new business that affirms the human spirit and personal freedom.

Truth: MLM is largely fear-driven. Solicitations inevitably include dire predictions about the impending collapse of other forms of distribution, the disintegration or insensitivity of corporate America, and the lack of opportunity in other occupations. Many occupations are routinely demeaned for not offering"unlimited income." Working for others is cast as enslavement for "losers." MLM is presented as the last best hope for many people. This approach, in addition to being deceptive, frequently discourages people who otherwise would pursue their own unique visions of success and happiness. A sound business opportunity does not have to base its worth on negative predictions and warnings.

Lie #9. MLM is the best option for owning your own business and attaining real economic independence.

Truth: MLM is not true self-employment. "Owning" an MLM distributorship is an illusion. Some MLM companies forbid distributors to carry other companies' products. Most MLM contracts make termination of the distributorship easy and immediate for the company. Short of termination, downlines can be taken away arbitrarily. Participation requires rigid adherence to a "duplication" model, not independence and individuality. MLM distributors are not entrepreneurs but joiners in a complex hierarchical system over which they have little control.

Lie #10: MLM is not a pyramid scheme because products are sold.

Truth: The sale of products does not protect against anti-pyramid-scheme laws or unfair trade practices set forth in federal and state law. MLM is a legal form of business only under rigid conditions set forth by the FTC and state attorneys general. Many MLMs are violate these guidelines and operate only because they have not been prosecuted. Recent court rulings are using a 70% rule to determine an MLM's legality: At least 70% of all goods sold by the MLM company must be purchased by nondistributors. This standard would place most MLM companies outside the law. The largest MLM acknowledges that only 18% of its sales are made to nondistributors.

Accountability Needed
An FTC trade regulation rule that forces honest disclosure of potential MLM distributor income is desperately needed. Toward this end, Pyramid Scheme Alert has launched a petition drive urging the FTC to force multilevel companies to disclose the true income of their distributors. The requested data would include: (a) the total number of distributors involved in the company for at least three years (or since the company's founding if less than three years); (b) the average incomes of all distributors who have signed up for a distributorship by percentiles, not just the ones deemed "active"; and (c) a "weighted" overall average income of all distributors so that the extraordinary high incomes of the small number at the top are not calculated in with vast majority so as to give a more statistically valid figure.
_________________
Mr. FitzPatrick consults and writes about trends in manufacturer/distributor relationships. He founded and is president of Pyramid Scheme Alert, a consumer advocacy group focused on exposing and preventing pyramid schemes. He has served as an expert witness in several cases involving pyramid schemes and MLM companies. He writings include False Profits (a book about MLM deception) and "Pyramid Nation" (a booklet that laments the growth and "legalization" of pyramid schemes.)
MLM Watch Home Page
The article was posted on August 4, 2002.
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#20 Consumer Comment

Herbalife distributors are going by anyother name. They are now called THE ONLINE BUSINESS SYSTEMS or THE ONLINE BUSINESS= PYRAMID SCAM.

AUTHOR: Bridget - (U.S.A.)

First of all let me tell everyone that the Herbalife distributors are going by anyother name. They are now called THE ONLINE BUSINESS SYSTEMS or THE ONLINE BUSINESS. Vertical Skip Marketing is still around but there web site is completely different from Online Business Systems. Anyways I called myself doing research on The Online Business System before buying into their product. I checked web sites such as this one and the BBB and didn't find anything negative about the company. So Friday night I purchased the "decision package for $39.95 and got some crap (whiched looked as if it had been sitting in someones garage for months) in the mail today.Today I did a little detective work and typed "the online business" in the search bar and not " The Online Line Business Systems" which is what I had done in my so called research. Sure and behold a web site pops up for the the distributors which discloses the products that I (the idiot) would be selling. Herbalife products are you serious.There are so many law suits against this company its ridiculous and anyone willing to recruit others or sell Herbalife's products are ruthless. I came back to this web site and typed in Herbalife and presto just what I was looking for. My point is this, dont be BAMBOOZLED as I was. The decision package has no real information in it. It's nothing but a bucnh of testimonials which are the same ones from their web site and you pay 39.95 plus shipping for it. From what I read on this web site about the Herbalife distributors its obvious that this is a huge scam. With all the name changing this organization has gone through I wonder how the government is letting this go one. Herbalife + Vertical Skip Marketing + Online Business System = PYRAMID SCAM.
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#21 Consumer Comment

Personal Experience

AUTHOR: Crystal - (Canada)

Being that I foolishly bought into this crap I can knock it, Because Ive tried it, what did I experience? First I was promised that the reason everyone did so well with the business was there was a great product.ALso the product was soooooooooo great that you dont even have to advertise or do cold calls or rely on friends and family to get your business going, Customers came to you ! Can you believe it CUSTOMERS actually think your product is so wonderful they come to you ! WOW. SO I eagerly dished over $350.00 plus dollars and what did I get a couple of cheapply packaged herbs and the complete opposite of what the lady promised. First customers dont come to you , she told me to look into putting out a couple of advertisements in the paper, then to get a 1800# at my cost so that my business looks good, and then just to buy a website from them or I can get a free crappy website if I cant afford the good one. Then all I had to do was purchase four thousand dollars worth of herbs so I could qualify for a supervisor of some sort so I could scam other people so I dont even have to sell the product, I just rake in the dough by lying to people to pay hundreds of dollars for a pyrimad scheme. She kept pushing the point that the only way to get big with this is to get people under you and you will collect royalties and other stuff.
Then she asked me to throw a herbal life party for all my FAMILY AND FRIENDS .
So anyway my point being is it would have been
wise of me to research this before I bought into it to just try it! Because If someone were to just buy into a business even though there were soooo many bad reports about it, it would not be wise. I couldnt go through with it, Because I love my friends and family to much to do anyhting like that to them, I also care about people enough not to trick them into thinking there getting a good deal, I have a baby now and the thing that trully breaks my heart is to think about a single mother trying to provide for her baby with barely enough to make ends meet
so blinded by stress and money problems, she sees an opportunity to make a better life for her and her baby and decides to take her life savings of 3 to 4 hundred dollars and even possibly groceries for next week in hopes that she will start making money right away! (which herbal life claims and highlights but you dont)
You would have to trully be heartless to go through with that.
This world just keeps getting sicker and sicker.
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#22 UPDATE Employee

The freedom of choice and speech

AUTHOR: Raymond - (U.S.A.)

Carl and William,

Thank you both for the outstanding debate concerning Global Online Systems and Herbalife. I have to tell you both it was most enjoyable and informative reading what you wrote. It was because of your information I decided to give both GOS and Herbalife a try. Was that a wise decision? For me the answer is yes. I was presented with an opportunity. It's not all smoke and mirrors but an honest chance to work a business with honest results. Are we misled when we are told about the "successes" of distributors? I don't think so. Let me tell you why. How often are we presented with stories of people who came from nothing and made themselves successful?

We're presented with this idea all the time. It's because of this MLMs, pyramid-schemes, get rich quick schemes, the Nigerian money scam, real estate ventures, winning lotto tickets, et. al. are even discussed and pursued. For what are we looking when we take the time to invest in various opportunities? We're looking for what we were told was the American Dream. Streets of gold and money and less worry and all of that in a Norman Rockwell painting. Are we gonna get it? Who knows.

Sam Walton wasn't looking to become the richest man in America, was he? He just wanted a better way for folks to buy stuff. Bill Gates wanted a better computer program. Oprah Winfrey wanted to talk to people and have a way for the "average" person to share their story. It's the opportunity that counts. People get "ripped-off" all the time primarily because they don't want to investigate the hows. They only want what's at the end of the rainbow.

Herbalife is a corporation. Independant Distributors are the "stores" for Herbalife products, just like GNC is for other diet/nutrition products. Why are they not being taken to task? Well, I think it's because people can walk into a physical location and touch and shake and "handle" what they're about to buy. This is not to mention the fact that GNC is in your local mall and as such must be a "reputable" establishment, unlike an Independant Distributor. It's insane to think the market is saturated.

Herbalife has 1 million distributors world wide. Hmm, 1 million in 59 countries after 25 years in business doesn't seem like market saturation to me. Even if we all were to sign up 6 people unrelated to one another, that's still only 6 million people associated with the products. (Don't bother checking my math, I majored in it...) Are there more than 6 million people overweight in this country? Oh goodness yes! This isn't to mention those around the world overweight (granted we're the fattest country). It's sad to me that it seems so easy to pick on a legitimate company like Herbalife. Now, legitimacy is based on this: is there a product? yes., does it work? for some, yes, for some, no., can you make money? yes. People are always looking for the quick and easy way out of things.

The only quick and easy way to wealth to is inherit it. That's it. Everything else takes hard work and ridicule and some many other things. Have you ever wondered why Oprah Winfrey is the only BLACK FEMALE billionaire? Wow, it's amazing isn't it. For most people it's too difficult to succeed. They simply give up. There is luck involved a lot of the time, but you have to be willing to work, to try. There isn't an easy answer. There's only a safe answer. If you don't want to take the risk, or aren't financially able to take the risk, that is understandable and respectable. Personally, I look at myself and a diet/nutrition store, like GNC.

Before you compare my products to those at GNC by saying mine don't work and their's do, let me point out, there is not a template for human weight gain and loss. We're all different. What works for some may not work for others. I know girls who took ephedra lost a lot of weight and kept it off, I also know some who had serious health problems. Is it bad? Depends on who you ask, I guess. Herbalife's products haven't caused me any adverse side effects. It is armed with this knowledge that I promote.

Ok, I've rambled too much now...simply put...don't knock it until you try it...then with a personal knowledge give your opinion...
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#23 Consumer Comment

Thank you Kenny and Glenda

AUTHOR: William - (U.S.A.)

Just want to thank both of you for your input and want to give some advice.

First of all, keep that entrepenurial spirit going, and don't be discouraged by the scams going on. I'm sure that both of you will find a niche for yourselves that will bring you financial success, and the satisfaction of doing something you can truly be proud of.

This site is very strict about giving out web site addresses, but I can tell you this much...
Do a Google search by typing in [Friends in Business Home of Scams 101], go to the site it directs you to, then spend as much time as you need to go over all the info provided there. You will find excellent advice on what to look out for, and also learn of some home based business opportunities that require little or no investment.

This is how I learned of the business of which I am currently practicing. It has been very rewarding for me, both finacially, and for my self-esteem.

Please keep me posted through this site, as to how you folks are doing, because I really do care.

Good bye for now, and all the best to you, your families, and friends.

Remember that knowledge is power!
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#24 REBUTTAL Individual responds

Global Online Systems and Herbalife

AUTHOR: Glenda - (U.S.A.)

I have been trying to find work at home opportunities and have been going crazy by all the different company names HERBALIFE go under. On TV there is a commercial that says "this website match me with the perfect opportunity". Well it was just one opportunity, it was Herbalife. That's what started this whole searching on the web. Since then there has be Global Online Systems, Home Business Solution and countless others all selling HERBALIFE. I did pay 38.95 for some initial material and did not find out it was Herbalife until after I had received the package. But my problem is I am a homemaker and I have no money to invest in any type of homebased business. After keeping the information packet for about a month, I contacted the person who sent me the packet and I was able to get my money back. But now there is another company called Home Business Solutions who also sent me a packet for 29.95. I have been having it for about a month now. I was serious considering joining, taking the little bit savings that we have in the bank to go with this company, but now that I have read the rip-off report between William and Carl I think that I will have to tell the gentleman I will have to decline for now. I tried to tell him two weeks ago that I would put it aside for now but he did convince me to keep looking over the information for another 2 weeks. I do need to find something soon, but I can't afford to give my life savings to someone and not make any money out of this.
Thank you William for the advice.
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#25 Consumer Comment

Carl vs. William- what round is it? Thank you both =)

AUTHOR: Kenny - (U.S.A.)

Carl- you first/ I have worked in the same industry for over 20 yrs.,yes making someone else rich.I have been looking for a way out of that rat race and into you guys race. After taking an hour or so to really read you two's,debate,it has really changed my mind about doing any of that type of business;(MLM programs)....I supose ;me being a redneck-n-all,puts me in that lower 40% u talkn bout. I have an interally differant opinion now;you have made me see the light.NEVER BYE INTO SOMETHING THAT YOU CAN NEVER GET A STRAIGHT ANSWER FROM.... William- your turn/I am a born and raised Texan that lives in NC.thanks to the USAF. I have been looking for a way out of the hustle a bustle of making the rich get richer. You have helped me in making the discession NOT to fall a victom to this type of desception. I will continue to work towards owning my own bussiness so that i may be one of those people,who has people working;for me,to make me HAHA rich. They almost had me...lol...but I have no money to invest in any kind of get rich "SCAM" . THANKS AGAIN Jobless in North Carolina.......
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#26 Consumer Comment

Okay Carl, school me some more.

AUTHOR: William - (U.S.A.)

Carl..Carl..Carl,

I admit that I am confused at the math your citing. Looks like you did some pencil whipping to make the square peg, fit in the round hole, but I don't think you are quite done yet. You simplified, so us dummies can understand.

10% = 72% of total wealth
60% = 27%....
40% = 01%....

Okay...yep, you got the total wealth to equal 100%, but we are now at 110% of the population.

It is not that I don't believe the stats provided by the Federal Reserve Board, it is that I don't believe that you got these stats on your own. You are using figures that you quote off of your script provided by GOS, when you are doing your recruiting thing.

Carl, can you tell me where I can find these stats provided by the FRB? It will save me the trouble of doing a search, and I would appreciate that very much. But, if not, then I will see what I can come up with, and I will come up with something Carl.

Carl, just out of curiosity, what is your opinion about the recent $6,000,000.00 class action settlement paid out by Herbalife for operating a pyramid scheme? We never really heard from you on that. You know if people were writing trash about the company I work for, I would certainly get in touch with the company lawyers and let them pursue legal action. It's all in writing here, for all the public to see, so what is your stance on that?

Carl, I'm not going argue your opinion that all the rich people in the world exploit the masses. I guess what I want you to clarify, is that what you intend to do too? So that you can make the top 10%?

I'm glad that I'm involved with a business that deals with other businesses. I did, in the early course of my life, work for companies that sold goods or services to the public, and I never really liked any of that, but it did pay the bills. To each his/or her own. Carl you have chosen to foist this crap on the masses, so give it your best shot. I will always be here to point out all the negatives with GOS, VSM, NWTW, HERBALIFE, and any other pyramid scheme out there. It's what I like to do. So come on back with how Bill G., and Sam W. do it too, because it gives me a good laugh, and shows that you really are not very good at addressing the the real issues being discussed here. Like I've stated before, you are just smoke and mirrors baby, nothing more than a modern day SNAKE OIL SALESMAN.
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#27 UPDATE Employee

Well, seems I can't add, either

AUTHOR: Carl - (U.S.A.)

Total Wealth:

1% = 39% of wealth
9% = 33% of wealth
50% =27% ' '
40% = 1% ' '

OKAY?

Geez, Now that my simple arithmetic skills are shot, I guess I need to stop submitting to this insane opinion station. It's been fun and time consuming, but I'm going to take up a new hobby.

Teach Your Children Well!
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#28 Consumer Comment

Math correction.

AUTHOR: William - (U.S.A.)

Carl,

Sorry for critisizing your math, when I should have been checking my own. So lets try this again.

Population................Net Wealth of America

...1%...........................39%............
..10%...........................72%............
..40%............................1%............
________________________________________________
..51%...........................112%...........

As you can see, I did screw up with the Net Wealth of America (112% not 121%), but it still is funny math. Maybe the USA switched over to the metric system, and I just didn't get the memo, I don't know???

Any way Carl, hopefully you can clear it all up for us bottom feeding 40% who only account for 1% of Americas net wealth.

Peace...in the Middle East. I'm out for now.
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#29 UPDATE Employee

Where would Bill Gates, the Hiltons, the Waltons, the Dells, the rich people be without the mass of people working their jobs.

AUTHOR: Carl - (U.S.A.)

William, Your not very good at Math, are you...

Top 10% includes top 1%, 2%, etc... all the way up to 10. Bottom 40% includes 39, 38, 37, etc... So top 10% is NOT 1+2+3+4+5....

1% have 39% and 10% have 72% means that the remainder of the top 10%, those not in the 1%, have 33% of the money. Simply:

10% = 72% of Total Wealth
60% = 27% of ...
Bottom 40% = 1% ...

Forget it...I'm sure you can't understand that either.

If you don't want to believe Federal Reserve Board statistics, okay, it follows the same pattern of belief only what you want to belief anyway.

And, all the rest of your comments...well, frankly it's just more of the same. I just wanted to point out your misinterpretaion of the stats. All the rest of your opinions are exactly right....FOR YOU and millions of other people. But, the few people with a different opinion also have most the money.

In my opinion, just my opinion, the hordes of people that have been taught to get a good education so you can get a good job are the foundation of business owners' successes. Where would Bill Gates, the Hiltons, the Waltons, the Dells, the rich people be without the mass of people working their jobs. And that is the widest used "Scam" in America, used to make more workers for the rich to get richer. So, teach your children well to make good grades and get a good job, so the few can enjoy the fruits of their employees' labor. And, William, please do not agree with this opinion, it takes away from the employee pool that the rich people need, hopefully including my employees one day.
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#30 Consumer Comment

I'm not going away, and it seems Carl, neither are you (Contrary to your own post)

AUTHOR: William - (U.S.A.)

First I would like to thank Crystal for the kind words. It takes a special person to come forward and share their experience for others, who might be considering joining a program that is less than ethical in the way they do busines. I think the majority of people who have been taken to the cleaners by these types of scams, are to ashamed to come forward and bring to light, what has happened to them, as a result of participating in these so called business opportunities. Thats why I feel that this forum is a great tool for folks who need the input, both pro and con, to be able to make an informed decision. I incourage all to post, whether you are a victim, or you are someone who has made a particular program work.

