WakeUpNow fail to address retail elephant in the room
Retail sales are the lifeblood of any MLM company. Without a steady flow of revenue from people outside of the opportunity purchasing your products, you’re only putting off an inevitable collapse.
A complete lack of retail sales saw WakeUpNow rack up $3.3 million dollars in losses for 2012. This trend continued and in 2013 the company recorded another loss of $4.5 million.
No doubt seeing the writing on the wall, WakeUpNow management introduced mandatory retail quotas in late 2013. Forced onto an affiliate-base that had previously been solely focused on affiliate recruitment, these changes were met with mixed reactions.
Affiliates who had focused on signing up, paying the minimum volume-spend themselves and then recruiting others to do the same were rather unhappy.
The loss figures above are quoted from WakeUpNow’s own 2013 Disclosure statement, which was the focus of a recent BehindMLM article. Titled “WakeUpNow blows through almost $8 million in two years“, the article looked at the current situation, what WakeUpNow focused on in the statement and what that likely meant for the business going forward.
In summary, WakeUpNow looked to be pushing more of the same – which I suggested would in turn result in more of the same. That being the ongoing loss of millions of dollars from year to year.
That evidently didn’t go over too well with WakeUpNow corporate, who were quick to deploy their PR agency.
The first response came in less than 24 hours by way of a spammy press-release. Written for no other reason than to be linked back to by over-zealous WakeUpNow affiliates, who for some reason can’t quite seem to grasp WakeUpNow themselves author (or at the very least solicit) such works, declares “WakeUpNow passes 100,000 customer milestone”.
Sounds impressive, until you consider there’s no mention of how many of those customers are retail.
Furthermore, the maths doesn’t add up either. How does a company with 100,000 customers still manage to lose $8 million over two years? Even the smallest of spends ($10), translates into millions of dollars in revenue.
Some things need to be considered here. In addition to no mention of retail ratios, WakeUpNow also don’t clarify whether these 100,000 customers are currently active (having made any recent orders), or whether it’s a cumulative number.
Anyway, it is what it is – a bunch of spam that’s both misleading and ultimately irrelevant.
WakeUpNow followed up this response with an email sent to me via BehindMLM’s contact form. Well, not from them per say but from Mike Scerbo of Rose Moser Allyn Public Relations, who appear to be working for them.
Scerbo’s email was anything but personal, containing seemingly recently written spammy press-release that asked me to “consider” the following “key points”:
A Bright Future For A Different Type Of Direct Sales Company
WakeUpNow welcomes all constructive criticism. That’s the best way to improve our product and our people. We even welcome criticism from direct marketing critics. However we must take issue with a piece recently published by Inside MLM on May 8th.
To set the record straight WUN has always made retail sales a priority BECAUSE trends show we are excelling in that area. There has always been a focus on retail as our many affiliates would attest.
As for not showing massive profits in the early stages, we’re in some pretty good company. Amazon, Facebook, Tesla and others technology companies did not show profits in their early years. WakeUpNow is developing a long term, legacy company and to fulfill this strategy we would rather reinvest in our growing company than make a quick short term profit.
As for commission generation, the numbers reflect that we are blessed with a very large customer and independent business owner base and only a percentage of them choose to make the commitment of time and energy needed to earn commission.
However, many of those who do make the commitment have become financial success stories. Regardless of their intent to earn commissions WakeUpNow customers derive real value from the products. There is no cost to become an independent distributor.
Much of Inside MLM’s article focused on selected items on our 2013 Annual report. That report was honest and comprehensive because we believe in full disclosure. It shows we are honest and optimistic.
Our sales continue to grow. In the last many quarters, WakeUpNow’s gross sales volume has increased at a substantial rate relative to prior quarters. WakeUpNow attributes this growth largely to improvement in the scope and quality of its product offerings.
Recently our Energy drink Thunder sold out of the initial order months ahead of expectations.
WakeUpNow is in business for the long-term, unlike many in the direct marketing firms that make big promises, leave town with a fast buck, and leave affiliates holding the bag.
We are investing in our company, improving our customers experiences and in a future that will provide long term success.
We appreciate your consideration of these key points.
Inside MLM, really…?
As you can see, yet again the retail elephant in the room is side-stepped in favor of a bunch of irrelevant waffle. Scerbo does mention retail, but in the vague sense that “trends show (they) are excelling in that area”.
Oh really? Let’s see some numbers then. Enough with this marketing spin bullshit.
Here was my response:
“To set the record straight WUN has always made retail sales a priority BECAUSE trends show we are excelling in that area. There has always been a focus on retail as our many affiliates would attest.”
With all due respect, what an absolute load of horseshit.
Mandatory retail quotas were brought in in (sic) late 2013 for the sole reason that retail just wasn’t happening. Then a good cross-section of your affiliate-base revolted, because prior to that they’d all been making money solely on recruiting.
I’m not interested in the PR spin bullshit. You’re welcome to provide 2012 and 2013 retail figures at your convenience (and month on month 2014 if you so wish). Note that the only figures I will accept are revenue from subscriptions sold to non-affiliates (this does not include ex-affiliates, affiliates who have not recruited or affiliates who stopped paying fees).
If you’re willing to provide this information, please contrast it with the revenue sourced from affiliate subscriptions (internal consumption).
“As for commission generation, the numbers reflect that we are blessed with a very large customer and independent business owner base”
The “numbers” show you’re in the hole almost $8 million dollars.
If that’s WakeUpNow with a “very large customer” base, you’re doing it wrong.
I applaud the transparency your company has shown in providing the figures, but in and of itself does not excuse them – or change what they reveal.
Care to make an official loss/profit prediction for 2014 based on your first quarter 2014 revenue figures? Better still, provide those figures to me and I’ll do my own analysis.
Please do not reply back with anything but correspondence on the points above. If I see a tincan response or excuses, it’s going straight into the spam bin.
I sent that yesterday, and was going to do the polite thing and give them a week to reply (and provide the requested retail information) before writing a followup.
As of yet I haven’t received a reply, but that doesn’t mean WakeUpNow’s PR agency have taken the weekend off.
Published today, WakeUpNow’s latest press-release again fails to provide any clarity on the issue of retail activity within the company. Instead, they do their best to divert attention away from the topic primarily by
- implying BehindMLM is ‘working for or with competitors‘ and
- drawing irrelevant comparisons to Facebook, Amazon, eBay, NuSkin, Herbalife and Usana (WakeUpNow claim they are “on a similar track” to these companies)
One sentence did catch my eye: ‘WakeUpNow’s revenues have increased in recent quarters’. WakeUpNow attribute some of their losses to re-investing said revenue back into the business. This is of course fair enough, but again …”revenue”, how much of that is retail revenue?
Three separate responses to the same article highlighting a near $8 million loss over two years, yet none of them provide any hard retail revenue figures or ratios.
Instead we get a bunch of rosy fluff statements, irrelevant comparisons and marketing bullshit that fails to address the core issue behind WakeUpNow’s demonstrated failure:
Is WakeUpNow the MLM business opportunity viable on a retail level?
The only way to ascertain that would be a year on year retail revenue comparison, which only WakeUpNow can provide its investors, affiliates and to a lesser extent myself. That and only that will show that the company indeed is not heading for another straight year of millions of dollars in losses.
WakeUpNow publishes disclosure documents to provide information to investors. Our company embraces this practice. We believe that transparency and honesty help foster a culture of accountability and integrity.
The ball is in your court guys. Provide those figures and put the concerns to rest, or continue to publish irrelevant waffle, have your affiliates create childish YouTube campaigns and go on failing to address the core-issue.
You didn’t lose nearly $8 million dollars over two years because of BehindMLM, your competitors, other MLM companies, transparency, corporate integrity or whatever other nonsense you want to come up with. You lost it because your affiliates weren’t selling your third-party merchant offerings to retail customers.
Either show tangible proof that changes have been made in this area for the first quarter of 2014 (compared to 2013), or come clean and admit that WakeUpNow is on track to record another year of millions in losses going forward.
You don’t me anything, but that much you at the very least owe to your investors, shareholders and affiliates.
Footnote to WakeUpNow affiliates: If you cannot conduct yourselves in a professional manner, your offtopic comments will not be published. This is not the place for what passes for WakeUpNow marketing on Facebook, YouTube et al.
A certain MLM advocate and I had a bit of debate on how much of the early efforts of an MLM should be on recruiting (“growing a sales team”) and how much should be on pushing the product. His view was that a young company can be given a wee bit of a slack to grow a sales team but must, sooner or later, turn that team into a real sales team.
I asked him if a) is that conversion actually feasible, since it attracts the “recruiters” rather than the “sellers” from the very beginning, and those recruiters virtually NEVER turn into sellers, other than asking their downlines/team members to buy stuff, and b) what sort of a deadline are we looking at to do the conversion? 6 months? 12 months? 18?
I don’t quite recall what our conclusion was, but let’s say our differences were never settled.
And since then, we watched MANY of the supposedly recruit-ing-based companies try to transition to a retail basis, and most of them died with a whimper, when the recruiters realized this isn’t for them (it never should have been) and jumped to something else.
Looks like here comes another one.
