(from Consumer Health Digest newsletter)
MLM (Multi-level Marketing)
Book warns
that MLMs are not profitable. (#11-39,
November 17, 2011)
Jon Taylor, M.B.A., Ph.D. has updated his critical analysis of
multilevel marketing, which concludes:
**Data from 40 companies show that an average of 99.6% of MLM
participants lost money, spending more on company purchases and
minimal operating expenses than they receive in commissions.
**Those who lose the most are those who invest the most, having
accepted deceptive claims the MLM is a legitimate income or business
opportunity, and having continued to invest in the vain hope of
eventually profiting handsomely.
**Based on statistics from the Direct Selling Association, the
chief MLM lobbying organization, aggregate sales (which are actually
losses suffered by tens of millions of victims) exceed tens of
billions per year in the U.S., with far greater losses worldwide.
MLMs plunder vulnerable populations overseas.
**Some MLM participants lose more than money. Divorces, rifts
among extended families, and even addiction to MLM can result
from excessive commitment to MLM that can become a lifestyle.
"MLM junkies" who have internalized its "easy money"
appeal may find it difficult to work again in a normal work setting.
[Taylor JM. The Case for and against Multilevel Marketing: The
Complete Guide to Understanding and Countering the Effects of
Endless Chain Selling and Product-based Pyramid Schemes. Bountiful,
Utah, 2011, Consumer Awareness Institute] The book can be downloaded
free of charge from http://www.mlm-thetruth.com/index.php/download_file/view/77/149/.
MLM analyses
available. (#12-18,
May 24, 2012)
Jon Taylor, Ph.D., MBA, who has analyzed the financial offerings
of more than 400 multilevel companies, offers a free book and
many other reports on his MLM-the-Truth Web site. http://mlm-thetruth.com/ He
also offers a free newsletter that is published about six times
a year. http://us2.campaign-archive2.com/home/?u=82ad608e1cc2c87491fc1f32e&id=59ba8ad767
Taylor believes that the entire MLM industry in fundamentally
flawed and 99% of participants actually lose money.
Book about
MLM deceptions updated. (#12-23,
July 5, 2012)
Jon M. Taylor, M.B.A. Ph.D. has updated THE CASE (FOR AND) AGAINST
MULTI-LEVEL MARKETING: The Complete Guide to Understanding and
Countering the Effects of Endless Chain Selling and Product-based
Pyramid Schemes. The book's introduction states:
**MLM as a business model is predicated on an endless chain of
recruitment, as are "pay to play" chain letters and
no-product pyramid schemes.
**Every one of the compensation plans of hundreds of MLMs Taylor
has analyzed assumes an infinite and virgin market, neither of
which exist in the real world. MLM is therefore fundamentally
flawed, uneconomic, and deceptive.
**For the more than 400 MLMs for which Taylor has been able to
obtain relevant data, the percentage of distributors who lose
money is over 99%.
The 381-page eBook can be downloaded free of charge at http://www.mlmwatch.org/01General/taylor.pdf.
Taylor's Web site (MLM-The Truth.com) contains a wealth of additional
information. http://mlm-thetruth.com/
Herbalife
attached as "pyramid scheme" (#12-46 December 27, 2012)
Billionaire hedge fund investor Bill Ackman has mounted an attack
on Herbalife that he apparently hopes will drive it out of business.
The attack was launched with a 3-1/2 hour presentation at the
Sohn Conference Special Event on December 20th. During his presentation,
Ackman noted:
**Herbalife recruits unwitting "distributors" with the
promise they can achieve lofty incomes. However, fewer than 1
in 1,000 do so.
**Herbalife's products are overpriced but sell because they are
bundled with a perceived business opportunity. However, the vast
majority of new distributors make nothing.
**Herbalife is a pyramid scheme because its participants obtain
their monetary benefits primarily from recruitment rather than
the sale of goods to consumers.
Ackman began short-selling as his report was compiled and says
that he has short-sold more than 20 million shares. (A short sale
is a market transaction in which an investor sells borrowed securities
in anticipation of a price decline and is required to return an
equal number of shares at some point in the future. Short sellers
will gain if the stock price goes down and lose if it rises).