Which brings me to you again, Carl. You state that you fail more times than succeed, in trying to help people improve and enhance their lives. Do you mean that in respect to overweight people who you cannot convince to buy your product, or to stuggling people who might be looking for an opportunity to improve their lives financially, but do not buy into the program? Or, do buy into the program, but fail to make it work? I'm not asking you for stats on the company as a whole Carl, but I am asking you what your success rate is with your orginization? Are you just selling product, or are you actively recruiting a downline? If you are just selling product to non participants in the program, what are you making in commissions? If you are actively recruiting, how many have you personally signed up, and how many successes have resulted, and how many have failed? It seems to me that you should have some idea of what those numbers would be. I'm very curious, as I'm sure we all are, how well the program is workig for you, especially since you are devoting 70 hours a week to your business.

You say you want to be in the top 10% of the population that account for 39% percent of the net wealth of America. Okay Carl, I can't fault you for that, I think every one in America would like to be there too. However, I am a little confused about the math, so maybe you can clarify for us.

Lets see:

population / net wealth
1% 39%
10% 72%
40% 1%
______ _______

51% 121%

Whats going on with the 49% of the population not cited here? And how do you explain that the 51% cited, are accounting for 121% of the net wealth?

Carl, I would have thought that you would have checked these figures before posting them for all to see here.

People, it is my opinion that this is just the kind of stats brought up to prospective recruits at these opportunity meetings/phone conferrences, to trigger an emoitional response. No one wants to be the bottom feeders, and they play on that. But if they want to quote figures, at least make sure it all ads up!

Carl, I thought at first you were a shill, but now I'm convinced that you bought into the program, and are trying your best to justify what you are doing to people, to get to that small percentile of the population that accounts for the majority of the net wealth of America. I think I get what you're driving at, that the majority of the population accounts for a fraction of the net wealth (weird math aside), and that these are the particular folks who are on your hit list, so that you can attempt to improve and enhance their lives. Carl, would you agree that the reasons that this large percentile of the population that accounts for such a small portion of the net monies, are probably not to well educated, and therefor working in low paying jobs? Does this make them easier marks for all these pyramid scam participants to go after? Why don't you have some of these people that you have helped so much, post on here, and let us all know how much Herbalife has helped them improve and enhance their lives?

Its nice that you are giving to those wonderful charities Carl. It probably helps ease your conscience.

I guess that you feel like you need to promote the biz, so that you might gain more users of product, and more recruits to duplicate your efforts, and increase your bottomline. Thats fine Carl, do what you must. I'll keep rebutting you til hell freezes over, because I believe that with all the evidence that I've come across, shows that Herbalife is nothing more than a pyramid scheme, and has done far more harm than good, for the unwitting participants that get suckered in. I feel that if I can stop just one person from throwing away their hard earned money on this and other schemes, then it has been worth all the time I have invested in this debate. And by the way, in my winning in that regard, I don't get paid any money, but I do get a nice feeling inside, and thats enough to keep me going.
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#31 UPDATE Employee

Thank You Crystal and Greg

AUTHOR: Carl - (U.S.A.)

In the course of my work, I spend my time trying to help people to enhance their lives. I talk to people and offer them the chance to improve their lives. But, of course, I fail more times than succeed, and that is something I do not get any pleasure from, it is a fact only.

Whether it is from personal experience or from personal tastes or from simple skepticism, does not change my failure rate. Yet still, the fact is that "failures" do increase my odds for success. So, in a twisted sense, I thank you. And, I'm sorry at the same time.

According to the Federal Reserve Board, 1% of the U.S. population have 39% of the Net wealth of America, 10% have 72% of the money. And the bottom 40% of the population have only 1% of the total Net money of the U.S. population.

What that means to me is that the people that have the "real jobs" are helping me increase my odds. Yet, I feel like I have a job (I spent over 70 hours this past week working my job), but my job is my business.

I made my choice to attempt to be in the top 10% of the U.S. population and share in 72% of all the money in America. The rest of the population are going to help me get there, period. That's capitalism and how this land of opportunity works.

And, I have investments with Phillip-Morris (Altria Group),K-Mart and Halliburton and others. These companies have bad publicity, pending lawsuits, etc...but they are financially sound and the balance sheets are strong. I also give to St. Jude Children Research, Ronald McDonald House and others every month, as well as give blood platelets monthly. I invest and give because of my choices.

The real statement is MY CHOICES. I feel bad for Greg and Crystal and William, and yet these people are why I have the odds to succeed that I do. I don't wish anyone anything negative, but we are all given the same opportunity and then we make our own choices. The bottom line then is "Thank You" William, Greg and the other 90% of the people. Wealth distribution in America needs the hard-working people with decent jobs in order for the few to have the money.

This whole 'Rip-Off.com' crap started with Herbalife and Global Online Systems. I don't need to defend those businesses. [Once again, if you don't like Bush's Beans (Herbalife), use B&M's or Van Kamp's (Melaleuca or Cyberwize) OR whatever system that allows you do build a business] In hindsight, I wish I had never started this "Submit Your Rebuttal" thing. I spend a large part of my days already trying to deliver the message that your life and future can improve and your family can benefit, and still I fail most times. Most people buy into...using Rogaine will bring beautiful babes around, or Jeep will blast out of a volcano and still drive away, or Bush's Homemade Chili is cooked in a house kitchen one jar at a time and Keebler crackers are made by elves in a tree. But, present those same people with a way to build financial independence without having to invest your money in the stock market's quirks (I personally do invest) and the bells and buzzers sound. And, so many people rely on the Williamses around the country, the 'nay-sayers', to give them a real picture of what building wealth really is. And, into what percentile will William fall in 10 years?

Anyway, Thank you for remaining in the bottom 40%. And, I feel bad for you, too. I'm sorry we failed you.
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#32 Consumer Comment

For the love of williams.

AUTHOR: Crystal - (Canada)

I wish there were more williams and less carls for then I wouldnt have been sucked into this scam of buying Magical weight loss product.
I regretably wasted almost 500 dolllars and catalogs and products all of it crap , I couldnt even bring myself to sink to the level of sucking more people into such a scam so I kept all the booklets to ward off any interested people I know so they can see for them selves what a load it all is!!!!
What doesnt kill you only makes you stronger.
So know when I smell a scam and it doesnt feel or sound right (like the sales lady reading her script to me!!!) I assertively say get a life and a real job, Can you honestly be proud of yourself knowing your a con of innocent REAL HARDWORKING people that in a desperate time try to get a big break only to get a reminder of how foolish we all can be. Not william hes so forunate to be so clever and smart and wow can he debate, its sad to see it wasted on the shallow minded.
Thanks for saving poeple thier time, money and self-worth your the best william!
Crystal
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#33 Consumer Comment

Thank you Greg.

AUTHOR: William - (U.S.A.)

Thanks Greg,

I'm glad that this helped you in your making an informed decision. Spread the word to your friends and family! Remember that knowledge is power.

Best regards,
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#34 Consumer Comment

Thanks William

AUTHOR: Greg - (Canada)

Thanks William

I was "this" close to signing up! You did an amazing job againt a very formidable foe. All the best to you, and thanks again.
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#35 Consumer Comment

"Dr. Louis Ignarro", is he a Ph.D. Carl? More dirt on Herbalife.

AUTHOR: William - (U.S.A.)

Hello all,

More interesting stuff on herbalife:

Herbalife Class Action Settlement Reveals "Secret" Business, Similar to Amway/Quixtar's Exposed on NBC Dateline
1. July 14, 2004

A $6 million settlement reached by attorneys for victims of Herbalife and its recruiting organization, The Newest Way to Wealth, reveals the same type of "secret" business that was exposed at Amway/Quixtar in the May 7, 2004 NBC Dateline. Both Amway/Quixtar and Herbalife are members of the Direct Selling Association.
Pyramid Scheme Alert has formally requested that the FTC investigate Amway/Quixtar's recruiting practices. It is now expanding this request to also include Herbalife, which follows the same pattern of deception.

The victims of Herbalife's recruiters tell the same story as those interviewed during NBC's expos on Amway/Quixtar. They are lured to recruitment meetings and told about the extraordinary income opportunity in the business, in which speakers claim they have personally become wealthy. Recruits are then told they also need to purchase books, tapes, marketing materials and attend seminars offered by the kingpins in order to become as successful as they are.

According to a story in the Los Angeles Business Journal where Herbalife is based, "The suit alleged that top-level distributors made more money selling independent promotional materials, which were supposed to help the lower-level distributors drive sales, than on the actual sales of Herbalife products."

This is exactly the charge made to NBC Dateline by top-level Amway whistle blowers. They stated that the claims by Amway's kingpins of high income from Amway product sales are false and that actually the top-level recruiters earn most of their money from the recruitment business itself, not from the Amway business. The NBC report focused on the recruitment operations of Amway kingpin Bill Britt of North Carolina
Victims in both cases, Amway/Quixtar's and Herbalife's, stated that these recruiting programs operate as secret pyramid schemes in which the upper level recruiters pay the lower levels a portion of the money gained from sales of these recruitment-based products (books, tapes, seminar fees, etc.) when they bring in new recruits. These products are not resold to the public on a retail base. They operate as an "endless chain" in which investments can only be recouped by recruiting others who would then do the same.

The Direct Selling Association, of which Herbalife and Amway are members, is currently lobbying state legislatures and the US Congress (HR 1220) to enact a new law that will legalize non-retailing endless chain marketing schemes. It would also exclude the sales of "tools" sold to recruits from the definition of a pyramid scheme. Pyramid Scheme Alert has sent warnings to all members of the House Subcommittee on Commerce, Trade and Consumer Protection, which is reviewing the bill, alerting them of the harm this bill will inflict on consumers and informing them of the special interests that are promoting it.

Pyramid Scheme Alert has also called on Congresswoman Sue Myrick of Charlotte, North Carolina to withdraw her name from sponsorship of the bill. Mrs. Myrick has been an Amway distributor, spoken at Amway recruitment meetings where these deceptive practices occur and has received hundreds of thousands of dollars in political contributions from Amway/Quixtar kingpins.

Herbalifers, please feel free to comment.
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#36 UPDATE Employee

CLOSING ARGUEMENT FOR THE DEFENSE...

AUTHOR: Carl - (U.S.A.)

William has delivered an appeal to your root for the guy that fell on hard times sympathy. And, we all should admire his fortitude to recover from events beyond his control. Job well done, William, and I hope your endeavors lead to further success.

I had been a "manufacturing specialist" for nearly 25 yrs., which is to say a factory worker. Sure, I've had Supv., Mgr., Supt. titles attached to my name, yet still, factory worker fits best. I have had no sales experience/training, in fact I always "disliked" sales people and categorized sales as a "smile in your face, stab you in the back" function. But, I always realized their importance in the operation of the business. I was glad there were (My Term)"scummy" people in the world that could do it, but never me.

One of the beauties of GOS (I can't speak for Verticle Skip, Financial Success,...) is that normal, everyday people without natural or trained talent for sales presentations can do it virtually effortlessly because of the "script" developed by people, like William, that do have that talent. I modify the script with personal chit-chat because I enjoy talking to lots of the people that have come to me. But, yep, the script is my foundation to sell since selling is not my forte. I bought the right to use that script.

When I made the personal choice to look ,again, for a business for myself, I choose to look for a work at home type of opportunity. My first business venture, several years ago, failed after 9 months and about $65,000 lost and was not an at-home venture. Still, I wanted out of my "rut" and found GOS. Personally, I found them, they did not find me, but internet and e-mail ads, newspapers, flyers,.. are ways to generate business.(Get a spam-killer if you don't want e-mail ads, I did) My 2nd attempt looks like it's going to succeed, of course that's still not guaranteed. Others may have had, or maybe will have a different experience than I'm having. I had lots of good experiences at Best Buy before I then had one bad one. If I had the bad one first, I wouldn't have gone back.

The prosecution, William, uses words like "scam" and "rip-off" to describe GOS's marketing style. He speaks of market saturation and uses a psychology trained "expert" that throws out outrageous numbers in math formulas to make a case that is not founded in the facts of GOS nor Herbalife. Like the trained salesman he is, he twists my comments and writes that I said "all businesses are shitty", when the fact is the arguement I made was that all businesses have negative aspects, that does not make any business "shitty". I have tried to show that market saturation of GOS and Herbalife exists ONLY if the world stands still, in other words, as long as population demographics change, as long as trends and interests change, as long as products and product lines change with the changing marketplace, as long as survival of the fittest exists in capitalism, the demand for GOS and Herbalife can grow.

Again, I found GOS, they did not come to me. I found a website and bought the REFUNDABLE Decision Pack. I followed the instructions and found out that Herbalife was the product being sold and was given the marketing plan info, BEFORE I spoke to anyone. Looking back, if I had been approached about GOS by a person on the phone and was told that I would be selling Herbalife, being the skeptic and naturally negative to selling anything type that I am, I would have turned away from the offer. My guess is that most people don't want to sell any product. The thought of being a "salesperson" is not appealling to the masses. But, presented to me as it was, I was able to make the right choice in spite of my aversion to selling. So today, I'm making money doing something I thought I'd never do, and GOS gave me that opportunity, thanks to their marketing style.

Having heard positive statements of Herbalife products in the past was another factor in my decision. In fact, Herbalife does make great quality products and the company encourages it's distributors (and is policy) to support the customers with contacting and monitoring the efforts of the people using the product. Anyone can go to a store and buy cheap "nutrition" drinks or "diet" bars, but you can't get the personal support of someone helping you achieve your goals. Exercise is great,that's why there are places where people go to exercise instead of doing push-ups and sit-ups at home, personal support and help. I've always wondered why people will pay more to join a 'Health Club' when a YMCA is cheaper.

William, it seems, came across a person within GOS's system that may not have been the best at delivering the message to him. And, frankly, like me, William is also a person that tries to get all the answers before moving to the next step and, as any salesperson, will testify, some people are harder sells than others. Okay. His choice of turning away from GOS is certainly his own option. My only arguement here is that a person's option to decline a business offer does not, in itself, make that business bad.

William says I have not answered his questions. The only question I will not answer is my personal business questions, that's none of his business. He asks about the success rates within GOS, and, of course, I don't have that exact number anymore than I can tell you the number of employees that have been fired by Alcoa in the last 5 years, even if I have been in Alcoa management. So, my answer has consistently been that people fail in any business. Starting your own business is risky, extremely risky. There are no guarantees. Start up costs vary greatly from business to business, but the risk factor is pretty much the same. That William is now working from home is further testimony to the growing demand to work from home and GOS will tap into that growing demand. And, the failures within GOS's opportunity opens opportunities for others, the same as a person getting fired from a job is an opportunity for another to take that job. And, yes, success will always depend on your own abilities and work. Is there really any arguement there?

"Deceptive and fraudulent", William? I have repeatedly submitted that what you call deception and fraud is just plain, old-fashioned advertising and marketing. Let's see, will you claim that K&B has been saintly in everything it has ever done and that every associate K&B ever had always practiced with the highest of integrity and ethics and that every associate always did the complete best effort that could be done? If you did know of 5 negative aspects of that company, past, present, people-related, bookkeeping-related, etc..., will you walk into a potential client's office with that list of 5 negative aspects and tell him/her all about those 5 things? Will you tell your potential client your company's profit margin on the client's cost, or your own profit margin? Just how much info will you disclose, ALL or just what the client asks for and will you answer the questions with ALL the info you know or just the better info? DID GOS EVER REALLY OUTRIGHT LIE TO YOU? Okay, let's move on.

All right, closing statement. I have no arguement! Surprise! William is an highly intelligent man, very obviously. He is entitled to his opinions like every lucky person that is a citizen of this great land of opportunity. If he wants to write this site and call GOS and Herbalife a scam and wants to call me stupid and even if his opinion of slant-eyed people is negative, he can state his opinions. It won't change anything, but he has the right to express his thoughts. If William has presented his case more convincingly really makes no difference to the outcome of GOS or Herbalife or me (or slant-eyed people). But, I just couldn't resist the fun of the debate.
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#37 UPDATE Employee

ROBERT, THE CANADIAN IDIOT...BUY HERBALIFE

AUTHOR: Carl - (U.S.A.)

Dear Idiot,

I'm in the business of selling Herbalife products and while I was thinking of my work, I thought of your love affair with prestigous awards.

Dr. Louis Ignarro is on Herbalife's respected Medical Advisory Board. His research in the benefits of Nitric Oxide to cardiovascular health was recognized in 1998 by winning the NOBEL PRIZE!!!!

Now that you know that and are, I'm sure impressed by that prestigous award, contact me so I may sell you some of our great product. (Think of it...NOBEL PRIZE!!!)

If the Malcolm Baldridge award makes you run out and buy a Motorola pager, I'll bet you will spend at least twice the pager price on Herbalife products. Hurry and contact me!

NOBEL PRIZE, NOBEL PRIZE, NOBEL PRIZE...
HERBALIFE, HERBALIFE, HERBALIFE...
CONTACT ME TO BUY, BUY, BUY....
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#38 Consumer Comment

Sorry to see you go Carl. I think that this debate has bee most helpful for people who may be considering signing up to be an Herbalife Distributor.

AUTHOR: William - (U.S.A.)

Carl,

Just would like an opportunity to clear up some things before you leave.

I won't ask you to answer my questions as it is pretty obvious that you will not.

Sorry to say, Carl, that I don't need a job. I have a business that I enjoy very much. I am an independant dealer/distributor for Kaeser & Blair Inc., in which I provide businesses with promotional advertising.

After working in the corporate sector for many years, I found myself looking for some thing new after 9/11. I won't go into all the details, for the sake of time and space, but suffice it to say, I was another victim of downsizing due to the downturn in the market place. So after a string of go nowhere jobs, I finally decided to go into business for myself. While 9/11 was bad for a lot of folks, for me it was a blessing.

