S1 E11: And That’s When I Woke Up

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Speaker 35 Hey, dream listeners. If you like this podcast, you're going to love the book.
Yeah, I wrote a book. It's called Selling the Dream, and it's coming out March 12th, 2024.
on Atria.

Speaker 35 It's about all of your favorite characters from MLMs and some that you've never even heard of, I hope. Check it out.

Speaker 35 There's a refrain you've been hearing on this show all season long. There's no pyramid scheme, those are illegal.
I would never be part of that.

Speaker 35 You don't, you may not know, but pyramid schemes are illegal. First of all, it is illegal to have a pyramid scheme.

Speaker 37 First of all, pyramid schemes are against the law.

Speaker 35 That refrain is bullshit. Not the part about pyramid schemes being illegal, that's true, obviously.

Speaker 35 But the part about a company not being a pyramid scheme because it's still in operation, that's bullshit. That's just not how crime works.

Speaker 35 Murderers who haven't been caught don't get to say, murder's illegal, and I'm not in jail. So Nadoy, I'm not a murderer.

Speaker 35 And it's not like when you open an MLM, the government slips you a note asking, are you a pyramid scheme? Check yes or no.

Speaker 35 A business can be found to be a pyramid scheme based on a number of characteristics that must be proven by a thorough investigation. A la Joe Brownman taking down holiday magic in episode 7.

Speaker 35 In reality, the test of whether you're a a pyramid scheme is not whether you're selling all your products to your own sellers in a closed system or whether you got a business model that makes it mathematically impossible for your recruits to make any money.

Speaker 35 The real test is whether someone has called the authorities on your business and then whether the FTC has investigated you and said, yes, you're a pyramid.

Speaker 35 Well, the Direct Selling Association, that's the MLM lobby, and the Direct Selling Caucus, that's their friends in Washington, they're trying to change that by pushing for the passage of a groundbreaking bill called H.R.

Speaker 35 3409.

Speaker 35 The sponsor of the bill, Marcia Blackburn, wrote an op-ed about it in The Hill in August of 2017, stating, quote, every year, far too many unsuspecting Americans fall victim to pyramid schemes.

Speaker 35 Sold on the hopes of economic freedom that direct selling can deliver, many find themselves stuck with unmovable inventory and mountains of debt.

Speaker 35 Worse, operating under the guise of a reputable direct selling business, these schemes often target the most vulnerable among us, such as single parents, immigrants, and retirees.

Speaker 35 She continues, I have long said that the fundamental goal of American government is to protect the people and to make sure they are provided with the environment to succeed.

Speaker 35 These illegal get-rich-quick schemes hurt unsuspecting consumers and aspiring entrepreneurs, and they need to be stopped.

Speaker 35 After hearing Marsha's take, you'd think we'd be all for this legislation, right?

Speaker 35 Well, no,

Speaker 35 because this bill that sounds ever so much like it's trying to protect consumers, in fact, if it passed, it could prevent the FTC from ever shutting down another MLM.

Speaker 35 I'm Jane Marie, and this is the dream, episode 11. And that's when I woke up.

Speaker 35 Leave it to those stinkers in Washington to bamboozle us once again. The bill, now called the Anti-Pyramid Promotional Scheme Act of 2017, has gone by a few other names in recent years.

Speaker 35 Last winter, a version of it was called the Moulinar Amendment, which Congressman John Moulinar unsuccessfully tried to squeeze into the omnibus bill.

Speaker 35 John Moulinar, by the way, happens to be the representative from Michigan's 4th District, Awasso's district, my district.

Speaker 35 We couldn't get Marsha Blackburn on the phone, and we were similarly ignored by John Moulinar, even though I played the, but I'm a former constituent and my grandma lives there card.

Speaker 35 So here's Dan to tell us what H.R. 3409 is all about.

Speaker 39 What it does is it attempts to define for the first time

Speaker 39 what a pyramid scheme actually is.

Speaker 35 The way it sounds is like some sort of consumer protection.

Speaker 39 It does sound like that, and I think it purposefully sounds like that.

Speaker 35 It even sounds like that in its title. The Anti-Pyramid Promotional Scheme Act uses roughly 1,000 words in that definition, but I'll paraphrase here.

Speaker 35 It says that an MLM is not a pyramid scheme so long as they don't require their distributors to buy a bunch of inventory and they must have a refund policy. Voila, that's it.

Speaker 39 But as we know, those refund policies can be a little shady.