Ackman has pledged to donate any personal profits to charity. Herbalife's
price plummeted after Ackman's presentation but has rebounded
slightly in the past few days (link).
Pershing Square Capital Management, L.P., which Ackman heads,
has launched FactsAboutHerbalife.com,
which contains Herbalife distributor presentations, recruiting
scripts and presentations, distributor lifestyle videos, third-party
investigative reports, Herbalife Today magazines, court hearing
and deposition transcripts, archival video and other materials
on the company's history, lead generation systems, SEC correspondence,
and other data to help the public understand the facts about Herbalife.
The most significant items are the video of Ackman's presentation,
the PowerPoint slides from the presentation, and the 4-part CNN
investigation that decimated Herbalife sales in 1985.
White
paper calls for greater MLM regulation (#14-13 April 13, 2014)
Attorney Douglas M. Brooks and two other experts on multilevel
marketing (MLM) and pyramid schemes have delivered a 37-page white
paper to Senator Ed Markey (D-MA) concerning the need for more
effective regulation of the MLM industry. [Brooks DM and others. The
pyramid scheme industry: Examining some legal and economic aspects
of multi-level marketing. March 13, 2014] Based on data
released by Herbalife, Amway, and Nu Skin, the report concludes:
* Approximately 99% who purchase distributorships with the hope
of earning money wind up losing money, and most eventually drop
out.
* Approximately 54% of all commissions paid by these firms go
to the top 1% of distributors, with that top 1% earning an average
of about $128,000.
* Current FTC policy concerning MLM, which is based primarily
on a 1979 case involving Amway, is a failure.
Earlier this year, Markey asked the Federal Trade Commission (FTC)
and the Securities and Exchange Commission (SEC) to investigate
Herbalife, one of the largest MLM firms. The
FTC was also petitioned last year by an international coalition
of consumer advocates. Last month, Herbalife announced that
the FTC is investigating it. The New York State Attorney General
is also investigating.
Herbalife
hit by class-action suit (#14-14
April 20, 2014)
A class-action lawsuit has been filed by Abdul Awad, an Herbalife
shareholder who claims to have bought the company's stock at inflated
prices because of false or misleading statements made by the company.
Awad is seeking to represent all investors who bought the stock
between May 4, 2010 and April 11, 2014. His complaint states:
The company's operations were based on a pyramid scheme whereby
its distributors generate revenue by recruiting other distributors
rather than selling its diet and nutritional products to the general
public.
Herbalife engaged in deceptive trade practices where it unduly
pressured its members to purchase more products to resell as one
of its "distributors."
As a result of the above, the company's financial statements were
materially false and misleading at all relevant times.
In 2013, The New
York Times reported that the Securities and Exchange
Commission (SEC) opened an investigation into the company. Recently
the Financial
Times reported that the FBI has opened a criminal probe
of Herbalife. [Registration is required to access the article.]
U.S. Senator Edward J. Markey of Massachusetts has sent a letter
to Herbalife's chief executive, Michael O. Johnson, asking (a)
How much profit (net earnings after expenses) can the average
distributor expect to make from retailing to non-distributors
(i.e., people who are not directly involved in Herbalife themselves)?;
and (b) What's the correct number of sales outside the network
as a percentage of total sales for each of the last five years
measured by product, quantity and dollars. Markey also urged both
the FTC and SEC to examine whether Herbalife was a legitimate
multilevel marketing company. Markey also reported that one family
in Norton, MA had lost $130,000 from its investments in the company's
products, and another woman said she was pressured to recruit
family members and spend more money to buy more Herbalife products
so she could qualify as a "supervisor" in the Herbalife
system.
News of the investigations triggered sharp declines in the price
of Herbalife common stock, causing Awad and many other investors
to suffer significant losses.