After looking into many different business opportunities, I was very happy to find K&B, as I have been in marketing and sales for most of my adult life, and it was the perfect match for me. The start up costs were very reasonable (around $150). I office from home and now enjoy the many tax benefits that go with owning your own biz.

I am very proud of my association with K&B Inc.. They are a company that has been in the business of helping business, for 110 years of continuous operation. Grover Cleveland was president when this business got its start.

When I call on prospective clients, I let them know that I am a dealer for K&B Inc. I tell them about K&B, their exceptional track record, and the great product line we carry. I don't have to hide anything about who I work for. When meeting with my clients, I enjoy the reputation that comes with being a dealer for K&B.

OK, enough of my personal history. I would like to express some personal opinions regarding GOS/Verticle Skip Marketing/Herbalife/,or whatever it is they go by now.

Since the day that I responded to an unsolicited email from one of the Herbalifers, I wanted to find out about the opportunity being offered, so, I then get tag teamed on the phone by the Herbalifer and her upline sponser. I let them know in no uncertain terms that I have some questions I want answered before I will even think about getting in "while the time is right".
This Herbalifer sounded as though she were reading off a script, and everytime I posed my questions, the upline would come back at me with everything but the answer to my question. The first thing I wanted to know was the name of the company that was offering this opportunity, as the email only said I could earn X-amount working P/T to X-amount F/T (I'm certain everyone has gotten at least one of those). Never got a straight answer til the very end of the phone interview. Which at that point did not suprise me, because of all the other red flags I was getting, from the other questions that were being evaded. Once this phone ordeal was finally done, I informed the Herbalifer that I would do my due diligence on Herbalife, then I would get back to her. At which point the upliner sounded very indignant, and the downliner sounded very...well, down.

Which now brings me to my opinion of Herbalife! "Thank God!", I'm sure you're all saying.

I think Herbalife is deceptive and fraudulent in their recruitting of new distributors. They lead you to believe that the market is wide open, when in fact, it is saturated beyond belief. My definition of market saturation is when the company you work for does, not care how many more distributors they add on in any given area, to the point that you will be competeing with umpteen other herbalifers in your town (look in your business pages phonebook under Herbalife distributors) to sell the same overpriced crap that studies have shown to be pretty useless, and even dangerous to some. So who would you believe, Carl, or Me?

Carl, and all the Herbalifers, will argue that all companies are shitty so that makes Herbalife okay, and that all the people on this site who have made complaints that they were ripped off, are losers and don't work the system. He also argues that PH.D.'s, who have written on the subject, are crack pots and drug users, so one should discount their theories or ideas on the subject. Herbalifers will not answer your questions on how many people they have signed up, how many people have succeeded, and how many have failed, because it would become apparent that it is not such a great opportunity as they would have you believe. They want you to buy the info packet and then buy the IBP, and all the tapes and books on how to run the biz. That is how they try to make their investment in the business back.

Carl, you say I failed with GOS, when in fact its the other way around. GOS failed with me, in that they would not answer my questions at the outset, thus I did not sign up.

I've been butting heads with you too long and it has been a futile attempt to have the questions I have, answered. But I think that the questions you chose not to answer has spoken volumes about what Hebalife really is. So I hope that all who are considering signing up read these posts from you and I, and get enough out of them, to make a better, informed, decision.

I don't know how many people who read through these threads, but I sure would like to get some feedback as to who makes the stronger case, as I'm sure Carl would. So please feel free to share.

Carl, normally I would go back and edit this post. I'm not real happy with it, but I've got clients to go see, and not enough time. So I apologize for the quality of this post. I hope anyone reading it gets the gist of it, and if they need too, go back and read the previous posts in the thread, to get a better understanding of whats going on here.

Hope everyone has a wonderful day.
Later.
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#39 UPDATE Employee

THIS IS LEADING NOWHERE.... SO GO ELSEWHERE... go get a job

AUTHOR: Carl - (U.S.A.)

William (and Canadian Guy):
This whole thing of arguing pointless points has taken too much of my time. Now, someone wants me to rebut their opinion of Florida businesses.

I don't buy at Best Buy because of a personal bad experience. I could even say I was "scammed", but actually, I just fell for a "deal" and should have known better. And, I'm NOT saying Best Buy is a Bad business, I made my choice and it was wrong for me. We need to be careful about calling a business bad when the fault actually lies elsewhere.

During these hurricanes here, some gas stations raised their price and victimized the public during the crisis. That was NOT the fault of Texaco, Hess, Mobil... Those events do not make oil companies bad.

Hold on, William, let me get that Canadian idiot out of the way...

Clearwater, FL... capital of scam artists and lightning strikes.... SO WHAT! Yankton, S.D. has highest number of drunks per capita in U.S....SO WHAT! Geez...Get off your high horse, Canadian Guy. Look at the scams generated in your own backyard...and I am NOT knocking Canadians for bad individuals in Canada. I like most all the Canadians I've ever met. But, Canada is not full of saints, either. And, Canadian Guy, all I said about McDonalds is that a few bad employees DO NOT make the company bad. 5000 employees in McDonalds is a few. And comparing manufactured products to people that put your order in a bag is crazy.

At the factories, offices, distribution points of Motorola, where the people are, is where you can compare mistake rates per 5,000 employees. Does every retailer of Motorola goods receive their complete order on time? Do you really think there is not a defective product rate in the plants even with the aid of automated equipment? Do you see automated order takers/fillers at McDonalds, idiot? Machines don't make mistakes, people do. LEAVE ME ALONE, YOU'RE STUPID AND PROBABLY THINK IF YOU FILLED BAGS AT MCDONALDS YOU WOULD NEVER,NEVER FILL THE ORDER WRONG OR GIVE THE BAG TO THE WRONG CUSTOMER. GO AWAY!

Okay. I'm back.

William, years ago, a small group of investors supported a young company that had failed, repeatedly. Some investors pulled out after losing lots of money (at that time, "scamming" wasn't a common word, otherwise those that pulled out would've written this site, I'm sure). Other investors stuck it out and finally, Thomas Edison invented the light bulb. The same for two brothers that owned a bicycle shop and were trying to make a flying machine.

Hell, these guys were bicycle makers and repairers and people had been trying to do the same thing for centuries. What were the odds that these "unqualified" young men were going to succeed where smarter people had failed. And, yet... Alexander Bell, Michael Dell, Sam Walton...Then compare the successful attempts numbers against the failed attempts numbers.

And, we can't forget the successes that turned to failures later. How many once thriving businessses later went bankrupt. I don't know, but even success now is no guarantee of success later. When Polaroid failed to change with the times and didn't get on the digital camera wagon soon enough, Polaroid practiced bad business, not by "scamming" their stockholders, but by not being market smart. Same with the Swiss watch makers that did not think quartz movement was going to succeed.

Global Online and Herbalife are just businesses. If you want to take them up on their opportunity, without a guarantee or promise of success, then do it. If you want to be safe, then work for someone and help to make them richer. GOS and Herbalife both show disclaimers on all their literature regarding income rates and FDA approvals, etc..., as do all legitimate businesses about their products/services. GOS and Herbalife has not shown me any LIE about their product/service. But, like all businesses, they don't give a rat's ass about William's success, nor Carl's success. They only care about their business success. AND THAT'S A SUCCESSFUL BUSINESS ATTITUDE!

Bottom Line: The words SCAM and RIP-OFF are used too loosely. People should say "unfair" "slow to respond" "misleading" "unsubstantiated", etc...when those terms better apply.

Any business opportunity is risky to various degrees. For those that can't stomach the risk, there are jobs and they can help make other people more money while keeping, supposedly, safe and secure. All they're risking (besides their own ability to keep a job) is that the people that own and run the company do all the things necessary to stay successful in the business.

Hopefully, the corporate management will keep the company financially sound, by doing all those things some people complain about, like...fine print and disclaimers, advertising and marketing, NOT broadcasting the negatives of their business, etc...(When I worked for the aluminum industry, I sure did not want my company to broadcast the strip mining practices still being used overseas to get the ore needed to produce aluminum.

I needed my company to stay strong and financially fit so I could keep my job.) OOPS! Yes, those that do take a job do risk something else, the company's decision to keep their position available. In other words, plant closures, lay-offs, machines that do the job instead, etc... And the risk of policy changes to retirement plans, benefits, etc... I guess having a job is not really security, either, just less risky.

People that don't read the fine print, the disclaimers nor the terms and conditions are being very unwise. But, no one can be forced to do those things, it's their choice.

Market Saturation is defined by the same factors that define supply and demand. Lots of info in the world about that. As the population average age gets older, the demand increases for health products. As internet access increases, the demand for work-from-home increases. The U.S. is only #6 in the world for the number of computers per household, a huge potential for increasing and so, a huge potential for GOS.

Businesses that come under scrutiny by the public or government or whatever are NOT bad businesses by that measure alone, no more than being reported to the BBB makes the business bad. Did the company make a reasonable effort to resolve the issue and act in good faith? If a practice, an ingredient, an ad campaign, or whatever falls out of favor, does the company change? When O.J. Simpson was a hero, Avis used him to market their business. Because O.J. became a "bad" person, Avis changed. That does not make Avis a bad business because they once used O.J. Simpson, no more than a business that once used an ingredient that later proved bad.

Tobacco companies...are they a bad business? Probably you say yes, William. Bad for people's health, sued, don't acknowledge the negative reports of nicotine, even lie to the public, forced by gov't to put warnings on their products, billboard ads illegal, etc... Of course, I think they're a great business. They don't force people to smoke, they promote smoking through ads and marketing and give people the option to make their choice. They fill a niche in the market of satisfying peoples desires. They do things like change their name as marketing strategy and expand into the food/beverage market.

Their employees are benefitting from a very well run business and those employees are making the stockholders richer and richer. They are a part of the Dow Jones Industrials. Of course people are dying because they smoke, but that is the fault of the individuals that smoke. Sure it's additive, but smokers become non-smokers daily. PEOPLE MAKE THEIR OWN CHOICE ABOUT SMOKING, GUNS, HEALTH PRODUCTS, TO EXERCISE OR NOT, EATING FATTY FOODS, DRINKING TOO MUCH, DRIVING WHILE DRUNK, ETC...Do you want to outlaw guns, liquor, cars....?

Still Bottom Line: If you don't like GOS options, go somewhere else. If you don't like Bush's baked beans, buy B&M's. If you don't like baked beans, don't buy baked beans. Make your own choice. But, don't call B&M a scam because they don't taste good to you. Don't knock them for advertising their nutritional goodness and how they make a hamburger picnic more family fun, while NOT telling you about the rats and bugs in their processing plants. Make your own choice, William. GOS was my choice. Herbalife was my choice. We both began with the same offer of opportunity. You failed. I did not. So What.

I think I lost a Decision Pack order the other day because I was spending time rebutting instead of minding my business. So this IS the last response. I am not practicing good business if I'm wasting time on this site just because people like you won't see the obvious (and I get a degree of personal pleasure in the debate). Call me anything you like, it doesn't affect my bank account. Call GOS and Herbalife anything you like, the business of making money will continue.

If the "noise", no matter how false the "noise" is, becomes too loud, the businesses adjust and continue to make money. For those that are willing to take risk and WORK with business sense, join on. For those that want to buy their success with $500 or $5000 or $50,000, go somewhere else and take your chances( Las Vegas...)And for those that just want to stay secure and pay the bills, build a retirement nest egg,... go get a job and keep your fingers crossed.

William, it's been fun and thanks for your concern about the hurricane and GOOD LUCK TO YOU. I do mean that sincerely.
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#40 Consumer Comment

Still won't answer the questions Carl?

AUTHOR: William - (U.S.A.)

Thanks Carl for letting me know that my posts are improving. It means alot to me coming from you.

I agree Carl that everyone should weigh the pros and cons when making a decision on anything...especially anything that means parting with your hard earned dollars.

But you say that I have failed again, and you are most certainly right. You still have'nt answered the questions for me Carl. So, I will keep trying to improve, in hopes that the questions that I've been posing to you, or any of the other 999,999 Herbalife distributors, will finally get answered.

Carl, I've even printed up your last rebut so that I can answer all the questions you're asking me, to the best of my ability. So here it goes Carl.

Question #1 Why do people work for and buy from K-mart when they sell clothes made by children in sweat shops in India?

My opinion: Part I. People work for K-Mart regardless of how many Indian sweat shops supply their goods, because they have bills to pay, and K-Mart doesn't charge you for an info pack to see if you are really interested in working for them, and then make you buy $2,000.00 worth of goods for the privilidge to work for them. They probably provide some type of benefits too, but don't take that as the gosphel, because I've never worked for K-Mart.

My opinion: Part II. I think people continue to buy from K-Mart regardless of the overseas sweat shops, because they are very competitive on their prices. This I know, because I have been known to shop at K-Mart on occasion. For instance, I bought an eight-pack of protein drinks for around $10.00, what do protein drinks go for at Herbalife Carl, just curious?

So, regarding Micro-soft, I think the above answers could be applied as well.

As far as the Catholic Church, I think that people will continue to worship, regardless of the scandals, because of their personal faith in Christ their Lord.

Vote Democratic as opposed to Republican...do we really need to go there?

Goodyear Tires? I'm not sure what the issue is there, so I won't comment.

Which brings us to the hard hitting question: The only "crime" in any of my arguments is that GOS and Herbalife are successful businesses and where's the crime?

Well Carl, if you had read any of my previous posts, I would think such a smart cookie such as yourself, would have answered the questions posed therein, so that we all could weigh the pros and cons to come to an informed decision. Is their fraudulent or deceptive practices? Just answer the questions, Carl, and let the people decide.

As far as all the other scams going on, I think that is wonderful that you take an interest in them, as well we all should. Once people bring these awful things to light, it probably helps others before they fall victim to these unscrupulous scavengers.

Well I guess thats it for now Carl, so once again, I will be waiting for your reply.

Oh, by the way, I hope all of your friends and family are doing OK after the bad storms to hit in FLA, and I sincerely mean that.

Good luck and best regards.
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#41 Consumer Suggestion

Yes if McDonalds has 5,000 bad servers then McDonalds is a bad company.

AUTHOR: Robert - (Canada)

Who has the audacity to say If I am one of the 5,000 persons or families who experience bad service at McDonalds then that does not meant he corporation of McDonalds a bad experience. This is ridiculously obscene, if I am one of the 5,000 victims then yes McDonalds corporation has failed as a whole. Have you ever noticed how the Motorala company measures their products (and is the largest manufacture of pagers) failures to the one product per million. 5,000 failed pagers per 5 billion experiences would definitely not even place such a company in the running or worth looking at to recieve or be audited for the prestigous Malcom Baldridge award.

In fact it would be deemed a overall failure unable to meet the Quality criteria of the awards recepients and worthwhile guests for auditing. 5,000 failures a year is horrid business. I would also like to note, how many of these responses come from Clearwater, FLA. Did any of you know, Clearwater, FLA. is considered the telemarketing scam city in the United States? Did you know the Better Business Bureau investigates over double the amount of complaints in the city of Clearwater, FLA. than any other city in America. Did you also know that the next four most common violators of sound business are all located in FLA.

I say Lease it out to the Cubans and cut off all phone lines with FLA. Let the Cubans grown their sugar cane to feed their poor, and keep them from voting as well, as they are also responsible for throwing the first presidental election in the U.S.

Thxs Brother Jeb! Who won the personal vote count in the U.S., Why is Fla. so corrupt with telemarketers, sure Fla has several good things to offer. However these days I just see the word FLA. on anything and into the trash it goes. Ooops I let my secret out, now the frauds and scam artist will leave their self address information out!
Robert Marcotte
Montreal, Quebec.
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#42 UPDATE Employee

AND FINALLY, MY FINAL RESPONSE TO WILLIAM and all...

AUTHOR: Carl - (U.S.A.)

I did not answer your comments regarding my personal success, the mathmatics nor the initial subject that led us to this point, market saturation.

1) My income, distributors, etc...is between me, my business and the IRS. Suffice it to say that I am presently moderately successful and, naturally, expect to do better.

2) I don't know what hat Doc Taylor pulled $97,000/month out of. I have not seen that kind of income promoted by Global Online. Although it very well is possible, odds are not in favor of it. I advertise $500 to $5000+/month, depending on individual effort, time, skills etc...And the higher income is not "out of the gate". I sure won't argue the 2+2=4 math, I argue that Global Online makes no such statement regarding that kind of income. Even "implied" income through ads or above average testimonials don't get nearly that high.

3) Herbalife has been around for about 25 years. No business thrives and has the success Herbalife has had by doing the same thing year after year. Research, market developement, product changes and expanding product lines are some of the factors ALL successful companies use to grow, year after year. Changing market demographics require changing market strategies to adjust and continue to grow. A market that is even approaching any measure of saturation has many competitors in the game and the weaker businesses die as the successful businesses become more successful. An MLM, like Global Online, can ride that success. And, like any "job", people retire, change companies, change careers, fail(get fired)...so that the next generation moves into the successful ranks.

Personally, my goal is to get up to about $5000 per month in residual income, then venture into a different, riskier business. I may venture before $5000, but whenever I do make my move, there's another opening for someone else.

So,William from Texas, I'm sorry you failed with Global Online. You probably will never agree with me and frankly, I DON'T CARE. If you want to blame GOS, fine, and if you fall off a horse, be sure to blame the horse. If you take a job somewhere and don't get that promotion or that raise you feel you deserve, be sure to blame the company you work for.

And, all the people that eat at Subway everday and don't lose weight...blame Subway.
All the people that use an antacid and still have an upset tummy...blame the antacid manufacturer.
All the men that have erectile dysfunction and take Viagra and sex is still not exciting with that woman you've been to married to for 25 yrs...blame Viagra.
All the women that bought that $500 dress that looked glamorous on the store dummy, but when you wore it to the party nobody took a 2nd look, blame the store or the maker of the dress.