Associates are being told by “Seemore Green” and company from MCA to “flash pictures of money” around Facebook and go rent cars and promote them in videos as something you own…
This has become MCA II.
Income claim fraud is NOT tolerated by FTC. And FTC is tracking video claims made on Facebook, Youtube, and such.
Kevin “The MLM Attorney” Thompson have a series of articles on what *can* you say online vs. what you can’t. If they really are making false income claims online, they are DOOMED and overdue for an investigation.
Hey Oz, what coverage of the TF events, KUDOS. You really really have me hooked with your straightforward content and attitude.
Please help me here, I have now been following coverage of WUN and I am once again blown away by Troy Doody hype. I have been posting to his site (MLMHELPDESK) but UNLIKE this site and LIKE Ted Nuyten – Business For Home, they will NOT address my posts asking if he is disclosing up front on videos that he is getting paid to promote WUN.
I have been taking screen shots of my posts and as Troy will have it, he just never approves or addresses my questions.
Now I know he has a “Safe Harbor” statement drummed up by KT or some other attorney and also says on the bottom of the post that he is a consultant for WUN but it should be IN THE VIDEO or in text across the video, ie:
I am a PAID CONSULTANT for WUN or whatever else he does. These youtube vids do NOT have this “paid consultant” statement.
He is one of the biggest whores in MLM and will sell anything for money.
PEOPLE MUST BE AWARE HE IS DECEPTIVE and will lead viewers to be out of pocket!
Oz, I believe in my heart of hearts you would NOT SELL OUT like Troy Doody and some other pro attorneys.
Please help expose this crooks, thanks again for the most entertaining info on the net for MLM
Ted Nuyten – Business For Home is next, been posting to his site, anything negative or truthful and you are booted.
I have screen shots if you like
From memory Dooly has disclosed he’s a consultant of WUN’s in at least one video (I remember seeing it).
If you’d suggested he put a big message on his WUN videos and he hasn’t… then that’s up to him. I do recall it being disclosed verbally though.
Yes it was disclosed, he is there to help iron out issues with compliance and reigning the young ones who go crazy..that’s why you see EVERY video they make now says see the ‘income disclosure statement’ at blah blah…
WUN … overrun by all the crap from MCA
Cochrane sealed the deal when he recruited “Seemore Green” and
company from MCA
Can you tell me what you think of this?
Sounds like he’s encouraging affiliates to purchase and then resell the drink.
That’s not retail. Money coming into the company is from affiliates. What an affiliate does with the product after they’ve purchased it from WakeUpNow is irrelevant.
If you sell to retail customers and they pay the company for the product, that’s retail. Anybody have true retail figures for the thunder drink (drink sales revenue from affiliates vs. actual retail customers)?
Also your own retail numbers would add to the discussion Rick.
How many retail (non-affiliate customers do you have paying WakeUpNow for subscriptions and what not each month. These are non-affiliates who pay the company directly as retail customers, versus your recruited downline.
(Naturally your own spend with the company count as affiliate volume, regardless of whether you resell anything or not).
I believe he said we take a class to learn how to distribute to stores at WHOLESALE pricing, which is perfectly Legal.
Every MLM distributes its products at Wholesale pricing to sell to others, the difference is we’re allowed to be the middleman for distributing to stores. Tell me why that’s bad for us and how illegal it is…
Stop trying to deflect. We’re talking about retail.
Affiliates buying products is not retail.
If the entire company is doing that to generate volume, then effectively the company is running as a pyramid scheme (100% internal consumption with commissions only generated by defacto recruitment).
What are you talking about dude lol How am I deflecting, Our Affiliates will close deals with Bars, Restaurants, Corner Stores, and Gas stations to sell Awaken thunder for us. Perfectly legal…Stop distorting facts, nothing Pyramid about it and NO recruiting
And then the attempted reframe of retail discussion to what’s illegal/legal.
Retail revenue is all that’s being discussed here. Legality is for the courts.
Hard market to crack. No MLM company to date has managed to compete with CocaCola/Pepsi et al.
On the retail front, if the bars etc. buy direct from the company (under your affiliate code), that’s retail. If you buy product as an affiliate and then resell it to the bars etc., that’s not retail.
That video you linked sounded like affiliates were going to be buying product and then reselling it. That’s not retail.
Nobody said we were going to buy the product and sell to the stores…You just told me what we’re going to do is Retail because the stores will buy from our affiliate code…EVERY MLM company focuses on establishing a strong Distributor base first an then switches focus to retail, THIS is our time to do so.
Nobody said we were competing with Coca Cola or Pepsi, if anything we’re competing with Monster or Redbull an it won’t stop us from succeeding because its “Hard”….nothing is “Hard” if you dedicate.
“That video you linked sounded like affiliates were going to be buying product and then reselling it. That’s not retail.”
Then you obviously didnt watch the video. It clearly stated we will take classes to learn how to distribute to stores, not buy product and keep selling it.
No, they don’t. This seems to be some bullshit WakeUpNow affiliates made up to justify what is otherwise a recruitment-driven pyramid scheme.
You want to sell energy drinks in bars, who do you think you’re going to be competing against?
I take it you don’t know the meaning of “et al”.
Still dodging the providing of your own retail figures…
Best of luck with that. It’s not an industry-first. Every drink MLM company that has tried this has failed.
And an affiliate can’t distribute, or that’s not retail. The distribution is handled by the company. I take it you mean “sell to the stores” (they become your retail customers).
Since Im a Referral Marketer an my IBOs are also customers, who joined as customers, are considered retail when I sold them the platinum package…over 80 in my network…and Yes, the bars an such will be Retail customers of mine. Ending any non-retail claims
And I dont remember any MLM trying this, can u show me one?
That they are. They are not retail customers however.
No. They are your recruited downline.
I take it you have no retail customers then. No surprises there, as this appears to be the typical scenario within WakeUpNow.
PureNRG FX is a recent’ish one that had their affiliates try to market to pubs, bars and what not. Didn’t work out for them.
I’m sure affiliates in the other energy drink opportunities have tried too.
It’s WUN’s way of throwing some read meat to its most reliable lions. Herds the lions in one place for the prekilled, easy meal and heightens their instinct to be on diligent watch for an enemy inside the gates who’d interfere with the food supply. Also provides the requisite serving of MLM conspiracy theory.
The most reliable lions will reflexively regurgitate these talking points and do no thoughtful analysis at all. The downlines who follow the lead will be the Stepfordians. They’ll simply consume the upline vomit and then re-vomit it.
Phil Piccolo — and NO, I’m not implying Piccolo is on the WUN train — has been selling irrelevant (namedropping) waffle for years. He does it because it “works.” He’s trained thousands and thousands of MLMers to drop names and to sell irrelevant waffle.
Piccolo, I believe, also grooms people for penny-stock swindles — outside of public view, though.
If WUN folks who actually are willing to take their brains out for a walk want a quick means of reducing this waffle to its irrelevant essence, they can do one simple thing: Reject any Piccolo-like practice that makes MLM at large look ridiculous. In short, just say no to “We’re gonna be the next Google, Groupon, Johnson & Johnson, Amazon . . .”
The bizarre and ill-fated Dawn Wright-Olivares’ “McDonald’s” talking points at Zeek and/or her toilet-paper training tips also could jolt awake the MLM folks drifting toward Stepfordianism — at least the ones who remain capable of summoning the five seconds or so required to reclaim their gray matter from the robot-masters.
If this is being done by a WUN affiliate, he or she must be blind to the realities of FTC’s FHTM case. And since this is MLM in the age of ASD, Zeek and TelexFree, unindicted felons could be transitioning to other companies and bringing their felonious artifices with them.
Here’s hoping they didn’t go to the Paul Burks or Carlos Wanzeler school of how to mislead the consuming public about “customer” levels. Has WUN bought an advertorial from Keith Laggos yet?
Walmart buys products and resells them. It’s called retail.
They were promoting this over at the MMG forum They started a thread in the MoneyMakerGroup » HYIPs, Autosurfs, & Other High-Risk Opportunities » MLM, Direct Selling , Referral & Network Marketing section which is the kiss of death.
The thread only got to 23 pages before it was sent to the Closed, Inactive and Offline dead file. I think this hurt them in their recruiting efforts and tarnished their reputation.
If you can’t get those people on board, you are in deep trouble because they are recruiting masters. Those who did join weren’t interested in “retail sales,” as it was all about recruiting affiliates.
Dooly has used that reasoning to justify his rationalizations on every Ponzi scheme that “the critics” have called out, which he in turn would defend or otherwise provide only a tepid “caveat emptor; time will tell” type of response.
Dooly’s track record vs. “the critics” is poor. At least Zeek was a wake up call.
Some went out with a bang.
Yes, but are you living in the 1980’s? MLMs have gone to drop-ship system in the past 10-15 years. Making affiliates keep inventory makes them vulnerable to inventory loading, which is one of the things that defined the difference between pyramid scheme and MLM. And you can’t do inventory loading if you don’t have to keep inventory.
Omnitrition case CLEARLY stated that if you are IN the company (i.e. you can be compensated) you are NOT an end-customer.
It appears that your understanding is incomplete.
Wallmart is not an MLM company with affiliates and downlines.
Comparing retailers to MLM companies = fail.
