Speaker 1: Hey, dream listeners. If you like this podcast, you're gonna
Speaker 1: love the book. Yeah. I wrote a book. It's called
Speaker 1: Selling the Dream and it's coming out March twelfth, twenty
Speaker 1: twenty four, on Atria. It's about all of your favorite
Speaker 1: characters from MLMs and some that you've never even heard of.
Speaker 1: I hope check it out. There's a refrain you've been
Speaker 1: hearing on this show all season long. There's no pyramid scheme.
Speaker 1: Those are illegal. I would never be part of that.
Speaker 1: You may not know, but phumid schemes are illegal. First
Speaker 1: of all, it is illegal to have a pyramid scheme.
Speaker 1: First of all, pyramid schemes are against the law. That
Speaker 1: refrain is bullshit. Not the part about pyramid schemes being illegal,
Speaker 1: that's true, obviously, But the part about a company not
Speaker 1: being a pyramid scheme because it's still in operation, that's bullshit.
Speaker 1: That's just not how crime works. Murderers who haven't been
Speaker 1: caught don't get to say murders illegal. And I'm not
Speaker 1: in jail, so NADOI I'm not a murderer. And it's
Speaker 1: not like when you open an MLM the government slips
Speaker 1: you a note asking are you a pyramid scheme check
Speaker 1: yes or no. A business can be found to be
Speaker 1: a pyramid scheme based on a number of characteristics that
Speaker 1: must be proven by a thorough investigation a la Joe
Speaker 1: Brownman taking down Holiday Magic in episode seven. In reality,
Speaker 1: the test of whether you're a pyramid scheme is not
Speaker 1: whether you're selling all your products to your own sellers
Speaker 1: in a closed system, or whether you've got a business
Speaker 1: model that makes it mathematically impossible for your recruits to
Speaker 1: make any money. The real test is whether someone has
Speaker 1: called the authorities on your business, and then whether the
Speaker 1: FTC has investigated you and said, yes, you're a pyramid. Well,
Speaker 1: the Direct Selling Association, that's the MLM lobby, and the
Speaker 1: Direct Selling Caucus that's their friends in Washington. They're trying
Speaker 1: to change that by pushing for the passage of a
Speaker 1: groundbreaking bill called HR thirty four h nine. The sponsor
Speaker 1: of the bill, Marsha Blackburn, wrote an op ed about
Speaker 1: it in The Hill in August of twenty seventeen, stating quote,
Speaker 1: every year, far too many unsuspecting Americans fall victim to
Speaker 1: pyramid schemes. On the hopes of economic freedom that direct
Speaker 1: selling can deliver, many find themselves stuck with unmovable inventory
Speaker 1: and mountains of debt, worse, operating under the guise of
Speaker 1: a reputable direct selling business. These schemes often target the
Speaker 1: most vulnerable among us, such as single parents, immigrants, and retirees.
Speaker 1: She continues, I have long said that the fundamental goal
Speaker 1: of American government is to protect the people and to
Speaker 1: make sure they are provided with the environment to succeed.
Speaker 1: These illegal get rich quick schemes hurt unsuspecting consumers and
Speaker 1: aspiring entrepreneurs, and they need to be stopped. After hearing
Speaker 1: Marsha's take, you think we'd be all for this legislation, right, Well, no,
Speaker 1: because this bill that sounds ever so much like it's
Speaker 1: trying to protect consumers. In fact, if it passed, it
Speaker 1: could prevent the FTC from ever shutting down another MLM.
Speaker 1: I'm Jane Marie, and this is the Dream episode eleven,
Speaker 1: and that's when I woke up. Leave it to those
Speaker 1: stinkers in Washington to bamboozlas once again. The bill, now
Speaker 1: called the Anti Pyramid Promotional Scheme Act of twenty seventeen,
Speaker 1: has gone by a few other names in recent years.
Speaker 1: Last winter, a version of it was called the Moulinar amendment,
Speaker 1: which Congressman John Mullinar unsuccessfully tried to squeeze into the
Speaker 1: omnibus bill. John Mullinar, by the way, happens to be
Speaker 1: the representative from Michigan's fourth district, Awasso's district, my district.
Speaker 1: We couldn't get Marsha Blackburn on the phone, and we
Speaker 1: were similarly ignored by John Mullinar, even though I played
Speaker 1: the But I'm a former constituent and my grandma lives
Speaker 1: their card. So here's dan to tell us what HR
Speaker 1: thirty four O nine is all about. What it does
Speaker 1: is it attempts to define for the first time what
Speaker 1: a pyramid scheme actually is. The way it sounds is
Speaker 1: like some sort of consumer protection. It does sound like that,
Speaker 1: and I think it purposefully sounds like that. It even
Speaker 1: sounds like that. In its title. The Anti Pyramid Promotional
Speaker 1: Scheme Act uses roughly one thousand words in that definition,
Speaker 1: but i'll paraphrase here. It says that an MLM is
Speaker 1: not a pyramid scheme so long as they don't require
Speaker 1: their distributors to buy a bunch of inventory, and they
Speaker 1: must have a refund policy. Voila. That's it. But as
Speaker 1: we know those refund policies can be a little shady.