Business is business, fine print is fine print, advertising is advertising, etc...knock it all you want, William, it ultimately comes down to your own abilities to make the right choices for yourself. Herbalife and Global Online are not your enemy, you are. And, you're not my worst nightmare. My worst nightmare, in respect to business opportunity, is not having an opportunity. Global Online and Herbalife have given me an opportunity. The rest is up to me.
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#43 UPDATE Employee

MUCH BETTER, WILLIAM. What matters most is that people, hopefully, look at the pros and cons of anything to make their decisions.

AUTHOR: Carl - (U.S.A.)

I like your effort much more here, William. Although I "promised" to just delete this time, I have to give you your credit for effort. But, you failed again.

Ultimately, every asshole in the world has to make his/her own decisions in life. What matters most is that people, hopefully, look at the pros and cons of anything to make their decisions.

Microsoft sued....under gov't scrutiny...
U.S. Democratic Pres. lies to public...
Martha White convicted...
Goodyear recalls tires...blamed for deaths...
Cold medicine companies' claims false...no cure for common cold....
Clothes manufacturers use child labor...
Catholic priests convicted of child molestation...
ETC...ETC...ETC...
Mark Hughes, founder of Herbalife, dies of drug overdose...

Why do people work for and buy from KMart when they sell clothes made by children in sweat shops in India? Why do people still use and work for Microsoft, go to church, vote Democratic and buy Goodyear tires? Because they choose to! There is enough info out there for them to decide not to, still they made their own decisions.

Ephedra is NOT used in today's Herbalife. But, now citrus aurantium is under FDA scrutiny, and Herbalife, LIKE LOTS OF OTHER COMPANIES, use it. That's the way the world is, good and bad, even good yesterday is bad tomorrow. The info you provided, thank you, is a common statement for MOST companies that are in the Health and Nutrition industry. Face it...nothing beats exercise and sound, nutritional diet for a body's well-being.

But, all these things do not show or prove that Global Online Systems and Herbalife is a "Rip-Off". The only "crime" in any of your arguements is that GOS and Herbalife are successful businesses and where's the crime?

You did, in my opinion, present your views much better this time. Have you heard of the "Sweepstakes" scams being used to rob elderly people of their money. Most of the scams are out of Canada targeting retired people all over the U.S. and Canada to send in thousands of dollars to "pre-pay" taxes on their "winnings". Check it out. I hope you decide to put your efforts into something more worthwhile. Child labor, child prostituting, or the elderly being abused are favorites of mine.

So, "Snakeoil Carl" is done....Oh! Doc Taylor and Doc Leary are the same in the respect that they used their Ph.D. status to make their opinions more "credible". But, in the case of Taylor, he more used his opinions to make his money, too . They're both nuts, in my opinion.
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#44 Consumer Comment

Just getting started I can never get straight answers to my questions.

AUTHOR: William - (U.S.A.)

Dearest Carl,

No, I'm just getting started.

While my last post contained no statistical data regarding market saturation, I was hoping that you would answer the questions for all of the people here, who might be wanting to sign on to the "Herbalife Program".

Everytime I've been approached by someone wanting to sign me up, I can never get straight answers to my questions. Since you seem to be big on stats, could you please tell all of us how many people you have signed up as distributors, how many have succeeded, and how many have failed? Would you be willing to give names and contact info of your distributors, both successful and failed?

I was hoping too, that the section titled "Excessive Levels" would drive home the point of market saturation by using the mathmatical formula given to illustrate commissions for a distributor in a given month based on $5 commission x 5 distributors, thru 6 levels. Yes the $97,650 commissions and bonuses at the sixth level is outrageous, but look at the number of distributors (19,530). I think Herbalife claims to have 1 million distributors worldwide, and please feel free to correct me if i'm wrong, but my god man you don't have to be a marketing expert to see that you will have serious competition trying to sell the products to an ever dwindling customer base.

Which brings me to "Weird Jon Taylor?".You compare him to Timothy Leary. What is your point? All persons with Ph.D's are wacked out drug users? I don't think that he was on a vendetta as you describe, but more on a mission to educate the public of what constitutes a pyramid scheme, how it can damage and destroy peoples lives, what questions to ask recruiters when attending these opportunity meetings, etc. I did a google search on him, and did find that he sells his books, which are very reasonably priced. What's the price range on all of the different self help and coaching material you need to buy from Herbalife in order to succeed? How much money and time have you spent Carl, to market your business, and how much profit have you realized?

Yes Carl, I do use search engines when wanting to learn more on any given subject. It is the best thing since sliced bread, for uneducated hillbilly folk, like myself. Who can never get their questions anwered by slick salesperson types. So Carl, I thought the questions were pretty straightfoward and easy to answer. Do you feel that they have no merit? Is he just another pill popping wacko like your ex-wife? Why can't you just answer the damn questions.

So while on the subject of search engines, here are a few more tidbits I found while researching Global Online/Verticle Skip Mrkting/Herbalife.

Herbalife International: 1985 Hearings, Part IMLM Watch Home Page
Herbalife Criticized at Senate Hearings
Odom Fanning
Opening two days of hearings, Senator William V. Roth, Jr. (R-DE), chairman of
the Senate Permanent Subcommittee on Investigations, made it clear that their
purpose was not to "get" Herbalife or any other product, but resulted from five
months of investigation into weight reduction products and plans of all types.
The Subcommittee is authorized to investigate the efficiency and economy of all
branches of the government and also has jurisdiction over "all aspects of crime
and lawlessness within the U.S. which have impact upon or affect the national
health, welfare, or safety."
Roth acknowledged that following announcement of the hearings (held in
Washington, D.C., May 14th and 15th), he had received a "very large number of
phone calls and letters from individuals who are very satisfied with the
Herbalife products, and have lost large amounts of weight." Many of these
correspondents, and an estimated 3,000 Herbalife distributors who marched on the
second day, were obviously on the defensive. So was the Food and Drug
Administration, for, as the senator put it, the purpose of the hearings was "to
find out if the public is being adequately protected when it buys and consumes
diet products."
In his opening remarks, Roth made a distinction between "miracle pills and
creams," tinted sunglasses, plastic ear forms and other "patently fraudulent
products" and the very low calorie (VLC) products that can actually produce
weight loss but may not be safe. His major concern with the VLC products, he
specified, "is with what the Food and Drug Administration is doing and what it
is not doing, particularly when serious questions have been raised both within
the FDA and outside this agency about the safety of such products....We are
dealing with a multi-billion dollar industry which produces items ingested into
the human body. Yet the FDA has been reticent to involve itself in low calorie
diets. I want to know why, because I think the public deserves to know
conclusively about the safety of individual products now in the marketplace."
On the first day Roth's subcommittee heard testimony from scientists and VLC
product users, all of whom submitted written statements as well. Most of the
scientists favored more regulation of such dietary products; the users were pro
and con.
One scientific witness was Judith S. Stern, Sc.D., professor of nutrition and
director of the Food Intake Laboratory at the University of California, Davis.
She conceded:
The inadequacy of traditional medicine to provide a permanent cure for obesity
has given rise to an entire industry of entrepreneurs who claim to be able to
relieve the frustrations of the overweight. The ironic tragedy is that most
diets work-at least initially-when they are followed. However, fad diets are
usually quite restrictive in their food choices, may have unpleasant side
effects, and most people cannot follow them for any length of time. In
addition, when daily calories are restricted below 1,200, it becomes difficult
to satisfy all other nutrient needs.
Dr. Stern also made the distinction between "miracle cures" and VLC products.
Products in the former category include the hormone cholecystokinin (CCK),
claimed to decrease hunger, and various amino acid pills, said to release growth
hormone. Both have been promoted with false claims based on legitimate
scientific discoveries that were overgeneralized and misrepresented, she noted.
Debunking claims that grapefruit or grapefruit extract can act in a catalytic
manner enhancing breakdown of fat, Dr. Stern described her testimony last year
which helped the U.S. Postal Service stop sales of Super Grapefruit Pills by a
California company. Noting that these pills contained glucomannan, she reported
that in 1980 she had conducted a double-blind study in which the test group
received one gram of glucomannan while the control group was given a placebo.
Both groups were placed on a behavior modification program. Both groups lost
weight, she noted, but there were no statistically significant differences in
hunger ratings or weight loss between them.
Dr. Stern also zeroed in on kelp/lecithin/cider vinegar/vitamin B6 combinations
found in dietary products since 1974. Iodine-rich kelp is potentially harmful to
a small number of individuals in whom high amounts of ingested iodine can cause
thyroid trouble. The other three ingredients are worthless, she noted.
Another expert witness was Varro E. Tyler, Ph.D., professor of pharmacognosy
(the science of medicines from natural sources) and dean of Purdue University's
School of Pharmacy and Pharmacal Sciences. Here is my summary of Dr. Tyler's
detailed analysis of various Herbalife products contained in the lengthy packet
of written material released by Roth's subcommittee to the press:
Slim and Trim Formula #1 (46 cents per day), described in the sales literature
"as a balanced protein powder made from natural vegetable soy, casein and whey
protein." Tyler said the product is falsely represented in company literature
because there is nothing about a protein powder, per se, that will curb the
appetite any more than an equivalent amount of protein derived from eating
lean meat, nuts, or the like. Further, no protein powder will "cleanse the
system" or facilitate "burning excess calories." It will supply needed daily
nutrients, but no more effectively than a low-calorie diet, carefully balanced
for carbohydrates, minerals, and vitamins-as well as protein.
Slim and Trim Formula #2 (21 cents per day), described by the Herbalife
organization as a special blend of 14 herbs plus kelp, lecithin, vitamin B6,
and cider vinegar designed to cleanse the digestive system and naturally help
curb the appetite. Tyler said that, of its many herbal ingredients, none is
actually present in sufficient quantity to produce significant physiological
effects by itself. But he noted that four ingredients-senna, cascara sagrada,
dandelion root, and kelp-might work together to exert a laxative effect in
sensitive individuals.
Slim and Trim Multivitamin and Multimineral Formula #3 (23 cents per day) is a
fairly standard vitamin/mineral preparation with some herbal products added in
such tiny amounts that they exert no significant effect. Unless vitamin
deficiency was present, Tyler noted, the product would be a complete waste of
money.
Slim and Trim Linseed Oil Formula #4 (10 cents per day) contains small amounts
of linseed oil but has no advantage over less expensive vegetable oils
ordinarily used in the kitchen of the average home. (Moreover, as noted by the
next witness, the amount found in the formula will be obtained in food
consumed in just one balanced meal per day.)
Cell-U-Loss (43 cents per day) is described in Herbalife literature as a
product designed to attack cellulite, promote circulation, and eliminate
excess fluids, is recommended for use with the Slim and Trim formulas. Tyler
noted that its tiny amounts of herbs would at most cause a slight diuresis
(output of body water), but would have no effect whatsoever on appetite or
body fat.
Herbalife Agrrews to Pay $850,000 PenaltyMLM Watch Home Page
Herbalife Agrees to Pay $850,000 Penalty (1986)
Stephen Barrett, M.D.
In 1986, Herbalife International, Inc., and its president Mark Hughes, agreed to
pay $850,000 to settle charges by the California Attorney General that the
company made false medical claims and engaged in an illegal pyramid-style
marketing scheme. Herbalife has been selling its products through a multilevel
marketing program in which the amount of money received by its distributors
depended upon the amounts purchased by them and by those whom they recruit as
distributors. The Attorney General's suit, filed in 1985, cited the following
questionable claims made for Herbalife products:
Slim and Trim Formulas comprise an effective weight loss program which can
produce a typical weight loss of 10-29 excess pounds a month.
Cell-U-Loss can attack "cellulite," eliminate inches, suppress appetite,
improve circulation, and help many other conditions.
Herbal-Aloe can aid digestion, "heal" and "cleanse the system."
N.R.G. can increase energy, increase mental alertness, and provide a
"nutritional lift." (The fact that caffeine is one of its active ingredients
was not disclosed.)
Lifeline aids the cardiovascular system.
Schizandra Plus can combat damage that leads to premature aging.
Tang Kuei is effective against hot flashes and can help the regularity of the
menstrual system and relieve menstrual disorders.
Flora-Fiber "scrubs and cleanses" the intestine with fiber and prevents
disease.
K-8 stops "induced depression" and "elevates your mood so you can handle
stress."
The suit also charged:
Early editions of the Herbalife Official Career Handbook made illegal claims
that various herbal ingredients were effective against more than 70 diseases
and conditions. Although most of these claims were deleted in subsequent
editions of the handbook, the company had not replaced the original pages sent
to distributors with the revised pages or asked these distributors to destroy
them.
Similar testimonial claims were made in company broadcasts over cable
television.
To attract new distributors, the TV programs and company magazine contained
stories of individuals who made large amounts of money by building large
networks of Herbalife distributors. These representations are misleading
because there is no reasonable basis to assert that most people who become
distributors will earn large sums.
Although the company offered a "full warranty" on all of its products,
customers who tried to invoke the warranty were often thwarted in their
efforts by the defendants.

Ephedra Products under Attack in U.S. and CanadaQuackwatch Home Page
Herbalife, Other Ephedra Marketers
Face Soaring Insurance Rates
David Evans
2002 Bloomberg, LP
April 11, 2002
Herbalife International Inc. continues to sell weight-loss products containing
ephedra, following lawsuits blaming the substance for customer deaths, and a
six-fold increase in product-liability insurance expense. Herbalife, which faces
two wrongful death suits blaming its ephedra weight-loss products, still
includes the herb in its line of diet products, which made up 42.7% of last
year's $1.66 billion in sales, according to its annual report.
Late yesterday, the company agreed to be taken private for $685 million, or
$19.50 a share, by Whitney & Co. LLC and Golden Gate Capital Inc.
Robert Hartwig, chief economist for the Insurance Information Institute, said
ephedra insurance premiums have increased along with adverse incident reports
and lawsuits. "You have a situation where the house is on fire," said Hartwig.
"If your house was already on fire, it's very unlikely we'd write a policy."
More than a half dozen other publicly traded companies also continue to sell
ephedra products, while unable to obtain desired levels of insurance.
Herbalife said in its federal filing that its product- liability insurance
premium soared from $400,000 in 2000 to $2.5 million last year, even as its
deductible increased 10-fold to $5 million, and its coverage limit fell by $10
million to $40 million.
Ephedra is an herbal stimulant also used for bodybuilding. The National Football
League banned ephedra last year after it was linked to the deaths of several
athletes. Health Canada ordered a voluntary recall of the products in January,
after finding "these products pose a serious risk to health."
Dozens of Deaths
Ephedrine, the active ingredient in ephedra, also called ma huang, is a chemical
cousin of amphetamines and increases both blood pressure and heart rate, say
experts. The U.S. Food and Drug Administration has linked ephedra to hundreds of
adverse reactions and dozens of deaths.
Herbalife, based in Los Angeles, said in its annual report it might discontinue
selling ephedra products because insurance is "becoming prohibitively
expensive." It said the company had "substantial defenses" to the lawsuits and
said "they will not have a material impact on us." An Herbalife spokeswoman,
Tammy Taylor of Sitrick & Co., said Herbalife believes ephedra products are
"safe and effective when used as directed." Francis Tirelli, company president,
didn't return telephone calls.

Well that'll be all for now Carl, I don't want to overload you with too much info. I'll let you digest whats here, and I'll eagerly await your response. Probably something to the effect that all politicians are womanizing, pot smoking, non-inhaling, liars, and cheats. And as far as the Medical studies done by the M.D.'s, I'm sure you will come up with something equally entertaining.

Yes Carl you are intitled to your opinion that this webite is a waste. But remember Carl, opinions are like a**holes, everybody has one.
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#45 UPDATE Employee

Dear William in Texas

AUTHOR: Carl - (U.S.A.)

Was that your best effort? I asked for market saturation info and you veered to NWM, MLM and pyramids. And used 'ole Doc Taylor as expert testimony to boot. At first, I thought to just delete and get on, then, geez...Jon Taylor??? The same Jon M. Taylor, Ph.D. in psychology from U.of Utah? Is he still on that Consumer Awareness thing and Pyramid Scheme something business? I remember flipping through books by Jon M. Taylor who was on a vendetta to 'expose" the MLM industry.....How did you get from market saturation to weird Jon? (Admittedly,"weird" is my opinion)

Look William, Jon M. Taylor is no more credible than thousands and thousands of other people who have actually experienced MLM or NWM, like he did. Sure, he has first hand experience. And, he has his opinion of the industry, just like all those others that have opinions opposite of his. His Ph.D. in psychology DOES help him better able to "package" his opinion than lots of others, though. And, he'll sell you his detailed opinions in his packages (books). I'm not knocking him the right to sell his opinions in books, it's probably good money. Still, his Ph.D don't impress me. (Are you old enough to remember Dr. Tim Leary, Ph.D.? The LSD nut.)(I used to be married to a Ph.D. and she sure did not impress me either)

Okay. The U.S. Dept. of Commerce stats show that 90% of new businesses fail in the first 2 years. A person that invests his own money and borrowed money from SBA, friends, etc..., to open a, let's say, ice cream shop, will most likely fail. And, in my opinion, he probably has a better chance than the normal person does in an NWM or MLM based business. I believe, because the initial start up cost is much less than an ice cream shop, the normal person starting an MLM business is more likely not qualified and lacks skills to be a business success. And, too many of those people just don't WORK their business like the ice cream shop person would. They think they just buy their success with $50 or $500 or whatever amount.

That said, the business laws and regulations of the U.S. are not based on success rates. They are based on fair opportunity. That is why illegal pyramiding became illegal, unfair opportunity. The legal businesses in NWM and MLM DO ALLOW ANYONE A FAIR OPPORTUNITY. A person with business savvy and capital backing has a better chance of success than regular "John Doe". But "John Doe" has the same opportunity to try, according to the law. And, no one is forcing people to try NWM or MLM. Sure, marketing and advertising is out there, the same for no matter what product, service, etc... is being sold. It all falls under capitalism.

