Multilevel Marketing: Last Week Tonight with John Oliver (HBO)

I would like to talk to you about an exciting opportunity I just need 30 minutes of your time to explain it but it has the potential to transform your life I'm talking about multi-level marketing companies or MLM companies like Mary Kay Rodan and fields a new skin and way and Herbalife they sell different products but generally MLMs have two main things in common first you don't see them on store shelves you buy them through distributors like a friends family and co-workers and secondly those distributors are always looking for more people to join them and they have a pretty attractive message why over life because you get to be your own boss earn extra money work from home raise your own children you can name your own hours make part-time or full-time money paying the bills share this video with ten people that you care about that you love that's your door that you admire 20 people 30 people come on what are you waiting for 100 people share with everybody they want what we have we got it okay hold on I'm supposed to share that with 10 people I love adore and admire that's a tough ask let's see there are the judges on this season of Project Runway that's three all this Tim Gunn that's obviously four if you count Tim Gunn twice that's five but I'm still five short and I am out now and before you brush this industry off you should know collectively it did around thirty six billion dollars in retail sales last year in the u.s. you probably know someone who is considering joining an MLM or who already has and is posting about it ten times a day on Facebook or Instagram and if you do know someone like that or have considered signing up yourself this story is important because let me explain how the system is supposed to work generally distributors have two main ways to make money sell the product itself whether it's makeup vitamins or health shakes and earn money on those sales and and this is key recruit other people into the company and get money based on their sales and the sales of people they recruit intern just look at Vemma a few years ago a hidden camera caught our then distributor for that company walking a prospective recruit through just how easy it can be you and I would sign up and get there Samantha there's nine people there right gets their money back wait you kind of get your money back that's as reassuring as hearing a doctor say he kind of knows where your appendix is it's probably somewhere near the spleen and if you are thinking well hold on that business structure sounds familiar isn't that a pyramid scheme well there was a journalist waiting outside to ask the exact same question it's not an illegal pyramid scheme it's a Direct Selling never what does it shape like a pyramid the businesses shaped like a pyramid yes but you're saying it's not an illegal pyramid it's not an illegal pyramid scheme oh I get it so it's not a pyramid it's just pyramid shaped you know like a Dorito or an angry bird or just a pile of but let's put that pyramid question aside for a moment because from the outside these companies do have the trappings of legitimacy many have high profile celebrity endorses vemma had noted science experts Jenny McCarthy AdvoCare has esteemed ball thrower Drew Brees and an MLM called max international had this guy after more than a year of due diligence gene and I joined max international as home-based distributors and media spokespersons Oh to be a fly on the wall while Gina and Chuck were poring over the numbers during that year long due diligence session Gina with an adding machine Chuck randomly kicking stuff it'll be like watching Lennon and McCartney write Sergeant Pepper still for many MLMs the biggest celebrity is their founder who can enjoy cult-like status just look at JR Ridinger CEO of market America at company conferences the guy makes quite an entrance [Music] okay fourth string wedding chapel Elvis calm the down and that's just his walk-on once he gets going he puts on a real show demonstrating how you can pump money dramatizing the rat race by sweaty Lee running around in a giant wheel and screaming at the gravestone of Joe nobody who never fulfilled his true potential job the more man the dreams you told me about we can actually do them now we don't have to wait man it works and I'm doing it and I want to help you do it because it's so good Joe this is amazing we can we can have vacations and sailboats and we can have multiple homes and you can give your wife the the jewelry that she deserves then you're gonna be a hero come on get up holy all I can say is thank goodness funerals don't have a speak now or forever hold your peace section because he would be at every cemetery delivering motivational speeches she lived a good life loser come back to life at all you can still have that yachts come back to life the dangling of vast lifestyle improvements is at the heart of the MLM pitch their materials feature flashy cars and luxury travel that you can achieve and just watch a distributor from youngevity walk you through a future dream scenario in exquisite detail in two years this is what's gonna happen to you you are gonna you're gonna drive to your work you're gonna walk into your boss's office you're gonna sit down and you're gonna quit your job [Music] you're gonna explain that that little pyramid scheme thing that you almost got terminated for last year you're now an entrepreneur