Speaker 1: For instance, part of the bill, at one point in
Speaker 1: the bill, it says, does not include inventory that has
Speaker 1: been clearly described as discounted, seasonal, a special promotional item,
Speaker 1: or and this is important, or it's not subject to
Speaker 1: the plan or operation's inventory repurchase program. Wait a minute, wait,
Speaker 1: so the inventory repurchase program doesn't need to apply to
Speaker 1: products that are seasonal like these right now. Lime Life
Speaker 1: has a bunch of holiday stuff up, and it doesn't
Speaker 1: apply to discounted products. But that's also something that they
Speaker 1: advertise a lot when you're signing up, like you can
Speaker 1: get so many discounted products. Doesn't apply to those, And
Speaker 1: it doesn't apply to perishable stuff like diet shakes or
Speaker 1: oils or makeup because makeup has an expiration date, or
Speaker 1: anything that isn't currently marketable. It actually says that, which
Speaker 1: who gets to judge that? And then the last line
Speaker 1: says that the refund policy doesn't apply to products that
Speaker 1: aren't subject to the refund policy, which reminds me of
Speaker 1: my dad's favorite law. Ever, it's the Michigan there's a
Speaker 1: Michigan seat belt law that says kids have to use
Speaker 1: seat belts unless there's more kids than seat belts, right.
Speaker 1: So I would say to any anybody who is looking
Speaker 1: into becoming a distributor, I would look very closely at
Speaker 1: that fine print. So you could say, we have a
Speaker 1: buyback policy, none of our products are eligible for it. Yes,
Speaker 1: moving on, moving on, moving on. So moving on to
Speaker 1: what ends up being the most confusing part of the
Speaker 1: bill to me, which is they have this little provision
Speaker 1: about not requiring inventory loading, which is like having to
Speaker 1: have a lot of stuff on hand. Well, in the
Speaker 1: bill it says it's a practice in which a planner
Speaker 1: operation requires or encourages its participants to purchase inventory in
Speaker 1: an amount exceeding that which the participant can reasonably expect
Speaker 1: to use, consume, or resell. So to me, if you
Speaker 1: have a buy back policy, then you're automatically not requiring
Speaker 1: inventory loading. I wonder if it's in there to clarify
Speaker 1: what happened to Mackenzie where she was encouraged to buy
Speaker 1: a thousand dollars worth of stuff from her upline. She
Speaker 1: was encouraged, but they're saying, but there's nothing in the
Speaker 1: bill that says this is how we're going to get
Speaker 1: around inventory loading. Aside from the fact that there is
Speaker 1: a buyback policy that is required, right, all it says
Speaker 1: is in the definition of what a pyramid scheme is,
Speaker 1: it's a company that were requires you to have inventory right.
Speaker 1: By putting this in the bill, in my mind, they
Speaker 1: are calling attention to something they've gotten in trouble with before,
Speaker 1: but they're not doing or saying they're going to do
Speaker 1: anything about it. Just saying we don't require inventory loading
Speaker 1: is just saying we don't require inventory loading. That's it, right.
Speaker 1: There's no plan of attack as the how there's nothing
Speaker 1: right and so then that's why to me, it's just
Speaker 1: a part of the bill that's like whatever you know, yeah, okay.
Speaker 1: So in the bill, the ultimate user is someone who
Speaker 1: is described as an individual who consumes or uses the
Speaker 1: product or service, whether or not that individual is a
Speaker 1: participant in the plan or operation. And traditionally, the FTC
Speaker 1: has shut companies down when they find that most of
Speaker 1: the people buying the product are people who have signed
Speaker 1: up to sell the product. There have been plenty of
Speaker 1: cases where the courts have shut companies down because they
Speaker 1: found that there were there's no end user outside of
Speaker 1: the company So basically what they're trying to do with
Speaker 1: this bill is they're trying to redefine the ultimate user
Speaker 1: as either someone who's inside the company or outside the company.
Speaker 1: But if you don't know that that's a bad thing,
Speaker 1: then you could totally miss that. So they're taking the
Speaker 1: most problematic parts of their business model, like the fact
Speaker 1: that it is really impossible to get refunds, that you
Speaker 1: do actually have to buy a lot of product that
Speaker 1: you that you don't have to have an outside ultimate
Speaker 1: end user like that it could just be going into
Speaker 1: your garage. So they're looking at the big problematic parts
Speaker 1: that we're looking at and in this bill saying those
Speaker 1: don't count. Right. So what the bill is trying to
Speaker 1: set in stone is as long as you're a multi
Speaker 1: level marketing company and you have a bonafide repurchase agreement,
Speaker 1: which again you can get around completely by just saying
Speaker 1: in the fine print of your compensation plan that any
Speaker 1: or all products do not apply to the bonafide repurchase agreement,
Speaker 1: then you cannot be prosecuted. So that's why people say
Speaker 1: that this is essentially a bill that provides immunity to
Speaker 1: companies going forward. What are the chances that this will pass.