William, it looked to me like you went to a search engine, found Doc Jon, copied and pasted and then patted yourself on the back. You probably have good intentions of trying to do good for others. But, when I ask a used car salesman about the milage on a car and his answer is an old lady kept it in the garage, I feel like I'm talking to a salesman. I'm not wanting to "snakeoil" you into anything. Frankly, everything I've read on this site is like talking religion and politics. MY OPINION IS THAT THIS OPINION SITE IS A WASTE. And, yes, I've just wasted my time writting this. But, that's the beauty of freedom, I can choose to waste my time rebutting on a site that really is nothing but people talking out of their tails. This site even calls the BBB a "rip-off", as if yours or my opinions are more valid!

Imagine a world where whenever more than 10,000 people share the same negative opinion about something, that something went away. What would be left? I bet there are more than 10,000 people with negative opinions about Texas. And about the name William...... ARE YOU STILL THERE?

All right, next time DELETE, I promise.
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#46 Consumer Comment

Directed back at the snake oil salesman

AUTHOR: William - (U.S.A.)

Carl,

Well you sure nailed me to the wall. I admit that I am no expert, and cannot give statistical information to back up my claims of what market saturation is. You win on that point. Carl, what I really am, is is your (pyramid participant) worst nightmare. Let me explain.

You see Carl, when I am approached by people like you (snake oil salesman), who want to sign me up in their great money making program (pyramid scheme), so that I can finally retire from the rat race and live a life of luxury, and have all the time in the world to enjoy my new found wealth, I tend to be a sceptic. I do not make snap decisions when it involves buying a business in a box, period. I will research this great opportunity fully, so that I can make an informed decision.

So Carl, the guy who likes facts so much, lets just see if Global Online, aka-Verticle Skip Marketing, aka-Herbalife, is an ethical company when it comes to recruiting new dealers/distributors.

I will use a do it yourself evaluation of MLM programs and suspected pyramid schemes that is posted on the internet by Jon M. Taylor Ph.D.

"Pyramid schemes in which no products are offered are fairly easy to identify, and they seldom last long without government officials shutting them down. But when consumers are presented with an income opportunity with multiple levels of product distributors, it is not always easy to determine whether or not it is an exploitive product-based pyramid scheme. It is well to remember that some programs are worse than others in terms of the percentage of participants who lose money and that some of the most damaging programs manage to escape legal action.

By doing this evaluation, you can decide for yourself whether or not a program should be avoided. As you answer each question (Carl-aka Snakeoil Boy), you will be given information that will enable you to make a more informed decision.

The key to identifying the potential harm of a MLM program is to look for elements in the compensation system that creat extremely high leverage for the top persons in the hierarchy of participants. MLM leverage refers to the concentration of payments from the company to founding and other top-level distributors, who profit hugely from the efforts and purchases of a multitude of distributors beneath them, the vast majority of whom lose both time and money.

CHAINING

Question 1 : Does a participating distributor advance through a chain of multiple levels of distributors by recruiting other distributors, who in turn recruit distributors under them, etc. ?

Answer: (NO) - If there is no chaining of participants into levels based upon recruiting, and if a participant does not progress through those levels by recruiting others, then the program would not qualify as a pyramid scheme and is probably harmless.


Answer: (YES) - All MLM programs, as well as illegal pyramid schemes, and chain letters have this multi-level chaining characteristic in common. But be cautious about joining programs in which you are recruited into a chain of distributors (agents, representatives, etc.) which are organized into multiple levels, especially where the position of the chain is determined by timing of entrance into the program and by success at recruiting others. while a few earn substantial profits, most participants lose both time and money.

In theory, the use of person-to-person referrals is a very powerful maketing strategy. And with outstanding products, fast-talking promoters, and/or connections with famous persons or notable experts, it is easy to be taken in by their appeal.

It should also be noted that quality of products or services often becomes questionable when incentives are tied to recruitment. This would apply to such products and services as health products, investments, or internet services.
For most MLM's, income is dependant primarily on downline recruiting. As a general guideline, if you must recruit to be successful, or if a program's emphasis is on building a downline, it is a de facto pyramid scheme, whether or not it has been declared illegal by authorities. You may just be setting yourself up for wasting much precious time and money, depending on factors that can be identified by answering the following questions.

UNLIMITED RECRUITING

Question 2 : In any area, is unlimited recruiting of distributors allowed--and even encouraged?

Answer: (NO) - If reasonable territorial protection is offered to participants in a given area, the program would not soon collapse from market saturation. Recruiters would not be as likely to promote the illusion of an ever-expanding market and of the potential for very large incomes for vitually all new recruits.

Answer: (YES) - With unlimited recruiting, new recruits find it increasingly difficult to recruit more participants into the system. This is due to market saturation, wherein prospects perceive a diminishing opportunity to profit from participation.

To illustrate an approach more in line with maket realities, suppose the program were limited to one distributor for each 10,000 population in a given area or to one distributor within each one mile radius - much like the territorial protectionn of a retail franchise. The problem of saturation would not be significant.

But limiting the amount of recruiting or the number of distributors in a given area is uncharacteristic of MLM because that would lessen the illusion of the potential for very large incomes for new recruits. Such limitations would render a pyramid scheme impotent.

PAY TO PLAY

Question 3 : Are participants expected to make a significant investment, or to make ongoing purchases in order to continue qualifying for bonuses, purchase discounts, etc.?

Answer: (NO) - If the investment in the scheme is minimal and repeat investments are not expected, it may still be a pyramid scheme, but the harmful effects will be minimized.

Answer: (YES) - If you have to pay a fee or to buy products to get into a program -- and are then expected to keep on purchasing products, services, training, etc., in order to progress in the orginization, be wary. You paying ongoing fees to "play the Game",one of the earmarks of a product-based pyramid scheme. If you add the operating costs of selling and recruiting to the cost of purchases from the company, total expenses will generally exceed any payments to you from the MLM company.

Pyramid schemes masquerading as MLM's are often allowed to grow and flourish unchecked because they do not require a large up-front enrollment fee to sign up. Because recruiters generally do not profit from the initial enrollment fee of a recruit, it is often assumed the program is not a pyramid scheme.

In fact, nothing may be further from the truth. MLM programs typically incorporate escalating incentives to purchase products (some at initial signup, some later) to qualify for ever-higher levels in the distributorship hierarchy and/or for larger discounts on product purchases. As a result, MLM "distributors" often overuse products or give away a lot of samples. Others fill their garages with products they don't need, in spite of policies to the contrary. The argument that participants would have purchased the products from another source anyway, and that these purchases should not be considered an expense of doing business, simply does not hold water.

Also, because some compensation systems offer incentives for recruiting and retaining a certain number of distributors (or escalating incentives to recruit more and more distributors), many participants will recruit "dummy distributors" from friends and family members and buy products in their names. They are led to believe this will then qualify them for "the really big bucks". It is not until they leave the system that the more astute among them realize that they have in effect paid a very large fee (in the form of product purchases) for participation in a pyramid scheme. Often this amounts to many thousands of dollars over a period of months or years.

Such an amount paid at the start into a no-product pyramid scheme would immediately arouse suspicions by the public and by regulators of its constituting an illegal pyramid scheme. But since the money paid into an MLM program is paid for legitimate products and over a period of time, most participants (and many regulators) fail to see it as an investment in a pyramid scheme. However this "pay to play" feature of a product based distribution system should be seen as a red flag signaling an illegal pyramid scheme.

Many observers believe that MLM products are sold at a premium to support a large downline. If an MLM product were to be sold at a premium of $20 more than competitve products sold thru other outlets, the $20 premium could be considered the pyramid premium portion of the price, which would flow to the top of the distributor Hierarchy in typical pyramid fashion.

As suggested earlier, what is often not factored in to projections made at opportunity meetings is the expenses of conducting the business. In most programs, if products purchased from the company (which would not likely have been purchased if the person had not been a participant in the program) and operating expenses were subtracted from commissions, few-except for those at the top levels-would be making any profits. The vast majority would actually be losing money, only to enrich the MLM company and fatten the bank accounts of the top upline distributors, in the form of overrides from product purchases by downline participants.

DISPROPORTIONAL PAYMENTS

Question 4 : Would a distributor receive about the same payment from the company for a wholesale purchase--or for a retail sale--as distibutors several levels above him/her who had nothing to do with it?

Answer: (NO) - If the pay is spread out to all participants, or if no pay is received at all, it may be a pyramid scheme, but probably not harmful or worth enforcement action against it as an illegal pyramid scheme.

Answer: (YES) - MLM plans typically offer very small rewards to front line distributors who actually sell the products and services of the company. So the only way to achieve significant income is to rise to the top of the distributor hierarchy by recruiting a large downline of distributors.

Many MLM compensation systems lead to extreme inequality in payout (money paid by the company) to distributors, which means there are few "winners" --but a high loss rate (after subtracting all expenses) for the rest of the participants. Often these "losers" will invest considerable amounts of time and money and then quit, blaming themselves. But their "failure" is not due so much to lack of effort on their part as to a SYSTEM which is stacked infavor of a few at the expense of the many.

In other direct sales settings, it is not unusal for a successful commissioned sales person to receive more income than sales managers at local or even regional levels. this is because the person making the sale makes more in commissions per sale (often 20-40%) than managers two or three levels above him/her. But in many MLM programs, upline distributors several layers removed from the actual sale receive as much or more in total payments per sale (including commissions and bonuses) from the company as the person who actually sold the product - who may get only five or ten % from the company.

EXCEPTIONS: In some cases, MLM's depart from this pattern of paying front-line distributors no more per sale than upline distrbutors several levels removed from the sale. For example, for MLM's which provide financial services, companies have to meet certain commission requierments for sales by their agents. In cases such as these, one should look at the overrides beyond the agent commissions, which are paid to upline participants in the hierarchy. If overrides for participants several levels above the agent making the sale are the same as for the person who recruited the agent, the result will be an undue emphasis on recruiting and extreme inequality in company payout to participants.

As mentioned earlier, since the total payout per sale is limited, when upline distributors receive substantial overrides from the sale by downline distributors,this limits the percentage of commissions to the person making the sale. so the income of the front line distributors is extremely limited, forcing them to recruit a large downline to realize a significant income. Powerful incentives may then be at work to recruit a downline in order to "make the really big bucks" collecting small overrides on hundreds even thousands of downline participants. MLM promoters call this "leverage". When the leverage is extreme, the program should be considered an illegal pyramid scheme.

MLM companies usually suggest that distributors who buy at wholesale prices from the company can then sell them at an elevated retail price, such as happens in more conventional retail outlets, thus allowing a significant profit margin for the distributor. The problem is that suggested retail prices for MLM products are generally too high to be competitve with other outlets. So MLM distributors wind up purchasing large quantities for themselves and their families and/or selling most products at wholesale prices to downline participants in order to meet volume requirements for bonus or discount levels.

Also, extreme incentives to recruit a downline often lead to many of the attendant deceptions for which such programs are notorious - overstating income potential and/or product effectiveness, deceptive recruiting practices,etc. Doing less may not produce any significant income. This explains why many otherwise honest persons eventually mimic the deceptions of their upline and either rationalize or fail to see the fraudulence of their actions.

EXCESSIVE LEVELS

Question 5: Does the company pay overrides or commissions on more than four levels above the distributor making a sale or purchase?

Answer: (NO) - If no more than four upline levels are allowed above the distributor buying or selling the product, then the system may be quite harmless, since customers may be served without excessive upline remuneration. No upline distributors are likely to receive exhorbitant incomes at the expense of their respective downliners.

In fact, with a maximum of four levels, most systems would die out for lack of opportunity for top distributors to receive extremely large override checks. Blatant appeals to greed would be minimized.

Answer: (YES) - More than 5 levels in the distributor hierarchy enriches those at the top, at the expense of a multitude of downline participants, the vast majority of whom lose money.

For even the largest of conventional distributor arrangements, the entire U.S. can be covered by a maximum of four supervisory levels in the distributorship hierarchy; e.g. branch managers, district mgrs., regional mngrs., and national sales manager -plus an international manager if one is needed for foreign markets. More than that is superflous and bloated, driving up product prices and making sales at a competitive retail markup unprofitable and unrealistic.

When several levels are allowed in an MLM hierarchy of distributors, there is seldom any functional justification for doing so other than to encourage recruiting and the illusion of very large potential incomes to more participants than is mathmatically possible -- a hallmark of many pyramid schemes. Only those distributors at the top of the hierarchy of the participants realize any significant income.

Also, with an upline of many levels, the top-level distributors may be profiting to an extreme degree from the losses (including products that would not have been puchased had the investing distributors not gotten involved) of those beneath them. Such exorbitant incomes result from reaping of huge commissions, overrides and bonuses from the combined efforts and investments (in the form of product purchases) fo the hundreds or even thousands of downline participants.

This is what MLM enthusiasts often refer to as "leverage" or "residual income" -- large company payouts disproportionate to effort expended, resulting primarily from the purchases of downline participant. Leverage can be illustrated by adding up a downline of participants that is extended to six levels -- although many programs allow for many more levels. But for the purpose of illustration, assume that a "distributor" recruits five active distributors,each of whom recruits five more, and so on through six levels of distributors. Lets assume a $5 commission on each sale. The exponential growth of the pyramid becomes evident:

LEVEL 1: 5 distributors X $5 in commissions & bonuses = $25 a month

LEVEL 2: 25 + 5 = 30 total Distributors X $5 in commissions & bonuses = $150 a month

LEVEL 3: 125 + 30 = 155 total distributors X $5 in commissions & bonuses = $775/month

LEVEL 4: 625 + 155 = 780 total distributors X $5 in comm. & bonus =$3,900/month

LEVEL 5: 3,125 + 780 = 3,905 distributors X $5 in comm. & bonus = $19,525/month

LEVEL 6: 15,625 + 3,905 = 19,530 distributors X $5 in comm. & bonus = $97,650/month!!!

If each "distributor" (or "participating consumer") were to buy enough products each month to yield an override of $5 in commissions and bonuses to the original upline distributor, then with a five-level downline, the upline distributor gets $19,525 per month, while with a complete six-level downline the same distributor gets $96,650 per month. The incentive to recruit to move up a level becomes very great.

Of course it seldom works out that way, but these are the type of figures that are often presented to prospective new recruits at MLM opportunity meetings. This example illustrates why so much emphasis is placed on recruiting, as opposed to selling products to persons outside the pyramid. $97,650 is much more appealing than $100 that might be earned by a level 1 distributor for selling the products at the full retail price (assuming $20 markup on products sold to each of five customers - before expenses). In comparison with recruiting, retailing products at full retail price becomes a waste of time.

WARNING!!! WARNING!!! WARNING!!!

If the answer to all five questions is "yes" then the MLM program should be considered a harmful pyramid scheme in concept, structure, and effects -- regardless of quality of products offered, type of compensation system (binary, breakaway, matrix, unilevel, etc.), company policy regarding recruiting, or any other efforts by company officials to make its program appear to be legitimate. The primary emphasis will be on deriving income from recruiting with insufficient incentive to retail products or services.

Also -- if all five of the above are true, then the likelihood of a distributor earning a significant income is so infinitessimally small that it would be misleading to say that any significant income could be realized from it, even with dilligent effort. If a recruiter then suggests that a high percentage of participants can earn a significant income from such a program, a case can be made for misrepresention of earnings or deceptive sales practices. And if a sizable investment of products is encouraged to "jump start" the business, it may be appropriate to ask if the recruiter has registered as a broker-dealer of securities.

While none of the above five yes responses in and of themselves costitutes a pyramid scheme, a combination of four(the first four) or all five most certainly indicates a high enough degree of exploitation to be considered very harmful(and probably illegal) pyramid scheme, if properly understood. In actuality many participants are not "distributors" at all, but unwitting investors in a pyramid scheme.

The effects of such a system can be measured by requiring existing MLM companies to release data on payout to all participants (not just active ones) by percentiles after subtracting average purchases for gross income before operating expenses. It will then be seen that very large incomes accruing to the top distributors in the hierarchy are financed by the losses on the part of the vast majority of participants.

....Well Carl-aka Snakeoil Boy, if you will take the time to read this, and answer the questions truthfully, and the outcome is positive for Global Online Systems, then I would be glad to re-asses my feelings about the great MLM that you are a participant of.

I also hope that other people who are considering investing their hard earned money into schemes such as Herbalife, will read all of this report and it will help them to make an informed decision.

Again I would like to give my heartfelt thanks to Jon M. Taylor for posting his website, so that poorly educated people like me, who can't back up their claims with statistical data, can at least give people like Snakeoil Boy, something to think about.

Many thanks to rip-off as well, for providing this forum for all the consumers out there..
Respond to this report!
What's this?

#47 Consumer Comment

Directed back at the snake oil salesman

AUTHOR: William - (U.S.A.)

Carl,

Well you sure nailed me to the wall. I admit that I am no expert, and cannot give statistical information to back up my claims of what market saturation is. You win on that point. Carl, what I really am, is is your (pyramid participant) worst nightmare. Let me explain.

You see Carl, when I am approached by people like you (snake oil salesman), who want to sign me up in their great money making program (pyramid scheme), so that I can finally retire from the rat race and live a life of luxury, and have all the time in the world to enjoy my new found wealth, I tend to be a sceptic. I do not make snap decisions when it involves buying a business in a box, period. I will research this great opportunity fully, so that I can make an informed decision.

So Carl, the guy who likes facts so much, lets just see if Global Online, aka-Verticle Skip Marketing, aka-Herbalife, is an ethical company when it comes to recruiting new dealers/distributors.

I will use a do it yourself evaluation of MLM programs and suspected pyramid schemes that is posted on the internet by Jon M. Taylor Ph.D.

"Pyramid schemes in which no products are offered are fairly easy to identify, and they seldom last long without government officials shutting them down. But when consumers are presented with an income opportunity with multiple levels of product distributors, it is not always easy to determine whether or not it is an exploitive product-based pyramid scheme. It is well to remember that some programs are worse than others in terms of the percentage of participants who lose money and that some of the most damaging programs manage to escape legal action.