The fact that MLM distributors get paid more when they do more volume is very similar to Walmart getting better prices from manufacturers, which allows them to sell for less and/or make more profit. Not comparing retailers to MLM companies when the analogy holds up = FAIL.
There are plenty of problems with MLM, but this comparison holds up. Your errors are costing you coming across as logical and factual.
Walmart is not an MLM company. You cannot compare apples and oranges.
There is no analogy, only fail. End of discussion.
“very similar to”
Don’t you just love that expression ??
Just as a Porsche has many features which are “very similar to” those of a Volkswagen.
I never claimed that Walmart IS an MLM. But the definition of retail applies to both of them, and most MLMs fail to do much retail sales, for a variety of reasons, making them illegal pyramids.
Walmart’s retail customers and an MLM retail customers both have nothing to do with the business. The customers are the same, businesses are not.
The definition applies solely to the customer-base.
Your problem was you were trying to draw comparisons on the business side of things (“Walmart buys wholesale etc”) and that’s where I took objection.
Irrelevant business comparisons are a common derail tactic used by pyramid scheme supporters. It’s one of the first lines of defense.
Troy Dooly belongs in prison. Every company he endorses he has family member posistions.
Every top 10 earner in wake up now is paid under the table regardless of what volume they have. It’s a con job. There are no globals in wake up now. It wasn’t earned. And distributors are paying for their salaries.
There are many that have tried the energy drink space. Efusjon is one of the bigger ones in recent memory… they cancelled their mlm program back in 2010, but I was surprised to see they are attempting a relaunch of the mlm model again at thefusjon.com now.
IMO most of these type of programs lead to inventory loading of the rep base and are ultimately destructive to the average rep involved.
~~ As with almost all product based mlms the products are not proprietary and there is really nothing special about the product itself that gives the company a sustainable competitive advantage in the marketplace.
Since the product price has to have huge margins to compensate the rep base, and since the consumer can almost always find a comparable product cheaper, this leads to a business model which, at its core, is not sustainable. This is the biggest problem with MLM as an industry.
When most people talk about the organization collapsing from the bottom up they are thinking along the lines of the representatives quitting… They forget that the retail customer is the most important link in the chain, and if they do not stick then reps will not stick.
The lack of a sticky retail customer base is the cause for almost all MLM failures. (and like Oz has said repeatedly, internal consumption is very different from retail consumption).
IMHO in order for the MLM industry to survive they will need to shift to a mindset of providing value to the end user instead of focusing everything on the rep base. That’s a big change from where most companies are at right now…. it will be interesting to see if this transition ever occurs.
Here’s the Webster v Omnitrition case:
A quick look at the business model, it seems to be very similar to Herbalife’s.
* Distributors who don’t participate in the opportunity
* Supervisors with monthly mandatory purchases
* “Bonus override commission”
* Selling the opportunity itself
The court had a clear understanding of pyramid schemes, how they work and why they’re illegal (even without involving any “internal vs external customers” logic).
The court’s own understanding have probably made a huge difference there. It used descriptions like “What the defendant cryptically describes as sales volume” when it analysed the monthly purchases.
Oz, you shouldn’t be so afraid to admit that retail is retail, you lose a LOT of credibility when you do. The problem isn’t that Walmart isn’t an MLM model, or MLM isn’t a Walmart model.
The problem is most MLMs don’t have much/any retail sales, therefore they are illegal pyramids, as I stated above.
Ok so lets drop some nuggets here. People do not understand the meaning of “retail” completely. I myself own a business and understand the ins and outs of Retail and network marketing. Now since we can go out there and start a franchise with WakeUpNow by selling our own drinks, Well guess what it is possible.
People say Walmart, target, and all these other top ionic companies doesn’t support MLM or Affiliates. But doesn’t quite realize that you can become a affiliate with Walmart, Home depot, Target. People People Understand what WakeUpNow is. We are a social distribution network. All the products and services we offer are for what we “people” consume on a daily basis.
Yeah we have the option to recruit business like-minded people just like “Subway” has the option for businessman to go out there an recruit others to franchise and sell there products as well.
So to sum everything down. We are the first to do it all. And anybody and everybody will find a way to put us down. This is business I understand!
This website have probably some statements in the “About” article about analysing business models rather than laws. It’s impossible to cover laws in each and every country or state, but it’s possible to analyse whether a business model primarily is recruitment driven or is based on sales to external customers.
From Webster v Omnitrition:
Pyramid schemes are said to be inherently fraudulent because they must eventually collapse. Like chain letters, pyramid schemes may make money for those at the top of the chain or pyramid, but “must end up disappointing those at the bottom who can find no recruits”.
That is the general part of the description. The rest of the description is country-specific, e.g. about FTC, Koscot test and similar country specific factors. Some of the logic can probably be applied to other countries too.
Internal consumption isn’t illegal in itself. Consumers can legally buy products or services from anyone they want, including their own employers or someone they have a business relation to.
Pyramid schemes are illegal because they’re deceptive and inherently fraudulent. They involve payments for the opportunity to earn a profit based directly or indirectly on the recruitment of other participants making similar payments (for the opportunity to earn a profit based directly or indirecty on the recruitment of other participants, etc.).
Anymore making up of bullshit and it’ll be the spam bin.
Oh come on. A franchiseeship is not even remotely similar to a recruitment driven pyramid scheme. Let alone the fact that Subway sell their own product.
FFS, anymore idiotic non-MLM to MLM comparisons are just going to get nuked.
@Chang You might want to review the 2004 FTC Staff Advisory on this issue…it concluded that distributors purchasing products for personal consumption can be classified as end users if I remember their advisory opinion correctly…
I believe that they also concluded that having a large number of distributors purchasing product for personal use does not in and of itself make the program an illegal pyramid scheme.
This is fro 2012:
Clarification: There’s nothing wrong with personal consumption in MLM, provided it’s not generating the majority of a company’s incoming revenue.
If it is, that company is effectively operating as a pyramid scheme.
Correct. That factor alone doesn’t make it illegal in itself.
The best way to test something like that is normally to look at it from more than one perspective, e.g. to look at what a consumer legally can buy.
The general rule is that a consumer legally can buy from anyone he want. There’s no restrictions against purchasing products from an employer.
If a consumer legally can buy from you then of course you legally can sell to him, even if he’s part of the same organizational system as yourself. It will first become questionable if the consumer CAN’T buy from anyone he want, if there’s restrictions in place to restrict the consumer’s normal rights.
If you have a business selling a product, with the odd exception, you BETTER be be using it yourself. How can someone effectively sell a product without personal use?. If you have a distributorship it only makes sense to buy from yourself at wholsale rather than someone else at retail. Sam Walton did not shop at Kmart.
I totally do not have a problem with internal sales.
What I DO have a problem with and so do the regulators is the majority of the commissions coming from internal use.
I am not going to mention the companies name because I dont want this to be construed as a pitch. This is for an example only.
About 30 percent of OUR companies “sales” are from personal use. I am sure some of those products get physically handed to someone and sold directly. I have a few customers myself that I do that for because they don’t know how to turn on a computer and place an order.
My point is that roughly 70% or more of our sales go to an end user that is NOT in the pay plan. Reciepts are generated to the fact, tracked, forms filled out every quarter by the distributors SHOWING the specific sales and its ALL reported to the concerned regulatory agencies.
In over 20 years, we have never had a legal issue and never will. That equates to over $700Milion in net sales with only about 160,000 distributors. Gross is well over a Billion.
To Address CEO.W in post #38 The idiotic statement of “we are the first to do it all” has me quite baffled. Seriously?
WUN and the other 100 affiliate/e-commerece “companies” are trying to blatantly and directly copy a company that started all of this over 20 years ago when the internet was in its infancy. The best you have is some kind of cheap imitation of the standard that has been set.
There is no direct relationships with the retailers, no retail profit from them no nothing but a stupid energy drink and a bunch of gathered affiliate links that has been done to death. NONE of those companies JUST LIKE WUN have amounted to anything or ever will. Lyoness, Dubli, FHTM, Shopping Sherlock, to name a few. INNOVATION wins the race NOT imitation.
Sorry to get on you but if you are going to come on here and claim to be a business owner you need to be able to back yourself up. Especially with such stupid comments as that. I apologise if I got a little personal. I usually dont take that route but the total lack of IQ that is sometimes here, is really frustrating sometimes.
Like OZ I am starting to get annoyed with the level of stupidity here.
And yes, I know my grammar sucks. ha ha. Being dumfounded does that to a guy. 🙂
What is the retail profit on a WUN product?
If you have ZERO people on your sales team. ZERO distributors, reps or whatever you call them and you sell an energy drink or a case of energy drinks through the website TO A CUSTOMER how much retail profit is credited to your account?
Retail profit is the difference between the wholesale price and what the customer pays for it on the website at “suggested retail”.
Can anyone answer that?
It has 3 types of monthly subscriptions, containing third party software (or apps) “Taxbot”, “WUNprotect” (etc., 3-4 software products). Price $25, $50, $100 per month. Some magazines (were) included in the price.
* $10 per month to separate between distributor subscribers and retail subscribers.
* energy drink, “Tropical Burst”, “Thunder” and “Citrus Rush”.
* Vacation Club.