Speaker 1: So far, it's moving in the right direction. They're adapting
Speaker 1: to the issues they've had in presenting this bill and
Speaker 1: trying to get kind of sneaky in how they get
Speaker 1: it in. They're not going away. There is nothing to
Speaker 1: say that they won't continue, including the conversations that we
Speaker 1: had with the head of the DSA. Oh yeah. I
Speaker 1: forgot to mention that despite Marsha Blackburn and John Moulenard
Speaker 1: ignoring our requests for interviews, one request actually came to
Speaker 1: us from the head of the Direct Selling Association, who
Speaker 1: were partners in crafting this bill. Joe Mariano heard our show,
Speaker 1: or at least heard of it, and asked if he
Speaker 1: could speak to us on the record. On the one hand,
Speaker 1: very brave of him to reach out. We've repeatedly contacted
Speaker 1: the heads of every company we've looked into, Lime Life a,
Speaker 1: et cetera, and the politicians doing their bidding. We've exchanged
Speaker 1: plenty of emails, but none of them wanted to talk
Speaker 1: to us on tape. So getting this note from their
Speaker 1: advocate was surprising until I thought about it a little more.
Speaker 1: And as grateful as we were to speak to someone
Speaker 1: from the other side, it is also his job. I mean,
Speaker 1: he literally gets paid to do damage control on behalf
Speaker 1: of the members of his association. But still, he just
Speaker 1: happened to be visiting la while we were wrapping up production,
Speaker 1: so he came into the office. Well, I'm glad you're here,
Speaker 1: and I've been thinking about whether I was going to
Speaker 1: tell you this when you came in. I'm worried that
Speaker 1: you're going to lie to me. Do you get that ever? Not? Really? No,
Speaker 1: you understand nobody's ever sad that nobody's ever said that
Speaker 1: to me. Can I tell you what I'm worried about? Yes,
Speaker 1: To be honest, I'm worried that in a broadcast or
Speaker 1: podcast like this, where my words can be taken up context,
Speaker 1: that you won't necessarily lie to me, but you won't
Speaker 1: accurately represent the thrust of what I'm trying to say.
Speaker 1: On a personal level, one's honor is important to me,
Speaker 1: as hopefully it is to everybody. And there are two
Speaker 1: things that I really don't like. Okay, I don't like
Speaker 1: being lied to, and I don't like people thinking that
Speaker 1: I'm lying to them, right, So I do my best
Speaker 1: to convince them great that even if we disagree that
Speaker 1: at least you know that I think I'm telling the truth.
Speaker 1: Great Joe has been with the DSA for over thirty years. Today,
Speaker 1: about two hundred companies are members of the organization, and
Speaker 1: they include many we've reported on Amway, Mary Kay Herbal
Speaker 1: Life avon thirty one, and even that Landline videophone company
Speaker 1: at the center of the lawsuit against Trump ACN current members.
Speaker 1: So here we go our chance to hold the industry's
Speaker 1: feet to the fire. And just a warning, Joe isn't
Speaker 1: a politician, but he has his talking points and rhetorical
Speaker 1: acrobatics down. I don't know if he was on the
Speaker 1: high school debate team, but I wouldn't be surprised. Our
Speaker 1: mission as an association is not only to represent the
Speaker 1: interests of those companies, but to represent the interests of
Speaker 1: the individual sellers or people who sign up with those
Speaker 1: companies to sell in the marketplace. And indeed, a lot
Speaker 1: of my interaction is with members of the field. For example,
Speaker 1: a few weeks ago, I guess it was a month
Speaker 1: or two ago now, we had about one hundred and
Speaker 1: fifty to two hundred individual sellers come into Washington, d C.
Speaker 1: And tell their stories to members of Congress and others
Speaker 1: as individual sellers regardless of their companies. Where were they
Speaker 1: in the company? The junior sellers, some of them are
Speaker 1: more senior sellers who've been successful. They were chosen by
Speaker 1: the companies, right, So they weren't coming, They weren't people
Speaker 1: who were failing. Well, no, they weren't the majority of
Speaker 1: people who well, actually no, I won't put it that way.
Speaker 1: You use the word failing. So that's what I know.
Speaker 1: One of the issues that we want to get to
Speaker 1: actually a lot of motivations for people to be involved
Speaker 1: in direct selling. And why don't you know that We
Speaker 1: do a couple of different surveys. We do Salesforce surveys
Speaker 1: where we go out and talk to the people who
Speaker 1: were involved in direct selling through a variety of mechanisms.
Speaker 1: In the National Salesforce Survey, which is the one we're
Speaker 1: talking about, the companies will provide us with a pool
Speaker 1: of names. So it's self selecting. Absolutely, it is self selecting.
Speaker 1: And but that's the implication of your question is that
Speaker 1: you know, Okay, we're only talking to successful people. The
Speaker 1: reality is no, if we look at the statistics of
Speaker 1: the folks who are involved in direct selling and that's
Speaker 1: the term I used involved in direct selling. You will
Speaker 1: see that we've actually begun to do a much better
Speaker 1: job as both an industry and as individual companies in
Speaker 1: segmenting the salesforce in terms of their motivations, why they're
Speaker 1: involved in the business, what they're trying to do in
Speaker 1: the business. This quote segmenting of folks quot vote involved
Speaker 1: in MLMs is something Joe really wanted to talk about
Speaker 1: a lot. He's particularly interested in segmenting out a group
Speaker 1: that he calls preferred buyers or discount buyers, which is
Speaker 1: another way of saying distributors who are the end consumer.