Herbalife
distributors caught making improper medical claims (#14-15 April 27, 2014)
An undercover ABC News investigation has found many examples of
distributors boasting to potential customers that the company's
products helped treat serious ailments. [Ross B and others. Caught
on video: Can Herbalife cure a brain tumor? ABC Nightline,
April 22, 2014] In one case, a distributor even told an ABC
reporter that a woman with a brain tumor became symptom-free after
starting on Herbalife products. One of Herbalife's major growth
areas is in "nutrition clubs"—neighborhood storefront
locations where those interested in losing weight come to consume
shakes and get coaching about their nutrition. When a ABC News
reporter visited a nutrition club in Staten Island, he was given
a document resembling medical intake form to fill out. Then he
was escorted to what looked like a medical exam room, where he
underwent a test that he was told showed his cholesterol was high.
The distributor recommended Herbalife supplements to "help
you clean your cholesterol." During an interview, Herbalife's
president stated that the company uses "secret shoppers"
to monitor distributor compliance and that he didn't think it
was common for medical claims to be made. However, the company
later disclosed that during 2013, it had disciplined nearly 600
distributors, 12 of whom were expelled, for violating its "no
medical claims" policy.
Former
Herbalife distributors describe how they were severely harmed (#14-17 May 11, 2014)
Bill Ackman, who believes that Herbalife is a pyramid scheme,
has produced a documentary and
a panel
discussion in which former Herbalife distributors describe
how they suffered significant financial losses. The videos—which
are very compelling—can be viewed on Ackman's Facts about
Herbalife Web site, which contains detailed financial analyses,
court documents, and many other source materials about the company.
Although the basic cost of becoming a Herbalife distributor is
small, many people are persuaded to invest thousands of dollars
stocking up on products, buying sales aids, and attending promotional
meetings.
New Herbalife
investigation results available (#14-26
July 20, 2014)
Pershing Square Capital Management will present its investigation
of Herbalife Ltd.'s "nutrition clubs" at the AXA Equitable
Center, 787 Seventh Ave., New York, on Tuesday, July 22, at 9:15
AM EDT to be followed by a question-and-answer session. The presentation
will also be simultaneously webcast at www.herbalifepyramidscheme.com
and www.factsaboutherbalife.com.
Herbalife says that these "clubs" are simply social
gatherings that bring people together to focus on good nutrition
and exercise. But Herbalife arch-critic Bill Ackman believes that
they are a core driver of Herbalife's pyramid scheme. Herbalife
shares fell 10% after the presentation was announced.
Analysis
of MLM complaints published (#14-33
- September 7, 2014)
John M. Taylor, MBA, Ph.D., who operates MLM-thetruth.com,
has published a 356-page analysis
of complaints about multilevel marketing firms sent to the FTC
in 2013. The report concludes:
More than 900 complaints were filed regarding more than 100 companies.
The complaints—which include "channel stuffing"
(pressuring participants to buy products they have a hard time
selling); overpricing; grossly exaggerated health claims; and
high churn rates—are indicators of widespread deceptive and
unfair trade practices, which the FTC is charged with investigating.
MLM as an inherently flawed business model. Typically, prospects
are lured with exaggerated product and income claims. And because
the pay plan is heavily stacked in favor of those at the highest
levels in the pyramid, the vast majority of participants spend
more than they receive and eventually drop out, only to be replaced
by a stream of similarly misled recruits, approximately 99% of
whom are likewise destined to experience loss and disappointment.
The FTC does not have the resources to prosecute the hundreds
of MLMs that violate the FTC Act. Consumers have expressed anger
at the abuses they experienced and provided a large body of evidence
that points to specific areas in which the FTC could take preventive
action. Although the agency could establish rules that will provide
some protection to consumers, it has exempted MLMs from industrywide regulation
under its Business
Opportunity Rule in favor of case-by-case reviews that
are rare and fail to protect against abuses that are common throughout
the industry.
Avon leaves
Direct Selling Association (#14-35
- September 21, 2014)
Avon has announced that it has withdrawn from the Direct Selling
Association (DSA), which it co-founded and helped lead for many
years. In an open
letter to DSA members, Avon said that the organization's
code of ethics was outdated and had failed protect people entering
the direct selling business. Many DSA members are multilevel marketing
companies (MLMs) whose distributors depend upon recruiting rather
than product sales for most of their income. Knowledgeable observers
believe that Avon was concerned about the recent wave of negative
publicity toward Herbalife (another prominent DSA member), which
several regulatory agencies are investigating — and Avon
did not want its reputation tarnished by continued close association
with MLMs. [Stewart M. The
women of Avon 'lipstick' it to the DSA, Wherefore art thou Ramey-O?
