A (MLM) Skeptic

Recently, multiple news outlets reported several disturbing reports that LuLaRoe is not only rescinding money back policies, but also threatening to sue a blogger critical of its operations to obtain information that it claimed were "proprietary". This has raised questions about why would a company with claimed 80000 reps would turn on its reps like this.

First, multiple TV stations reported that local reps are worried when LuLaRoe rescinded its no-fee 100% money back and free return shipping policy, which has only been in effect for a month. Instead, reps are to use the regular return channel, which only return 90% of price, but also have to pay shipping.

According to reps, the inventory you get from LuLaRoe is like hitting a lottery, as you cannot specify designs, merely quantity and size. Similar to collectible card games. Certain rare patterns sell quickly at inflated prices on eBay or such, while the rest languish in rep's stock, until the rep either liquidate them on eBay and give up, or try to go through the buyback process. There are rumors that up to 4000 cases of refunds are pending, and people have been waiting for months

And unlike other MLMs, LuLaRoe's startup costs are extremely high, as much as 5500 dollars to start, and if rep can't sell them, often the advice one gets from rep's upline is "order more!" Some reps claimed you need about 15000 in inventory and markup of over 40% to earn a profit. And if you get a bunch of duds from the factory order (remember, it's random), you will have to arrange a trade with a different rep... if you can find someone who wanted your duds and trade you something they considered duds.

One blog that exposed such practices, and other complaints about LuLaRoe from disgruntled customers and reps was Christina Hinks, better known as MommyGyver online. And after publishing many such complaints, including documents shared online by such, Hinks has been served with a "discovery petition" from LuLaRoe demanding that she...

...disclose the identity and contact information of potential defendants who have damaged LLR and its goodwill by providing Respondent with LLR's confidential and proprietary business information, information about LLR and its merchandise, and false, derogatory information regarding LLR, much of which respondent has posted on her blog, www.mommygyver.com.

The interesting thing is much of the information had already been shared online via various social media platforms.

LuLaRoe so far has yet to comment about this potential SLAPP suit, though they did respond to the change in return policy (which is technically against their own company policy that changes in return policy must be announced for 30 days before it can go into effect). LuLaRoe's statement claimed the policy was always 90% buyback. The "improved" 100% buyback and free shipping was merely a temporary "waiver".

There are reports that LLR reps who decided to quit are not getting those refunds, and it's easily viewable on Facebook and other social media sites.

LuLaRoe was in hot waters earlier when a watermarked design of Micklyn LeFeuvre ended up on LuLaRoe's leggings... and LuLaRoe did not license the design. Back in January 2017, a Hungarian artist also accused LuLaRoe of unauthorized use of her work on its leggings. As there is no definitive catalog of LuLaRoe designs (it's stated that the company adds up to 400 designs a day), there is no way for artists to know if their work had been used without their permission by LuLaRoe until someone spotted the pattern on an existing LuLaRoe product.

These are indeed, troubling developments.

LuLaRoe claimed 1 billion in annual revenue earlier and had more than doubled its rep numbers in 2017 to over 80000. However, this also lead to local saturation, as the market size had not increased.

Instead, what seem to have happened is some abusive uplines started urging irresponsible practices to gain more operating capital. According to stories told to Quartz, and reported by BusinessInsider, some uplines urged their downlines to "stop paying bills", "pawn your vehicle", "open more credit cards", all in order to free up more capital to order more inventory from LLR. One was quoted saying "... I had $8000 worth of inventory sitting in my home while I was running up to food banks to feed my family".

All these downlines refused to give their name for fear of retaliation.

LuLaRoe does indeed encourage its reps to bulk up on inventory to achieve greater success. However, its CMO stated "[we do not support] retailers... put their personal financial situation at unreasonable risk to operate their retailer business."

When you combine this "overzealous ordering" (let's assume the company is NOT instigating such) with the inability to obtain refunds, it can seem to be the perfect storm.

But is the answer to such wave of negative publicity a SLAPP lawsuit? Really?

SLAPP, or strategic lawsuit against public participation, is basically a threat to shut someone up by threatening to sue him/her. Just the lawyer costs would give people pause. Often, it's easier to just roll-over... Unless you live in a state with anti-SLAPP laws and can find some pro-bono lawyers to help you.

But in the age of Twitter and Facebook, such news will leak out immediately, then whatever you're trying to hide is actually thrust into the light. The Streisand effect was named after Barbra Streisand, who tried to sue a photographer to keep photos of her estate private. When the news of the lawsuit broke, the downloads of photos of her estate skyrocketed from 6 (2 of which by Streisand's attorneys) to 420000+ in the next month alone. Not to mention the lawsuit was tossed out and Streisand ordered to pay the photographer's legal fees (over $150000).

So why is LuLaRoe trying to attract attention to its own woes by mistreating is own reps?

It's like a snake trying to eat its own tail.

It ain't pretty.

Some recent surfing brought me to an interesting bit of information:

...consumers who had purchased a [membership in] pyramid scheme were the least likely to complain – less than one-quarter indicated that they had complained. -- FTC fraud survey (2004)

This is a fascinating statistic. The FTC definition of pyramid scheme specifically means "pyramid marketing schemes", as in MLMs that went over to the dark side.

Here it is important to note that FTC questions were actually 1) Did you purchase an opportunity to operate (your) own business 2) Were you lead to believe most of the money earned from this business would be from recruiting others to join the business, rather than sale of products and 3) Were you deceived by the offer of business opportunity with false income claims or false offers of assistance? (Not exact wording, but you can find the questions in the linked PDF)

It is worth noting that in MLM...

A) Almost all MLM claim you are "owning your own business", follow by a derisive attitude toward a job ("just over broke" is often uttered).

B) You almost always get some lecture that you are NOT in a pyramid scheme, yet you are told to "build your team", which is just euphemism for recruiting.

C) Many questionable "leaders" of MLMs will resort to false income claims and false offers of assistance to get you to join, then blame you for your failure. "You must be doing it wrong", they'll point fingers, "because it worked for me."

But there is a hidden statistic that is not obvious until you read the fine print...

... In conducting this test it was necessary to drop the government jobs and business opportunities categories because there are too few consumers who experienced these types of frauds to meet the necessary statistical properties to conduct a Chi-square test.

The "government jobs" fraud is victim paid for false promises of government jobs. And business opportunities... needs no introduction.

But think about it. If there are so few reported incidents for them to even calculate the odds of underreporting...

Either there are so few instances of fraud in business opportunities...

Or there are so many instances of underreporting in business opportunities that it's like an iceberg...

Let's consider a real ponzi case... Zeek Rewards.

ZeekRewards is a ponzi scheme that finally died in 2012 when US Secret Service moved in. Its chief perpetrator, Paul Burks made a plea deal and went to Federal prison for 14 years. In the complaint against him, it was stated that ZeekRewards is a $939 million ponzi scheme involving possibly 2.2 million accounts (unknown number of actual victims).

The receivership reported that only 122000 filed proper victim claims and will be paid. Out of 2.2 million accounts. That's less than six percent reporting rate. Let's round that up to 10%, to account for the fact that some claims are probably just mis-filed, and not all the 2.2 million accounts are real.

But 10% is still low as that means 9/10 of ponzi fraud did not complain, compared to 22% for pyramid scheme victim reporting rate... or less than 1/4 of the victims. Obviously the two stats cannot be compared directly as they are from very different methodologies, but it is still food for thought.