and you're gonna be doing that full-time whoa did you just say pyramid scheme and then almost got terminated and then you're going to go out to the parking lot you're gonna get into your silver Mercedes that youngevity has paid for and you're gonna drive home oh no wait actually first you're gonna drive to the bank I'm sorry I hate to dwell on this but you definitely said pyramid skating back then I'm sorry now we're suddenly going to the bank and you're gonna walk into the bank and you're gonna deposit your coding bonus and the lady's gonna say will that be checking or savings and you're gonna say yeah I don't really care I get these all the time and then the lady's gonna say haha that's fantastic but I actually need to know which account this goes into and you're gonna say makes no difference to me and she's gonna say but I can't deposit this unless you specify which account it's policy and you're going to say it's all gravy and she's gonna say how about checking and you're gonna say I'm loving it and she's gonna say do I need to get security and you're gonna say the account ending in eight four two four please now youngevity told us that that woman's claims are not authorized by the company and are against youngevity policy which forbids income claims although that video was taken at one of their official events and the woman Denise Chenault is featured with her husband on the company website with the words Denise and Tom Chennault are youngevity oh come on you don't let someone embody your company if you don't agree with them if Flo turned out to run a dogfighting ring progessive would wipe her off their websites immediately and by the way you know that's coming you can see in her eyes dead dogs dancing in there but but you cannot deny the picture that she paints is enticing who doesn't want to tell their boss to go themselves half my staff would do it right now if they could but MLMs hold out the hope that if you work hard you can take control of your life start your own business and help your family but how real is the opportunity well let's take a look at just one of these companies in-depth Herbalife you saw its pitch earlier it was the one that you were supposed to send to ten twenty a hundred people it sells nutritional supplements like shakes and vitamins and it's one of the biggest MLMs around with net sales of 4.5 billion dollars last year it has a celebrities who talk up its benefits from superstar athletes like Cristiano Ronaldo to pretty much the last person you are expecting to see in this piece well first of all you have a great product that makes all the difference here we go sorry buddy you're a product to the product well I am a product with the product it has every combination of things that I like it's a very good product delivered by really good people yes that is Madeleine Albright talking to Herbalife CEO claiming she's a product of the product so forget studying at Columbia and Johns Hopkins if you want to be like the first female Secretary of State just chug a couple of vanilla adjacent you tree shakes a day and thank her in the morning oh and about those products in its early days Herbalife was accused of overstating their health benefits claiming in the 80s that one product helped relieve everything from venereal disease to tumors to bedwetting and back then their founder Mark Hughes was asked by a Senate subcommittee to answer experts who'd called his diet products into question and this was his response I think if they're so expert in weight loss why were they so fat yesterday it seems to me and I'm not trying to make any jokes but I do think that they ought to use our product first he seems great but second why would anyone in the 80s take Herbalife to lose weight they had cocaine come to think of it we also have cocaine the point is cocaine is an effective weight loss option it's not where I thought I was going with this but it is where we have ended up now to be fair that was 30 years ago and a lot has changed at the company since then although when ABC News filmed some Herbalife distributors just two years ago they found some claims that seemed to echo the company's past this Herbalife distributor in New York City told us the story of a woman who overcame an inoperable brain tumor thanks to Herbalife new recruits were told Herbalife products help to treat heart disease even helped one woman get pregnant well that is obviously nutritional shakes cannot help you get pregnant there are only three liquids that can do that a glass of merlot the honey smooth music of Sharda and good old-fashioned jeers people might be making claims like that because they are desperate to move excess product you think broadly speaking under Herbalife system distributors can get bonuses and massive discounts on products based on how much they buy which can be a huge incentive to buy in bulk and for instance let's say you're selling Herbalife's disgusting creamy chicken soup powder for 1335 a box the cheaper you can buy it from Herbalife the more profit you could make but to stay qualified for those higher discounts you have to keep buying product and it might not be easy to sell that extra soup because a it's a little pricey and B we actually tried it and it tastes like the wood shavings inside a gerbil cage and as one former top distributor will tell you if you are just accumulating product that can lead to a problem common enough to have a special name we'd call it