Speaker 1: Remember back in the seventies when the FTC was going
Speaker 1: after MLMs successfully, one feature that would label a company
Speaker 1: a pyramid scheme was where a significant portion of their
Speaker 1: profits were coming from within the company itself. In other words,
Speaker 1: each new recruit who has to spend X dollars for
Speaker 1: their starter kit, or each new distributor who's encouraged by
Speaker 1: their upline, as Mackenzie was, to buy samples or inventory
Speaker 1: to have on hand to show people or sell. If
Speaker 1: those purchases are driving the business rather than there being
Speaker 1: a genuine market for the product, that's a scam. In
Speaker 1: light of this, Joe Mariano and his colleagues are hoping
Speaker 1: something like HR thirty four or nine passes so that
Speaker 1: they no longer have to worry about that being a crime.
Speaker 1: So in the meantime, they're aiming to create a category
Speaker 1: of people quote involved direct selling called preferred buyers. But
Speaker 1: even Joe admits that people in direct sales resist the label. Interestingly,
Speaker 1: a number of people who are in fact preferred buyers,
Speaker 1: meaning that their primary and seemingly exclusive motivation is to
Speaker 1: get products at a discount, have resisted being categorized and said, actually,
Speaker 1: you know, I would still like to stay part of
Speaker 1: the plan, Joe. They're either preferred buyers or they're not.
Speaker 1: The reality is that the vast majority, or at least
Speaker 1: a significant percentage of people get involved in the business
Speaker 1: for a variety of reasons, including to purchase the product
Speaker 1: at a discount for them. So I need you to
Speaker 1: back up to sure. You said the vast majority, well,
Speaker 1: get get involved for a variety of reasons. Correct, that's
Speaker 1: exactly right. Well, of course, I mean a vast majority
Speaker 1: of people get jobs for a variety of reasons. I
Speaker 1: have a job to pay my rent, but not to
Speaker 1: pay my child's private school because she goes to public school. Right, Like,
Speaker 1: the reason I work every day is for a variety
Speaker 1: of reasons. So anyone a job anywhere would be getting
Speaker 1: a job for a variety. Sure, but you're saying that
Speaker 1: it's like it means something. Yeah, it does mean something.
Speaker 1: What does it mean? They're about probably six or seven motivations.
Speaker 1: And again, I'll provide you with the survey data in detail,
Speaker 1: but your surveys, Okayloho, I want to talk about where
Speaker 1: your surveys are coming from, because even in your own
Speaker 1: literature it says that you've only asked fifteen hundred people
Speaker 1: that your proprietary survey group Artemist Strategy Group has chosen.
Speaker 1: So it's not it's not a randomized survey of people
Speaker 1: with nun randomized surveys as well. But the motivations for
Speaker 1: sellers to get involved in a direct selling business are
Speaker 1: not necessarily in this order of financial They some of
Speaker 1: them are product devotees. They become passionate about the product themselves,
Speaker 1: and they are really driven to share. Some people get
Speaker 1: involved because of their desire to pick up some business
Speaker 1: skills and be acknowledged and rewarded for whatever they are
Speaker 1: able to do in their business. The experience of getting
Speaker 1: up on stage and being applauded for having accomplished something
Speaker 1: is unusual for many of these folks and they value
Speaker 1: that greatly. They do as we talked about with the
Speaker 1: red jacket status you can get at Mary Kay or
Speaker 1: the clap clap collapse from Danielle for making a sales
Speaker 1: goal for the month. But with what we know about MLMs,
Speaker 1: with ninety nine percent of participants losing money, I felt
Speaker 1: that there was a moral issue here. Why should it
Speaker 1: cost money to get lauded on stage. This isn't a
Speaker 1: beauty contest or even a bowling championship. This is purportedly
Speaker 1: an opportunity to earn more than a good feeling that
Speaker 1: you have to pay for upfront. Right Joe did not
Speaker 1: see this as an issue, and in fact, he tried
Speaker 1: arguing that all business enterprises work this way. People get
Speaker 1: involved and go into different stores and environments all the
Speaker 1: time because of the experience, because of the sense that
Speaker 1: they get of satisfaction. No museums, that's what museums are for.
Speaker 1: You pay an admission to have like an enrichment of
Speaker 1: your life. But stores, I would respectfully suggest that you
Speaker 1: haven't been on top of the retail environment. What do
Speaker 1: you mean, because folks actually get involved or go in
Speaker 1: as customers because the successful ones, because they're in an
Speaker 1: environment that they enjoy and they liked. I'm similar about
Speaker 1: people leaving with nothing or less than they walked in. Sure,
Speaker 1: and you're saying that if they leave with less than
Speaker 1: they walked in with, they got something out of it. No,
Speaker 1: I'm saying that the people who were involved in the business,
Speaker 1: were involved in the opportunity, were involved in purchasing the
Speaker 1: product or indeed getting value. That's in fact, why they
Speaker 1: continue to do it. I think it's more likely that
Speaker 1: they continue to do it for all the reasons we've found,
Speaker 1: loss of version, honoring some costs, and you know the
Speaker 1: shame and embarrassment and denial we all feel when we've failed,
Speaker 1: especially if we've roped friends and family into that failure.
Speaker 1: But Joe is saying, no, they keep putting money in
Speaker 1: because it feels good. So back to segmenting. On the
Speaker 1: DSA's website, I found these annual reports, one page documents
Speaker 1: with graphics and pie charts that Joe would like me
Speaker 1: to believe offer some helpful info. There were eighteen point
Speaker 1: six million people involved in direct selling in the US
Speaker 1: in twenty seventeen. Nine hundred thousand of those were what
Speaker 1: we are now calling full time business builders, four point
Speaker 1: seven million were part time business builders, four point million,
Speaker 1: one million were discount buyers, and nine million became inactive
Speaker 1: during the course of the year. How many of the
Speaker 1: nine hundred thousand become quote discount buyers and then inactive
Speaker 1: over the year. Well, no, those are two different categories.