ZeekRewards scam deniers are very fond of claiming they are operating a business... an internet advertising business, they claim, helping to spread the word of Zeek. Indeed, ZeekRewards bought advertorials (pretending to be real articles) on Keith Laggo's NMBJ touting "business opportunity", while Keith Laggos is working actively for Zeek as a consultant *and* is taking money out of the "profit pool"... and did not disclose that to his readers.

Could it be a deep sense of shame that caused many of these victims to not seek any distribution? That they just want to walk away and start over? A firm who specializes in "asset recovery" for victims calculated that roughly HALF of victims of scams will NOT actively seek recovery of assets, but instead write off the loss completely... or try to negotiate with the scammer for return of the funds. And we are talking big amounts here, millions.

We need more data, and we need more justice done.

And the victims need to stand up, and let other victims know... that they do not stand alone.

The more they stay silent, the more the perps will get away with scamming. And that only creates even MORE victims.

Two days ago (September 29th, 2017) SEC shut down two companies ran by Maksim Zaslavskiy trying to promote ICOs, or initial coin offerings. Zaslavskiy claimed his cryptocurrencies are backed by Real Estate (REcoin) and Diamonds (DRC - Diamond Reserve Club/Coin). Turns out they are just bogus claims.

For those who track this sort of things, this is a virtually beat-for-beat clone of an earlier scam, Gemcoin, "backed by amber", shut down by SEC back in 2015.

Gemcoin was a fictional cryptocurrency released by USFIA based in Arcadia, California. Its head is Steve Chen (also known as Chen Li 陳力). Chen ran 13 different entities that dabbled in MLM telecom, real estate, jewelry and gemstones, art imports, and so on, and also encouraged recruitment from inside China. In 2014, his latest scheme, American Mining 美洲礦業 collapsed in China leading to multiple arrests. American Mining also promised massive profits by investments in amber.

Steve Chen's final scheme, Gemcoin, is aimed at overseas Chinese ex-pats. It is supposedly a cryptocurrency like Bitcoin but backed by amber. It also claimed amber is very valuable and USFIA has exclusive mining rights and jewelry factory in the Dominican Republic. It had the backing of several local celebrities, including former mayor of Arcadia John Wuo. Steve Chen and his second, Leonard Johnson, ran investment seminars in multiple Chinatowns across North America, sometimes even dressing up his security guard, John Zhang, as a "jewelry appraiser".

When SEC finally shut down USFIA/Gemcoin in 2015, the scheme had taken in over 30 million dollars. John Wuo, who had endorsed Gemcoin, quickly resigned as city councilman "due to health reasons". And the truth started coming out... The receiver who took over the company said there are no gem grade amber in storage, just regular 'souvenir' grade stuff. And the alleged contract for the mine doesn't exist either. It was all one huge hoax scam.

When you go through the history of REcoin and DRC, you will find a familiar albeit accelerated pattern.

REcoin was launched in July 2017 but did not actually go live until August 7, 2017. It claimed it gathered US$1.5 million in token purchases. Zaslavskiy was so happy, he quickly launched the successor, Diamond Reserve Club and DRCoin.

But it was all a lie. SEC shut down the whole thing, revealing that Zaslavsky only got about 300K, inflating his revenue 5X to sound impressive. All the alleged "charitable donations" go back to Zaslavskiy himself as he runs all the foundations too. All his companies are actually PO Boxes and Virtual Offices.

It also suggested that the launch of DRC was an attempt to divert attention as there were announcements that any REcoins will be automatically converted to DRC, suggesting there were no real estate backing anything. It's also amusing how much technobabble this guy can produce on bitcointalk.

But the similarity is clear: empty promises of profit, backed by something (you can't see) and a bunch of high-falutin.

Don't fall for bogus promises of money, no matter how fancy it sounds.

As the #mlmskeptic, it is often sad to see how people turned absolutely illogical when it comes to money. We all like to believe we are rational creatures, capable of evaluating problems objectively. However, scientists have shown that our biases have far more hold on our processes than we think, and skepticism must be learned to combat those biases.

Let's take ZeekRewards for example. ZeekRewards is a convicted ponzi scheme that was closed in 2012 by US Secret Service and SEC. You can learn more about Zeekrewards on Oz's website BehindMLM.com , or check my attempt to track the scam throughout 2012 until just as it closed. But basically, even AFTER the scam was closed by the authories in October 2012, people CONTINUED to believe in the scam. One of them even posted this note on the closed office window of Zeek:

"We forgive you / Please restructure and save our Dreams"

There are comments posted by conspiracy theorists who insisted that Zeek was closed for nefarious reasons, and Zeek cannot possibly be a Ponzi scheme.

Curt Miller: It was the SEC that slowed your growth, sorry. There were no victims until the government came around...
only 2 million happy affiliates. It was no ponzi and the program would NEVER have gone bankrupt.

Basically, people are in denial. They refuse to believe they have been scammed. Instead, they behaved irrationally by spinning tales that fit their own biases.

Scientists have been studying this for a long time, and they now have more proof that we would rather believe in something that cost us $$$ rather than accept bad and unpleasant news.

Scientists conducted this experiment in two phases. In phase one, the participants are only told the value of the symbols they chose, and they slowly learned which symbols are worth more. In phase two, the same people are given two symbols to choose, but this time they know both values, except this time the other symbol may be worth more. Yet the participants keep choosing the symbol they prefer from phase I, rather than logically, pick the OTHER symbol which is now worth more.

In other words, even with evidence staring them in the phase that their "favorite" symbol is now worth less, THEY STILL PICKED IT ANY WAY.

That is NOT rational behavior. Yet it is true. Once we formed an observation, we are often NOT willing to change it, even with clear evidence we should, and even with financial stakes.

Let's go back to ZeekRewards again. For over a year prior to its closure, critics such as Oz over at BehindMLM and yours truly have been warning the public about how this can't possibly work. The number of penny auctions cannot possibly sustain the so-called "profit sharing". This had to be a ponzi scheme, and there are plenty of proof.

Yet few listened. The membership at Zeek grew to allegedly up to 2 million before it was shut down. And as shown before, people CONTINUED to believe in the scam, even after it was shut down, that it is believed thousands of people actually donated money to a fund allegedly for the purpose of argue in court to have Zeek exonerated. That never happened.

People refused to believe they've been scammed. Their first impression "great money maker" had taken hold. Even when faced with facts that they are losing money, they cannot let go of their initial impression.

That self-serving bias and inability to change one's thinking is VERY dangerous to one's financial well-being.

Recently, someone posted the following comment on BehindMLM

"Davie Watkins" claimed on 6-OCT-2017 that "FDA approved
Vida Divina's Coffee Line in October 2017"

Let's first examine, what did "Vida Divina" reps say about FDA? If you Google, you may find:

The search results says "FDA certified", or "FDA Approved". But what is the truth?

None of the actual results link to FDA, it's just announcements, and they can't even agree on the language. Some say "certified", some say "approved". What is the truth? As it turns out, it was NEITHER.

Searching for proof got me this photo of the founder/CEO holding up a certificate:

It says: "certificate of registration", and an FDA registration number, for Vida Divina in Azcapotzalco, Mexico City, Mexico.

It doesn't say certified. It doesn't say approved. It simply says registered. So the claim that the company is "officially FDA certified" is wrong.

It is simply a registration of any company required to do to import anything edible into the US. The law is very clear:

The FDA Food Safety Modernization Act (FSMA), enacted on January 4, 2011, amended section 415 of the Federal Food, Drug, and Cosmetic Act (FD&C Act), in relevant part, to require that facilities engaged in manufacturing, processing, packing, or holding food for consumption in the United States submit additional registration information to FDA -- Food Facility Registration, FDA.gov

In fact, here's the same company, Registrar Corp, explaining this is a "Food and Beverage Certificate of US FDA Registration". The certificate is in IDENTICAL format to the one shown above. It just costs $195 to get, and it is required for "dietary supplement facility" as well, which is what Vida Divina is... maker of dietary supplements.