By doing this evaluation, you can decide for yourself whether or not a program should be avoided. As you answer each question (Carl-aka Snakeoil Boy), you will be given information that will enable you to make a more informed decision.

The key to identifying the potential harm of a MLM program is to look for elements in the compensation system that creat extremely high leverage for the top persons in the hierarchy of participants. MLM leverage refers to the concentration of payments from the company to founding and other top-level distributors, who profit hugely from the efforts and purchases of a multitude of distributors beneath them, the vast majority of whom lose both time and money.

CHAINING

Question 1 : Does a participating distributor advance through a chain of multiple levels of distributors by recruiting other distributors, who in turn recruit distributors under them, etc. ?

Answer: (NO) - If there is no chaining of participants into levels based upon recruiting, and if a participant does not progress through those levels by recruiting others, then the program would not qualify as a pyramid scheme and is probably harmless.


Answer: (YES) - All MLM programs, as well as illegal pyramid schemes, and chain letters have this multi-level chaining characteristic in common. But be cautious about joining programs in which you are recruited into a chain of distributors (agents, representatives, etc.) which are organized into multiple levels, especially where the position of the chain is determined by timing of entrance into the program and by success at recruiting others. while a few earn substantial profits, most participants lose both time and money.

In theory, the use of person-to-person referrals is a very powerful maketing strategy. And with outstanding products, fast-talking promoters, and/or connections with famous persons or notable experts, it is easy to be taken in by their appeal.

It should also be noted that quality of products or services often becomes questionable when incentives are tied to recruitment. This would apply to such products and services as health products, investments, or internet services.
For most MLM's, income is dependant primarily on downline recruiting. As a general guideline, if you must recruit to be successful, or if a program's emphasis is on building a downline, it is a de facto pyramid scheme, whether or not it has been declared illegal by authorities. You may just be setting yourself up for wasting much precious time and money, depending on factors that can be identified by answering the following questions.

UNLIMITED RECRUITING

Question 2 : In any area, is unlimited recruiting of distributors allowed--and even encouraged?

Answer: (NO) - If reasonable territorial protection is offered to participants in a given area, the program would not soon collapse from market saturation. Recruiters would not be as likely to promote the illusion of an ever-expanding market and of the potential for very large incomes for vitually all new recruits.

Answer: (YES) - With unlimited recruiting, new recruits find it increasingly difficult to recruit more participants into the system. This is due to market saturation, wherein prospects perceive a diminishing opportunity to profit from participation.

To illustrate an approach more in line with maket realities, suppose the program were limited to one distributor for each 10,000 population in a given area or to one distributor within each one mile radius - much like the territorial protectionn of a retail franchise. The problem of saturation would not be significant.

But limiting the amount of recruiting or the number of distributors in a given area is uncharacteristic of MLM because that would lessen the illusion of the potential for very large incomes for new recruits. Such limitations would render a pyramid scheme impotent.

PAY TO PLAY

Question 3 : Are participants expected to make a significant investment, or to make ongoing purchases in order to continue qualifying for bonuses, purchase discounts, etc.?

Answer: (NO) - If the investment in the scheme is minimal and repeat investments are not expected, it may still be a pyramid scheme, but the harmful effects will be minimized.

Answer: (YES) - If you have to pay a fee or to buy products to get into a program -- and are then expected to keep on purchasing products, services, training, etc., in order to progress in the orginization, be wary. You paying ongoing fees to "play the Game",one of the earmarks of a product-based pyramid scheme. If you add the operating costs of selling and recruiting to the cost of purchases from the company, total expenses will generally exceed any payments to you from the MLM company.

Pyramid schemes masquerading as MLM's are often allowed to grow and flourish unchecked because they do not require a large up-front enrollment fee to sign up. Because recruiters generally do not profit from the initial enrollment fee of a recruit, it is often assumed the program is not a pyramid scheme.

In fact, nothing may be further from the truth. MLM programs typically incorporate escalating incentives to purchase products (some at initial signup, some later) to qualify for ever-higher levels in the distributorship hierarchy and/or for larger discounts on product purchases. As a result, MLM "distributors" often overuse products or give away a lot of samples. Others fill their garages with products they don't need, in spite of policies to the contrary. The argument that participants would have purchased the products from another source anyway, and that these purchases should not be considered an expense of doing business, simply does not hold water.

Also, because some compensation systems offer incentives for recruiting and retaining a certain number of distributors (or escalating incentives to recruit more and more distributors), many participants will recruit "dummy distributors" from friends and family members and buy products in their names. They are led to believe this will then qualify them for "the really big bucks". It is not until they leave the system that the more astute among them realize that they have in effect paid a very large fee (in the form of product purchases) for participation in a pyramid scheme. Often this amounts to many thousands of dollars over a period of months or years.

Such an amount paid at the start into a no-product pyramid scheme would immediately arouse suspicions by the public and by regulators of its constituting an illegal pyramid scheme. But since the money paid into an MLM program is paid for legitimate products and over a period of time, most participants (and many regulators) fail to see it as an investment in a pyramid scheme. However this "pay to play" feature of a product based distribution system should be seen as a red flag signaling an illegal pyramid scheme.

Many observers believe that MLM products are sold at a premium to support a large downline. If an MLM product were to be sold at a premium of $20 more than competitve products sold thru other outlets, the $20 premium could be considered the pyramid premium portion of the price, which would flow to the top of the distributor Hierarchy in typical pyramid fashion.

As suggested earlier, what is often not factored in to projections made at opportunity meetings is the expenses of conducting the business. In most programs, if products purchased from the company (which would not likely have been purchased if the person had not been a participant in the program) and operating expenses were subtracted from commissions, few-except for those at the top levels-would be making any profits. The vast majority would actually be losing money, only to enrich the MLM company and fatten the bank accounts of the top upline distributors, in the form of overrides from product purchases by downline participants.

DISPROPORTIONAL PAYMENTS

Question 4 : Would a distributor receive about the same payment from the company for a wholesale purchase--or for a retail sale--as distibutors several levels above him/her who had nothing to do with it?

Answer: (NO) - If the pay is spread out to all participants, or if no pay is received at all, it may be a pyramid scheme, but probably not harmful or worth enforcement action against it as an illegal pyramid scheme.

Answer: (YES) - MLM plans typically offer very small rewards to front line distributors who actually sell the products and services of the company. So the only way to achieve significant income is to rise to the top of the distributor hierarchy by recruiting a large downline of distributors.

Many MLM compensation systems lead to extreme inequality in payout (money paid by the company) to distributors, which means there are few "winners" --but a high loss rate (after subtracting all expenses) for the rest of the participants. Often these "losers" will invest considerable amounts of time and money and then quit, blaming themselves. But their "failure" is not due so much to lack of effort on their part as to a SYSTEM which is stacked infavor of a few at the expense of the many.

In other direct sales settings, it is not unusal for a successful commissioned sales person to receive more income than sales managers at local or even regional levels. this is because the person making the sale makes more in commissions per sale (often 20-40%) than managers two or three levels above him/her. But in many MLM programs, upline distributors several layers removed from the actual sale receive as much or more in total payments per sale (including commissions and bonuses) from the company as the person who actually sold the product - who may get only five or ten % from the company.

EXCEPTIONS: In some cases, MLM's depart from this pattern of paying front-line distributors no more per sale than upline distrbutors several levels removed from the sale. For example, for MLM's which provide financial services, companies have to meet certain commission requierments for sales by their agents. In cases such as these, one should look at the overrides beyond the agent commissions, which are paid to upline participants in the hierarchy. If overrides for participants several levels above the agent making the sale are the same as for the person who recruited the agent, the result will be an undue emphasis on recruiting and extreme inequality in company payout to participants.

As mentioned earlier, since the total payout per sale is limited, when upline distributors receive substantial overrides from the sale by downline distributors,this limits the percentage of commissions to the person making the sale. so the income of the front line distributors is extremely limited, forcing them to recruit a large downline to realize a significant income. Powerful incentives may then be at work to recruit a downline in order to "make the really big bucks" collecting small overrides on hundreds even thousands of downline participants. MLM promoters call this "leverage". When the leverage is extreme, the program should be considered an illegal pyramid scheme.

MLM companies usually suggest that distributors who buy at wholesale prices from the company can then sell them at an elevated retail price, such as happens in more conventional retail outlets, thus allowing a significant profit margin for the distributor. The problem is that suggested retail prices for MLM products are generally too high to be competitve with other outlets. So MLM distributors wind up purchasing large quantities for themselves and their families and/or selling most products at wholesale prices to downline participants in order to meet volume requirements for bonus or discount levels.

Also, extreme incentives to recruit a downline often lead to many of the attendant deceptions for which such programs are notorious - overstating income potential and/or product effectiveness, deceptive recruiting practices,etc. Doing less may not produce any significant income. This explains why many otherwise honest persons eventually mimic the deceptions of their upline and either rationalize or fail to see the fraudulence of their actions.

EXCESSIVE LEVELS

Question 5: Does the company pay overrides or commissions on more than four levels above the distributor making a sale or purchase?

Answer: (NO) - If no more than four upline levels are allowed above the distributor buying or selling the product, then the system may be quite harmless, since customers may be served without excessive upline remuneration. No upline distributors are likely to receive exhorbitant incomes at the expense of their respective downliners.

In fact, with a maximum of four levels, most systems would die out for lack of opportunity for top distributors to receive extremely large override checks. Blatant appeals to greed would be minimized.

Answer: (YES) - More than 5 levels in the distributor hierarchy enriches those at the top, at the expense of a multitude of downline participants, the vast majority of whom lose money.

For even the largest of conventional distributor arrangements, the entire U.S. can be covered by a maximum of four supervisory levels in the distributorship hierarchy; e.g. branch managers, district mgrs., regional mngrs., and national sales manager -plus an international manager if one is needed for foreign markets. More than that is superflous and bloated, driving up product prices and making sales at a competitive retail markup unprofitable and unrealistic.

When several levels are allowed in an MLM hierarchy of distributors, there is seldom any functional justification for doing so other than to encourage recruiting and the illusion of very large potential incomes to more participants than is mathmatically possible -- a hallmark of many pyramid schemes. Only those distributors at the top of the hierarchy of the participants realize any significant income.

Also, with an upline of many levels, the top-level distributors may be profiting to an extreme degree from the losses (including products that would not have been puchased had the investing distributors not gotten involved) of those beneath them. Such exorbitant incomes result from reaping of huge commissions, overrides and bonuses from the combined efforts and investments (in the form of product purchases) fo the hundreds or even thousands of downline participants.

This is what MLM enthusiasts often refer to as "leverage" or "residual income" -- large company payouts disproportionate to effort expended, resulting primarily from the purchases of downline participant. Leverage can be illustrated by adding up a downline of participants that is extended to six levels -- although many programs allow for many more levels. But for the purpose of illustration, assume that a "distributor" recruits five active distributors,each of whom recruits five more, and so on through six levels of distributors. Lets assume a $5 commission on each sale. The exponential growth of the pyramid becomes evident:

LEVEL 1: 5 distributors X $5 in commissions & bonuses = $25 a month

LEVEL 2: 25 + 5 = 30 total Distributors X $5 in commissions & bonuses = $150 a month

LEVEL 3: 125 + 30 = 155 total distributors X $5 in commissions & bonuses = $775/month

LEVEL 4: 625 + 155 = 780 total distributors X $5 in comm. & bonus =$3,900/month

LEVEL 5: 3,125 + 780 = 3,905 distributors X $5 in comm. & bonus = $19,525/month

LEVEL 6: 15,625 + 3,905 = 19,530 distributors X $5 in comm. & bonus = $97,650/month!!!

If each "distributor" (or "participating consumer") were to buy enough products each month to yield an override of $5 in commissions and bonuses to the original upline distributor, then with a five-level downline, the upline distributor gets $19,525 per month, while with a complete six-level downline the same distributor gets $96,650 per month. The incentive to recruit to move up a level becomes very great.

Of course it seldom works out that way, but these are the type of figures that are often presented to prospective new recruits at MLM opportunity meetings. This example illustrates why so much emphasis is placed on recruiting, as opposed to selling products to persons outside the pyramid. $97,650 is much more appealing than $100 that might be earned by a level 1 distributor for selling the products at the full retail price (assuming $20 markup on products sold to each of five customers - before expenses). In comparison with recruiting, retailing products at full retail price becomes a waste of time.

WARNING!!! WARNING!!! WARNING!!!

If the answer to all five questions is "yes" then the MLM program should be considered a harmful pyramid scheme in concept, structure, and effects -- regardless of quality of products offered, type of compensation system (binary, breakaway, matrix, unilevel, etc.), company policy regarding recruiting, or any other efforts by company officials to make its program appear to be legitimate. The primary emphasis will be on deriving income from recruiting with insufficient incentive to retail products or services.

Also -- if all five of the above are true, then the likelihood of a distributor earning a significant income is so infinitessimally small that it would be misleading to say that any significant income could be realized from it, even with dilligent effort. If a recruiter then suggests that a high percentage of participants can earn a significant income from such a program, a case can be made for misrepresention of earnings or deceptive sales practices. And if a sizable investment of products is encouraged to "jump start" the business, it may be appropriate to ask if the recruiter has registered as a broker-dealer of securities.

While none of the above five yes responses in and of themselves costitutes a pyramid scheme, a combination of four(the first four) or all five most certainly indicates a high enough degree of exploitation to be considered very harmful(and probably illegal) pyramid scheme, if properly understood. In actuality many participants are not "distributors" at all, but unwitting investors in a pyramid scheme.

The effects of such a system can be measured by requiring existing MLM companies to release data on payout to all participants (not just active ones) by percentiles after subtracting average purchases for gross income before operating expenses. It will then be seen that very large incomes accruing to the top distributors in the hierarchy are financed by the losses on the part of the vast majority of participants.

....Well Carl-aka Snakeoil Boy, if you will take the time to read this, and answer the questions truthfully, and the outcome is positive for Global Online Systems, then I would be glad to re-asses my feelings about the great MLM that you are a participant of.

I also hope that other people who are considering investing their hard earned money into schemes such as Herbalife, will read all of this report and it will help them to make an informed decision.

Again I would like to give my heartfelt thanks to Jon M. Taylor for posting his website, so that poorly educated people like me, who can't back up their claims with statistical data, can at least give people like Snakeoil Boy, something to think about.

Many thanks to rip-off as well, for providing this forum for all the consumers out there..
Respond to this report!
What's this?

#48 Consumer Comment

Directed back at the snake oil salesman

AUTHOR: William - (U.S.A.)

Carl,

Well you sure nailed me to the wall. I admit that I am no expert, and cannot give statistical information to back up my claims of what market saturation is. You win on that point. Carl, what I really am, is is your (pyramid participant) worst nightmare. Let me explain.

You see Carl, when I am approached by people like you (snake oil salesman), who want to sign me up in their great money making program (pyramid scheme), so that I can finally retire from the rat race and live a life of luxury, and have all the time in the world to enjoy my new found wealth, I tend to be a sceptic. I do not make snap decisions when it involves buying a business in a box, period. I will research this great opportunity fully, so that I can make an informed decision.

So Carl, the guy who likes facts so much, lets just see if Global Online, aka-Verticle Skip Marketing, aka-Herbalife, is an ethical company when it comes to recruiting new dealers/distributors.

I will use a do it yourself evaluation of MLM programs and suspected pyramid schemes that is posted on the internet by Jon M. Taylor Ph.D.

"Pyramid schemes in which no products are offered are fairly easy to identify, and they seldom last long without government officials shutting them down. But when consumers are presented with an income opportunity with multiple levels of product distributors, it is not always easy to determine whether or not it is an exploitive product-based pyramid scheme. It is well to remember that some programs are worse than others in terms of the percentage of participants who lose money and that some of the most damaging programs manage to escape legal action.

By doing this evaluation, you can decide for yourself whether or not a program should be avoided. As you answer each question (Carl-aka Snakeoil Boy), you will be given information that will enable you to make a more informed decision.

The key to identifying the potential harm of a MLM program is to look for elements in the compensation system that creat extremely high leverage for the top persons in the hierarchy of participants. MLM leverage refers to the concentration of payments from the company to founding and other top-level distributors, who profit hugely from the efforts and purchases of a multitude of distributors beneath them, the vast majority of whom lose both time and money.

CHAINING

Question 1 : Does a participating distributor advance through a chain of multiple levels of distributors by recruiting other distributors, who in turn recruit distributors under them, etc. ?

Answer: (NO) - If there is no chaining of participants into levels based upon recruiting, and if a participant does not progress through those levels by recruiting others, then the program would not qualify as a pyramid scheme and is probably harmless.


Answer: (YES) - All MLM programs, as well as illegal pyramid schemes, and chain letters have this multi-level chaining characteristic in common. But be cautious about joining programs in which you are recruited into a chain of distributors (agents, representatives, etc.) which are organized into multiple levels, especially where the position of the chain is determined by timing of entrance into the program and by success at recruiting others. while a few earn substantial profits, most participants lose both time and money.

In theory, the use of person-to-person referrals is a very powerful maketing strategy. And with outstanding products, fast-talking promoters, and/or connections with famous persons or notable experts, it is easy to be taken in by their appeal.

It should also be noted that quality of products or services often becomes questionable when incentives are tied to recruitment. This would apply to such products and services as health products, investments, or internet services.
For most MLM's, income is dependant primarily on downline recruiting. As a general guideline, if you must recruit to be successful, or if a program's emphasis is on building a downline, it is a de facto pyramid scheme, whether or not it has been declared illegal by authorities. You may just be setting yourself up for wasting much precious time and money, depending on factors that can be identified by answering the following questions.

UNLIMITED RECRUITING

Question 2 : In any area, is unlimited recruiting of distributors allowed--and even encouraged?