Speaker 1: The business builders that we've described, there are people who
Speaker 1: are business builders throughout the course of the year have
Speaker 1: described themselves as business builders. So the inactives are the inactives.
Speaker 1: So I don't know how you can look at them
Speaker 1: and say that that's not helpful. I mean, those are
Speaker 1: five I want to know. This is telling me nothing.
Speaker 1: I don't know where is Jane. The point I was
Speaker 1: trying to get at was that a snapshot of how
Speaker 1: people self identify at any given moment says nothing about
Speaker 1: their behavior or experience. Folks who become inactive over the
Speaker 1: course of a year half of all participants, according to
Speaker 1: Joe's numbers, and a hell of a lot more according
Speaker 1: to others, those people may have started out hoping to
Speaker 1: earn a living but couldn't and gave up after investing
Speaker 1: god knows how much money, And those claiming to be
Speaker 1: full time business builders. The pie chart doesn't tell me
Speaker 1: if that's working, if they're earning any money at all.
Speaker 1: Collecting that data would be helpful and useful information if
Speaker 1: it mattered at all to these companies' bottom lines, but
Speaker 1: it doesn't. I tried again to get Joe to address this,
Speaker 1: and that's when Joe blew my mind by redefining another term.
Speaker 1: How many people who are attempting a full time job
Speaker 1: in an MLM become inactive? First, it's not a job.
Speaker 1: A number one, but it's not a job. But it's
Speaker 1: not a job an activity. Okay, so this entire season
Speaker 1: has been just some silly dream we had. MLMs are
Speaker 1: like bowling our beauty contests. That's funny because the whole time,
Speaker 1: based on promotional materials and videos and interviews we've done
Speaker 1: with countless people in the industry, we were under the
Speaker 1: impression that this was a business opportunity, a way to
Speaker 1: make money, a job, and we weren't the only ones.
Speaker 1: Michelle Gay of Lime Life and countless other pushers of
Speaker 1: this model think so too. You know, direct sales is work.
Speaker 1: It is amazingly rewarding work, and it's work you can
Speaker 1: do during flexible hours. This is net work marketing. It's
Speaker 1: not net set marketing. It's not net play marketing. It's
Speaker 1: not net think about it marketing. It's not that one
Speaker 1: day I'll get to it marketing. It's not work marketing.
Speaker 1: And most people missed the w the work partner, sure
Speaker 1: everybody and start, you know, making tons of money like myself,
Speaker 1: whilst home with your kids, never missing a moment with them.
Speaker 1: So I'm working less and making three times the amount
Speaker 1: of income y'all three times the amount of income almost
Speaker 1: four and leaders from making the big bugs. They never
Speaker 1: stop going to the events. They're always constantly learning, learning learns.
Speaker 1: I recognize, how you know, strategic and smart and savvy
Speaker 1: and hardworking this group is. And as a result, I
Speaker 1: make sure that our sales field is paid their worth.
Speaker 1: It's non employment. This is a direct selling activity. Why
Speaker 1: do you like this business model? I think that you,
Speaker 1: perhaps others, with all due respect, have fallen and your
Speaker 1: skepticism is probably indicative of this, I think you've fallen
Speaker 1: into a little bit of a trap, and the trap
Speaker 1: is being skeptical of the business model only because it's
Speaker 1: a little bit foreign to you. It's not fun, and
Speaker 1: I think you came at it with a degree of skepticism,
Speaker 1: if I could suggest that. And part of that is
Speaker 1: as a result of Look, we're used to walking into
Speaker 1: a mall or a store and making a purchase that way.
Speaker 1: We think of companies or products as legitimate, or for
Speaker 1: that matter, opportunities as legitimate much more readily when we
Speaker 1: see advertising, when there's a Super Bowl commercial, or they're
Speaker 1: advertising in the newspaper or what have you. And because
Speaker 1: this model doesn't do that, people go at this with
Speaker 1: the degree of skepticisy. Why is my question. It's a
Speaker 1: model that works for who. It works for the companies,
Speaker 1: it works for individuals who are getting involved. It works
Speaker 1: for people that I have met and spoken to. And
Speaker 1: I think if there's one flaw in the way that
Speaker 1: our business model has been structured over the years is
Speaker 1: that we were too attentive to the distributors in the
Speaker 1: salesforce and not aware enough of who those ultimate consumers
Speaker 1: were when they were outside of the sales plan. Well,
Speaker 1: doesn't that seem backwards in a capitalist society? That seems
Speaker 1: like the first thing you'd be concerned with is who's
Speaker 1: buying the end. I think it's one of the things
Speaker 1: that has been unique about the model, and it's been
Speaker 1: one of the things that has been the least understood
Speaker 1: and is still the least understood. And why in fact
Speaker 1: today as a result of well, the attention that people
Speaker 1: like you and others have given the model and the
Speaker 1: lack of understanding, is that there is a clear movement
Speaker 1: and a clear understanding on the part of certainly DSA
Speaker 1: members that we collectively have to do a better job
Speaker 1: in making sure that we can establish without question that
Speaker 1: people outside the plan are using the product, or that
Speaker 1: people inside the plant are in fact using the product,
Speaker 1: and that they're not just purchasing large amounts of inventory
Speaker 1: for other reasons to get higher commission levels. Sort of
Speaker 1: the easiest way to do that would be to get
Speaker 1: rid of the incentive. Why have purchase quotas? Why did
Speaker 1: you open your business when you opened it? I mean,
Speaker 1: are you doing a show about podcast companies? At this point,
Speaker 1: when Joe used the pee wee Herman tactic of I
Speaker 1: know you are, but what am I? Dan decided to
Speaker 1: tag me out and get us back on track with
Speaker 1: that troublesome bill HR thirty four h nine. To me
Speaker 1: and to I think a lot of outside observers, it
Speaker 1: appears that you are trying to set up a definition
Speaker 1: for what a pyramid scheme is so that you can
Speaker 1: look at that definition, you can say see that we
Speaker 1: didn't do that, and I can show you the different
Speaker 1: reasons why to point them out right? Absolutely all right?