Seeking Alpha Blog, Sept 16, 2014].
Herbalife
accused of making illegal health claims (#14-45 - December 14, 2014)
Pershing Square Capital Management has issued a videotape which
shows distributors claiming that Herbalife products are effective
against asthma, bronchitis, migraine headaches, stomach problems.
arthritis, multiple sclerosis, and many other diseases, and can
also provide weight loss without a change in diet or exercise
activity. The video also notes that these claims violate federal
drug laws as well as a permanent
injunction obtained in 1986 by the California Attorney
General. The current Attorney General (Kamala Harris) has been
asked to take action, but so far has not done so. A recent report
revealed that her husband (Douglas C. Emhoff) is a partner in
a law firm that acts for Herbalife. [Is
the California Attorney General avoiding investigating Herbalife
to protect her husband?] Quoth the Raven blog, Dec 4, 2014]
Herbalife
ordered to remove misleading ad (#14-46
- December 21, 2014)
The FDA has asked Herbalife Ltd to remove a YouTube video in which
Vassilos K. Frankos, Ph.D., claimed that when he was director
of dietary supplements at the FDA, he "oversaw nutritional
supplements, making sure they were safe and effective." The
FDA's
letter pointed out that "as Herbalife and Dr. Frankos
should know . . . the FDA is not authorized and does not review
dietary supplements for effectiveness" and does not usually
review them for safety. A copy of the letter was sent to the Federal
Trade Commission, which is known to be investigating Herbalife's
marketing practices. Visitors
to the video's URL now get a message saying that the video is
"private."
Video
says many MLMs are pyramid schemes (#15-03 - January 18, 2015)
Pershing Square Capital Management, whose president, Bill Ackman,
is urging government regulators to shut down Herbalife, has produced
a brilliant 6-minute video explaining why many multilevel companies
(MLMs) should be considered pyramid schemes. The video states:
Most companies that sell products make money by selling them to
consumers. But many MLMs make money by selling overpriced, difficult
to sell products to their own distributors who are typically aspiring
entrepreneurs hoping to fill the business. To qualify as a distributor,
you must buy a minimum amount of product from the company. This
can cost you hundreds or even thousands of dollars. Once you purchase
enough of the product to qualify for commissions, you will soon
realize it is difficult to resell the inventory you purchased
and generate retail profits. At that point, you will learn that
recruiting others to become a distributor is the only way to have
a chance of recouping the money you invested. You will likely
be pushed by the distributor who recruited you to convince others
to buy in and become distributors. . . . This constant emphasis
on recruiting new distributors is a telltale sign you're dealing
with a pyramid scheme.
MLM Watch
has the full-text of the video plus links to the English and Spanish
versions.
More skepticism
expressed about Herbalife (#15-40
- October 11, 2015)
The Vemma case has caused many journalists to wonder whether the
FTC will bring similar charges against Herbalife. The FTC has
been investigating Herbalife for several years, but Herbalife
has hired former government officials and is maneuvering to try
to block FTC action. It is also clear that the FTC could do a
lot to protect the public against MLMs but has failed to do so.
A Seeking Alpha blogger has summed up the situation this way:
The reality is that multi-level marketing is fundamentally flawed.
The problem is that there are too many people trying take out
of the pie (i.e., a sale). In direct sales, the company and the
seller both get a cut of the pie. The company gets an efficient
route to market, and the salesperson makes a nice profit. We know
that in MLM, very few people make a reasonable amount of money.
The problem is that in MLM, you have to share the pie with many
people who are not directly involved in the sale. At Herbalife,
if a distributor makes a sale to their mother, money will wind
its way through the complex marketing plan and could end up in
the pocket of a Chairman's Club member who has never met the distributor
and who lives thousands of miles away. The problem is that this
squeezes your margin on the sale-they are eating out of your pie.