So repeat after me...

Vida Divina is FDA REGISTERED as a dietary supplement facility

Not approved

Not certified

FDA REGISTERED as a dietary supplement facility

So what does FDA approve? Instead of explaining it, I'll let FDA do the explaining. Please consult FDA guide on "Is It Really 'FDA Approved'?"

And you will see in that link, it says very specifically, FDA does NOT approve dietary supplements.

FDA doesn't approve dietary supplements. Unlike new drugs, dietary supplements are not reviewed and approved by FDA based on their safety and effectiveness. -- FDA.gov

Strictly speaking, FDA only "approve" drugs and high-tech medical devices (such as defibrillators).

FDA certify certain laboratories and staff, some mammography centers, and some specific food coloring as safe for use. They don't certify food supplements.

At best, Vida Divina's "registration" simply means it is entered into an FDA database of food "importers".

It does NOT mean Approved.

It does NOT mean Certified.

It is REGISTERED (as a facility).

Not products, not people. FACILITY ONLY.

So to summarize

FDA Approved -- only drugs and class 3 medical devices, NOT nutritional supplements
FDA Certified -- only installations like mammography centers, labs, and certain types of food coloring, NOT companies or products
FDA Registered -- only companies and facilities that manufacture or import stuff to be consumed in the US, NOT specific products

Any other claim is a misrepresentation.

A lot of ponzi schemes were caught by authorities and assets seized so the victims can be repaid.

ZeekRewards Receivership has sent out hundreds of thousands of checks for hundreds of millions of dollars. All victims with allowable claims have received funds for at least 75% of their losses.

This was a huge ponzi involving almost a billion dollars and a million victims. And this was one of the most successful repayments by the receivership.

But notice the term: All victims with allowable claims

That means victims who filed all the proper paperwork proving the amount of their loss and other requirements.

Victims who did NOT file the paperwork will probably NOT get anything. And one case that was adjudicated September 2017 illustrated this clearly.

To make a long story short and mostly free of legalese, a certain ponzi scheme ran for 23 years in Hawaii when it finally collapsed. A bankruptcy trustee managed to recover about 8 million dollars. However, creditors filed claims of about 10.6 million dollars, of which 8.1 million was filed before the deadline. Claims are for both the invested amount (principal) and investment returns.

Before deadline: 5.8 million principal and 2.3 million returns

After deadline: 2.6 million for both principal and returns

So now comes a question... Should the principals be paid out first, even though some of the claims were after the deadline? Logically speaking, those who lost the principal should be paid out first, and any "returns" earned in ponzi schemes are bogus and claims should be unenforceable. Indeed, that was the position taken by the receiver.

However, the judge, sticking to a strict definition of bankruptcy law, ruled that only the claims filed before the deadline will be paid... which means any claims filed after the deadline, even those for principal, are simply out of luck.

Thus: if you are victims of a ponzi scheme, and there is a claim process to get back your money... FILE EARLY. Else, you may be out of luck.

Weight loss industry is a 60 BILLION dollar business (2013 figure) and it's no surprise there are a lot of various unproven claims from companies that sell magic weight loss formulas, each with its own claims how its own secret ingredient can help you lose weight through some semi-plausible mechanism. Frankly, all of them are bull****. The more you diet and exercise, the more your body adjusts to counteract your efforts. Most of the contestants in "The Biggest Loser" gain back all the weight they lost in a few years, despite all attempts to keep off the weight.

Consumers are getting wise to the various weight loss woos, and the entire diet industry is seeing a slow down, no doubt helped along by magic claims such as "alternative" to gastric bypass surgery by simply swallowing something. That company is called Roca Labs.

To quote the FTC director of Bureau of Consumer Protection, "Roca Labs Has An Adversarial Relationship With The Truth". And that's only the beginning. (for a complete list, see TechDirt's Roca Labs coverage)

They claimed their product has a 90 percent success rate. In fact, they conducted no trials or clinical studies with their own products.

They offer 50% discount to people who videotape their "success stories", but did not tell people to disclose that they were compensated for such stories.

They operated a website that showed dangers of gastric bypass, with a page that links to selling Roca Labs products, without disclosing they actually own and run the website.

They have a "gag clause" in their contract that if you buy their stuff, you are contractually prohibited from saying anything negative about them for ever and to anybody including review sites and even BBB. And they have sued such customers.

They also claim if you say bad things about them, they'll rescind any discounts you've been given and they'll sue you for the difference. (!)

They tried to sue pissedconsumer.com to shut down negative comments left by members. (They lost)

They threaten to sue the witnesses at their trial for violating the unenforceable gag clause, in a clear case of witness tampering, threaten to sue the other party's expert witness and threatened him with criminal violations, as well as sue the other party's lawyer for statements made in court.

They tried to use DMCA takedown to hide criticism against them

They threaten to sue TechDirt (twice) for reporting on the above egregious behavior, including once from merely QUOTING the lawsuit.

They claimed their opposing lawyer had bribed a state senator into passing the anti-SLAPP law of Nevada which hindered their SLAPP lawsuit. (It was dismissed)

They tried to claim endorsement by actor Alfonso Ribeiro until his lawyers stepped in and slapped that down. Then they did the same with Tommy Chong.

But that's not the most hilarious part.

That would be...

Their former "director of medical team" was actually a pediatrician who lost his license to practice medicine due to child porn. (After that's exposed, the website was quickly purged)

Yet none of these are new, and has happened before, and will happen again.

A "brain supplement" company with a chiropractor as its "chief science officer".

Nerium associates used Ray Liotta's image without his permission.

Website selling dubious "income courses" also setup "review sites" giving its lessons a good rating.

And yours truly, #mlmskeptic, was threatened by ZeekRewards for exposing them.

Things don't really change. It is up to you to recognize the scam when you see it.

Recently, I came across MLM "inspirational" propaganda that permeated social media. An example is embeded below, along with my reply:

“But all the love in the world won't save a sinking ship. You have to either bail or jump overboard.” -- Sarah Dessen
— Kasey Chang (@kschang777) October 28, 2017

The original tweet is an attempt to reframe sunk cost fallacy as a virtue, when it's really a cognitive bias that leads you into making irrational decisions.

Think about it... Why is "working through" the pain is preferred way to resolve the pain, when it is just as easy to stop the pain altogether? Yet that is clearly the implication of the original tweet... by implying that your setbacks are only temporary, and as long as you dedicate sufficient effort you will succeed.

This is unrealistic, dangerous and utterly reckless thinking, yet what MLMers call "positive thinking". Positive thinking was repopularized recently because some author copied a 1910 book and added some pseudoscience to unproven pop psychology. And MLMers ate it up.

Yes, I am talking about "The Secret".

First of all, the Secret is not new. As I said, it's a rewrite of a 1910 book with some new pseudo-science references to quantum physics that really made no sense. It is basically magical think: if you ask and believe, you shall receive. It's a rephrase of Bible Matthew 21:22, yet somehow this was generalized to anything in life.

Yet there are a lot of stuff you don't know that's in The Secret... And they are things you won't hear about from the MLMers who don't want to read about "negativity", even if it's in the book that taught them about positivity.

Did you know that The Secret advocates victim blaming? It's right there in the section "Attract Abundance".

If you do not have enough, it is because you are stopping the flow of money coming to you, and you are doing that with your thoughts.

That's right. The book blames YOU for being poor.