* some other products or incentives, e.g. language training, grocery discount, etc.
Products were listed in this order:
* Energy drink
* Vacation Club
* various incentives
I’ve read the advisory, Ken. They’re being polite in saying that it’s not the ONLY sign they see a pyramid for. But it is ONE of the signs.
I know DSA takes a completely opposite position, that self-consumption is 100% legal, but you should read what MLM lawyers say about the same thing.
I think that Grimes and Reese wrote somewhere that FTC takes a much tougher stance with the public than they do with DSA. I don’t recall the exact citing right now.
DSA is a lobby organization. But there’s nothing illegal in voluntarily self consumption of the product you’re selling, i.e. buy a product from yourself or from someone in the same organization.
Consumers can buy from anyone they want, including themselves, e.g. a shop owner can clearly buy products from his own shop rather than from a competitor.
REALITIES VS WRITTEN RULES
“Laws are about realities, they’re not about constructed law theories”. They will need to be tested against “Is it really so?” rather than against other rules. If the rules don’t reflect the realities, the rules will need to be adjusted.
Is it really so that a consumer can’t buy from himself, e.g. that a farmer can’t “buy” the vegetables he has grown, but will have to buy them from another farmer? He’s actually buying them from himself, even if he doesn’t pay for them (it doesn’t make any sense paying money to yourself).
If a farmer can buy vegetables directly from himself, a butcher can buy meat from his own shop etc., then an MLM consultant can truly buy products from himself or anyone in the same organizational system. Other ideas will not reflect the realities, they will reflect constructed interpretations of written rules.
The Webster v Omnitrition case reflected that the judges had enough “technical knowledge” to clearly identify what a pyramid scheme is about, e.g. why it’s harmful and why it’s illegal.
The point about retail vs internal consumption is only a minor point. It’s about the test methods. “If Koscot is to have any teeth, such a sale cannot satisfy the requirement that sales be to “ultimate users” of a product” is about the interpretation of the test in that specific case.
The logic for that argument is placed like this:
It’s an additional factor, supported by evidence.
The court then points out the differences between real retail sales to consumers and the internal consumption type of sale. If that internal consumption type of sale can be considered to be retail sale, it must follow similar rules as the retail sale to external consumers.
#50 OK so OZ is right. There is NO retail. You go on an autoship and the person that sold it gets no retail profit. THAT IS NOT RETAIL SALES.
To the other points. Its perfectly legal to purchase your own products. However you must consume or sell at least 70% of your inventory before ordering more and you cannot get paid commissions on your own purchases.
The affiliate is NOT the farmer, the company is. The analogy would make a flea market vendor buying vegetables from a farmer, setting up a table, eating all the food himself, then calling that a business. Why can’t people grasp that?
Test it against anything you want, anything you feel can be compared to self consumption by distributors.
The main point was that consumers legally can buy products or services from anyone they want, including from themselves.
The farmer is both a farmer and a consumer. As a consumer, he will most likely have needs for some vegetables from time to time. He can choose to take them from his own production of vegetables, he can buy them from another farmer or he can buy them in a grocery store.
That’s how the REALITY is. There’s something obviously wrong when people interpret rules and come up with conclusions that don’t reflect the reality.
When the farmer used of his own vegetables, he did it as a consumer = completely voluntarily, of his own choice, because the quality and price satisfied his needs and wants, a completely rational decision for him as a consumer. His own consumption isn’t much of a problem, it’s both ethical and rational.
That doesn’t mean that ALL self consumption is ethical and rational. It means that the problem is about something else.
If people will need to buy a certain amount of products for the right to earn a salary or commission, the purchase will obviously be motivated by other factors than the wants and needs for the product itself. That’s what the judges pointed out in the Webster v Omnitrition case.
The tobacco companies would like to “change the rules” too and legally sell to minors, but the citizenry and the judiciary have more sense than that, recognizing at they do that this would be adverse to the public good.
Similarly, changing the “rules” to permit unlimited internal consumption in mlms would serve private interests at the expense of the public at large. Its a bad idea.
The reason why I couldn’t directly answer the question about retail commission was because of “Simple idea, complex commissions”
I didn’t say that consumers legally can buy anything or everything they want either?
The general rule is that consumers can buy anything that legally can be sold from whoever they legally can buy it from, including themselves.
It doesn’t mean there isn’t any rules in place to regulate trade of certain products or services. Some products or services may require certifications or licenses to sell or buy, some may have age-restrictions, some may be regulated by the FDA.
The discussion was about self consumption among distributors in MLM. Self consumption as a consumer isn’t much of a problem, it first starts to become a problem when people are buying products to qualify for commissions, or when they’re restricted from normal consumer rights.
Tobacco laws probably reflects the reality?
One rule that didn’t reflect the reality was when a Norwegian authority banned skateboards in 1978 (illegal to import, sell, buy, own or use). The law was based on a report from the National Electronic Injury Surveillance System (NEISS) in the U.S., which had recorded and analysed accident statistics from 1974 to 1977 (it showed an explosive growth in the number of injuries, from 3,600 to 71,000).
That law was abandoned in 1989.
Segway is (AFAIK) illegal in Norway, but that’s because a motor vehicle rule will need to be adjusted to reflect the reality. “Laws are about realities, not about constructed law theories”.
TL;DR version: Omnitrition decision basically says that the Koscot Test are useless if people are buying products merely to qualify for commissions, and thus, Koscot test does NOT rule out the scheme being a pyramid scheme (even though it *seems* to).
When FTC/Amway came up with Amway safeguard rules, FTC was more worried about inventory loading, i.e. the upline forcing the downline to stock up to enrich the upline. Nowadays, the focus had shifted… Upline don’t force downlines to stock up… they simply ENCOURAGE downline to recruit more downlines and buy up inventory in the name of “enrich themselves” but the overall effect was the SAME… merely the focus level had shiftdown…
Instead of downline consumption, it’s now SELF-consumption (albeit encouraged by the uplines on the downlines).
When you argue there should be no rules governing self consumption you are in effect arguing for a change in the status quo since prevailing case law supports the 70/30 paradigm.
I don’t think I mentioned anything like that? It’s clearly not a type of argument I would have used, it sounded much more similar to your type of argument.
I mentioned something quite opposite, e.g. that people shouldn’t be so focused on interpreting laws that they fail to see realities.
Will you two stop ASSUMING what each other had written? This interpretation thing is getting a bit old.
The difference is context. “self-consumption” in itself is not illegal. However, it is a symptom of a pyramid scheme / endless chain where the bottom rung was tricked into the scheme with forced purchases (i.e. inventory loading) to feed their uplines. And pyramid scheme / endless chain is illegal fraud.
Nobody said otherwise. If you thought someone did, You misinterpreted what was written.
Its more than a symptom isn’t it? Case law, statute and precedent all indicate there are reasonable limits which govern this activity. Who contends that zero self consumption is the limit? Nobody.
On the other hand some apparently want the self consumption limit to be raised or abolished entirely. I think that’s a bad idea, not as bad as lowering the smoking age but still bad.
What further realities do want people to see? The farmer eats some of his own corn? Salesmen use some of their own product? Nobody disputes that those things occur and are completely legitimate.
Webster v Omnitrition stands for the proposition that the company has an obligation to police the amount of self consumption within its purview (the so called 70% rule) not whether Webster et al had a legal right to purchase the product at all.
The ruling lays the responsibility for compliance squarely on the company’s shoulders (where it belongs.)
The WUN “cheerleaders” remind me of folks like Marco Rubio in denial about Global Warming …
Not if … but rather WHEN it crashes as the base gathering right now is the biggest pack of frauds in the history.
OMG, So now Troy Dooly the MUSH of mlm. Reverse merger? Wrong, it was a take over by Hedge Fund Venture Capitalist who are now spending all the investors money until it runs out and goes bankrupt.
When Troy Dooly starts promoting and protecting a company, it’s just months before it closes and someone is charged.
He talks about us kids as if they we are morons. Enticements? If they are real there is no problem, but if they are fake as with the top 10 earners in wake up now are paid salaries and do not have the required volume to hold those positions.
Troy speaks of rumors? Rumors are better than his paid for lies about a company.
Well, again it depends on the context. Are we talking about the act of self-consumption in itself, or are we talking about the behavior of the entire company?
Though personally I prefer the 10 customer rule in the Amway Safeguard Rules rather than outlaw self-consumption. If you want to self-consume, fine, but it can only count as 10% (or less) of your PV. I.e. you can’t “self-qualify” your purchase, and any company that lets you do it is probably a pyramid scheme out to take your money.
Yes, its called DIVERSION on the part of WUN. Why would ANY “sales” company choke their own ability to sell and TRACK sales properly?
Answer: Its NOT a sales company, its a signup game. Stop getting blinded by all the details of WUN’s convoluted “sales” process. Get back to the basics of what makes sales and distribution organizations successful. Whatever WUN is doing AINT IT!
You mentioned Webster v Omnitrition. As I understand it, the Court found self consumption exceeded a reasonable percentage of company-wide sales, thus the company could be held liable for Webster’s losses.
This suggests the company had the duty to monitor its sales force to ensure retail sales made up the bulk of revenues.
