Recently I received an email from Robert Fitzpatrick, a consumer advocate and prominant critic of 'multi-level marketing.' Mr. Fitzpatrick brought to my attention a Belgium court decision that found Amway clone, Herbalife, to be a disguised recruitment pyramid scheme.
The court found that Herbalife could not conclusively prove that it had any significant retail customers, and therefore all profits were generated via a never ending recruitment of new distributors.
Herbalife, Amway, and nearly all of their numerous MLM clones, seek to describe their own 'distributors' as 'retail customers.' Readers of this blog know that I have always maintained that the products these MLMs supposedly market are effectively unsellable to outside retail customers. The court correctly determined that Herbalife failed to prove that it had any real customers and therefore all commissions and profits were paid by the ever churning recruitment of new distributors.
I have maintained that few people signing up as a distributor in these MLM frauds ever make a cent of profit and most ultimately despair and quit. Many are decieved by the 'dream selling' nature of these MLM cons. They are lured by the potential of lucrative profits and follow a destructive course of action where their own money is extracted to enrich the company founders and a small group of distributors who sell 'tools,' useless propaganda that prompts the newly recruited distributors to convince even more of their relatives, friends, and neighbors into 'investing' in the scheme.
Mr. Fitzpatrick went on to say in his email:
If Herbalife is a fraud, as the Belgian court decided, it is one of vast proportions, affecting millions of people worldwide, year after year. Herbalife has 1.2 million distributors in 74 countries. Each year it enrolls hundreds of thousands more to replace the huge numbers who lose money and quit.The full decision of the Belgian court is available at the Pyramid Scheme Alert website.
In the past Robert Fitzpatrick has called Amway the 'American Scam' and it is to the shame of all presidential candidates in the U.S. who accept campaign funding from these disreputable schemes spawned by a supposed 'cult of free enterprise.'