Furthermore, the book also advocates don't visit people who are sick or even take phone calls from them so you cannot hear their negativity regarding their disease. Don't believe me?

You cannot "catch" anything unless you think you can, and thinking you can is inviting it to you with your thought. You are also inviting illness if you are listening to people talking about their illness. As you listen you are giving all of your thought and focus to illness,

Again, book blames YOU for getting sick, and if you listen to people who are sick, you'll get sick too. Argh. Guess that precludes you from speaking to people who're not rich either, huh?

In fact, Rhonda Byrne blamed people who died in disasters and terrorist attacks for not thinking positive thoughts and thus "hit the same frequency as the event" (The Secret Made Simple).

...masses of lives were lost... If people believe they can be in the wrong place at the wrong time, and they have no control over outside circumstances, those thoughts of fear, separation, and powerlessness, if persistent, can attract them to being in the wrong place at the wrong time.

Yep, you read it correctly. Rhonda Byrne blamed victims of natural disasters and terrorist attacks for their own negative thoughts which "attracted" the disaster and the attack. This was confirmed by Bob Proctor, one of the positive-thinking coaches quoted extensively in the book. ABC Nightline interviewed Bob Proctor in 2009, and the dialog follows:

Nightline: "Children in Darfur are starving to death... Have they attracted that starvation to themselves?"

Proctor: "I think the country probably has..."

It's worth noting that Bob Proctor made a mint speaking at MLM events, esp. Vemma events before Vemma was shut down by FTC. In fact, Bob's wife and daughter were prominent Vemma members.

But what's even more interesting is the Secret's approach to money. It says... don't worry about bills. Imagine they're really checks, or whatever. You have to put yourself into positive frame of mind, imagine you have plenty of money, to open bills, and money will flow in magically. Or to put it another way, the book said any one can be like Jesus... who can magically create more food out of some food... people who believe can create more money out of a little money.

Focus on not enough money, and you will create untold more circumstances of not having enough money. You must focus on the abundance of money to bring that to you.

Remember? Victim blaming again. Book says you are poor because you're thinking poor thoughts. But it gets even more bizarre.

When you have a pile of bills that you have no idea how you are going to pay you cannot focus on those bills, because you will continue to attract more bills.

Oh, but it gets worse.

If the words "I can't afford it" have passed your lips your power to change that is now. Change it with, "I can afford that! I can buy that!" Say it over and over. Become like a parrot. For the next thirty days, make it your intention that you are going to look at everything you like and say to yourself, "I can afford that. I can buy that." As you see your dream car drive past, say, "I can afford that." As you see clothes you love, as you think about a great vacation, say, "I can afford that."

Except that's LYING to oneself. If you can't afford it, you can't afford it. You may be able to afford it one day, but NOT NOW. And denying reality generally results in it coming back and bite you in the rear, and it will hurt a lot, and may put you into the loony bin. Your bank and your creditors will not care if that "check from Universal Bank" hadn't cashed yet. No, I'm not kidding about the check.

yes, The Secret website wants you to buy this check
and put your name as the payee to prove you are thinking
positive thoughts and soon you'll get your unlimited abundance

The Secret is basically rehashed "New Think" (which is 100 years old at least) advocating victim-blaming and reckless thinking, which made it a PERFECT MLM recruiting tool... as they require people who do no due diligence (reckless thinking) and can blame themselves if they fail. And that is its real secret.

Ever heard of Professor Cipolla's theory on stupidity? Neither have I until recently, but it explains quite clearly how the world works, esp. scams.

According to professor Cipolla, you can measure a person by 2 axis: benefit derived from their own actions... and benefit to others because of their own actions

It roughly goes like this:

Cipolla's theory on stupidity, summarized

A scam mastermind cares not for mutual gain, and strictly belongs in the Bandit quadrant, though s/he will present him/herself as being in the I quadrant.

A ponzi scheme participant also believe they are in the I quadrant, but in reality, they're in the B quadrant (if they are a "net winner), or S quadrant (if they are a net loser).

It's even more interesting when you realize the rhetoric used by scammers is to falsely portray the victims are in the U quadrant ("you're just making your boss rich") when in fact, the victims are actually slightly positive on the X-axis (they are earning a salary) and thus already in the I quadrant and purport to teach them to migrate over to the I quadrant ("be your own boss"), but in reality, moved them into S or B quadrant.

Pyramid schemes are no different. The rules are usually simple: recruit X people, and you get your money back, and you stand to make more, a lot more if you recruit even more. So they start with a loss, and start in S quadrant. Depending on how fast they recruit, they may move into quadrant B, but they delude themselves into thinking they're in quadrant I.

Indeed, some victims in pyramid schemes, upon learning they're in such a scheme, actually INTENSIFY their recruiting efforts, in order to recoup their losses, thus making themselves willfully criminal, rather than admit to their stupidity.

Which brings us to judas goats, where most people in pyramid schemes are. Judas goats are goats used to lead sheep around. In terms of a scam, judas goats are "leaders" who recruit victims for the masterminds, and may or may not benefit from the recruitment. They often honestly think they are doing their victims a favor by introducing them to such "great opportunity", but in reality dragged them all into being victims.

In the future, we'll discuss the subtypes of people on this graph, about perception and reality.

Woo, short for woo-woo, is a term used to describe something that is completely implausible, yet explained with pseudo-scientific and potentially-plausible jargon that can fool innocent sheeple. You can encounter woo in all sorts of places, and most of the time they do no harm. However, when they show up in medicine and finance, they can do quite a bit of harm indeed. And today, we'll discuss the a new wrinkle... physical woo on top of financial woo.

But let me start from the beginning.

HYIP, or "high yield investment program" is a form of ponzi scheme that promised impossibly high yields. Claimed returns like 1% per day is not uncommon.

Some of them are pretty transparent in being a scheme, while others may adopt weasel language like "crowdfunding" or "charity". Yet others turn to woo explanations for their ability to pay such high yields that makes absolutely no sense when examined in detail. Frankly, it failed to pass the smell test... If they have techniques that can reliably generate such income, just put down a mortgage or borrow X dollars from credit card or bank, and they'll make it back in no time. Right? Yet there have been, for decades, schemes that attempt to explain their ability to generate such returns, with bogus excuses such as "bridge loans" [DOJ], "P2P lending" [CNBC], "forex" [DOJ], "arbitrage" [wikipedia], "penny auctions" [CBSnews], "prime bank" [SEC] and so on.

The latest buzzword is cryptocurrency, and it's no wonder ponzi schemes have latched onto it as the latest craze, by incorporating something people who have heard of, but do not understand, as their woo. Some launch their own cryptocurrency (that nobody would ever use), yet others latch onto the idea of cryptomining, the idea that you can "mine" bitcoin and other currencies.

While cryptomining is real, it is hard to make money in such because the hardware to mine and the electricity to run them, not to mention cooling, are expensive as well. It may be possible to run such in China and Eastern Europe, where electricity is cheap (by government mandate) and hardware and labor are cheap, esp. if one exploit scale by running massive crypto-mine.

So the latest crypto-woo is launched by a company called USI-Tech, which used to be Forex HYIP (see above), but they've since switched to Cryptomining as their new woo. Recently in London, they've shown their latest "innovation"... they can create "virtually FREE energy" to run their cryptomining machines.

USI-Tech claims they can create "virtually free energy",
but they only want to run cryptomining rigs with it

Perpetual motion machine doesn't exist, as it violates law of thermodynamics. Yet there are plenty of kooks who claim they made one, or claim the knowledge was suppressed by the evil government or energy consortiums or something. Though you had to admit, using one to power cryptomining is rather cute.