Accordingly, it appears that excessive self consumption (when compared to retail sales) is what is symptomatic of pyramid schemes not self consumption by and of itself.
“Promotional pyramids” will normally be part of commercial laws, e.g. consumer protection laws, competition laws or similar laws.
“Traditional pyramids” will normally be part of gambling laws, lottery laws or something similar.
If you analyse laws, you should probably try to find out WHY something is legal or illegal. The typical reasons for why something is illegal are harmfulness, unfairness and similar reasons.
“Laws are about realities, they’re not about constructed law theories”. Law theories are something people use to convince themselves about something, e.g. the different systems used in Telexfree (pay in product, etc.).
You will need to look at what a regulator or a court realisticly are designed to handle, e.g. a federal district court is not designed to handle hypothetical legal issues. It can handle real disputes and controversies.
Webster v Omnitrition involved significant amounts of money, $2,000 to become a Supervisor and monthly mandatory purchases to qualify for commissions. It’s those types of purchases that are illegal, not the internal consumption in itself.
It had constructed law theories, “If AmWay is legitimate, so is this company”, based on “if we have the same rules …” theories. The court pointed out some major differences between those 2 companies’ policies.
Internal consumption can fill SOME of the sales, revenue, profit and commissions. It’s impossible to extract any clear rules, e.g. about “minimum 50%”. The most important rule should be about whether it’s harmful or acceptable.
In practice that would be arbitrary and impractical.
And so would any other rule be, “arbitrary and impractical”, if they’re based on constructed law theories.
The only rule I highlighted was the one about realities. “Laws are about realities, they’re not about constructed law theories”. Webster v Omnitrition focused on the realities of the case, e.g. whether the so called “AmWay rules” had been enforced / had any function rather than the theory.
So then. Symantics aside, what is WUN doing differently than FHTM did?
Other than losing money and not worth the attention of the authorities?
The above sentence may make sense to you but I doubt it conveys any meaning to anyone else….at least it doesn’t to me.
Laws are ideals. They represent what we hope or expect should happen. Reality is what actually happens. They are separate things.
“constructed law theories” I have no idea what they are or why they would be important. Are you talking about interpretations of the law?
I’ll leave that issue to others.
ha ha. Yeah. Good point. 80% of their distributor base has been, or WILL be in jail at some point anyway.
You may find the answer to that in your own ideas, e.g. in the following ideas:
Most people will simply identify laws to be written rules about something, rather than ideals people should try to live up to. I don’t believe legislators make laws for that purpose either.
It may come as a shock to you, but people in general didn’t respect the anti skateboard law in Norway for more than a short period of time. They didn’t exactly try to live up to that law. 🙂
If you analyse the idea “Laws are ideals”, you will most likely find that the idea won’t reflect the reality.
I haven’t analysed any of them, neither FHTM nor WUN. I analysed briefly WUN’s annual report and IDS, but that was all.
It was a rhetorical question anyway. I have gone through them both, quite extensively. There is very little difference from my vantage point. There will be NO difference from the regulators vantage point.
Its no shock at all, if one understands that the ideal expressed in the law was not shared by the skateboarders.
They ignored it. They continued to skate. That’s the reality.
Take a look at the Ten Commandments. Disregard the religious elements. They are codified laws (ideals) that the Israelites were expected to live up to beginning more than 5000 years ago. They are basic and they reflect an idealized code of conduct that people still try to live up to today.
The reality has always been that people fall short of the ideal. The do kill, they do fornicate, the do steal.
All laws are passed with the expectation that members of society will abide by them (attempt to live up to them.) Always the reality falls short of the ideal. It has been so for the last 5000 + years.
The main point in that post was that I pointed out a plausible explanation for your “It doesn’t make any sense to me” statement. You tested the statement “laws are about realities” against your own idea “laws are ideals”.
It was the test method itself that didn’t make any sense. It didn’t test whether the statement was true or false, it only tested how it reflected the ideas you already had. And when it didn’t reflect your own ideas, the easiest way was to assume the problem was related to the statement itself.
You are hiding behind your typical go nowhere, say nothing nonsense again. End.
I gave you an explanation for where it failed to make any sense to you, and for why it failed. Most people will simply identify laws to be a system of written rules rather than some “Words of God” rules taught by religious leaders.
The discussion was initially about promotional pyramid scheme rules, e.g. “external consumers v internal consumption”. It’s much easier if we identify it to be about commercial laws than religious laws.
To avoid further misundestandings and confusion, I can specify that the statement “Laws are about realities, they’re not about constructed law theories” was about non-religious laws, e.g. commercial laws.
Laws like that are based on the idea that the society will change over time, and that the laws themselves and the interpretation of laws will need to be updated to reflect the realities.
Segway types of motorized vehicles are currently illegal to use on public roads in Norway. That’s related to a missing cathegory in the classification system for motor vehicles, 2-wheel motor vehicles of that type are simply not defined in the rules. It’s not related to some legislators trying to come up with “ideals” people should follow as a Bible. 🙂
“Laws are about realities, not about constructed law theories” will of course not make any sense if people are trying to test that statement on the opposite idea, “laws are about constructed law theories”. The logic for that is rather obvious.
This is apparently explains your statement that “the law is about realities.”
It would be a poor thing if law was only and actually about your “realities.” Law is and must be “about” more than amending statutes to accommodate innovations, fads, and events. What guides the law is a society’s ideals, what we want to be, not just what is or has been. We aspire and the law reflects those aspirations.
Ideally people will not steal. The law demands that we adhere to this ideal. It does not demand “reality.” Madoff is reality.
That idea is rather constructed, and it doesn’t reflect the realities for most laws. You can try to test your own idea on the anti skateboard rule? “Regulators saw it as an ideal with a skateboard free society, so they came up with a law people could live up to”.
The reality is normally plain and simple. The anti skateboard law came into existence because the regulatory body had a too onesided viewpoint.
It used an “expert authority” that had registered different types of injuries for 4 or 5 years, showing that skateboard was the second most dangerous toy in sale in the U.S., with explosive growth in serious injuries among children.
The regulatory body failed to analyse other parts of the realities, e.g. the resources needed to enforce the law and the general importance of the law compared to other laws (police and customs simply couldn’t give it a high priority).
That’s all that needs to be said. Everything else is about politics, resources, and enforcement.
One can readily see why the law was unpopular.
….and also why it was passed.
I used that as an example for “rather constructed idea that didn’t properly reflect the realities”.
It’s the idea that legislators make laws as “ideals people can live up to” that was constructed. Skateboards were more likely made illegal because of “potential harmfulness to children” than because of “the ideal of a skateboard free society among legislators”. 🙂
You don’t think your clear on what is meant by ideal here. I am not using it as synonym for perfection. Think ideas, and ideations as closely related concepts. Here are two definitions which illustrate the way I have been using the word.
3. An ultimate object of endeavor; a goal. (here laws have a goal)
4. An honorable or worthy principle or aim. (here to protect the public)
You seem to agree that skateboard laws were formulated with both the object and aim of reducing the risk of injuries to youth.
In your own words….
So there you are. You have made the point. The ideal was to protect children. But what was the reality? A. the Children were getting hurt? B. the children were not getting hurt? C. the children did not want to be protected from potential harm? D There is no risk to skateboards? E. Something else?
Err, forgive me for intruding here,
but, what on earth do skateboards and skateboard laws in Norway have to do with pyramid scheme laws in the USA ?
How about we leave the strawman arguments to the fraudsters.
Its kind of wonky and I am not sure you want to know.
I’m not sure how that applies. Can you explain. Thx
Both the thread and the forum are not talking about skateboarding or how and why laws are framed.
We are talking MLM and pyramid schemes and how the relevant laws are being ignored in the case of WUN.
No matter how “like” other entities they may be, they are, MLM and pyramid schemes are NOT other entities.
It’s not the similarities with other businesses and/or laws we need to be discussing, it is the “differences”
M_Norway may very well make his point WRT skateboard laws in Norway,or how and why laws are formulated and enforced but it remains a strawman.
IOW, a Volkswagen may be “like” a Porsche in many ways, the designers may even have had similar intentions when they were designed and it may be possible to convince an inexperienced observer they are both “nearly” the same.
But, they are not “the same” and it’s the differences that define why they are not.
You are right this back and forth has no relevance to WUN and its taken up too much space.
Why buy retail when all you have to do is sign up?
It’s doomed by design as are all of them or it wouldn’t be MLM.
Because no retail in MLM = pyramid scheme. Why sign up? To earn commissions.
You’re defacto paying on recruitment, and it’s indicative of a lack of retail viability.
Only a fool would pay retail when purchasing regularly with some commission as an added incentive. And only a foolish affiliate would run around for $2.00 retail sales. Sometimes simple explanations make more sense. I mean really, what bar owner selling energy drinks would pay retail? Plus think of all the people he could recruit. Lol
Inherently a pyramid = MLM system.
Only a fool would claim to be an entrepreneur earning money when in reality he’s a customer SPENDING money.
^^^MLM spin “Buying from yourself” instead of you’re a customer of the company spending money. Somehow affiliates think its THEIR company. The MLM double talk HAS had over 50 years of practice.
Ever notice in the same pitch, one is told they can buy wholesale then sell retail as a money maker, then that same person is told anyone can do MLM with no skills required or territories. Think about that for a moment!!