Speaker 1: Would you like to hear again my interpretation and my
Speaker 1: understanding of the intent of the legislation. It is to
Speaker 1: make sure that when an individual who's involved in the
Speaker 1: plan also personally uses the product and or their sales organization,
Speaker 1: members of their sales organization use the product legitimately for
Speaker 1: their own use. And there's no way to try and
Speaker 1: finish my statement, I have to interrupt and say, there's
Speaker 1: absolutely no model. There is no way to make that distinction.
Speaker 1: How would you first possibly be able to tell whether
Speaker 1: someone is buying something first to try and hit a
Speaker 1: commission or whether someone is buying someone would send you
Speaker 1: back to some of your research and look at some
Speaker 1: of the actions that have been taken against pyramid schemes
Speaker 1: when they have been very clear factual situations that have
Speaker 1: been alleged by the prosecution and ultimately and some of
Speaker 1: them proven in some of those circumstances that people were
Speaker 1: in fact claiming to use the product themselves but were not,
Speaker 1: and law enforcement was clearly able to identify the fact
Speaker 1: that these people were not using that product. If a
Speaker 1: person's purchasing one thousand dollars worth of toothpaste each month
Speaker 1: and suggesting that they are using it for personal use,
Speaker 1: on its face, that is clearly not doable law enforcement.
Speaker 1: But in fact the companies yousent, that's not that's up
Speaker 1: to the companies to do and in facts them No, No,
Speaker 1: there's a presumption of innocence in our situation, in our
Speaker 1: system of government, which I'm sure you understand. And if
Speaker 1: a law enforcement agency or others makes a determination that
Speaker 1: this is a likely pyramid scheme, as in any criminal
Speaker 1: or other civil case, they are obliged to provide evidence,
Speaker 1: and part of that evidence, which would be allowed under
Speaker 1: this potential law, is to say, look, this is a sham,
Speaker 1: You're not really engaged in personal use, and then to
Speaker 1: prove that they're not engaged in personal use. Now to
Speaker 1: answer your question and your thoughtful question, yeah, there is
Speaker 1: an obligation on the part of companies and the association
Speaker 1: to some extent, to the extent possible, to determine that,
Speaker 1: in fact, companies are engaged in real sale of product
Speaker 1: to real people. And that's why companies have large compliance departments.
Speaker 1: That there's a compliance department within a multi level marketing company,
Speaker 1: is what you're telling me. And I need to shy
Speaker 1: away on their compliance department to make sure that they're
Speaker 1: doing the right No no no, no, no, no no, okay,
Speaker 1: well then who has overseen the compliance Let me again.
Speaker 1: You're you're going down this sort of path that you
Speaker 1: have an agenda that is understood, and I understand you,
Speaker 1: but are you Let's just clear about what our agendas are. Sure,
Speaker 1: and your your agenda is is clearly to question and
Speaker 1: suggests that no matter what these companies do, it's illegitimate.
Speaker 1: And I could say, and that's that's not the case.
Speaker 1: I wish I could say that, Well, here's what I've
Speaker 1: seen from your industry. Yeah, I wish I could say that.
Speaker 1: I wish I wish to say that I that my
Speaker 1: intentions weren't pure, because it would mean that I hadn't
Speaker 1: seen what I'd seen, that I hadn't seen people suffer,
Speaker 1: and that I didn't care. Right, Well, I've seen plenty
Speaker 1: of people too, and I care, and I've seen the
Speaker 1: way that this business model has affected people's lives in
Speaker 1: the thousands. Positive care and you can talk about your care,
Speaker 1: and I can talk about mind, and I can talk
Speaker 1: about the devotion of the association and individual companies to
Speaker 1: do the right thing. As frustrated as I was with
Speaker 1: our chat, I got to say Joe was a real trooper.
Speaker 1: He stuck around for two and a half hours and
Speaker 1: was gracious in the face of me basically refuting every
Speaker 1: claiming made because we have evidence contradicting almost every claiming made.
Speaker 1: But Joe for sitting and talking with us, We are
Speaker 1: very grateful. We have heard nary a peep out of
Speaker 1: proponent of this business model. Why do you think that is?