But what does this thing look like?

A few minutes of waffling later, they show this:

So it's not even installed yet. But let's zoom in a bit, noting three things:

The "Asymmetric Permanent Magnet Motor/Generator"

The "Hydrogen Fuel / Electric Generator"

And the presenter

who was named as "Evan Ahern"

Let's start in reverse order.

Who is Evan Ahern? Google says... "Las Vegas equipment rental". Here's his LinkedIn Profile:

Ahern Rental rents industrial and construction equipment.

Google yielded a slightly better picture from Alumni UNLV website

Looks reasonably close to the blurry picture above, but hey, I don't have a close-up. Call it... 75%? But really, construction guy is suddenly head of product development? Hey, I don't know the guy. So that's a maybe?

Next, let's look at that Hydrogen whatever... Note what it says: "sHHO (stabilized) flow diagram"

HHO is water, i.e. H2O. What "HHO Generator" is, however, is electrolysis of water into HO and H, into a mixture known as "Brown's Gas or "hydroxy". And while the "principle" is sound, in that HHO gas can be used for fuel, the NET ENERGY is NEGATIVE, i.e. it takes more electricity to make the gas than the gas can be burned for. It's been debunked over and over, even by Mythbusters! Now the woo's been applied to bitcoin mining?

Oh, but it gets better! Let's look up "asymmetric permanent magnet generator". Near the top of the search results is probably "Tom Bearden" at cheniere.org and the site was just some ranting about the suppression of discovery.

What that website will not tell you is "Thomas E. Bearden" claimed to have invented several perpetual motion machines, which he calls "overunity systems". He'll gladly sell you a "documentary" showing his discoveries. His "masters degree" is from a diploma mill. He calls asymmetric permanent magnet generator "magnetic wankel engine", and claimed it had been suppressed and its inventor silenced via assassination.

But let's just try the "smell test" does this story even make sense?

Come on, it doesn't. If they managed to create a perpetual motion machine, they can sell it to Tesla or GE or US government or even the Saudis for bajillion dollars. They'll be set for life. But instead, they want to apply perpetual energy machines and "run engine on water" tech to bitcoin miners?!

It's hilarious. Really. Where do they come up with this stuff?

When one searches on the internet (through Google, Bing, or any other search engine), one often comes across MLM minded articles, and so many of them are touting "no negativity". In fact, heaps of articles are online about how to deal with negativity. Some may even quote 'studies' that claimed successful people avoid negative people. Some of the articles are actually relatively accurate, but many of them are just outrageously wrong.

One website used this definition:

Negative people are friends, family, strangers, associates, or prospects that talk badly, or in a non-positive way about your dreams, goals and how you plan on accomplishing them.

Why would people be positive about your dreams, goals, or potential accomplishments? Your friends and family will probably support you just because they know you. But why should ANYONE ELSE care? It would be up to you to convince them.

The same author went on to describe techniques on how to overcome the resistance of the prospect... Though prospect here means a potential recruit into the organization, not a prospect for a sale. But that's not the problem.

Another author claimed that negativity comes from lazy people who can't profit easily from MLM and create a rant blog about it, then went on to use "pyramid // pyramid scheme" obfuscation to deflect the criticism. It was a classic diversionary tactic.

Both suffer from a fundamental problem of lumping in all criticism, including skepticism, as "negativity".

And if you can't tell legitimate questions from insults, you can never improve your situation.

Q: How do you improve at ANYTHING?

A: You find a different way of doing things, that works better.

Q: But how do you find a different way?

A: By asking questions. How do I save money doing X? How do I improve efficiency doing Y? How can I do things faster? And so on and so forth.

Without asking any questions, you can never improve your process. You can only ape, clone, copy, and replicate.

You cannot look for flaws and fix them if you ask no questions.

You cannot improve if you ask no questions.

Get the idea?

So what questions will you ask? That is skepticism, not cynicism.

Negative toxic people simply tell you that you will fail. You'll go broke and die in a ditch. Whatever.

But skeptical people will ask you questions, like "Does the product really work? Can you actually make that many sales? Are you sure this isn't a pyramid scheme? You seem to do almost no work; isn't this a ponzi scheme?" And so on and so forth.

And how *would* you know without asking questions (and getting answers)?

If your uplines and fellow associates are simply deflecting your questions, what does that say about their mindset? Are they more interested in cloning instead of improving?

That is the difference between skepticism and cynicism / toxic negativity.

But you ask, what if I am successful? Doesn't that validate the system?

Nope. If you do end up more successful, it can be due to just random luck, instead of effort. After all, if average revenue per MLM participant is less than 2000 dollars per year (not profit) then the vast majority of people were UNsuccessful, that your success is an OUTLIER, and obviously, there are plenty of hardworking folks who did not succeed. So, if you are all using the same system, what is the difference between you, and them, if you both worked hard? And why is the a narrative in MLM that "obviously" those who failed "obviously" did not work hard? Why could it not be luck or even the system that caused the vast amount of failures?

Yet that is the sort of question MLMers do NOT want to ask. It's called luck blindness, a cognitive bias. People want to BELIEVE it is their skill or effort, not luck, that allowed them to succeed.

MLM is afraid of BOTH cynics... AND skeptics. It does NOT want people to ask questions of it. It wants to stay stagnant, only changing names to confuse.

And the victim of that confusion, is you, the prospect.

For further reading:

http://www.differencebetween.net/language/words-language/difference-between-cynicism-and-skepticism/

https://psychcentral.com/blog/archives/2011/02/08/im-a-skeptic-not-a-cynic/

Pet scams are all over the place, and pet scammers have moved onto the Internet as well. Current generation of pet scammers create fake "adoption" websites, then hand you off to associates with fake pet shipping services with an excuse for additional fees.

A woman in Milwaukee was duped by a fake kitten adoption website. The man claimed to be in Virginia and will ship her a kitten for $170... Except he demanded payment via a reloadable gift card, not regular methods. Then later, when a separate scammer called her, claimed they need to "recrate" the kitten at the airport for additional $840 that's "refundable" she knew she'd been had. They even used the name of a real pet transport service.

A Delaware woman was duped into sending money via Western Union to a scammer for deposit on a toy poodle, and even told the woman to go to Baltimore, MD to pick it up, except the address was bogus... The man living at that address had no pets, much less a toy poodle.

Delta Airlines discovered that someone had created a fake pet transport service using Delta's name called DeltaPetTransit.com, complete with Delta's logo and pictures of its planes, used by pet scammers to trick people out of even more money.

The common elements are:

* Fake pet adoption / sales website with cute pictures and flowery prose but no history
* The pets are in a different state, often Delaware, often with fake addresses
* Demand payment via non-traceable methods, like Western Union, gift cards, green dot cards, etc.
* (Optional) Handoff to a fake transport service, demand "mandatory fees" for insurance, vaccines, permits, etc.
* Again, demand payment via non-traceable methods

Modern pet scammers are in usually in West Africa, with accomplices in the US to pick up the payments. The websites are created from a template, with stolen pictures. Phone numbers are connected to burner phones, and addresses are fake (but real enough to pass cursory inspection).

Don't fall for such scams.

http://www.staradvertiser.com/2017/10/27/breaking-news/delta-probe-uncovers-criminal-scheme-to-scam-pet-owners/

http://fox6now.com/2014/01/22/contact-6-deals-with-kitten-catastrophe/

http://www.delawareonline.com/story/news/crime/2017/10/27/puppy-scammers-use-phony-delaware-addresses-collect-thousands-nonexistent-dogs/802527001/

https://www.bbb.org/council/news-events/news-releases/2017/09/bbb-warns-pet-scams-use-phony-ads-fake-websites-to-victimize-thousands-of-consumers-in-u.s.-and-globally/

What do actor Jamie Foxx, ex-Boxer Floyd Mayweather, rapper DJ Khaled, soccer player Luis Suarez, and hotel heiress Paris Hilton have in common?