Answer: (NO) - If reasonable territorial protection is offered to participants in a given area, the program would not soon collapse from market saturation. Recruiters would not be as likely to promote the illusion of an ever-expanding market and of the potential for very large incomes for vitually all new recruits.

Answer: (YES) - With unlimited recruiting, new recruits find it increasingly difficult to recruit more participants into the system. This is due to market saturation, wherein prospects perceive a diminishing opportunity to profit from participation.

To illustrate an approach more in line with maket realities, suppose the program were limited to one distributor for each 10,000 population in a given area or to one distributor within each one mile radius - much like the territorial protectionn of a retail franchise. The problem of saturation would not be significant.

But limiting the amount of recruiting or the number of distributors in a given area is uncharacteristic of MLM because that would lessen the illusion of the potential for very large incomes for new recruits. Such limitations would render a pyramid scheme impotent.

PAY TO PLAY

Question 3 : Are participants expected to make a significant investment, or to make ongoing purchases in order to continue qualifying for bonuses, purchase discounts, etc.?

Answer: (NO) - If the investment in the scheme is minimal and repeat investments are not expected, it may still be a pyramid scheme, but the harmful effects will be minimized.

Answer: (YES) - If you have to pay a fee or to buy products to get into a program -- and are then expected to keep on purchasing products, services, training, etc., in order to progress in the orginization, be wary. You paying ongoing fees to "play the Game",one of the earmarks of a product-based pyramid scheme. If you add the operating costs of selling and recruiting to the cost of purchases from the company, total expenses will generally exceed any payments to you from the MLM company.

Pyramid schemes masquerading as MLM's are often allowed to grow and flourish unchecked because they do not require a large up-front enrollment fee to sign up. Because recruiters generally do not profit from the initial enrollment fee of a recruit, it is often assumed the program is not a pyramid scheme.

In fact, nothing may be further from the truth. MLM programs typically incorporate escalating incentives to purchase products (some at initial signup, some later) to qualify for ever-higher levels in the distributorship hierarchy and/or for larger discounts on product purchases. As a result, MLM "distributors" often overuse products or give away a lot of samples. Others fill their garages with products they don't need, in spite of policies to the contrary. The argument that participants would have purchased the products from another source anyway, and that these purchases should not be considered an expense of doing business, simply does not hold water.

Also, because some compensation systems offer incentives for recruiting and retaining a certain number of distributors (or escalating incentives to recruit more and more distributors), many participants will recruit "dummy distributors" from friends and family members and buy products in their names. They are led to believe this will then qualify them for "the really big bucks". It is not until they leave the system that the more astute among them realize that they have in effect paid a very large fee (in the form of product purchases) for participation in a pyramid scheme. Often this amounts to many thousands of dollars over a period of months or years.

Such an amount paid at the start into a no-product pyramid scheme would immediately arouse suspicions by the public and by regulators of its constituting an illegal pyramid scheme. But since the money paid into an MLM program is paid for legitimate products and over a period of time, most participants (and many regulators) fail to see it as an investment in a pyramid scheme. However this "pay to play" feature of a product based distribution system should be seen as a red flag signaling an illegal pyramid scheme.

Many observers believe that MLM products are sold at a premium to support a large downline. If an MLM product were to be sold at a premium of $20 more than competitve products sold thru other outlets, the $20 premium could be considered the pyramid premium portion of the price, which would flow to the top of the distributor Hierarchy in typical pyramid fashion.

As suggested earlier, what is often not factored in to projections made at opportunity meetings is the expenses of conducting the business. In most programs, if products purchased from the company (which would not likely have been purchased if the person had not been a participant in the program) and operating expenses were subtracted from commissions, few-except for those at the top levels-would be making any profits. The vast majority would actually be losing money, only to enrich the MLM company and fatten the bank accounts of the top upline distributors, in the form of overrides from product purchases by downline participants.

DISPROPORTIONAL PAYMENTS

Question 4 : Would a distributor receive about the same payment from the company for a wholesale purchase--or for a retail sale--as distibutors several levels above him/her who had nothing to do with it?

Answer: (NO) - If the pay is spread out to all participants, or if no pay is received at all, it may be a pyramid scheme, but probably not harmful or worth enforcement action against it as an illegal pyramid scheme.

Answer: (YES) - MLM plans typically offer very small rewards to front line distributors who actually sell the products and services of the company. So the only way to achieve significant income is to rise to the top of the distributor hierarchy by recruiting a large downline of distributors.

Many MLM compensation systems lead to extreme inequality in payout (money paid by the company) to distributors, which means there are few "winners" --but a high loss rate (after subtracting all expenses) for the rest of the participants. Often these "losers" will invest considerable amounts of time and money and then quit, blaming themselves. But their "failure" is not due so much to lack of effort on their part as to a SYSTEM which is stacked infavor of a few at the expense of the many.

In other direct sales settings, it is not unusal for a successful commissioned sales person to receive more income than sales managers at local or even regional levels. this is because the person making the sale makes more in commissions per sale (often 20-40%) than managers two or three levels above him/her. But in many MLM programs, upline distributors several layers removed from the actual sale receive as much or more in total payments per sale (including commissions and bonuses) from the company as the person who actually sold the product - who may get only five or ten % from the company.

EXCEPTIONS: In some cases, MLM's depart from this pattern of paying front-line distributors no more per sale than upline distrbutors several levels removed from the sale. For example, for MLM's which provide financial services, companies have to meet certain commission requierments for sales by their agents. In cases such as these, one should look at the overrides beyond the agent commissions, which are paid to upline participants in the hierarchy. If overrides for participants several levels above the agent making the sale are the same as for the person who recruited the agent, the result will be an undue emphasis on recruiting and extreme inequality in company payout to participants.

As mentioned earlier, since the total payout per sale is limited, when upline distributors receive substantial overrides from the sale by downline distributors,this limits the percentage of commissions to the person making the sale. so the income of the front line distributors is extremely limited, forcing them to recruit a large downline to realize a significant income. Powerful incentives may then be at work to recruit a downline in order to "make the really big bucks" collecting small overrides on hundreds even thousands of downline participants. MLM promoters call this "leverage". When the leverage is extreme, the program should be considered an illegal pyramid scheme.

MLM companies usually suggest that distributors who buy at wholesale prices from the company can then sell them at an elevated retail price, such as happens in more conventional retail outlets, thus allowing a significant profit margin for the distributor. The problem is that suggested retail prices for MLM products are generally too high to be competitve with other outlets. So MLM distributors wind up purchasing large quantities for themselves and their families and/or selling most products at wholesale prices to downline participants in order to meet volume requirements for bonus or discount levels.

Also, extreme incentives to recruit a downline often lead to many of the attendant deceptions for which such programs are notorious - overstating income potential and/or product effectiveness, deceptive recruiting practices,etc. Doing less may not produce any significant income. This explains why many otherwise honest persons eventually mimic the deceptions of their upline and either rationalize or fail to see the fraudulence of their actions.

EXCESSIVE LEVELS

Question 5: Does the company pay overrides or commissions on more than four levels above the distributor making a sale or purchase?

Answer: (NO) - If no more than four upline levels are allowed above the distributor buying or selling the product, then the system may be quite harmless, since customers may be served without excessive upline remuneration. No upline distributors are likely to receive exhorbitant incomes at the expense of their respective downliners.

In fact, with a maximum of four levels, most systems would die out for lack of opportunity for top distributors to receive extremely large override checks. Blatant appeals to greed would be minimized.

Answer: (YES) - More than 5 levels in the distributor hierarchy enriches those at the top, at the expense of a multitude of downline participants, the vast majority of whom lose money.

For even the largest of conventional distributor arrangements, the entire U.S. can be covered by a maximum of four supervisory levels in the distributorship hierarchy; e.g. branch managers, district mgrs., regional mngrs., and national sales manager -plus an international manager if one is needed for foreign markets. More than that is superflous and bloated, driving up product prices and making sales at a competitive retail markup unprofitable and unrealistic.

When several levels are allowed in an MLM hierarchy of distributors, there is seldom any functional justification for doing so other than to encourage recruiting and the illusion of very large potential incomes to more participants than is mathmatically possible -- a hallmark of many pyramid schemes. Only those distributors at the top of the hierarchy of the participants realize any significant income.

Also, with an upline of many levels, the top-level distributors may be profiting to an extreme degree from the losses (including products that would not have been puchased had the investing distributors not gotten involved) of those beneath them. Such exorbitant incomes result from reaping of huge commissions, overrides and bonuses from the combined efforts and investments (in the form of product purchases) fo the hundreds or even thousands of downline participants.

This is what MLM enthusiasts often refer to as "leverage" or "residual income" -- large company payouts disproportionate to effort expended, resulting primarily from the purchases of downline participant. Leverage can be illustrated by adding up a downline of participants that is extended to six levels -- although many programs allow for many more levels. But for the purpose of illustration, assume that a "distributor" recruits five active distributors,each of whom recruits five more, and so on through six levels of distributors. Lets assume a $5 commission on each sale. The exponential growth of the pyramid becomes evident:

LEVEL 1: 5 distributors X $5 in commissions & bonuses = $25 a month

LEVEL 2: 25 + 5 = 30 total Distributors X $5 in commissions & bonuses = $150 a month

LEVEL 3: 125 + 30 = 155 total distributors X $5 in commissions & bonuses = $775/month

LEVEL 4: 625 + 155 = 780 total distributors X $5 in comm. & bonus =$3,900/month

LEVEL 5: 3,125 + 780 = 3,905 distributors X $5 in comm. & bonus = $19,525/month

LEVEL 6: 15,625 + 3,905 = 19,530 distributors X $5 in comm. & bonus = $97,650/month!!!

If each "distributor" (or "participating consumer") were to buy enough products each month to yield an override of $5 in commissions and bonuses to the original upline distributor, then with a five-level downline, the upline distributor gets $19,525 per month, while with a complete six-level downline the same distributor gets $96,650 per month. The incentive to recruit to move up a level becomes very great.

Of course it seldom works out that way, but these are the type of figures that are often presented to prospective new recruits at MLM opportunity meetings. This example illustrates why so much emphasis is placed on recruiting, as opposed to selling products to persons outside the pyramid. $97,650 is much more appealing than $100 that might be earned by a level 1 distributor for selling the products at the full retail price (assuming $20 markup on products sold to each of five customers - before expenses). In comparison with recruiting, retailing products at full retail price becomes a waste of time.

WARNING!!! WARNING!!! WARNING!!!

If the answer to all five questions is "yes" then the MLM program should be considered a harmful pyramid scheme in concept, structure, and effects -- regardless of quality of products offered, type of compensation system (binary, breakaway, matrix, unilevel, etc.), company policy regarding recruiting, or any other efforts by company officials to make its program appear to be legitimate. The primary emphasis will be on deriving income from recruiting with insufficient incentive to retail products or services.

Also -- if all five of the above are true, then the likelihood of a distributor earning a significant income is so infinitessimally small that it would be misleading to say that any significant income could be realized from it, even with dilligent effort. If a recruiter then suggests that a high percentage of participants can earn a significant income from such a program, a case can be made for misrepresention of earnings or deceptive sales practices. And if a sizable investment of products is encouraged to "jump start" the business, it may be appropriate to ask if the recruiter has registered as a broker-dealer of securities.

While none of the above five yes responses in and of themselves costitutes a pyramid scheme, a combination of four(the first four) or all five most certainly indicates a high enough degree of exploitation to be considered very harmful(and probably illegal) pyramid scheme, if properly understood. In actuality many participants are not "distributors" at all, but unwitting investors in a pyramid scheme.

The effects of such a system can be measured by requiring existing MLM companies to release data on payout to all participants (not just active ones) by percentiles after subtracting average purchases for gross income before operating expenses. It will then be seen that very large incomes accruing to the top distributors in the hierarchy are financed by the losses on the part of the vast majority of participants.

....Well Carl-aka Snakeoil Boy, if you will take the time to read this, and answer the questions truthfully, and the outcome is positive for Global Online Systems, then I would be glad to re-asses my feelings about the great MLM that you are a participant of.

I also hope that other people who are considering investing their hard earned money into schemes such as Herbalife, will read all of this report and it will help them to make an informed decision.

Again I would like to give my heartfelt thanks to Jon M. Taylor for posting his website, so that poorly educated people like me, who can't back up their claims with statistical data, can at least give people like Snakeoil Boy, something to think about.

Many thanks to rip-off as well, for providing this forum for all the consumers out there..
Respond to this report!
What's this?

#49 Consumer Comment

Directed back at the snake oil salesman

AUTHOR: William - (U.S.A.)

Carl,

Well you sure nailed me to the wall. I admit that I am no expert, and cannot give statistical information to back up my claims of what market saturation is. You win on that point. Carl, what I really am, is is your (pyramid participant) worst nightmare. Let me explain.

You see Carl, when I am approached by people like you (snake oil salesman), who want to sign me up in their great money making program (pyramid scheme), so that I can finally retire from the rat race and live a life of luxury, and have all the time in the world to enjoy my new found wealth, I tend to be a sceptic. I do not make snap decisions when it involves buying a business in a box, period. I will research this great opportunity fully, so that I can make an informed decision.

So Carl, the guy who likes facts so much, lets just see if Global Online, aka-Verticle Skip Marketing, aka-Herbalife, is an ethical company when it comes to recruiting new dealers/distributors.

I will use a do it yourself evaluation of MLM programs and suspected pyramid schemes that is posted on the internet by Jon M. Taylor Ph.D.

"Pyramid schemes in which no products are offered are fairly easy to identify, and they seldom last long without government officials shutting them down. But when consumers are presented with an income opportunity with multiple levels of product distributors, it is not always easy to determine whether or not it is an exploitive product-based pyramid scheme. It is well to remember that some programs are worse than others in terms of the percentage of participants who lose money and that some of the most damaging programs manage to escape legal action.

By doing this evaluation, you can decide for yourself whether or not a program should be avoided. As you answer each question (Carl-aka Snakeoil Boy), you will be given information that will enable you to make a more informed decision.

The key to identifying the potential harm of a MLM program is to look for elements in the compensation system that creat extremely high leverage for the top persons in the hierarchy of participants. MLM leverage refers to the concentration of payments from the company to founding and other top-level distributors, who profit hugely from the efforts and purchases of a multitude of distributors beneath them, the vast majority of whom lose both time and money.

CHAINING

Question 1 : Does a participating distributor advance through a chain of multiple levels of distributors by recruiting other distributors, who in turn recruit distributors under them, etc. ?

Answer: (NO) - If there is no chaining of participants into levels based upon recruiting, and if a participant does not progress through those levels by recruiting others, then the program would not qualify as a pyramid scheme and is probably harmless.


Answer: (YES) - All MLM programs, as well as illegal pyramid schemes, and chain letters have this multi-level chaining characteristic in common. But be cautious about joining programs in which you are recruited into a chain of distributors (agents, representatives, etc.) which are organized into multiple levels, especially where the position of the chain is determined by timing of entrance into the program and by success at recruiting others. while a few earn substantial profits, most participants lose both time and money.

In theory, the use of person-to-person referrals is a very powerful maketing strategy. And with outstanding products, fast-talking promoters, and/or connections with famous persons or notable experts, it is easy to be taken in by their appeal.

It should also be noted that quality of products or services often becomes questionable when incentives are tied to recruitment. This would apply to such products and services as health products, investments, or internet services.
For most MLM's, income is dependant primarily on downline recruiting. As a general guideline, if you must recruit to be successful, or if a program's emphasis is on building a downline, it is a de facto pyramid scheme, whether or not it has been declared illegal by authorities. You may just be setting yourself up for wasting much precious time and money, depending on factors that can be identified by answering the following questions.

UNLIMITED RECRUITING

Question 2 : In any area, is unlimited recruiting of distributors allowed--and even encouraged?

Answer: (NO) - If reasonable territorial protection is offered to participants in a given area, the program would not soon collapse from market saturation. Recruiters would not be as likely to promote the illusion of an ever-expanding market and of the potential for very large incomes for vitually all new recruits.

Answer: (YES) - With unlimited recruiting, new recruits find it increasingly difficult to recruit more participants into the system. This is due to market saturation, wherein prospects perceive a diminishing opportunity to profit from participation.

To illustrate an approach more in line with maket realities, suppose the program were limited to one distributor for each 10,000 population in a given area or to one distributor within each one mile radius - much like the territorial protectionn of a retail franchise. The problem of saturation would not be significant.

But limiting the amount of recruiting or the number of distributors in a given area is uncharacteristic of MLM because that would lessen the illusion of the potential for very large incomes for new recruits. Such limitations would render a pyramid scheme impotent.

PAY TO PLAY

Question 3 : Are participants expected to make a significant investment, or to make ongoing purchases in order to continue qualifying for bonuses, purchase discounts, etc.?

Answer: (NO) - If the investment in the scheme is minimal and repeat investments are not expected, it may still be a pyramid scheme, but the harmful effects will be minimized.

Answer: (YES) - If you have to pay a fee or to buy products to get into a program -- and are then expected to keep on purchasing products, services, training, etc., in order to progress in the orginization, be wary. You paying ongoing fees to "play the Game",one of the earmarks of a product-based pyramid scheme. If you add the operating costs of selling and recruiting to the cost of purchases from the company, total expenses will generally exceed any payments to you from the MLM company.

Pyramid schemes masquerading as MLM's are often allowed to grow and flourish unchecked because they do not require a large up-front enrollment fee to sign up. Because recruiters generally do not profit from the initial enrollment fee of a recruit, it is often assumed the program is not a pyramid scheme.

In fact, nothing may be further from the truth. MLM programs typically incorporate escalating incentives to purchase products (some at initial signup, some later) to qualify for ever-higher levels in the distributorship hierarchy and/or for larger discounts on product purchases. As a result, MLM "distributors" often overuse products or give away a lot of samples. Others fill their garages with products they don't need, in spite of policies to the contrary. The argument that participants would have purchased the products from another source anyway, and that these purchases should not be considered an expense of doing business, simply does not hold water.