Speaker 1: I don't know. It's a good question. Maybe nobody's paying
Speaker 1: attention to it. Ouch. We did hear via email from
Speaker 1: Michelle Gay of Lime Life, and she mostly expressed irritation
Speaker 1: that we didn't include her in the show from the
Speaker 1: start before we began investigating her company, given that Lime
Speaker 1: Life doesn't seem to be super up on their ethics
Speaker 1: in general. We patiently explained to her how that would
Speaker 1: have been on ethical We can't do an honest, candid
Speaker 1: exploration of how a company does business by first telling
Speaker 1: the company that we're looking at them. Once we saw
Speaker 1: what we saw, we reached out. Had we come up
Speaker 1: with nothing, then she'd have nothing to worry about, in
Speaker 1: which case I'm guessing she'd be happy to talk to us.
Speaker 1: We wrote Michelle back, begging her to prove us wrong,
Speaker 1: to stand up for her workforce honor, and defend her
Speaker 1: company and her products and her business model. We asked
Speaker 1: for numbers, how many beauty guides are there, and how
Speaker 1: many lose money, how much money does she make, etc.
Speaker 1: She responded that we should guess. Quote, here's my question
Speaker 1: to you, what percentage of each dollar goes to the
Speaker 1: commission payout to gross profit margin? And to me, given
Speaker 1: this anger you seem to harbor, I assure you that
Speaker 1: you're wrong. Okay, I'm not going to guess how much
Speaker 1: money you make. Michelle Amway also got back to us,
Speaker 1: but the communication broke down when they began offering hearsay
Speaker 1: evidence to counter our claims. For example, remember the Amway
Speaker 1: rules that Banandal and DeVos presented as a defense during
Speaker 1: the FTC trial. Amway claims those rules were always in
Speaker 1: place from the beginning. But the two people who would
Speaker 1: know for sure are dead. So we asked for some
Speaker 1: sort of proof, some documentation. They provided none and wished
Speaker 1: us luck. Not one company came to us with any
Speaker 1: evidence that our findings or those of Robert Fitzpatrick or
Speaker 1: John Taylor or any of the experts we referenced were wrong.
Speaker 1: They all offered lines like this is sensationalism, not journalism,
Speaker 1: and our salesforce is happy, and then sliding all the
Speaker 1: way down the pyramid shaped business model thingy we're looking
Speaker 1: at to the folks at the bottom. Surely those folks
Speaker 1: on the ground, the ones Joe and all the MLM
Speaker 1: owners keep telling us, are super content and successful and
Speaker 1: not complaining because there's nothing to complain about. Surely those
Speaker 1: testimonials would pour in, whether true or not. But nope.
Speaker 1: Of the thousands of tweets, reviews, and emails we've gotten,
Speaker 1: we've counted around ten anonymous notes from people claiming to
Speaker 1: be currently happily involved with an MLM. We'd gone into
Speaker 1: this hearing horror stories of cease and desist orders or
Speaker 1: defamation suits, but all we heard were crickets. That may
Speaker 1: be in part due to our impeccable reporting, but we
Speaker 1: also found out via private message on our Facebook page
Speaker 1: that Lime Life conducted a Facebook live event for their
Speaker 1: beauty guides in which the owner, Michelle, directed her minions
Speaker 1: to ignore us, to stick with her, believe only her,
Speaker 1: and carry on business as usual, which, if you've ever
Speaker 1: watched a cartoon, is exactly this, or a directive you'd
Speaker 1: expect from an evil genius facing a worthy opponent. Here's
Speaker 1: the thing I do know. The losses, be they large
Speaker 1: or small depending on who you ask, suffered by folks
Speaker 1: who get into MLMs, they aren't total losses. I mean
Speaker 1: they are to them, and much of the time those
Speaker 1: losses are on a balance sheet as credit card debt,
Speaker 1: which compounds with interest. But I say they aren't total
Speaker 1: losses because someone has that money to someone else. That's
Speaker 1: a gain, and that someone else is whoever is sitting
Speaker 1: at the top your credit card debt is in their coffers.
Speaker 1: This podcast company isn't my first foray into entrepreneurship. When
Speaker 1: I was eighteen, my dad and I rented a small,
Speaker 1: long shuttered drive through credit Union in a Wasso, Michigan,
Speaker 1: and turned it into a cafe. I was struggling to
Speaker 1: finish high school after dropping out. No college has wanted me,
Speaker 1: and given that I'd worked in cafes since I was fourteen,
Speaker 1: we thought it could be an avenue to me getting
Speaker 1: back on track. I also got a dog at the
Speaker 1: same time, and I ran that cafe shoddily for three
Speaker 1: years until we closed, as most new restaurants do. That loss,
Speaker 1: Joe Mariano and his cronies would argue was no different
Speaker 1: than money's lost to an MLM, And it is my
Speaker 1: great pleasure to be the moral authority here because I
Speaker 1: believe there is a huge difference. The money we were
Speaker 1: out went into the bank accounts of our employees kids
Speaker 1: who needed it to pay for college, and went to
Speaker 1: a food supply company that provided us flour and eggs
Speaker 1: from local farmers, and that flower and those eggs went
Speaker 1: into the bellies of our customers, keeping them alive. And
Speaker 1: it went to my rent three hundred dollars a month
Speaker 1: to share one of the nicest apartments in the county.