They all endorsed an initial coin offering (ICO), either publicly or online. Jamie Foxx tweeted about anticipating Cobinhood, Floyd Mayweather and DJ Khaled endorsed Centra, Luis Suarez endorsed Stox. Paris Hilton tweeted that she supported ICO of Lydian. only to delete the tweet 3 weeks later.

New York Times wrote an expose on how boxer Floyd Mayweather and rapper DJ Khaled endorsed an ICO called Centra, despite many questions about the head of the company and the business model. And that is when Security Exchange Commission (SEC), the regulatory body of investments in the US, started to see red.

SEC had already issued an investor bulletin in July specifically on ICOs, warning that some ICOs may be considered securities in the US, and promotion of such may violate security laws because they are not registered with the SEC.

SEC in September 2017 closed two fraudulent ICOs and alleged Maksim Zaslavskiy of fraudulently promoting two ICOs, REcoin and DRCoin, which were advertised as being backed by real estate and diamonds. SEC alleged that Zaslavskiy raised only 1/10th of the money he actually did, and never hired any experts nor purchased any diamonds or real estate as it claimed it did or will do. SEC obtained a court order to freeze all assets of companies related to these two ICOs.

SEC on November 1st issued a directive to all people, but specifically, celebrities who promote/endorse ICOs.

Any celebrity or other individual who promotes a virtual token or coin that is a securitymust disclose the nature, scope, and amount of compensation received in exchange for the promotion. A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws. Persons making these endorsements may also be liable for potential violations of the anti-fraud provisions of the federal securities laws, for participating in an unregistered offer and sale of securities, and for acting as unregistered brokers.

Paris Hilton seems to be the only celebrity who had walked back on his or her ICO endorsements as of 11/11/2017.

But SEC wasn't the only US Federal agency out looking for misleading and possibly illegal endorsements. Federal Trade Commission (FTC), and Federal Drug Administration (FDA) are also clamping down on such illegal behavior that may be misleading consumers.

Federal Trade Commission has kept track of rising endorsements on social media sites. In April 2017, FTC issued a "reminder" to "influencers" and brands" to clearly disclose relationships. It also has updated its endorsement guide as of September 2017 and it has a specific section on Social Media. Basically, if you are being compensated for the review or endorsement, you need to disclose it clearly or you may be in violation.

In the same month, FTC also prosecuted a pair of popular influencers in the online gaming community. Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell allegedly endorsed the online gambling service CSGO Lotto without disclosing that they jointly owned the company and were its president and vice president, respectively. They also allegedly paid other influencers to post on various social media platforms about CSGO Lotto without requiring that they disclose any sponsorship. This is a double violation, as the influencers also owned the company hiring influencers. The two settled with the SEC quickly, but they could have been fined heavily.

FTC also send various reminders and warning letters throughout the yet to other influencers who may not have clearly disclaimed their relationships with the brands. Even primarily visual social media sites like Instagram are required to overlay disclaimer text (not abbreviations) as per endorsement guide above. FTC had previously warned companies like Ann Taylor (2010) and Hewlett Packard (2012) for failure to require the bloggers who were compensated for posting content about them. In 2015, Machinima video network on Youtube also got an FTC warning when it offered its video stars money to produce videos highlighting Xbox One as a part of Microsoft advertising campaign, without requiring the stars to disclose they are being compensated to do so.

But the most often offender would be the Kardashians. Kim Kardashian had gotten into trouble with Federal Drug Administration (FDA) for not labeling Instagram posts about drugs treating morning sickness. The consumer watchdog organization Truth in Advertising (TINA) had spotted the Kardashian-Jenner family with over 100 potential violations of FTC guidelines in 2016 alone on Instagram, covering over two dozen brands.

But this is merely the tip of the iceberg. Those of you who keep up with tech reviews may recall the spectacular crash of Kanoa wireless headphones, which basically died after one scathing review, where the reviewer Crouch, who had been in contact with Kanoa all along, alleged that he was offered $500 in cash for an early and good review. Incensed, Crouch posted his epic struggle with the product, how crappy the product is, and how mad he was at being bribed. Four days after the video was posted, Kanoa went kaput.

Companies are fighting back. Amazon, for example, has banned incentivized reviews (even for receiving products, except ebooks) since October 2016, but it did not seem to slow down the flood. Recently Amazon had removed the reviewer ranking altogether. But retailers seem to have not gotten the message and some people are still being solicited to give positive reviews. And many shill reviews are written by hired help in India getting paid practically nothing.

However, the crap goes both ways. There are now book review blog sites that offer a book author favorable reviews... for a price.

So what can you do?

Stop relying on celebrity endorsements for ANYTHING

What does a celebrity have to do with anything? If s/he is neither a professional nor an expert regarding such, why do you listen at all?

Why do you look for endorsements on social media at all?

Shouldn't you be looking at review sites and ask opinions of real professionals and experts?

Use fake review checker if possible

For Amazon, there are FakeSpot and ReviewMeta to check if the product has shill reviews.

You should NOT trust any endorsement or reviews unless you are sure all relevant factors have been disclosed.

"Jason McRiffle" brought up an interesting test in a BehindMLM comment for the "legitimacy" of an MLM, and it's more useful than it first seems. He dubbed it "the eBay test".

If an MLMer wants you to join "for the product", the way to check whether it's viable or not... is to take the product name and size, and go search on eBay for the same item.

If you can buy it cheaper on eBay including shipping than what you are supposed to sell it for, then it's clearly NOT profitable to join at all as you can't retail it at any profit.

Let's randomly pick one product from each of the top 3 MLM companies by revenue: Amway, Avon, and Herbalife.

Amway Nutrilite Double X Refill "retail price" is $88 on Amway's website

Same refill is easily found on eBay for $50-$60, and if you want to bid, even less

That's not a surprise, is it?

Avon "Anew Clinical Thermafirm" is $28 on Avon's website

But the same cream is $12-$15 on eBay with shipping, even less w/ bidding.

Herbalife QuickStart kit for weight loss is $115 on Herbalife website

The same Herbalife Quickstart kit is $70-85 on eBay.

The pattern is obvious and undeniable: you are VERY UNLIKELY to make ANY retail PROFIT selling the products, no matter how much your upline insists that the products will 'sell themselves". (Undoubtedly you can find some exceptions if you look hard enough, but that's not the point.)

Your Bottom Line

So want to do this to your own MLM? Or the MLM you are thinking of joining?

1) Pick their top product. Figure out how much you have to sell it for to make a profit. If you can get it "wholesale" at 50, figure you have to sell it for at least $70 (including shipping and handling) to make a profit after all the hours you worked.

2) Then check the same stuff on ebay (or even Amazon, should you want to be thorough). People go where stuff is cheap, so if you can't beat the eBay price, you won't get any orders other than few pity orders thrown your way by your friends and family.

It's not a pleasant thought, is it?

To convince yourself, try a couple more products.

Parting Thoughts

If you cannot retail with a profit... then your only RELIABLE source of sales is your downline... the people you recruited to join your organization... AND yourself.

You were TAUGHT by your upline (just as your downline is taught by you) that you should switch over your existing products to these products because these are as good (or better) as the ones you used. And the only way you get RELIABLY get more sales... is to add more downline, not sell more, because, remember, you can't really sell these at a profit because you can't sell them at "retail" prices, but must offer heavy discounts to match the online sellers.