The only way to maintain the distributor's slice of the pie is
to make the pie bigger by increasing the prices. This is why goods
sold using MLM are typically so fantastically overpriced. This
overpricing decreases retail demand. If they took out the "ML"
in MLM, the retail side of the business would improve greatly.
That's not going to happen, because doing that would reduce the
volume of product shipped, which is not good for shareholders.
Circling back to paraphrase Steve Wynn, if you want to make money
in an MLM, own one.
[Davidson C. Unsustainable,
fragile, overvalued and under attack: The case for going short
Herbalife now. Seeking Alpha, Oct 7, 2015]
Trump's
MLM involvement laid bare (#16-11
- March 27, 2016)
The Washington Post reported that Donald Trump claims that his
involvement with the multilevel marketing company Ideal Health
merely allowed them to use his name for marketing purposes and
that he was not involved in the company's operations. But the
paper noted that "statements by him and other company representatives-as
well as a plethora of marketing materials circulating online-often
gave the impression of a partnership that was certain to lift
thousands of people into prosperity." [Swanson
A. The Trump Network sought to make people rich, but left behind
disappointment. Washington Post, March 23, 2016]
Herbalife
to pay $200 million to settle FTC charges (#16-28 - July 24, 2016)
Herbalife International of America, Inc., Herbalife International,
Inc., and Herbalife, Ltd. have agreed to restructure their U.S.
business operations and pay $200 million to settle FTC
charges that they deceived consumers into believing they could
earn substantial money selling diet, nutritional supplement, and
personal care products. [Herbalife
will restructure its multi-level marketing operations and pay
$200 million for consumer redress to settle FTC charges. FTC
news release, July 15, 2016] The settlement was announced
at a videotaped
press conference at which FTC chairwoman Edith Ramirez answered
questions about the case. Her opening statement noted:
- Herbalife "promised people a dream-a chance to change their
lives, quit their jobs, and gain financial freedom."
- The dream portrayed by Herbalife's testimonials and marketing
materials was "an illusion" because the vast majority
of new distributors found they could make little or no money selling
Herbalife products.
- The settlement
included a $200 million judgment for refunds to many distributors
and "forces the company to implement a major restructuring
of its business operations."
- The FTC hopes the principles embodied in the settlement will
set an example for the multilevel marketing industry more generally.
In response to the settlement, Carl
Icahn (an Herbalife board member and major shareholder) stated
that the FTC had "concluded that Herbalife is not a pyramid
scheme." However, Ramirez said that was inaccurate, that
the settlement made no such determination but focused on correcting
Herbalife's improper practices.
Comedian
John Oliver blasts MLM "income opportunity" (#16-42 - November 13, 2016)
In a 30-minute satire, John Oliver explains why multilevel marketing
should be regarded as an "endless chain pyramid" and
exposes the gamut of ploys used to trick prospective distributors
and minimize government regulation. The video,
which has had more than 5 million YouTube views, ends with the
promise that if each viewer sends it to five other people who
do the same, it will reach every person on earth in just 14 referral
cycles. A Spanish
version has had nearly 1.5 million views. An equally powerful
6-minute video - How
to spot a pyramid scheme should be required viewing for all
high school and college students. Please send these links to everyone
who you think will benefit from this information.
FTC Chair
clarifies MLM requirements (#17-08
- February 5, 2017)
Edith Ramirez, outgoing chairman of the Federal Trade Commission
has summarized what multilevel marketing (MLMs) firms must do
to avoid enforcement action by the Commission. In theory, MLM
distributors can earn money by selling products and/or by recruiting
others who do the same. However, enforcement actions have made
it clear that if most of the income comes from selling distributorships,
the setup can be considered a pyramid scheme. In a letter to the
Direct Selling Association (which represents more than 100 MLMs),
Ramirez said:
- Distributor compensation should be based on actual retail sales
that are profitable, verifiable, and primarily to customers outside
the distributor network - and not on recruitment of additional
participants.
- The FTC and the courts have demonstrated skepticism regarding
"personal consumption". Although salespeople may enjoy
purchasing the products they supposedly sell at retail, they should
be compensated only for sales made to retail customers, not for
buying the product for themselves or from other distributors.