garage qualified they would stack as much product as they can in their garage and at some point they would realize that they have to quit so people buy product more than they can then they can sell it sits in a garage what happens there's got to be an end point here at some point when they run out of money there's an end point exactly so over life maybe an industry leader in worthless crap people stick in their garage along with of course the PT Cruiser the car that looks like a sporty version of a hearse and and as a distributor it is not easy to figure out exactly how you are going to make money just watch this Herbalife video from a few years ago explaining one narrow part of their insanely convoluted compensation plan okay here we go take a look at this example now when e places a four thousand by n point order at forty two percent this counts as personal volume for you but since this qualifies eat a supervisor with a one-month qualification that volume now becomes encumbered for everyone in the upline remember each upline distributor needs to accumulate 1000 unencumbered volume points if they want to qualify for supervisor as well it's simple and if you accumulate 10,000 unencumbered volume points those are grouped into an unencumbered batch which qualifies benedict cumberbatch for one unencumbered cucumber cummerbund well yes that is absolute nonsense it makes exactly as much sense as everything that came before it in fact to hear another former Herbalife distributor tell it your main focus in the business might be less on products than on the people below you you don't make money from selling products you make a little not much not enough to pay the bills that are wrecking up you make money from signing people up of course it's like that famous salesmanship motto from Glengarry Glen Ross abst CE OS TOS always be selling the concept of selling to other sales people and at this point that's pyramid scheme question that we set aside earlier has to be addressed because in broad terms if distributors earnings come primarily from selling products to actual customers outside of the company that is probably a legitimate business but if those earnings come primarily from selling product to the distributors you've recruited below you and their sales of product to the distributors they've recruited below them or within the company that may be a pyramid scheme and any business that is set up that way has a big problem for a reason that and I will warn you does involve math almost all of these schemes tell you that you can make money by just recruiting three or four five let's say five then you let the five do they're five that gives you twenty five what they don't show you is that you could only do that 13 cycles and you would exceed the population of the earth it's true within 14 cycles you run out of people and that is assuming that everyone on earth wants to be a protein shake distributor and I can think of at least a few people who have better things to do Alan Alda for instance or Malala yousufzai or Morten Harket lead singer of aha the guy is still swimming in take on me money he doesn't need this an Herbalife CEO Michael Johnson has an interesting way of deflecting that whole pyramid scheme question I go back to any company I started in Disney as a director then I went to be executive vice president and then president of the international entity of the company so I moved up six or seven levels and at the top was sitting Basile of the company Michael Eisner is that a pyramid is that any different than what we're doing here yes it is completely different Disney was a corporate ladder those were all salaried positions with benefits the company wasn't banking on you personally filling your garage with cases of unsold DVDs of The Lion King to Simba's pride but but johnson could have made a stronger non pyramid case in that interview if he could have just shown how much money distributors get from selling product to actual retail customers but conveniently Herbalife didn't keep records of those figures now unfortunately for them the FTC recently finished a multi-year investigation into the car and filed a blistering complaint walking right up to the line of outright calling it a pyramid scheme ave alleged Herbalife's compensation program doesn't incentivize retail sales but rather the recruiting of additional participants who fuel the enterprise by making wholesale purchases of product which sounds like you know how pyramid schemes work and when people pointed this out the FTC chair made an amazing statement [Music] our focus isn't on the label the word appeared pyramid does not appear in our complaint that is true they were not determined not to have been a pyramid think about what she just said they're not determined not to be a pyramid how is that not a huge warning sign if the FDA announced we have not determined cotton candy not to be clown pubes you would never risk eating that ever again now now who knows why the FTC stopped short perhaps it ensured Herbalife agreed to a settlement in which they neither admitted nor denied wrongdoing but did pay two hundred million dollars and agree to significant new changes but the contents of this complaint are mind-blowing the FTC claims that the overwhelming majority of Herbalife distributors who pursue the business opportunity make little or no money and a substantial percentage lose money in fact the FTC even stated Herbalife is going to