Speaker 39 For instance, part of the bill, at one point in the bill, it says, does not include inventory that has been clearly described as discounted, seasonal, a special promotional item, or, and this is important, or it's not subject to the plan or operations inventory repurchase program.

Speaker 35 Wait a minute.

Speaker 35 Wait.

Speaker 35 So the inventory repurchase program doesn't need to apply to products that are seasonal, like these, right now Limelife has a bunch of holiday stuff up, and it doesn't apply to discounted products, but that's also something that they advertise a lot when you're signing up.

Speaker 35 Like you can get so many discounted products. That's not, it doesn't apply to those.
And it doesn't apply to perishable stuff like diet shakes or oils or makeup because makeup has an expiration date.

Speaker 39 Or anything that isn't currently marketable.

Speaker 39 It actually says that, which who gets to judge that?

Speaker 35 And then the last line says that the refund policy doesn't apply to products that aren't subject to the refund policy, which reminds me of my dad's favorite law ever.

Speaker 35 It's the Michigan, there's a Michigan seatbelt law that says kids have to use seatbelts unless there's more kids than seatbelts.

Speaker 39 Right. So I would say to anybody who is looking into becoming a distributor, I would look very closely at that fine print.

Speaker 35 So you could say we have a buyback policy. None of our products are eligible for it.
Yes. Moving on.
Moving on. Moving on to.

Speaker 39 So moving on to what ends up being the most confusing part of the bill to me, which is they have this little provision about not requiring inventory loading.

Speaker 35 Which is like having to have a lot of stuff on hand.

Speaker 39 Well, in the bill, it says it's a practice in which a planner operation requires or encourages its participants to purchase inventory in an amount exceeding that which the participant can reasonably expect to use, consume, or resell.

Speaker 39 So to me, if you have a buyback policy, then you're automatically not requiring inventory loading.

Speaker 35 I wonder if it's in there to clarify like what happened to McKenzie where she was encouraged to buy $1,000 worth of stuff from her upline. She was encouraged, but they're saying...

Speaker 39 But there's nothing in the bill that says this is how we're going to get around inventory loading, aside from the fact that there is a buyback policy that is required. Right.

Speaker 39 All it says is in the definition of what a pyramid scheme is, it's a company that requires you to have inventory.

Speaker 35 Right.

Speaker 39 By putting this in the bill, in my mind, they are calling attention to something they've gotten in trouble with before,

Speaker 39 but they're not doing or saying they're going to do anything about it. Just saying we don't require inventory loading is just saying we don't require inventory loading.

Speaker 35 That's it. Right.

Speaker 39 There's no plan of attack as to how.

Speaker 39 There's nothing. Right.

Speaker 39 And so then it's that's why to me, it's just a part of the bill that's like, whatever. Yeah.
You know? Yeah. Okay.

Speaker 39 So in the bill, the ultimate user is someone who is described as an individual who consumes or uses the product or service, whether or not that individual is a participant in the plan or operation.

Speaker 35 And traditionally, the FTC has shut companies down when they find that most of the people buying the product are people who have signed up to sell the product.

Speaker 39 There have been plenty of cases where the courts have shut companies down because they found that there was no end user outside of the company.

Speaker 39 So basically what they're trying to do with this bill is they're trying to redefine the ultimate user as either someone who's inside the company or outside the company.

Speaker 39 But if you don't know that that's a bad thing, then you could totally miss that.

Speaker 35 So they're taking the most problematic parts of their business model, like the fact that it is really impossible to get refunds, that you do actually have to buy a lot of product, that you, um, that you don't have to have an outside ultimate end user, like that it could just be going into your garage.

Speaker 35 So they're looking at the big problematic parts that we're looking at and in this bill, saying,

Speaker 35 Those don't count.

Speaker 39 Right.

Speaker 39 So what the bill is trying to set in stone is as long as you're a multi-level marketing company and you have a bona fide repurchase agreement, which again, you can get around completely by just saying in the fine print of your compensation plan that any or all products do not apply to the bona fide repurchase agreement, then you cannot be prosecuted.

Speaker 39 So that's why people say that this is essentially a bill that provides immunity to companies going forward.

Speaker 35 What are the chances that this will pass?

Speaker 39 So far as moving in the right direction.

Speaker 39 They're adapting to the issues they've had in presenting this bill and trying to get kind of sneaky in how they get it in. They're not going away.
There is

Speaker 39 nothing to say that they won't continue, including the conversations that we had with the head of the DSA.

Speaker 35 Oh yeah, I forgot to mention that despite Marsha Blackburn and John Moulinard ignoring our requests for interviews, one request actually came to us from the head of the Direct Selling Association, who were partners in crafting this bill.