When that commission is tied to defacto recruitment of new affiliates, then the only “fools” are the people running what is a pyramid scheme.
Only to someone who is interested in recruiting affiliates to get paid, and then getting their recruits to do the same.
And even then it’s a silly statement to make. MLM is about selling products to retail value. If you’re not creating viable retail competition in the market, time to call it a day and think up a new business.
Yet nobody notices this when they’re caught up in mob hysteria / groupthink during the presentation.
People who are empathetic are more susceptible to this sort of influence by pseudo-MLM scams.
I was just listening to another podcast (unrelated) and the guy said: there’s presentation, demonstration, and education, when it comes to spreading ideas/memes.
Internet Marketing / Network Marketing are often presentation ONLY. They rarely if ever actually *TEACH* anything. It’s just to send some ideas and say: cool stuff here!
The somewhat more ethical marketers do demonstrations: I am showing you what I did, a bit more concrete than just presenting (some ideas) but I’m not TEACHING anything.
But nobody in NM that I know actually do EDUCATION (except a few professors, like Charles King, but his lesson’s efficacy are in debate) where they teach you how, watch you do it, and tell you what you’re doing wrong, and make you better.
The standard response in NM to failure is “you didn’t work hard enough”.
And they wonder why failure rate in NM is so high… And why “any one can do it”… What they meant is “any one can fail in this business”.
Statement clarification. Only a fool would pay retail when all they need to do is sign up. Also by joining, you have the lure of commission potential.
Point is, who the heck is going to be a retail customer in MLM? NO ONE so pyramid scheme it is.
Tricky devil this MLM pyramid scheme system.
I take it you’ve never heard of preferred customers then…
Nothing. I carefully avoided anything that would involve “Webster v Omnitrition” or “FTC v AmWay, 1979” or other complex cases that would lead to lengthy discussions.
The initial discussion was about WUN’s retail sale / how to interpret “Webster v Omnitrition”. Lack of retail customers alone doesn’t prove anything illegal. It can be an indicator for something, but that’s all. A court will need much more than a few “indicators” to come to a valid conclusion.
That’s where I brought in the sub topic of WHY something is illegal, and the “realities v constructed law theories”.
Things can be illegal/legal because of poorly written laws, outdated laws, changes in the realities or how realities are being interpreted. If a law doesn’t reflect realities properly it will need to be adjusted / interpreted so it can reflect the realities.
I have. Prime pickings for recruiters to expand their downline. But then again who buys from MLM without a vested interest.
A preferred customer might buy a $2 item every few months to keep family happy but that won’t interest the affiliate unless of course he can convince them of the business opp.
It always comes back to recruiting doesn’t it? Round and round we go.
And I think we’re done here. No point further discussing this with the ignorant.
You have just described where MLM/NWM fail. They find their legal support in commercial laws, but they fail to reflect real commercial activity.
Your own argument for recruitment is one of the reasons for why some programs are being shut down as illegal pyramid schemes. They PRETEND to be about real commercial activity, but it’s poorly reflected in the realities.
People buying small quantities of goods to support “customer qualifiers” for an MLM rep doesn’t really make any sense. It won’t bring in much money, and it won’t make the program become more legitimate.
It will only have a delusional function, e.g. act as names people can add to their list of “retail sales to external consumers” each month (to qualify for commissions).
A normal commercial company would have looked at the functionality of the rules, e.g. “Does it generate any significant revenue and profit?”, or “Does it have any impact on the legality of this company?”.
WUN, if it is doing so, can not cherry pick from the court’s previous opinions. Stating that “lack of retail customers alone doesn’t prove anything illegal” is only a partial truth and does not reflect the actual opinion and findings of the Omnitrition court.
If anyone tells you that lack of retail does not matter its bullshit. Because:
It is equally obvious and also true that self consumption alone doesn’t prove anything is illegal either. Therefore:
The Omnitrition Court looked at BOTH and COMPARED one against the other. Only then did it rightly conclude, based on case law and precedent that that Omnitrition could be held responsible to Webster. The RATIO of internal consumption vs retail is what the court considered in coming to its decision, not “lack of retail customers alone.”
Are you calling me ignorant? Or Mlmers?
Try to present your arguments from a slightly different perspective?
Your argument was about how pointless the retail activity was, e.g. “preferred customers buying $2 worth of products now and then”. It’s clearly not a valid defense for that companies should start focusing solely on recruitment.
The problem is that the companies PRETEND to be about retail activity, when they really are about recruitment. “Stop pretending” isn’t a solution in itself, you will need more than that to solve the problem (the pyramid scheme issue).
“Retail sales haven’t had any real significant function in the companies I have joined” can be a defense for your own activity = you have simply adjusted yourself to the reality as it currently is (in the companies you have joined). It’s not a legal defense argument that can be used in court, but it should be “understandable” for
most peoplesome people.
What I am arguing is real world situations. Retail customers don’t exist for several reasons I thought I pointed out. All doors lead to a Pyramid in MLM and any changes to that system would make it something other than MLM such as territories, skills, and limited sign ups.
Also, debating laws, product quality, and pricing, WHILE I KNOW IS NECESSARY, IMO makes MLM unfortunately sound more legit. I try to focus on reality but indeed both perspectives have it’s place. Perhaps I’ve followed so many scams that my brain gets ahead of my typing and my text doesn’t translate.
I hope the one example I gave made sense to us regular folks who get lost with the legal stuff. Again, you’re told you can profit off selling for retail but then are told in the same presentation that anyone one can sign up and buy “wholesale”. Why people can’t see that contradiction is beyond me.
The $2.00 sale I agree is either a pretend sale or token gesture that doesn’t last and does not a business make. So who the heck will be a REAL retail customer with any significance to make it legal and not a pyramid. NO ONE that I’ve come across.
@Char — I personally recommend stop talking as if you have a chip on your shoulder and looking for a fight.
it sounds if both you and Oz have been burned out by looking at shady deals, and somehow mis-construed each other. IMHO, of course, and that actually turned this into a philosophical debate, as in “can MLM actually be legal and not a pyramid scheme”, and that is no longer about WUN, and it’s not a polarizing question.
I’ve ran into fanatics before that believed that there CAN be NO legal MLM; they are ALL pyramid schemes and FTC had a moment of lunacy to allow Amway to exist. And they based their entire argument upon that premise, much like the PROponents of MLM based their entire argument how great MLM is by citing Amway.
Personally, I’d rather start from a neutral opinion and find problems with a shady scheme’s operation, and conclude it’s shady, rather than start from the ASSUMPTION that all schemes are shady (until proven otherwise).
Correct, an unlimited number of recruitment will be in conflict with true retail sale. It will require a market of some size to be profitable.
MLM is defined to be about retail sale (the area of law). Chain recruitment is defined to belong to a different area of law. It can be completely legal if the primary purpose is to recruit sales people (not sale of an opportunity).
If a company can’t manage to sell in retail, the problem is about wrong type of product, wrong price, etc. = normal retail sale arguments. The company have simply not been designed properly.
Recruitment won’t solve that problem, it will potentially lead to a shutdown in the future. Pretended retail activity won’t solve it either.
You will most likely “meet the wall” here if you try that type of argument. It’s simply not worth it. You should either try to find a less resistant audience or try to look at “other areas of interest” (a rather vague description there).
I’m not sure which example you’re talking about there? The $2 “now and then purchase” doesn’t make much sense for a real business. The company have probably focused on “what income opportunity seekers can accept to buy” rather than on “what retail consumers gladly will buy”.
“Adjust to the reality” arguments should also be used on a different type of audience than the audience you will find here. I mentioned that argument only as an example for a slightly different perspective. I don’t have any “good arguments” to be used here.
Real world situations within an extremely limited scope.
Of course retail customers exist in MLM, otherwise there’d be no industry.
This. If you surround yourself with these type of opportunities that’s all you’re going to see.
Someone who has a genuine interest in the product. If there’s no value in the product itself then there’s a problem with the company.
As for preferred customers, they can’t earn anything – and often they are rewarded with more product if they introduce other preferred customers to the company’s products.
You can’t entice preferred customers with the opportunity because they are not a part of it.
They also must maintain a monthly order commitment though (goes hand-in-hand with repeat consumables) so $2 “every other month” is a ridiculous statement to make.
Sorry, but the court didn’t look at the RATIO between internal consumption and retail sales other than indirectly in some general statements, e.g. about whether or not the different parts of the Koscot test were met.
You have probably “constructed a conclusion” here based primarily on your own ideas. 🙂
Its Norwegian silly time again.
Do you even think before you write things down or are you too busy attributing “constructed theories” to everything that doesn’t coincide with your particular warped “reality”
The Appeals Court opined that “the second Amway safeguard, the 70% rule, must be implemented to ensure that regardless of the number of customers, the majority of the inventory is being resold to retail customers and is not gathering dust in distributors’ basements and garages.”
You do know that ratios and percentages are mathematically the same thing don’t you? DON’T YOU? ????
The starting point for the Ninth Circuit’s pyramid analysis of the Omnitrition marketing program was a review and adoption of the longstanding definition of a pyramid contained in the F.T.C.’s decision in Koscot Interplanetary, Inc.