Also, because some compensation systems offer incentives for recruiting and retaining a certain number of distributors (or escalating incentives to recruit more and more distributors), many participants will recruit "dummy distributors" from friends and family members and buy products in their names. They are led to believe this will then qualify them for "the really big bucks". It is not until they leave the system that the more astute among them realize that they have in effect paid a very large fee (in the form of product purchases) for participation in a pyramid scheme. Often this amounts to many thousands of dollars over a period of months or years.

Such an amount paid at the start into a no-product pyramid scheme would immediately arouse suspicions by the public and by regulators of its constituting an illegal pyramid scheme. But since the money paid into an MLM program is paid for legitimate products and over a period of time, most participants (and many regulators) fail to see it as an investment in a pyramid scheme. However this "pay to play" feature of a product based distribution system should be seen as a red flag signaling an illegal pyramid scheme.

Many observers believe that MLM products are sold at a premium to support a large downline. If an MLM product were to be sold at a premium of $20 more than competitve products sold thru other outlets, the $20 premium could be considered the pyramid premium portion of the price, which would flow to the top of the distributor Hierarchy in typical pyramid fashion.

As suggested earlier, what is often not factored in to projections made at opportunity meetings is the expenses of conducting the business. In most programs, if products purchased from the company (which would not likely have been purchased if the person had not been a participant in the program) and operating expenses were subtracted from commissions, few-except for those at the top levels-would be making any profits. The vast majority would actually be losing money, only to enrich the MLM company and fatten the bank accounts of the top upline distributors, in the form of overrides from product purchases by downline participants.

DISPROPORTIONAL PAYMENTS

Question 4 : Would a distributor receive about the same payment from the company for a wholesale purchase--or for a retail sale--as distibutors several levels above him/her who had nothing to do with it?

Answer: (NO) - If the pay is spread out to all participants, or if no pay is received at all, it may be a pyramid scheme, but probably not harmful or worth enforcement action against it as an illegal pyramid scheme.

Answer: (YES) - MLM plans typically offer very small rewards to front line distributors who actually sell the products and services of the company. So the only way to achieve significant income is to rise to the top of the distributor hierarchy by recruiting a large downline of distributors.

Many MLM compensation systems lead to extreme inequality in payout (money paid by the company) to distributors, which means there are few "winners" --but a high loss rate (after subtracting all expenses) for the rest of the participants. Often these "losers" will invest considerable amounts of time and money and then quit, blaming themselves. But their "failure" is not due so much to lack of effort on their part as to a SYSTEM which is stacked infavor of a few at the expense of the many.

In other direct sales settings, it is not unusal for a successful commissioned sales person to receive more income than sales managers at local or even regional levels. this is because the person making the sale makes more in commissions per sale (often 20-40%) than managers two or three levels above him/her. But in many MLM programs, upline distributors several layers removed from the actual sale receive as much or more in total payments per sale (including commissions and bonuses) from the company as the person who actually sold the product - who may get only five or ten % from the company.

EXCEPTIONS: In some cases, MLM's depart from this pattern of paying front-line distributors no more per sale than upline distrbutors several levels removed from the sale. For example, for MLM's which provide financial services, companies have to meet certain commission requierments for sales by their agents. In cases such as these, one should look at the overrides beyond the agent commissions, which are paid to upline participants in the hierarchy. If overrides for participants several levels above the agent making the sale are the same as for the person who recruited the agent, the result will be an undue emphasis on recruiting and extreme inequality in company payout to participants.

As mentioned earlier, since the total payout per sale is limited, when upline distributors receive substantial overrides from the sale by downline distributors,this limits the percentage of commissions to the person making the sale. so the income of the front line distributors is extremely limited, forcing them to recruit a large downline to realize a significant income. Powerful incentives may then be at work to recruit a downline in order to "make the really big bucks" collecting small overrides on hundreds even thousands of downline participants. MLM promoters call this "leverage". When the leverage is extreme, the program should be considered an illegal pyramid scheme.

MLM companies usually suggest that distributors who buy at wholesale prices from the company can then sell them at an elevated retail price, such as happens in more conventional retail outlets, thus allowing a significant profit margin for the distributor. The problem is that suggested retail prices for MLM products are generally too high to be competitve with other outlets. So MLM distributors wind up purchasing large quantities for themselves and their families and/or selling most products at wholesale prices to downline participants in order to meet volume requirements for bonus or discount levels.

Also, extreme incentives to recruit a downline often lead to many of the attendant deceptions for which such programs are notorious - overstating income potential and/or product effectiveness, deceptive recruiting practices,etc. Doing less may not produce any significant income. This explains why many otherwise honest persons eventually mimic the deceptions of their upline and either rationalize or fail to see the fraudulence of their actions.

EXCESSIVE LEVELS

Question 5: Does the company pay overrides or commissions on more than four levels above the distributor making a sale or purchase?

Answer: (NO) - If no more than four upline levels are allowed above the distributor buying or selling the product, then the system may be quite harmless, since customers may be served without excessive upline remuneration. No upline distributors are likely to receive exhorbitant incomes at the expense of their respective downliners.

In fact, with a maximum of four levels, most systems would die out for lack of opportunity for top distributors to receive extremely large override checks. Blatant appeals to greed would be minimized.

Answer: (YES) - More than 5 levels in the distributor hierarchy enriches those at the top, at the expense of a multitude of downline participants, the vast majority of whom lose money.

For even the largest of conventional distributor arrangements, the entire U.S. can be covered by a maximum of four supervisory levels in the distributorship hierarchy; e.g. branch managers, district mgrs., regional mngrs., and national sales manager -plus an international manager if one is needed for foreign markets. More than that is superflous and bloated, driving up product prices and making sales at a competitive retail markup unprofitable and unrealistic.

When several levels are allowed in an MLM hierarchy of distributors, there is seldom any functional justification for doing so other than to encourage recruiting and the illusion of very large potential incomes to more participants than is mathmatically possible -- a hallmark of many pyramid schemes. Only those distributors at the top of the hierarchy of the participants realize any significant income.

Also, with an upline of many levels, the top-level distributors may be profiting to an extreme degree from the losses (including products that would not have been puchased had the investing distributors not gotten involved) of those beneath them. Such exorbitant incomes result from reaping of huge commissions, overrides and bonuses from the combined efforts and investments (in the form of product purchases) fo the hundreds or even thousands of downline participants.

This is what MLM enthusiasts often refer to as "leverage" or "residual income" -- large company payouts disproportionate to effort expended, resulting primarily from the purchases of downline participant. Leverage can be illustrated by adding up a downline of participants that is extended to six levels -- although many programs allow for many more levels. But for the purpose of illustration, assume that a "distributor" recruits five active distributors,each of whom recruits five more, and so on through six levels of distributors. Lets assume a $5 commission on each sale. The exponential growth of the pyramid becomes evident:

LEVEL 1: 5 distributors X $5 in commissions & bonuses = $25 a month

LEVEL 2: 25 + 5 = 30 total Distributors X $5 in commissions & bonuses = $150 a month

LEVEL 3: 125 + 30 = 155 total distributors X $5 in commissions & bonuses = $775/month

LEVEL 4: 625 + 155 = 780 total distributors X $5 in comm. & bonus =$3,900/month

LEVEL 5: 3,125 + 780 = 3,905 distributors X $5 in comm. & bonus = $19,525/month

LEVEL 6: 15,625 + 3,905 = 19,530 distributors X $5 in comm. & bonus = $97,650/month!!!

If each "distributor" (or "participating consumer") were to buy enough products each month to yield an override of $5 in commissions and bonuses to the original upline distributor, then with a five-level downline, the upline distributor gets $19,525 per month, while with a complete six-level downline the same distributor gets $96,650 per month. The incentive to recruit to move up a level becomes very great.

Of course it seldom works out that way, but these are the type of figures that are often presented to prospective new recruits at MLM opportunity meetings. This example illustrates why so much emphasis is placed on recruiting, as opposed to selling products to persons outside the pyramid. $97,650 is much more appealing than $100 that might be earned by a level 1 distributor for selling the products at the full retail price (assuming $20 markup on products sold to each of five customers - before expenses). In comparison with recruiting, retailing products at full retail price becomes a waste of time.

WARNING!!! WARNING!!! WARNING!!!

If the answer to all five questions is "yes" then the MLM program should be considered a harmful pyramid scheme in concept, structure, and effects -- regardless of quality of products offered, type of compensation system (binary, breakaway, matrix, unilevel, etc.), company policy regarding recruiting, or any other efforts by company officials to make its program appear to be legitimate. The primary emphasis will be on deriving income from recruiting with insufficient incentive to retail products or services.

Also -- if all five of the above are true, then the likelihood of a distributor earning a significant income is so infinitessimally small that it would be misleading to say that any significant income could be realized from it, even with dilligent effort. If a recruiter then suggests that a high percentage of participants can earn a significant income from such a program, a case can be made for misrepresention of earnings or deceptive sales practices. And if a sizable investment of products is encouraged to "jump start" the business, it may be appropriate to ask if the recruiter has registered as a broker-dealer of securities.

While none of the above five yes responses in and of themselves costitutes a pyramid scheme, a combination of four(the first four) or all five most certainly indicates a high enough degree of exploitation to be considered very harmful(and probably illegal) pyramid scheme, if properly understood. In actuality many participants are not "distributors" at all, but unwitting investors in a pyramid scheme.

The effects of such a system can be measured by requiring existing MLM companies to release data on payout to all participants (not just active ones) by percentiles after subtracting average purchases for gross income before operating expenses. It will then be seen that very large incomes accruing to the top distributors in the hierarchy are financed by the losses on the part of the vast majority of participants.

....Well Carl-aka Snakeoil Boy, if you will take the time to read this, and answer the questions truthfully, and the outcome is positive for Global Online Systems, then I would be glad to re-asses my feelings about the great MLM that you are a participant of.

I also hope that other people who are considering investing their hard earned money into schemes such as Herbalife, will read all of this report and it will help them to make an informed decision.

Again I would like to give my heartfelt thanks to Jon M. Taylor for posting his website, so that poorly educated people like me, who can't back up their claims with statistical data, can at least give people like Snakeoil Boy, something to think about.

Many thanks to rip-off as well, for providing this forum for all the consumers out there..
Respond to this report!
What's this?

#50 UPDATE Employee

DIRECTED TO MARKET SATURATION EXPERT

AUTHOR: Carl - (U.S.A.)

Are you referring to market saturation like a fast food resturant on every block, like a complete aisleway in Walmart devoted to hair shampoo, like cars on the roads being bumper to bumper, like 6 "classic rock" radio stations in one city, etc....?

Are you implying that when a business has competitors in the same market, it must be bad business?

At what point is a market saturated?

I would like to know, from an expert like you, what is the measure of a market being saturated and please give me the statistical research that supports your claim. I want to look more into that research so I can use it to improve my own odds for success.

Thanks. With all the people out there feeding uninformed "crap" to the world, it's nice to know there are experts that can educate the rest of us with real facts and documented studies. I wish all those other people would just shut up, don't you?
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#51 UPDATE Employee

OPINIONS ARE LIKE..... AND SOME PEOPLE ARE TOO

AUTHOR: Carl - (U.S.A.)

Dear Steve in Dublin, CA,

FACT: The product info you could not find was on the CD. Some people choose to NOT follow the instructions and so fail to get it until later.

FACT: There is not an organization existing that has only IDEAL people involved. For example, if McDonald's has even 5000+ bad order servers, that does not make McDonald's a "ripoff".

FACT: A little digging to find a contact within Global Online Systems would have led to your immediate refund, gladly. And, it would not have taken any more time and energy than you spent to find an "opinion site" to complain on.

FACT: Over 30 million users buy that "crap that no one wants".

FACT: Global Online is the largest and best marketing company affiliated with Herbalife in volume of sales.

MY OPINION: Some people will always blame other people or anything else for their own incompetence and never accept responsibility for their own actions.
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#52 UPDATE Employee

OPINIONS ARE LIKE..... AND SOME PEOPLE ARE TOO

AUTHOR: Carl - (U.S.A.)

Dear Steve in Dublin, CA,

FACT: The product info you could not find was on the CD. Some people choose to NOT follow the instructions and so fail to get it until later.

FACT: There is not an organization existing that has only IDEAL people involved. For example, if McDonald's has even 5000+ bad order servers, that does not make McDonald's a "ripoff".

FACT: A little digging to find a contact within Global Online Systems would have led to your immediate refund, gladly. And, it would not have taken any more time and energy than you spent to find an "opinion site" to complain on.

FACT: Over 30 million users buy that "crap that no one wants".

FACT: Global Online is the largest and best marketing company affiliated with Herbalife in volume of sales.

MY OPINION: Some people will always blame other people or anything else for their own incompetence and never accept responsibility for their own actions.
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#53 UPDATE Employee

OPINIONS ARE LIKE..... AND SOME PEOPLE ARE TOO

AUTHOR: Carl - (U.S.A.)

Dear Steve in Dublin, CA,

FACT: The product info you could not find was on the CD. Some people choose to NOT follow the instructions and so fail to get it until later.

FACT: There is not an organization existing that has only IDEAL people involved. For example, if McDonald's has even 5000+ bad order servers, that does not make McDonald's a "ripoff".

FACT: A little digging to find a contact within Global Online Systems would have led to your immediate refund, gladly. And, it would not have taken any more time and energy than you spent to find an "opinion site" to complain on.

FACT: Over 30 million users buy that "crap that no one wants".

FACT: Global Online is the largest and best marketing company affiliated with Herbalife in volume of sales.

MY OPINION: Some people will always blame other people or anything else for their own incompetence and never accept responsibility for their own actions.
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#54 Consumer Comment

Global Online Systems AKA-HERBALIFE

AUTHOR: William - (U.S.A.)

I too get spammed to the nth degree from these jerks at Global Online Systems, AKA-HERBALIFE. Sorry to hear that you are already getting sucked into this scam, Scott from Baltimore. I suggest to anyone who is considering ordering this crap, to see what it is all about by learning what market saturation is.

CLICK here to see why Rip-off Report, as a matter of policy, deleted either a phone number, link or e-mail address from this Report.

go to ebay and type in herbalife in the search bar and see how many loser distributors are unloading all their miracle potions for pennies on the dollar!
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#55 Consumer Comment

Global Online Systems AKA-HERBALIFE

AUTHOR: William - (U.S.A.)

I too get spammed to the nth degree from these jerks at Global Online Systems, AKA-HERBALIFE. Sorry to hear that you are already getting sucked into this scam, Scott from Baltimore. I suggest to anyone who is considering ordering this crap, to see what it is all about by learning what market saturation is.

CLICK here to see why Rip-off Report, as a matter of policy, deleted either a phone number, link or e-mail address from this Report.

go to ebay and type in herbalife in the search bar and see how many loser distributors are unloading all their miracle potions for pennies on the dollar!
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#56 Consumer Comment

Global Online Systems AKA-HERBALIFE

AUTHOR: William - (U.S.A.)

I too get spammed to the nth degree from these jerks at Global Online Systems, AKA-HERBALIFE. Sorry to hear that you are already getting sucked into this scam, Scott from Baltimore. I suggest to anyone who is considering ordering this crap, to see what it is all about by learning what market saturation is.

CLICK here to see why Rip-off Report, as a matter of policy, deleted either a phone number, link or e-mail address from this Report.

go to ebay and type in herbalife in the search bar and see how many loser distributors are unloading all their miracle potions for pennies on the dollar!
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#57 UPDATE Employee

THIS REPORT IS ALL WRONG... $39.95 is a weeding out fee

AUTHOR: Scott - (U.S.A.)

I have just recently gone throught the process that Steve discribes. I had a completely opposite expreience. The $39.95 is a weeding out fee if you are not interested in paying the fee we are not interested in wasting our time talking to you, our time is valuable. Once you receive the package you are contacted by your personnal coach and you are given the whole scoop on the business. You could just ask to be contacted and the call you receive gives you more information that allows you to decide if you want to get the $39.95 package. I know that I keep funds to make refunds and since you charged it on your credit card you could always dispute it with them.
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#58 UPDATE Employee

THIS REPORT IS ALL WRONG... $39.95 is a weeding out fee

AUTHOR: Scott - (U.S.A.)

I have just recently gone throught the process that Steve discribes. I had a completely opposite expreience. The $39.95 is a weeding out fee if you are not interested in paying the fee we are not interested in wasting our time talking to you, our time is valuable. Once you receive the package you are contacted by your personnal coach and you are given the whole scoop on the business. You could just ask to be contacted and the call you receive gives you more information that allows you to decide if you want to get the $39.95 package. I know that I keep funds to make refunds and since you charged it on your credit card you could always dispute it with them.
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#59 UPDATE Employee

THIS REPORT IS ALL WRONG... $39.95 is a weeding out fee

AUTHOR: Scott - (U.S.A.)

I have just recently gone throught the process that Steve discribes. I had a completely opposite expreience. The $39.95 is a weeding out fee if you are not interested in paying the fee we are not interested in wasting our time talking to you, our time is valuable. Once you receive the package you are contacted by your personnal coach and you are given the whole scoop on the business. You could just ask to be contacted and the call you receive gives you more information that allows you to decide if you want to get the $39.95 package. I know that I keep funds to make refunds and since you charged it on your credit card you could always dispute it with them.
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#60 UPDATE Employee

THIS REPORT IS ALL WRONG... $39.95 is a weeding out fee

AUTHOR: Scott - (U.S.A.)

I have just recently gone throught the process that Steve discribes. I had a completely opposite expreience. The $39.95 is a weeding out fee if you are not interested in paying the fee we are not interested in wasting our time talking to you, our time is valuable. Once you receive the package you are contacted by your personnal coach and you are given the whole scoop on the business. You could just ask to be contacted and the call you receive gives you more information that allows you to decide if you want to get the $39.95 package. I know that I keep funds to make refunds and since you charged it on your credit card you could always dispute it with them.
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