Speaker 35 Joe Mariano heard our show, or at least heard of it, and asked if he could speak to us on the record. On the one hand, very brave of him to reach out.

Speaker 35 We've repeatedly contacted the heads of every company we've looked into, Limelife, Amway, etc., and the politicians doing their bidding.

Speaker 35 We've exchanged plenty of emails, but none of them wanted to talk to us on tape. So getting this note from their advocate was surprising.

Speaker 35 Until I thought about it a little more, and as grateful as we were to speak to someone from the other side, it is also his job.

Speaker 35 I mean, he literally gets paid to do damage control on behalf of the members of his association. But still, he just happened to be visiting LA while we were wrapping up production.

Speaker 35 So he came into the office. Well, I'm glad you're here.
And I've been thinking about whether I was going to tell you this when you came in.

Speaker 35 I'm worried that you're going to lie to me.

Speaker 35 Do you get that ever? Not really.

Speaker 35 Nobody's ever said that to me.

Speaker 38 Nobody's ever said that to me.

Speaker 38 Can I tell you what I'm worried about? Yes.

Speaker 38 To be honest, I'm worried that in a broadcast or a podcast like this, where my words can be taken out of context, that you won't necessarily lie to me, but you won't accurately represent the thrust of what I'm trying to say.

Speaker 35 On a personal level, one's honor

Speaker 38 is important to me, as hopefully it is to everybody.

Speaker 38 And there are two things that I really don't like.

Speaker 38 I don't don't like being lied to, and I don't like people

Speaker 38 thinking that I'm lying to them. Right.
So I do my best to convince them that even if we disagree, that at least you know that I think I'm telling the truth.

Speaker 35 Great.

Speaker 35 Joe has been with the DSA for over 30 years. Today, about 200 companies are members of the organization, and they include many we've reported on.

Speaker 35 Amway, Mary Kay, Herbalife, Avon, 31, and even that landline video phone company at the center of the lawsuit against Trump, ACN. Current members.
So here we go.

Speaker 35 Our chance to hold the industry's feet to the fire. And just a warning, Joe isn't a politician, but he has his talking points and rhetorical acrobatics down.

Speaker 35 I don't know if he was on the high school debate team, but I wouldn't be surprised.

Speaker 38 Our mission as an association is not only to represent the interests of those companies, but to represent the interests of the individual sellers or people who sign up with those companies to sell in the marketplace.

Speaker 38 And indeed, a lot of my interaction is with members of the field.

Speaker 38 For example, a few weeks ago, I guess it was a month or two ago now, we had about 150 to 200 individual sellers come into Washington, D.C.

Speaker 38 and tell their stories to members of Congress and others as individual sellers, regardless of the companies.

Speaker 35 Where were they in the company?

Speaker 38 They're junior sellers. Some of them are more senior sellers who've been successful.

Speaker 38 They were chosen by the companies. Right, so

Speaker 35 they weren't people who were failing.

Speaker 35 Well, no.

Speaker 35 They weren't the majority of people who failed. Well, actually, no, I won't put it that way.

Speaker 38 You use the word failing, so that's, I know, one of the issues that we want to get to. There are actually a lot of motivations for people to be involved in direct selling.
How do you know that?

Speaker 38 We do a couple different surveys. We do Salesforce surveys where we go out and talk to the people who are involved in direct selling

Speaker 38 through a variety of mechanisms. And the National Salesforce Survey, which is the one we're talking about, the companies will provide us with a pool of names.
So it's self-selecting.

Speaker 38 Absolutely, it is self-selecting. But the implication of your question is that, you know, okay, we're only talking to successful people.

Speaker 38 The reality is, no, if we look at the statistics of the folks who are involved in direct selling, and that's the term I used, involved in direct selling, you will see that we've actually begun to do a much better job as both an industry and as individual companies in segmenting the sales force in terms of their motivations, why they're involved in the business, what they're trying to do in the business.

Speaker 35 This quote segmenting of folks quote involved in MLMs is something Joe really wanted to talk about a lot.

Speaker 35 He's particularly interested in segmenting out a group that he calls preferred buyers or discount buyers, which is another way of saying distributors who are the end consumer.

Speaker 35 Remember, back in the 70s when the FTC was going after MLMs successfully, one feature that would label a company a pyramid scheme was where a significant portion of their profits were coming from within the company itself.