“Indirectly in some general statements you say!” Uh…. review and adoption sounds pretty specific to me but then I am using “constructed legal theories and you are the only person around who pecieves reality and blah blah blah.
Give it a break
1. I didn’t find the conclusion in the court document.
2. The conclusion itself was rather meaningless.
“Lack of retail sale” and “internal consumption” are actually about the same problem, only expressed from different viewpoints. They can also be expressed together as a RATIO, as a third method to describe the same problem. The problem itself doesn’t change if you describe it from another viewpoint.
The logical conclusion should have been either that ALL of them or NONE of them could prove anything illegal.
My argument about “consumption / sale / ratio doesn’t prove anything” is based on that retail sale can be used as exculpatory evidence (to prove legality). It doesn’t prove the opposite, that will need a different type of evidence.
Noooooooooo they’re at it again.
I didn’t understand that comment. The 70% rule is about that participants must “certify” that they acually have sold or consumed 70% of the products they have bought each month, before they can order new products. It’s part of the “AmWay rules” (70% sold or consumed, 10 retail sales, refund policy).
The comment simply didn’t make much sense.
“AmWay rules” are about exculpatory evidence (to prove legality). The court analysed the realities for all 3 arguments, and all of them failed.
Yet more nonsense. A ratio, by definition shows the relative sizes of two or more values.
“Lack of retail” and “internal consumption” are not values. and can not be “expressed together as a ratio” because there is no relative size difference between the two. Try putting “lack of retail” into your electronic calculator.
If there was a crazy bin. That statement would already be in it.
No, not this time.
So what? My argument was that they all were about the same problem, not that they were expressed in exactly the same way.
Retail sale was expressed as “The distributor level, however, is only a small part of the entire program”, as a general term rather than as an exact value. I didn’t find anything directly about RATIO.
“Lack of retail”, “internal consumption”, “internal v external sales ratio” are all about the same problem. It doesn’t really matter how they are expressed, the problem will still be the same. You can’t use “Gerald Nehra logic” on me. 🙂
Webster’s action was summarily dismissed and he appealed. The 9th Circuit of Appeals panel provided guidance in an often cited opinion and sent the case back to District Court for retrial. The parties settled.
What realities do you think the Courts analyzed since neither the Appeals Panel or District Court made any finding of fact.
Directly? So what.! If the court discusses 70% it is based on a ratio, i.e., the proportion of retail sales compared to total sales.
70% is the same as a 7 to 10 ratio. 7 retail plus 3 of self consumption equals ten in total sales.
I get it, that you don’t get it, so quit arguing as if you do.
But you can entice a preferred customer to change their status, No? I mean if you like the product, why not try to make some money. Lol that is the reality you will hear.
FYI, in Amway, you can get IBO pricing for $62 a year with NO MINIMUM monthy order. They do have a “customer only” option but without the discount – No doubt for the ones spending $2.00 every other month making the IBO a fortune!!.
Preferred customers aren’t customers because they’re ignorant of the business opportunity and are just waiting for you to explain it to them, they’re there for the value of the products and that alone.
Cannibalizing your retail pool of customers in MLM is counter-productive for obvious reasons.
It certainly does. You can not simply say retail is $x and leave it at that. It must be compared to total sales and from that you can derive a ratio, and from that the percentage of sales due to self consumption or to retail.
This is basic arithmetic (which you obviously do not understand) and has nothing to do with Gerald Nehra’s opinion on what constitutes retail or self consumption.
Woops I lied.
The problem itself won’t change if you measure it exactly, or if you focus on a different part of it, or if you calculate the ratio between different parts. And it certainly won’t change if you focus on something else, like the 70% rule.
The court DIDN’T calculate the exact ratio, so it didn’t use the same idea as you do. Your argument about arithmetic was hypothetical and irrelevant.
I already explained this to you. The Appeals Court is not a trial Court. It did not hear evidence and testimony, did not ascertain the facts and did not “calculate” anything. It wrote an opinion which upheld Webster’s appeal and sent the case back to the (District Court) for trial.
The District Court did not “calculate” or come to any conclusions of law or fact either because the parties settled.
What you have here in Webster v Omnitrition is only an Opinion rendered by the 9th Circuit. Its binding within the Circuit and its very influential in others but nobody calculated nuthin’ Have you even read the opinion or are you just going by hearsay and guesswork.
That is hardly the point. The opinion lays down the law for the 9th circuit and is cited in every other circuit in the country.
It is an authoritive text on what the legal system expects from MLM operators. It is a standard to which they can be held and they disregard it at their peril.
If you claim it didn’t review some realities (directly or indirectly), your own RATIO argument will fail too, in all the posts where you eagerly have defended that argument (from around post #112 or something). 🙂
It was until you just tried to introduce another point (I’m not counting the 70% rule as “switching to another point”, the arguments were still about retail etc.).
The Appeals Court discussed precedents. As I mentioned before the Court reviewed and affirmed the Koscot and opined on Amway. Then it reversed the lower court summary dismissal, sent the case back to the District Court and wrote its opinion.
That opinion did not rule of the merits of Webster’s case but it DID provide the guidance that the lower Court was bound to follow.
The guidance included criteria regarding ratios/percentages which the Appeals Court had discussed at length in its opinion. The handwriting was on the wall. Omnitrition knew it would be held responsible for not monitoring the sales ratios within the company and so it settled with Webster.
There was never a trial therefore the ratios were never presented as evidence against Omnitrition but the formulations and guidance outlined in the Appeals Court Opinion still serve as a cautionary reminder and precedent for the future.
I can only guess that you do not understand that retail sales divided by total sale determines the percentage of retail sales a company has. Any discussion of the 70% rule must include retail sales. That is what is being measured.
Precedent indicates that if the percentage of retail is less than 70% the company could be in legal jeopardy.
The 70% rule is about something else. You have probably derailed.
The first part of your comment is also derailing. It will first of all correct your own interpretation of what the 9th Circuit order was about, and then it will correct my replies. The only conclusion that can come out of it will be that people should carefully avoid replying to your interpretation of the reality until they’re sure you have corrected all the related details.
If you no longer want to defend your initial arguments then just stop the discussion, but don’t try to derail it.
Your initial argument was (slightly modified) that “lack of retail sale alone isn’t enough to prove illegality, and neither is internal consumption, but if you combine both of them together as a measurable RATIO then it will be enough to prove illegality”.
It was backed up by arguments about the difference between exact values (RATIO) and unmeasurable values (e.g. “too small”), i.e. that exact values can be calculated and therefore can prove illegality.
I’m not sure where the 70% argument fits in there.
Some mothers do ‘ave ’em.
Boy, don’t they.
OK. Your turn. What is it about?
My arguments have been that when referring to or interpreting Webste v Omnitrition, we can’t logically extract simple rules about retail sale versus internal consumption, e.g. point to a specific line and say “That’s the rule, I have found it! Sales to internal participants won’t qualify as retail sales!”.
The specific line people are pointing to is found in section II C of that order: “If Koscot is to have any teeth, such a sale cannot satisfy the requirement that sales be to “ultimate users” of a product”.
“Such a sale” points back to the type of internal sale performed by Omnitrition. The court had analysed many aspects of the same problem before that line. “Such a sale” will also point back to those other aspects, e.g. that the sale generated commission, safeguard rules were poorly enforced, etc.
“Such a sale” also points forwards. It wasn’t a final conclusion in that line, the court continued to analyse the other aspects of internal sales, e.g. refund policy. The internal sale didn’t offer similar rights, it was quite different from normal retail sale in all aspects.
Cherry picking one single paragraph from the Webster v Omnitrition and extracting it into a simple rule will be a “risky strategy”. It will not work if you meet experienced people.
I looked into some of the counter arguments against extracting a simple rule, and I will probably be able to produce much more “troublesome” counter arguments than people do from legal theories (I have read some counter arguments from MLM lawyers).
A better strategy will be required. From my point of view, “better strategy” will not be about analysing law theories or trying to extract valid arguments from that type of sources.
You can of course post arguments claiming otherwise, e.g. “70% was the exact ratio the court was looking for” (it wasn’t, but you can claim it was).
My main point there was to point out that the 70% rule was about something else than “internal vs external sales”. It wasn’t about the exact details, e.g. the use of “certify” or “verify” or whatever, or about “month” or “next purchase”.
If it really is about something else, then your own arguments about “a percentage IS a ratio” will neither support or contradict your other arguments, it will simply be irrelevant.
Is your hard-on whether there is some “exact” ratio?
Viagra down and use the big head.
Below is what I posted earlier….
“The Appeals Court opined that “the second Amway safeguard, the 70% rule, must be implemented to ensure that regardless of the number of customers, the majority of the inventory is being resold to retail customers and is not gathering dust in distributors’ basements and garages.”
To me 70 means 70, to you it apparently means something different.
If you want to determine what the Appeals Court in Omnitrition meant by “the second Amway safequard” then go ahead, interpret it… maybe you can figure out a way that zero retail complies with the “second Amway safeguard.” Others have certainly tried.
As for me I will take the 70% rule at face value and conclude that it means 70 not 50 or 30 or 10 or whatever number operators come up with after combing the message boards and archives for precedents that support alternate interpretations.
