Skepticism

Ask Surly Amy: Herbalife

Dear Surly Amy,

I have some friends who have jumped on the herbalife bandwagon. They go to conferences, host herbalife parties, and insist that they feel amazing. They’re convinced they’re going to make lots of money, but the whole thing sounds like a scam. I can’t find any unbiased reviews that aren’t from an herbalife distributor. What gives with this company? Something doesn’t seem right.

Sincerely,
Not Convinced

Dear Not Convinced,

You are wise to be not convinced.

Skepchick Felicia saw your email and immediately brought this to my attention:

Ah, thought this rang a bell… http://www.mlmwatch.org/04C/Herbalife/herbalife00.html I remember seeing not one but TWO herbalife tables at the Stockholm altmed fair. They didn’t even have any products to sell from what I could tell, their posters just spoke of business opportunities. I guess the altmed crowd are prime targets for MLMs, hence Amega, Aloe Vera stuff etc.

If you click that link it will take you to a website dedicated to keeping an eye on Multi Level Marketing companies with a page dedicated specifically to Herbalife International. In case you are unfamiliar with the concept of multi-level marketing, essentially it is a business model where you have to get people to sign up under you to distribute your products to while you purchase products from the person you signed up under and everyone gets rich*! (*Not really)

Here is the basic MLM plan:

Step one: Sign up under someone to sell some random product! Could be ANYTHING like dust monkeys or edible undies but you have to buy a certain amount during a certain time frame. Usually monthly.
Step 2: Get enough people to sign up under you to buy what you bought from the person above you.
Step 3: Hope they get people to sign up under them so they keep buying from you.
Step 4: PROFIT cuz the random product is so super great! (But only if you get enough people who keep signing up under you that don’t go broke.)

Confused?

Good.

That’s what multi level marketing companies want you to be. Because the majority of people who actually make money from these business arrangements are the people at the very top of the pyramid, in other words the people who fist sign up or create the company. The majority of the lower tier salespeople struggle to sell enough product to reach their quotas and to simply break even, without profiting at all. Many people just end up using the products they have agreed to buy and often convince themselves that the product is great or tell everyone around them that the product is great in hopes of selling at least some of what they have agreed to buy themselves.

In this case the product happens to be a lot of herbal supplements which as a good skeptic knows, you really don’t want and probably don’t need at all. In fact, if you click through on the link Felicia shared up above you will find this: “Herbal does not mean innocuous: Ten cases of severe hepatotoxicity associated with dietary supplements from Herbalife products”

Multi Level marketing is not illegal but it is often misleading and the odds are heavily stacked against you if you hope to make money and not lose it.

The Skeptic’s Dictionary has a good explanation of Multi Level Marketing here.

And this site goes so far as to show the math that demonstrates why multi level marketing can NOT work for the lower tiers. Your best bet is to completely avoid any type of multi level or pyramid schemes altogether.

Run! It’s a trap!

Got a question you would like some Surly-Skepchick advice on? Send it in! We won’t publish your real name, unless you want us to and creative pseudonyms get bonus points! Just use the contact link on the top left of the page.

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Amy Roth

Amy Davis Roth (aka Surly Amy) is a multimedia artist who resides in Los Angeles, California. She makes Surly-Ramics. She is the fearless leader of Mad Art Lab. Support her on Patreon. Follow her on twitter: @SurlyAmy or on Google+. Tip Jar is here.

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19 Comments

  1. As far as I can tell, the only difference between MLMs (which are legal) and pyramid schemes (which are illegal) is that MLMs actually give people a real product to sell. Which is a really stupid line in the sand because as Amy points out, the people at the lower levels of the pyramid still end up losing.

    When the product is something as thoroughly useless as herbal dietary supplements or healing rods (srsly, check out Amega), I really don’t get how society lets people get away with this bullshit.

  2. Every few years I lose another friend over some MLM or another. They get so fixated on how much money they’re going to make that they burn through everyone they know trying to get rich selling crap. One of the more prominent experiences I had was not with Herbalife, but with an Amway subsidiary, Quixtar. Part of their training was to teach the recruits to deny that they had anything at all to do with Amway. This couple pushed so hard and claimed they used only Quixtar products for all their cleaning supplies and toiletries.

    Until everyone in the family and extended family ended including infants were chronically sick from nutritional supplements. But that was long after they’d alienated all of their friends.

  3. Ugh. When I was 18 I went to what turned out to be an MLM recruiting session. When I chose to leave after the first half of the session (realizing that I would have to try to get my friends to sell FOR me, that the product was really not scientificky, and that chances were I’d make jack shit doing it) the recruiters were SUPER pushy. “I make 200,000 a year! I get to spend time with my daughter, which is really important to me as a single father!” “That’s nice, but how many people drop out of this after a month?” “Well, about half, but the other half-” “So basically that half wasted money on the $60 package of supplement powders and drinks and walked away with no profit.” “Well-” “Yeah, I’m leaving.”