You are told you'll be a retailer, a seller. But in reality, you are a BUYER, recruiting more BUYERS by telling them the same delusion... that they are sellers.

So where does that leave you?

A liar, who perpetuated a lie.

Someone brought this to the attention of /r/scams... is this legit?

FB page claims to have Sphynx kittens for sale at $600

The initial page is already problematic. Google photo search comes up with a for sale ad from south Australia town of Glenunga.

Scrolling through the cute photos shows they've been advertising these cats since January 20th, 2017.

A volunteer contacted them via Facebook Messenger, and they claimed to be in Dallas, TX.

Their first timeline photo is this cat:

While I cannot find the EXACT photo, it was pretty obvious it was a screencap from a video, as I was able to find this photo of the same cat, the same potted plant, the same plastic sheet on the same table, just different pose, but it's from a classified ad in Granada, Spain. There's a video below (no longer available) so presumably, that's where the above "photo" came from.

Here's another photo, which is interesting in the details:

This photo actually appeared previously in a UK classified ad in a modified form:

https://www.pets4homes.co.uk/images/classifieds/2017/10/22/1745587/thumbs/sphynx-kittens-for-reservation-59f843b69318e.jpg

Ah, but you ask, isn't this photo SMALLER than the other photo, therefore the OTHER photo is "real" and this is the copy?

Nope, look again in the upper right corner.

It's a reel of "Arctic Cable", and it's labeled as "30 Metre", which means it's in Europe. Here's an example from Gumtree. On the sticker is the same label: 30 METRE.

So the "Pets4home.co.uk" is the real photo, albeit, a trimmed version for a thumbnail, rather than the full-size photo. And the "sphynx for sale" photo is the copy, since they claim to be in Dallas, TX, but used a photo with "Metre", which means the photo is from UK.

I can go through more photos and point out other discrepancies, but I think I've made my point.

Facebook does NOT vet its vendors or pages
Scammers setup anywhere, and they *know* you will search, so they pick photos you can't find by doing screencap from hi-res videos instead
If you spot something suspicious, CHECK IT CAREFULLY. People want to see cat will only see cat, and not the clue that the photo was NOT from a US household.
Adopt a cat locally, from a shelter if possible.
Don't be scammed. Be skeptical.

With Bitcoin around 8000, people are once again excited about mining Bitcoins. But does it make sense for YOU to order a mining rig and start mining yourself?

Frankly, no, unless you live in an area with extremely cheap electricity.

You can play with the profitability calculator. http://www.bitcoinx.com/profit/

Remember to plug in the cost of the rig (assume Antminer S9 cost $2000, 1600W, produces 14 TH/s), and cost of your local electricity (assume $0.13/W), AND the current BTC/USD conversion (use $8000)

Even at the current prices of $8000 USD/BTC, you won't break even for 5 MONTHS (breakeven is calculated for 140-160 days depending on electricity costs). The ONLY way this can be profitable is you setup where electricity is cheap, like in India and China, where electricity is 1/3 less than in the US.

But then you say, wait, I can join a cloud mining pool! I'll just LEASE the computing power I need in China or something!

Please don't. It's fraught with danger you don't understand.

Gavin Andresen, chief scientist of Bitcoin Foundation, called mining contracts "make no sense... suspect many of them will turn out to be Ponzi schemes".

Furthermore, it is *very* likely that hash-power leasing will be declared an INVESTMENT and anyone offering such may be subjected to penalties because it fits every criterion specified in Howey Test that gave power to the SEC decades ago, making them illegal security offerings.

Even the oldest company on the block, Genesis Mining, is having some PR problems.

Not to mention there are companies that promise you crazy things, like a perpetual motion machine that will generate them "virtually free energy" to mine their coins. No, really. They presented such a thing at their "convention" in London.

All in all, it is STILL not a good time for you to mine Bitcoin (or any altcoin) for money. Unless you ALREADY have the equipment.

In 2017, there were lots of Ponzi schemes, and two of them caught my attention. One was the Pilbarra Ponzi scheme in Australia, and the other was Istuary Innovation Labs Ponzi in Canada. Both of them show classic Ponzi signs long before their collapse.

To recap, the alleged Pilbarra Ponzi was a real estate investment project on the island of Newman near Western Australia, and Port Hedland, also Western Australia. Over $120 million where raised from 1800 investors who were promised between 10 and 36% per year return, into what they thought where property-backed investment. Turns out, the largest property was a piece of undeveloped land on the island of population 7000. The group of companies went bankrupt in 2016, and the Australia agency ASIC charged the operator Veronica Macpherson of operating a Ponzi scheme, with the later joiner's money went toward paying the early participant's interests.

As for Istuary Innovation Labs Ponzi, it started in 2013 as "technology incubation platform" to link tech startups in Canada with customers in China. What was interesting was it promised to return FIVE TIMES what was put into the company in two years, alleged the victims suing the company. Several employees and contractors claimed they had not been paid for work or wages. One investor outright called Istuary a Ponzi scheme.

Let's ignore for now whether they are really Ponzi schemes or not. But what are the signs of danger both exhibited long before they started actually showing problems?

Hobnob with Politicos

Istuary head Yian "Ethan" Sun hobnobbed with Canadian prime minister Justin Trudeau. This was featured prominently in Istuary's promotional video.

Macro's MacPherson featured prominently interview with former minister for Regional Development Brendon Grylls. This video was hosted on MacPherson's company website.

Both are claims of legitimacy by proxy, though the minister *did* talk about developing the island. What real business need to advertise itself like this, clinging to leigtimacy by proxy, rather than by its own merits?

Both promised outrageous returns

Macro promised up to 36 percent per year

They were promised rates of return of up to 36 per cent if they gave their money to Macro to invest in Pilbara property developments around Newman and Port Hedland. --abc.net.au

Istuary promised 500 percent in 2 years.

All the investors claim in their lawsuits that they were told they would receive returns five times what they put into the company within two years. -- cbc.ca

It's absolutely incredible any one can believe legitimate projects can achieve returns like this while in this lethargic economic climate.

And this is just from public sources, not court documents.

Is your scheme showing such warning signs?

http://www.abc.net.au/news/2017-09-29/wa-ponzi-scheme-investors-unlikely-to-get-money-back/8997970

http://www.cbc.ca/news/canada/british-columbia/lawsuits-allege-vancouver-tech-company-a-ponzi-scheme-and-sham-1.4310897

How do you make decisions? It's usually a 4 step process:

1. Gather Data

2. Analyze Data

3. Decide on Action

4. Perform the action

This is pretty obvious to most people. Military call it the OODA loop, civilians called it DADA loop (data, analysis, decision, action), but it's the same thing.

So how can this loop go wrong? EVERY one of the four steps can go wrong.

One can gather the WRONG data (victim of deception or bad data gathering)
One can fail to analyze data objectively (by ignoring good data)
One can fail to decide on any action (stalled loop)
One can fail to perform the action correctly.

Let's see how MLMer reacts to these steps.

Gathering the Wrong Data

Many scammers do not scam directly, but rather, reach a core group of Judas goats and let them be the deceivers to go out and reach the masses.

MLMers are often very trusting of their uplines. They don't realize their recruiter could be passing on bad information, or simply UNVERIFIED information. Then all these bad information were repeated as if they were the truth, or morphed much like the game of "telephone" into something that no longer resembled the truth.

Here are two examples of companies and reps spreading FALSE OR INACCURATE INFORMATION to prospective clients and recruits.