- MLMs should have effective monitoring programs to ensure earning
claims are truthful and non-deceptive.
- The recruitment process should not include unrealistic "lifestyle"
testimonials that are true for only a tiny minority of participants.
Recent FTC actions against Herbalife
and Vemma suggest that the agency will be looking more closely
at the MLM industry. Whether the Trump Administration will interfere
with this activity remains to be seen.
Herbalife
sued by distributors
(#18-35
- September 2, 2018)
Eight former Herbalife distributors have filed a class
action complaint against Los Angeles-based Herbalife in
the U.S. Southern District Court in Florida. The complaint states:
The company uses misrepresentation to sell access to emotionally
manipulative events that have 200 to 20,000 attendees.
The events use labels such as "Circle of Success,"
as a guaranteed pathway to life-changing financial success with
Herbalife's multi-level
marketing business opportunity.
Each of the plaintiffs distributors has spent thousands of dollars
attending events, but they received no benefits from doing so
contrary to frequent claims by Herbalife that: "If you
go to all the events, you qualify for everything – you will
get rich."
The plaintiffs are seeking damages and injunctive relief against
"the corrupt organization of individuals and entities
who sell, operate and compel participation in the Circle of Success."
An Associated Press report states that the case might eventually
involve more than 100,000 plaintiffs. [Anderson C. Herbalife
distributors claim events were a sham. Boston Globe. Aug.
21, 2018] In pretrial motions, Herbalife's attorneys argued
that the plaintiffs had signed contracts mandating arbitration
of any disputes rather than trial in court. [Pickett A. Herbalife
seeks to arbitrate potential $1 billion class action. Courthouse
News Service. Aug. 21, 2018]
Herbalife
distributors accused of making false COVID-19 claims (Consumer Health
Digest #20-26 - July 5, 2020)
A TruthInAdvertising.org
investigation
has cataloged more than 30 instances in which Herbalife,
through its distributors, improperly claimed that various company
products can treat and/or prevent the coronavirus by boosting
one's immune system. The consumer advocacy organization has filed
a complaint with the Federal Trade Commission (FTC) against Herbalife.
[TINA.org
alerts FTC to Herbalife distributors' coronavirus claims.
TINA.org. Apr 27, 2020] While the FTC has sent dozens
of warning letters to businesses making deceptive coronavirus-related
claims, Herbalife is still not among those businesses.
Herbalife
to pay $123 million to resolve criminal charges (Consumer Health Digest #20-34
-August 30, 2020)
Multilevel
marketing company Herbalife Nutrition, Ltd. has entered into
a deferred prosecution agreement to resolve federal charges that
it conspired over a ten-year period to bribe Chinese officials
and falsify its accounting records to promote and expand its business
in China. Under the agreement,
Herbalife admitted to violations of the Foreign Corrupt Practices
Act and promised to pay penalties totaling more than $123 million.
By 2016, Herbalife's business in China accounted for $850 million,
which was about 20% of its worldwide annual net sales. [Herbalife
agrees to pay $123 million to resolve Foreign Corrupt Practices
Act case. US Attorney's Office for the Southern District of
New York news release, Aug 28, 2020] MLM Watch has an archive
of information about Herbalife collected over more than 30
years that includes regulatory actions and lawsuits against the
company.
Rise and
fall of multilevel-marketed mud product spotlighted (Consumer Health
Digest #21-48 - December 5, 2021)
NBC News has reported
on the recent rise and fall of Black Oxygen Organics (BOO), a
product consisting of 4½ ounces of mud sealed in a sleek
black plastic baggie that sold for $110 plus shipping. The report
indicates how BOO has been promoted during the COVID-19 pandemic
and how responses by critics and regulators appear to have caused
its marketers, Black Oxygen
Organics Canada, to shut down. [Zadrozny B. ‘Magic
dirt’: How the internet fueled, and defeated, the pandemic’s
weirdest MLM. NBC News, Dec 2, 2021] The report notes:
- CEO and BOO formulator, Marc Saint-Onge, a seller of mud in
various forms for 25 years, likes to be known as “the mudman.”