have to start operating legitimately which implies they hadn't been up till then and yet amazingly Michael Johnson characterized this as a victory hey we've got great news we've reached an agreement with the US Federal Trade Commission that ensures that our mission to improve people's lives will continue to thrive I have to tell you this is really good news and it comes at a time when our business is growing bigger and better than ever before Oh just polish that turd he put it in a bottle and convinced people that they could make a fortune selling nutritional turds in their spare time but look whether Herbalife is a pyramid not a pyramid or not not a pyramid it is true that Herbalife is growing and a lot of that growth has come from Latino communities where Herbalife has been aggressively expanding for years they even brought a sponsorship on the hit telenovela La Fea must bear it's very subtle to just see if you can spot it look it's called Herbalife this is going to help you have more energy and it's also going to help you face all the problems you have believe me really I drink it every day and besides it's delicious if that is happening on the show I can't imagine the real drama happening in the commercials mr. Geico lizard I want to say 15% on car insurance but how can i when you are sleeping with my wife and the fact a large percentage of Herbalife's business comes from Latinos is a point of pride for Michael Johnson we call it your Bligh family and we're not ashamed of that we're very proud of that the Latino the the blood if you will them well you know if it's in this company and it feels great I love the blood of a Latino community I just want to bathe in it I want to bathe in your blood lapsing he knows how's this sales pitch going I feel like it's going way no to those supplies that Latino blood it can feel less than great as this community meeting of those who feel burned by Herbalife shows where the negocio y yeah pero de la cantidad we don't mil dólares in my message over d diamond dollars her husband continuously reminds her about $8,000 that she owes to them el producto 7 C so C noticias tirta bas the vendor loophole ok - lo comp rust-eze una Grampian yes a via KO no tenía su dinero y esta bien muy bien de la mia mia evie ho tu tienes que me a hint Abajo TT para que una ganancia le dije sabes que is on the to take Eva Castilian oh boy espera nadion mas so yo you know what now might be a good time to point out when someone says their blood is in me and it feels great that is what a vampire says and friends of yours may say well that's just over life my MLM is different but there are echoes of what you've seen across this industry for instance Herbalife is far from the only company that has made bold product claims regarding health when I started my body fat was 37.5 and now it's right around 1617 the pain and the lethargy that go along with fibromyalgia is gone three days into the experience I was feeling like 25 years younger when I found out they had a pet formulation of liquid by ourselves that's when I knew I had something very exclusive after putting Rembrandt on liquid bile style pet for three months he started walking again okay first of all obviously good boy Rembrandt but second are you sure he didn't just summon the energy to walk because he was desperate to get away from the eyedropper of liquid nonsense you were shoving in your pets mouths and just like Herbalife MLMs can often have Scientology like levels for you to ascend through with USANA you may have gone from sharer to believer to Builder to achiever and beyond and at Kyani you passed through a series of ranks with the names of gemstones as a one distributor explained at a company conference I want to talk about a millionaire mindset because if you got involved in Kyani to become a Jade you're selling yourself short if you got involved in Kyani become a diamonds you're not thinking big enough yet if you haven't already visualized yourself a double black diamonds you need to kick yourself in the rear now double black diamond is technically a skiing term for particularly dangerous slopes and I'm thinking maybe you shouldn't choose a term that basically says if you even try this you'll go downhill fast and may end up in a king ditch and the garage qualified issue is not exclusive to Herbalife either it's come up with multiple other MLM including Mary Kay I start with my own two eyes the warehousing of the product meaning they had basements full of it or closets full of it or garages full of it take a look at this inventory from a consultant who is leaving the company she agreed to show us boxes of product she said she bought to keep her status Wow so it seems some distributors may have been more customer than salesperson that's what finding out Jamie Lee Curtis was actually the one eating all the activator I eat a hundred and forty six containers a day and I like a machine gun and Mary Kay an Herbalife will tell you that stockpiling is uncommon and you can return unsold products for a refund but you should know those refunds can be partial or may involve resigning the point is MMS may present themselves as a great opportunity but your chance of success is actually remote just look at the income disclosure statements kyani's shows that just under 40 percent of active distributors received a check for $10 or more meaning that most didn't even make that and new skins says around 18 percent of active