Speaker 1: I had my own bathroom. On the other hand, Katie
Speaker 1: from episode six, the money she lost went to Mary
Speaker 1: Kay Mackenzie's money went up the line at Lime Life.
Speaker 1: The woman who called in to say that she's hidden
Speaker 1: from her husband the fact that she lost twenty five
Speaker 1: thousand dollars to Herbal Life despite never having touched any
Speaker 1: of their products. All she or anyone in her family
Speaker 1: has to show for that money is a dark secret
Speaker 1: shame Herbal Life, though they have that twenty five grand.
Speaker 1: Same goes for the tens of thousands of folks who
Speaker 1: tried selling leggings for Lulaoe. What they have to show
Speaker 1: for at are basements upon basements, upon garages upon sheds,
Speaker 1: stacked full of boxes filled with unsellable leggings. And there's
Speaker 1: no eccentric madman like William Penpatrick milling about outside to
Speaker 1: take it off their hands. So what can we do?
Speaker 1: Start talking to ourselves, admitting that maybe we got in
Speaker 1: over our heads and it wasn't our fault, to our
Speaker 1: friends and family, acknowledging our vulnerabilities and lessons learned, and
Speaker 1: to the powers that be. You can write your state
Speaker 1: representatives easily found on the House dot gov website and
Speaker 1: tell them to vote no on HR thirty four oh
Speaker 1: nine or any other bill that serves to protect MLMs
Speaker 1: and not the people funding them. And you can write
Speaker 1: Joe directly send any information to me Joe Mariano m
Speaker 1: A r I A n O. The website is www
Speaker 1: dot d SA dot org. Feel free to send me
Speaker 1: an email. Might I'll give you the simple one. It's
Speaker 1: Joe Joe at DSA dot org. Where are your Young
Speaker 1: Living Oils? Yeah, you can, you show them to me.
Speaker 1: Sit tight back in Alasso. My grandma Ruth and Amy.
Speaker 1: Though they long ago realize MLMs are not a path
Speaker 1: to riches, they still buy MLM products from friends and family.
Speaker 1: They both believe in the healing properties of essential oils
Speaker 1: from a Christian company called Young Livingoils. What do you
Speaker 1: use these for? Oh? My goodness, Ah, you use them
Speaker 1: to inhale for different problems that you might have. Thieves
Speaker 1: you put on And what we do is we put
Speaker 1: it on like a collar or something like that when
Speaker 1: you're out places. Then you don't usually pick up anybody's
Speaker 1: colds or anything. They believe in the health benefits of
Speaker 1: taking a proprietary blend of very expensive vitamins sold exclusively
Speaker 1: through Life Vantage. My grandmother still lauds herbal Life shakes
Speaker 1: for helping my grandfather lose weight, and I get it.
Speaker 1: We're from a part of the world where big business
Speaker 1: has upended business on main street, the main street that
Speaker 1: politicians are always talking about. We had one of those quoint.
Speaker 1: In fact, there used to be a little town out
Speaker 1: here on the road our farm is on. It had
Speaker 1: a post office, a fire station, and a one room
Speaker 1: schoolhouse that my dad went to. But then cars made
Speaker 1: it easier to get to the bigger towns nearby, and
Speaker 1: so it disappeared. Same with Bannon's family owned grocery store
Speaker 1: once we got a Kroger. Things are impermanent, and businessmen
Speaker 1: are shisty, so are politicians. Michigan is a state pock
Speaker 1: marked with cancer clusters, the hotspots for these being along
Speaker 1: the Saginaw River, which feeds the smaller Shiawassi River, which
Speaker 1: runs right through the middle of a Wasso. People believe
Speaker 1: the government is poisoning them on purpose because famously they did,
Speaker 1: and doctors they're in cahoots with big pharma, so put
Speaker 1: them in the untrustworthy column. As well. The only people
Speaker 1: left in the trustworthy column are relatives, friends and neighbors
Speaker 1: who are selling my grandmother a miracle, essential oil and
Speaker 1: the chance for a more prosperous future. They don't know
Speaker 1: she's already rich the honest way. That's it for this
Speaker 1: season of the Dream, but don't worry. We'll be back
Speaker 1: soon with another season. It won't be about MLMs, but
Speaker 1: it will be about something just as fun. If you
Speaker 1: have topics you'd like us to cover, please send us
Speaker 1: an email at This is the Dream podcast at gmail
Speaker 1: dot com. The Dream is a production of Little Everywhere
Speaker 1: and Stitcher, written and reported by Me Jane Marie, Dan Galucci,
Speaker 1: Mackenzie gassab Lyra Smith, and help from Claire Rolinson. We're
Speaker 1: edited by Peter Clowney. Our fact checker is Michelle Harris.
Speaker 1: The Dream is mixed by Mike Richter. The Dream is
Speaker 1: executive produced by Laura Mayor, Chris Bannon, Dan Galucci and Me.
Speaker 1: Special thanks today to Bill Erwin, Shirley lou Ron, Gaskill,
Speaker 1: Amy Fitzgibbons, Dave Giles, Jordan Bell, Stephanie Kerauki, Matt Most,
Speaker 1: Christine Richard, Michelle Solarier, Doug Brooks, Bruce Craig, and once
Speaker 1: again Robert Fitzpatrick. We appreciate you subscribing, rating, and reviewing
Speaker 1: the show wherever you listen.