    Honestly, though? Their recruiting methods are convincing if you are the type to fall for the authority sales method, vividness fallacy, and sciency words that mean nothing.

    1. Yeah, I went to one too for something called the trek alliance. It went like this:

      1. Everyone was big smiles and like “WELCOME FRIEND!”, naturally the presenter was a smoking hot blonde

      2. They showed videos with people saying they got rich

      3. After the videos, they gave a corny lecture on the types of people who were successful and asked us if we were “ready to take a hold of our future”

      4. They did the Trek Alliance cheer which was a bunch of stomping and shouts.

      5. Two of their reps talked to me and told me literally “You gotta convince your friends to get in. if you know two people, and you get one in, then you both gang up on your friend and berate him for turning down such a good opportunity”

      At that point I literally ripped a huge, nasty fart I’d been holding in all session and said “that’s what I think of this shit” and walked out. They tried calling me a few times after that, but all I did was pick up the phone and make fart noises into it.

      Moral of the story is that there are a dangerously short supply of people who are willing to put up a skeptical outlook towards a crowd of people engaging in charismatic groupthink. And I’m a firm believer that those of us who are/become parents or are in teaching positions should drive it into to children that they should think for themselves and think skeptically at all costs. Anyone who gets involved in MLM (unless they started it) was seriously deprived of healthy skepticism as a child.

      P.S. The Trek Alliance was eventually busted by the FTC, but not after financially ruining many many people: http://www.rickross.com/groups/trekalliance.html

  4. I’m having nightmares about my childhood. Ugh. My parents did every MRM under the sun the whole time I was growing up and STILL do. Currently, it’s cell phone plans. No wonder I’m a skeptic, right?!

      1. My dad tried the herbalife thing too. And he too got defensive when I called it a pyramid scheme. And he too lost lots of money. And I’m right there with you, since in some ways I’m still paying for some of his mistakes (and I’m 35 years old).

  5. I used to work with a guy that was heavily into the Herbalife thingy. After trying for years to make a profit that was even remotely worth the effort, he gave up. And he was far from at the bottom of the chain and he was a decent salesman.

    Basically MLMs are scams. He described the meeting as Hallelujah-meetings, and they have much in common with those church-folk with loads of money trying to get more out of you. I know a lot of other people who have tried MLMs and pyramid schemes. No one has ever made any money, most have lost.

    As for the products, I don’t know. If they have Aloe Vera juice I know at least that it doesn’t do anything good and can damage your kidneys … if I remember Simon Singh’s book correctly.

  6. 20 or so years ago I was involved in the take-over of a run down cafe in a subtropical rainforest and was in dire need of cleaning products and scrubbing brushes.
    the cleaning bill would have been huge, so we did it ourselves.
    We signed on to Amway, went to a couple of meetings, got the rest of the village to sign up and help us restore the old Post Office Cafe to it’s former glory.
    Whenever we needed cleaning products, we just called Amway and we got a delivery for the whole village.
    The product was great and we only did deals on our terms, when we needed to.
    We all ended up paying a fraction of the RRP for the products and never dealt with them again.
    Caveat emptor.

  7. Ugh. It seems there’s always at least one friend or another who falls for these. I had to put a facebook friend on block recently because she was always pushing stella and dot jewelry, which as best I an figure, is slightly classier amway shit?

  8. I got invited to one by a friend, and I really only ended up losing that friend. I won’t go across the bar and say that they’re all bad. My mom sold Mary Kay for a long time, and she actually did make decent money. She also said that the company really helped her self-esteem. This was also in the early 90’s. The difference is that the precedent was set by Avon, and the products are actually worth the money, mostly. I think those two are pretty much the only exceptions, though. I will also point out that makeup is regulated more by the government than herbal supplements, which is screwed up. Frankly, people can’t calculate risk and probability at all, so they just hear anecdotal “I made MONEY!!!” and think they will too. I hate the way they pressure people. Read up on Milgram’s obedience study and what that did to people. I keep thinking about Sterling Holloway’s character on The Andy Griffith Show.

    1. Yeah, I agree that MK and Avon are different. Their product quality is decent for the price, and the individual sales people can make a decent wage if it’s their main job and they can put the time into it and find clients. Selling makeup=/=selling snake oil.

  9. MLMs really are pyramids. (And they’ll argue that any business is pyramidal in structure.) The legal distinction, however, is that they provide an actual product for the sales, but the sales are mandated by the business arrangement. Think of it as having a CostCo or Sam’s Club membership – but having to purchase a minimum amount every month in order to continue being a member. That’s in addition to your annual membership fees. And MLMs also have set up fees for “owning your own business” part of the “franchise” (but it’s not a franchise!).

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