distributors and Commission checks which is actually worse than it sounds because active distributors represent only around 36 percent of total distributors so if you do the math which they conveniently didn't that would mean that 93 percent of all new skin distributors receive zero Commission's from the company in an average month so even if you have never heard of Nu Skin before it may be paying you just as much as it does 93 percent of all its distributors now emmalin's 1/6 those percentages are misleading they will tell you that many of their distributors aren't even in the business to make money they just went to all that trouble of signing up to get discounts on their amazing Rhino ejaculate or as they call it soup well they'll they'll say individual distributors like that Vemma guy and those herbal life reps don't speak for them and that their claims are against company policies and violators get disciplined and most importantly they will all insist they are not pyramids and no one claims that any more spectacular manner than JR Ridinger who has an airtight case based on spelling the word pyramids backwards we're actually the anti pyramid the reverse pyramid the dipper ripe we are he sounds like a cult leader about to demand his followers drink poison and it frankly doesn't help that he looks like Jim Jones to a genuinely creepy degree but it is hard for the FTC to investigate these companies the industry is large and opaque and pursuing a case is a long arduous process they've only brought around two dozen pyramid scheme cases against MLM in the last four decades and MLMs have surprising lobbying strength there's actually a direct selling caucus in Congress with more than 40 bipartisan members including jason Chaffetz who worked at Nu Skin for more than a decade as per Herbalife it has gone to remarkable lengths to protect its name in Washington and it's recruited two former top FTC officials to work for the company and it's willing to be incredibly petty as well because remember that clip of Herbalife victims that is from an upcoming documentary called betting on 0 and when it played at a DC Film Festival earlier this year the screening had 173 empty seats because an Herbalife lobbying firm reportedly bought them out and that's not just petty it's stupid if you don't want people to see a movie you don't need to buy out seats just put up posters saying starring Shia LaBeouf job done nobody's there but even if the government did suddenly decide to crack down on this industry which seems unlikely many MLMs have been expanding overseas here is a video from India via changing people's life you are the brand we are growing every day let's master worth 1 million 1 billion one region they are lucky Gandhi isn't alive to hear that song because it would really test his belief in nonviolent protests you know what kid everybody pick up a rock and meet me at herbalife headquarters that song was unforgivable just look online and you can find videos of gigantic Herbalife events around the world here is one in South Africa here is one in Mongolia here's one in Venezuela here's one in Malaysia and here is Michael Johnson in Mexico doing this [Music] okay I don't say this lightly but that is douchebaggery at a double black diamond level so the point is what can we do because good hard-working people are going to keep getting caught up in these companies there has to be a way to tell the world about the dangers of MLMs and I think I might know the perfect distribution network and that is why tonight we are starting our own pyramid scheme hashtag this is a pyramid scheme because if someone you know is thinking about joining an MLM this is a huge opportunity and let me show you how it works [Music] [Applause] with friends and family the product is this entire video about why MLM czar King awful let me break it down for you by sharing this you can be an independent distributor for a leading web video about the dangers of MLM you can do this full-time or part-time and give your family the lifestyle they deserve which is frankly not getting caught up in this you need scientific proof that it works we told a dog we were going to produce this video and look the dog is walking now able to walk people sorry we don't keep those records here is how it works simply watch this video and then forward it to five people and then instruct them to send it to another five people and so on and so on and so on within 14 cycles every single person on earth will have seen this to the point that we will need to start to create more people to watch it also if every single person on earth is watching this video hello Beyonce I'm a really big fan and like MLMs we would like to direct a message to latinos in particular so we will be uploading two versions of this segment to YouTube with one in Spanish but because I do not speak Spanish it will be subtitled and this before this portion will be performed by Jaime Camil from Jane the Virgin professor you are clearly more attractive version of me in every way on you honey yes yes yes I am so please share this video to stop people getting involved with these schemes because MLMs are hurting people and we need to spread the word about their dangers send this to 20 people 30 people a hundred people what are you waiting for this system will work and it is not a dimmer right it's an anti dimmer right this is a pyramid right right this is a better man [Applause] goodnight [Applause]