Example 1: Company claimed FDA certified, when they are actually FDA Registered Facility. Their reps changed it to FDA Approved Product or FDA Certified Product.

Example 2: Company reps are eager to claim features that do not actually exist in their product.

Failure to Analyze Data

MLMers are very fond of repeating "positivity", which can be basically translated as "ignore any doubt". They don't understand there is a huge difference between skepticism vs. toxic negativity. This causes the MLMer to ignore useful but negative data because it was considered "negativity".

Ignoring all negative information makes the person reckless. No matter how much positivity you have, there are some things that can't be done. Being reckless in a business is NOT a wise move to make at all, as it made the decision making flawed. It's stuffing the ballot box, except you're doing it to yourself.

If you already have an agenda in your head about something, your analysis is already tainted.

Failure to decide on action

A failure to decide on action is known as analysis paralysis, i.e. when no decision can be reached.

MLMers often failed to appreciate that "no action" is an action in itself. Instead, they can often be goaded by recruiters into joining. Recruiters simply neg them into believing that failure to act is a failure of "entrepreneur spirit". Recruiters equate hesitancy to join without due diligence as "analysis paralysis", inviting you to be reckless and "join anyway" despite not having enough data for your "due diligence".

It is perfectly understandable that you would NOT want to try something new without knowing more about it. So why is it so difficult to understand that you would NOT want to join a business without studying it? It's called "due diligence". For these people, I offer a quote from Sir Richard Branson, billionaire head of Virgin Group

Business opportunities are like buses,
there's always another one coming. -- Richard Branson

Failure to act

MLMers often failed to act when their own business is clearly tanking. All the evidence says "cut the loss, get out now", and the decision was reached, but due to some "intervention", was talked out of quitting, often due to group shame tactics. Indeed, a lot of MLMers talk about "persistence", "grit", if you get out you'll only see regret, and so on.

MLMers are often in denial when it was clear the company is fraudulent and sinking fast, and even when all evidence is pointing at "get out fast", they fail to act, hoping that the company will recover (when there is no sign of it doing so). Indeed, there are people who always invoke "government conspiracy" when the scheme they had been making money in was shut down. Yet others want the scam restarted because they believe they deserve a chance to make money.

Conclusion

Any part of the decision making and action taking cycle can be corrupted and it is up to the person to detect and correct the loop despite outside influences by performing proper data gathering, filtering, analysis, and action.

Recently, there's an article at Vice.com, where the author decided to play a hoax on TripAdvisor... They created a FAKE restaurant, which is a picnic table in the back of the author's house, created some FAKE entrees (you'll laugh at the ingredients), got some FAKE reviews through burner phones and whatnot, and got it to be the top-rated restaurant in London... a restaurant that does NOT exist.

I won't spoil the method, let's just say, it's easier than you think.

This wasn't the first prank the author, Oobah Butler, had done. Previously he bullsh*tted his way onto Paris Fashion Week and it was absolutely brilliant. But he's hardly the first to prank experts and succeded.

But then, expert reviews are fooled all the time. In 2008, wine critic and author Robin Goldstein created a fake restaurant, allegedly stocked with the worst wines Wine Spectator magazine had ever rated. The submitted it to the said magazine. After a while, the fake restaurant had won "award of excellence" by the same magazine.

Wine Spectator called it "publicity seeking stunt", but it exposes something deeply troubling... What sort of experts at the magazine review the candidate for "award of excellence"? And if they let a fake restaurant get on, what can DELIBERATE manipulation do?

But the pattern ran much much deeper than that. Experts are fooled ALL THE TIME.

TV host displayed a $15 IKEA print in an art museum, and none of the art experts spotted the problem.
The Wine Spectator gag had a sequel... a French scientist decided to die a white wine red and gave it to 54 wine science students. NONE could detect they are tasting a white wine.
Food experts cannot tell McDonalds chicken McNuggets from "organic" chicken nuggets. In fact, people cannot tell organic fruit from non-organic fruit

And the problem doesn't stop there. There are review and authority websites that secretly signs under-the-table deals with crooks to promote or write nice articles without any disclosure. And this had been a long-standing problem in network marketing.

The problem with compromised authority and under-the-table deals were exposed when ZeekRewards collapsed. That is when we found that some movers and shakers in MLM had under-the-table deals paid by Zeek to deflect criticism of Zeek.

One certain individual was paid $6000 PER MONTH to deflect negative press, conduct interviews to make the company look good, etc, without disclosing was he was being paid to do so.

Another certain individual, was publicly employed as a consultant by Zeek, made Zeek "company of the month" in his newsletter (at estimated cost of 100K) as well as a position in the tree that is estimated to be earning in 40K a month, when he apparently said something that got him fired. What nobody bothered researching was the same consultant had pulled the SAME STUNT before... Made a press-release to help a company do a pump-and-dump without disclosing he was being paid to do so. SEC charged the perp with wrongdoing 4+ years after the scheme was closed.

I am not going to talk about lawyers that got ensnared in the Zeek mess. They were being PUBLICLY paid to do so, and that's not what we're talking about.

What can we do about it?

If you are thinking about leveraging crowd intelligence, that doesn't work either. Oobah Butler, who organized the TripAdivsor prank, opened his Vice.com report by saying he used to post shill TripAdvisor reviews for 10 quids (that's 10 British Pounds for you yanks) each. Review sites can't get rid of shill reviews, despite suing people left and right. Amazon has spawned TWO separate "review of reviews" sites (fakespot.com) and reviewmeta.com to check if the reviews are real or fake. Nowadays, shill review writing are outsourced to people working for pennies in India. And it's gotten so bad, Indian consumers have lost confidence in online product ratings and reviews.

The only one you can trust... IS YOURSELF. And sometimes, you can't even trust yourself.

It's called "cognitive bias". Admit it, everybody has them. It's BUILT into your brain (and mine). Everybody has them. After all, conmen and scammers know exactly which buttons to push.

So what can you do? Adopt skepticism. Skepticism is the perfect counter to scammers, and lets you work around biases and detect failure in experts.

Skeptics are NOT afraid to challenge bull**** sprouted by leaders
Skeptics do NOT accept tales at face value, but always seek verification from trusted sources
Skeptics regard arrogance as posturing, NOT proof or validation
Skeptics do NOT trust claims of esoteric knowledge of technique
Skeptics do NOT accept attempts to delay the inevitable.

Be skeptical.

Recently, it seems some folks want followings by posting popular quotes but framing them to be inspirational toward MLM participants. Here's one example:

However, it seems these folks do NOT actually look into the origin of such a quote.

Quote Investigator has the best investigation... It was NOT first spoken by Sir Edmund Hillary. decades after he first climb Mt. Everest with Tenzing Norgay in 1953, he was asked in an interview in 1998 did he say it, and he answered that he may have said it, and he agreed with it. But he never claimed to have coined the expression.

Indeed, searches show that in 1892, a religious text called "The Manna of the Soul" by Father Paulo Segneri used mountain climbing as similar to faith in God.

He would have us ascend, not fly, that we may have greater merit in the violence that we do to ourselves when we conquer ourselves little by little, as in climbing up a high mountain: “Come, and let us go up to the mountain of the Lord.”

So basically, the quote is actually about blind faith in one's ability to master the mountain.

Quote investigator believe the quote was actually from George Mallory, dated 1918 in a slightly different form where he used "vanquish" instead of conquer. It's worth noting that George Mallory died on Everest in 1924 and his body was not found until 1999. To date, there have been 292 deaths who died climbing Everest.

So I'll just leave you with this Unspirational Poster from SMOSH instead:

It is perfectly accurate as well, isn't it?

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