- Saint-Onge described BOO as fulvic acid, a compound derived
from decayed plants that was dug up from one specially selected
Ontario peat bog.
- Saint-Onge describes himself as an orthotherapist, naturopath,
kinesitherapist, reiki master, holistic practitioner, herbalist,
and aromatherapist.
- In 1989, Canadian authorities prosecuted Saint-Onge for practicing
medicine without a license and fined him $20,000 after which he
took his clinic “underground.”
- In 1996, the Calgary Herald reported that Health Canada forced
Saint-Onge to pull an early version of his mud product, then called
the “Anti-Rheuma Bath,” because he claimed it could
treat arthritis and rheumatism.
- The Black Oxygen Organics website, recently taken offline, advised
visitors to drink, wear, and bathe in BOO.
- Starting in May, social media posts tagged #BOO featured photos
and videos of smiling people, mostly women, drinking Mason jars
containing black liquid, slathering black paste on their faces
and feet, and dipping babies and dogs in tubs of black water.
- Testimonials on social media by BOO users have claimed a wide
variety of benefits, including efficacy claims not substantiated
by “competent and reliable scientific evidence,” as
legally required.
- Facebook has groups for both believers in BOO benefits and for
activists critical of BOO.
- Anti-vaccine activists and COVID denialists have joined groups
that promote BOO.
- Some BOO critics infiltrated the BOO community, signed up as
sellers, and shared videos online about company sales meetings.
- Videos debunking BOO are available on YouTube.
- On September 23, 2021, Health Canada announced
a recall of Black Oxygen Organics tablets and powders. It
cited “potential health risks which may be higher for children,
adolescents, and pregnant or breastfeeding women.” Health
Canada also advised against taking those products.
- The U.S. Food and Drug Administration has held BOO products
at the border.
- Just before Thanksgiving, the company announced in an email
it was closing for good (without delivering BOO to sellers who
had already paid thousands of dollars for it).
- Tests of BOO for heavy metals suggest that Health Canada’s
limits for lead and arsenic are exceeded by two and three doses
per day, respectively.
- A complaint
was filed in November in Georgia’s Northern District court
on behalf of four Georgia residents who had purchased BOO. The
complaint claims the company negligently sold a product with “dangerously
high levels of toxic heavy metals” that led to physical and
economic harm.
- A new Facebook group named “The Solution” hopes to
create a new direct-sales company to market a fulvic acid product
and a colloidal
silver.
David Gorski, MD, PhD has provided additional perspective on BOO
plus background on fulvic acid quackery. [Gorski D. BOO:
or how “magic dirt” became a MLM miracle cure scam for
COVID-19. Science-Based Medicine, Dec 6, 2021]
FTC staff
says most MLM earnings disclosures are misleading (Consumer Health
Digest #24-36 - September 8, 2024)
The Federal Trade
Commission (FTC) has issued a 95-page staff report detailing findings
from a February 2023 review of income-disclosure statements. The
statements were available on the websites of 70 different multi-level
marketing (MLM) companies that ranged from large, household
names to smaller, less well-known companies. Such statements are
often provided to consumers who are considering joining MLM companies.
[Multi-level
marketing income disclosure statements: An FTC staff report.
Federal Trade Commission, Sept 2024] The report notes that
many or most of the statements:
• do not disclose that displays of earnings omit participants
with low or no earnings
• don’t account for the expenses faced by participants,
which can exceed their income
• emphasize the high earnings of a few participants
• entirely omit or only inconspicuously disclose key information
about the limited earnings made by most participants
• present earnings information in a potentially confusing
way, such as by giving average earnings amounts for groups that
could have very different actual incomes, or using annual income
figures that aren’t based on what an actual group of participants
made for the year
The report also notes that many MLM participants received no payments
from the MLM companies, and the vast majority received $1,000
or less per year. [FTC
staff issue report on multi-level marketing income disclosures.
FTC press release, Sept 4, 2024] Consumers have been found
to expect more supplemental income from MLM participation than
they are likely to earn. [Bosley
S. So you say your MLM offers “supplemental income”
– what does that mean? TINA.org blog, July 16, 2024]
page
created: August
24th 2011 and last updated:
September
15th, 2024