Channel: LastWeekTonight

Views: 28,258,631

Rating: 4.8156238 out of 5

Keywords: last week tonight with john oliver, last week tonight multi-level marketing, pyramid schemes, herbalife, amway, mary kay, herbalife nutrition, michael o johnson, michael johnson

Id: s6MwGeOm8iI

Length: 31min 58sec (1918 seconds)

Published: Mon Nov 07 2016

Reddit Comments

[u/Fancy_Pantsu]

MLMs are awful. Unless you make it work. And then you're awful.

[u/BillMurraysTesticle]

If the employer wants you to pay them, don't. That's not how jobs work. Employers pay you, not the other way around.

[u/GunnieGraves]

The thing that really is horrible about these is how they have started to try and make their way into the job market. This is just my experience with it, and I was smart enough to not fall for it. I feel bad for those who didn't see it for what it was and didn't walk away.

I got called in for a job interview once for a very vague "sales" position. At the time I was desperate to make my way out of what I was doing and was willing to meet with almost anyone.

The office looked hurriedly put together, and all of the personnel I saw were very young. Not a big deal. I'm led into the supervisors office and he's a young guy, supposedly in charge of this agency, and he's wearing a red suit with a black shirt, and a white tie. Not a great sign.

The interview goes on with him basically telling me I'd have to start on the bottom, but could be in a management role in a matter of weeks with hard work. Bad sign #2.

I counter that I'm currently in a management role, and really wasn't in a place where I was willing to fall back into an entry level role. He proceeded to shit on my experience saying that it was outside experience and he needed to "verify" that I was able to work to their level and the way this starts was to go out with a rep one day on a "test run" before I was hired to see how I did. Bad Sign #3.

And the biggest warning sign? To this day, I don't know what the products were. He mentioned that it was a sales position, and when pressed advised that it was "Multi-Level Marketing". That was it. I said that we were done and told him he could take my name off his list of prospects.

It's one thing to recruit people into a side business. But to present it like a job and then reveal it's nothing more than MLM with no benefits, no steady paycheck, and no security, is really predatory. I made sure to track down their postings on every job board I could and advised the board what was really going on. Started to see less of their postings and eventually they were gone from the area.

[u/[deleted]]

This industry is largely supported by stay at home moms these days. Thanks to Facebook the problem has only gotten worse. Would be great if all these companies where forced to shut down or legitimize themselves. I don't see that happening when the market of suckers is so large and the profits so high. As the old saying goes - a sucker is born every minute. You can't protect stupid people - let them learn from their mistakes.

[u/imatworkyoujabroni]

It's a reverse funnel system

[u/crabsmash]

Good old fashioned jizz.

[u/[deleted]]

Anything that promises so much in a short space of time is always going to be bullshit.

I worked in a commission based sales job that was similar to MLM companies. I wasn't made to buy stock but the claims that they would make where nonsense.

[u/[deleted]]

Multi Level Marketing Companies are so sad. So so sad.

I remember reviewing the office lease for two multi level marketing companies and surprise surprise, their wealth is a total farce. All these "Big Winners" owe more than they are worth. All their cars are leases, all their homes are either leases or heavily leveraged. I met a guy who drove a Bentley and defaulted on his rent. It's all a show.

I remember i called the office of one of them with a question about their lease and their assistant said "I'm sorry, Mr. X isn't in right now, he's a millionaire and makes his own hours so I'm not sure when he will be in". I had to hold back from laughing at the poor girl.

[u/[deleted]]

What the fuck is that knocking/popping sound in the background? Drove me nuts!