Are there other precedents that are more permissive than the Omnitrition opinion. I am sure there are somewhere, so it boils down to how creative or evasive a company chooses to be. For myself, I would comply with the 70% rule. You are free to interpret it as suits your wants.
Well once again you have proven the point. internal sales are not the same as retail sales and they can not be used to reach the 70% threshold. There’s no need to cherry pick anything. its all there. Just because you do not want to recognize it is beside the point.
Nope, I have pointed out that the 70% rule is about something else. It’s not about retail sale ratio.
“External vs. internal sale” will typically be about the company’s sale, not about the individual distributors’. It will of course INDIRECTLY involve the individual distributors.
The “70% rule” will typically be about the individual distributor. They will need to resell or consume minimum 70% of the products purchased before they can order new products of the same type, to prevent inventory loading.
Your arguments about the 70% rule were simply irrelevant. You will first need to test your arguments for relevance. Try to ask yourself “What is the 70% rule about?”, try to google “AmWay 70% rule” or use other methods to identify it correctly.
Here’s a link to “The 70% rule” by Jeff Babener:
We have been over this before.
The issue raised in Webster v Omnitrition was whether or not the COMPANY could be held liable to Webster for his losses. The Appeal Court Opinion indicated it could. Why?
Because the company failed to monitor the performance and behavior of its distributors so as to ensure the 70% rule was adhered to on a company wide basis (Note: this does not mean every distributor was necessarily in compliance but that the company on average was in compliance.
The Babener article is a fine primer for understanding what the 70% is, and how to comply with it. Every company CEO should read it understand it, comply with it and ensure that his sales force does the same. Its particularly a good article for salesmen to read.
What the article does not say is that the Omnitrition Opinion laid the onus of monitoring compliance with the 70% rule squarely on the company. This naturally suggests that the company from the CEO on down can be held accountable if it does not. T
he company can not just say read this article by Babener and do what it says but must itself ensure compliance. Educating and monitoring the behavior of its distributors is the most immediate way of doing that.
An individual distributor may be complying with the rules but can not know the performance of all the other distributors… only the company can know that. Therefore the Omnitirion Court indicated that the Company could be held liable for Webster’s losses PROVIDED Webster proved that Omnitrition’s ratios were out of whack, which presumably they were since the company settled with Webster before going to trial.
Retail sales is the amount of external sales.
External vs Internal can be expressed as a ratio or a percentage
External + Internal = Total sales.
External divided by Total sales = Retail percentage which should be at least 70% to avoid legal jeopardy.
You need to learn what to ignore. You are picking up all the noise and missing what is important.
My protests against the 70% rule arguments you have used:
* The 70% rule is about something different than “internal v external sales”, “retail ratio” or whatever we call it.
That protest still stands until you clearly have identified what you actually mean (I wasn’t fully able to interpret it now).
1. “Lack of retail sale”, “internal consumption” and “retail ratio” are all about the same thing, only expressed from different perspectives.
2. The 70% rule is about something different.
Your arguments should preferrably clarify whether the 70% rule really is about the same thing or about something different. I’m not very interested in “the court has conclued” explanations (that method will only add one extra layer of potential misinterpretations).
Sorry, your comment was probably in moderation queue when I posted my previous post.
You have clarified that you believe the 70% rule is about the same thing as “required percentage of external sales” (if a company want to avoid legal jeopardy).
Since we both have completely different viewpoint there, we will need some others to look into it. That doesn’t prevent any of us from digging up sources or anything like that.
FTC’s staff advisory opinion letter to DSA, 2004 (one of the typical sources referred to by MLM lawyers when defending internal purchases).
Found 2/3 down in that article, in red text:
I identified it in a similar way in post #39 and a few other posts, but in less details and with a different type of logic. I used the logic “if it’s legal in other types of trade, it will be legal in MLM too” (if an employee legally can buy products from the company he’s working for, then they can probably legally do it in MLM too).
This is uncontested and obvious. Its legal to buy product. You’re flogging an imaginary dead horse.
The issue is whether purchasing the product is “merely incidental to the right to participate in a money-making venture.”
All of this off topic derailing and amateur back and forth about the legality or otherwise of self consumption must have readers who are here for practical information about what goes on BEHIND MLM in a state of total confusion.
How about we put aside individual agendas for a minute and revisit Oz’ opening paragraph for this thread:
Forget about legality, THAT is a basic truth prospective MLMers need to understand and remember if their intention is to create a sustainable career in Multi Level Marketing and not to gamble on the latest pseudo MLM get-rich-quick scheme.
As the headline says:
“WakeUpNow fail to address retail elephant in the room”
and the followup article quotes WUNs’ own figures indicating:
“A complete lack of retail sales saw WakeUpNow rack up $3.3 million dollars in losses for 2012. This trend continued and in 2013 the company recorded another loss of $4.5 million”.
Want to gamble on you being the one who can buck the trend and make pots of money when WUN can’t do so itself ???
Spend the rest of the year discussing legality and ignore the evidence in front of your eyes.
It’s not part of the same discussion. If you want the 70% rule answered by someone, then you must test it yourself.
If you’re talking about my post, then the 2004 FTC Staff Advisory Opinion was brought up in post #42 by Ken Stewart. I simply googled it and posted one of the sources. It’s not *MY* argument, I was simply checking one of the other arguments posted in this thread.
Yeah, yeah all that.
Is this inability to stay on topic a Norwegian thing or is it peculiar to you, M_Norway.
It’s not important who started it, who is right and who is wrong, the topic of the thread is:
I don’t care who it is, but SOMEBODY needs to start behaving in an adult manner
Why do you claim it was off-topic? It was brought up early in the thread as a general “You should probably check the 2004 FTC Staff Advisory Opinion”. I simply haven’t had time to check it before now.
The quote doesn’t necessarily reflect my point of view, I have used quite different arguments.
My GENERAL viewpoint have been stated earlier, something about that it doesn’t make much sense studying legal sources as a Bible but failing to test the conclusions against realities.
Hopeless diarrhea of the mind.
Quote of the Day
Additional reading on the topic from Len Clements:
(I’ve skim read it for now and will have a proper look at it later. I also have a fairly good idea of why WUN didn’t participate in Clements’ research.)
Len Clements …. Classic review !!!
Meanwhile the shit continues to pile high as the ads and videos get more low rate by the day.
WAKE UP NOW = MCA II
email I got this afternoon from a lady with WUN looking for help … Damar Lumpkin is the 20 yr old punk scammer from MCA
now working Wake up Now – check out the “advice”
There’s now rumors that Len was paid by none other than BK Boreyko of Vemma to write that review about WUN. Allegedly BK also approached KT to write one, but KT was already retained by WUN at the time and declined.
I don’t know how much to trust the rumors, but thus far it had not been denied.
I’ve heard as much.
It’s interesting to note Clements mentioned companies plural, I wonder who the others were?
Not sure if this was ever covered, but WUN income disclosure as of December 2013 shows that 82% of all affiliates made ZERO dollars the whole year.
Of the remaining, 14% made about $100 a month (1200 a year), 4% made about 630 a month (7600 a year),
That leaves 0%, or the number’s so small that any one making the big bucks, is negligible.
I wonder if they paid Troy Dooly more than $7600 to consult?
If so, then he made more than 99.something% of WakeUpNow affiliates did last year.
You buy products through WakeUpNow. Everyone keeps talking about recruiting but completely forgets when you “recruit” as you call it, the people who buy the Platinum subscription now have access to software products for the money they’ve spent. What is wrong with that?
The compensation plan is optional. DO it or don’t, it’s still that person’s decision. You can use the subscription on its own if you want. It’s your choice to be an IBO or not, either way, you’ve paid for actual products.
And when you run the numbers, it’s a fair price. They also have the tangible products.
You should be buying products from WakeUpNow.
Buying through = buying affiliate membership with whatever bundled with said membership. The affiliate membership is what is actually being bought and sold.
They’ve bought affiliate membership, which is what commissions are paid out on. Whatever is bundled with that is irrelevant.
If nobody but affiliates are buying packages, there’s a problem.
Irrelevant when everyone who signs up has access to it.
The choice to participate in a pyramid scheme in no way justifies its existence.
No, they don’t. They bundle other people’s tangible products with their affiliate membership.
And the fact, provided by the company itself, says 82% of reps made ZERO DOLLARS in 2013, should tell you very few if any people is doing that.
Not sure if anyone’s posted this already, but This American Life’s most recent episode is on WakeUpNow.
Oddly enough (or not, I guess) I had written an email to TAL pitching a story on BLGM, which they obviously weren’t interested in, but it seems by stumbling on WakeUpNow, they’ve also discovered modern network marketing.
The episode is still available online and can be downloaded as a podcast.
Here’s the link:
Kasey posted it a few days ago on the About page – https://behindmlm.com/about/#comment-328116
A report like that takes a lot of time, but here’s hoping they don’t make it a once off, as it was quite the interesting listen.
You can always re-pitch them, but you have to couch it in a way they can sell, like a mystery.
Their angle for WUN is “WTH is this WUN?” and it worked. Doubt they can do the same angle again, but if you can get them some additional stuff and they can reuse some of their old stuff as filler, it may work better.