Speaker 35 In other words, each new recruit who has to spend X dollars for their starter kit or each new distributor who's encouraged by their upline, as McKenzie was, to buy samples or inventory to have on hand to show people or sell, if those purchases are driving the business rather than there being a genuine market for the product, that's that's a scam.

Speaker 35 In light of this, Joe Mariano and his colleagues are hoping something like H.R. 3409 passes so that they no longer have to worry about that being a crime.

Speaker 35 So in the meantime, they're aiming to create a category of people, quote, involved in direct selling called preferred buyers. But even Joe admits that people in direct sales resist the label.

Speaker 38 Interestingly, a number of people who are in fact preferred buyers, meaning that their primary and seemingly exclusive motivation is to get products at a discount, have resisted being categorized and said, actually, you know, I would still like to stay part of the plan.

Speaker 35 Joe, they're either preferred buyers or they're not.

Speaker 38 The reality is that the vast majority, or at least a significant percentage, of people get involved in the business for a variety of reasons, including to purchase the product.

Speaker 38 at a discount for themselves.

Speaker 35 I need you to back up just you said the vast majority

Speaker 35 get involved for a variety of reasons. correct that's exactly right well of course i mean a vast majority of people get jobs for a variety of reasons i have a job to pay my rent

Speaker 35 but not to pay my child's private school because she goes to public school right like the reason i work every day is for a variety of reasons yeah so anyone getting a job anywhere would be getting a job for a variety of reasons but you're saying that like it's like it means something yeah it does mean something what does it mean there are about probably six or seven motivations and again i'll provide you with the survey data in in detail um but your surveys okay go home.

Speaker 35 I want to talk about where your surveys are coming from because even in your own literature, it says that you've only asked 1,500 people that your proprietary survey group, Artemis strategy group, has chosen.

Speaker 35 So

Speaker 35 it's not a randomized survey of people.

Speaker 38 We've done randomized surveys as well.

Speaker 38 But the motivations for sellers to get involved in a direct selling business are... and not necessarily in this order,

Speaker 38 financial.

Speaker 38 Some of them are product devotees. They become passionate about the product themselves and they are really driven to share.

Speaker 38 Some people get involved because of their desire to pick up some business skills and be acknowledged and rewarded for whatever they are able to do in their business.

Speaker 38 The experience of getting up on stage and being applauded for having accomplished something is unusual for many of these folks and they value that greatly.

Speaker 35 They do, as we talked about, with the red jacket status you can get at Mary Kay or the clap, clap, claps from Danielle for making a sales goal for the month.

Speaker 35 But with what we know about MLMs, with 99% of participants losing money, I felt that there was a moral issue here. Why should it cost money to get lauded on stage?

Speaker 35 This isn't a beauty contest or even a bowling championship. This is purportedly an opportunity to earn more than a good feeling that you have to pay for up front, right?

Speaker 35 Joe did not see this as an issue. And in fact, he tried arguing that all business enterprises work this way.

Speaker 38 People get involved and go into different stores and environments all the time because of the experience, because of the sense that they get of satisfaction.

Speaker 35 No, museums. That's what museums are for.
You pay an admission to have like an enrichment of your life. But stores.

Speaker 38 I would respectfully suggest that you haven't. You haven't been on top of the retail environment.

Speaker 35 What do you mean?

Speaker 38 Because folks actually get involved or go in as customers because the successful ones, because they're in an environment that they enjoy and they like.

Speaker 35 I'm talking about people leaving with nothing or less than they walked in with.

Speaker 35 And you're saying that if they leave with less than they walked in with, they got something out of it.

Speaker 38 No, I'm saying that the people who are involved in the business

Speaker 38 or involved in the opportunity or involved in purchasing the product are indeed getting value. That's in fact why they continue to do it.

Speaker 35 I think it's more likely that they continue to do it for all the reasons we've found.

Speaker 35 Loss aversion, honoring sunk costs, and you know, the shame and embarrassment and denial we all feel when we've failed, especially if we've we've roped friends and family into that failure but joe is saying no they keep putting money in because it feels good

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Speaker 35 So back to segmenting. On the DSA's website, I found these annual reports, one-page documents with graphics and pie charts that Joe would like me to believe offer some helpful info.

Speaker 38 There were 18.6 million people involved in direct selling in the U.S. in 2017.
900,000 of those were what we are now calling full-time business builders. 4.7 million were part-time business builders.

Speaker 38 4.1 million were discount buyers. And 9 million became inactive during the course of the year.

Speaker 35 How many of the 900,000 become,

Speaker 35 quote, discount buyers and then inactive over the year?

Speaker 38 Well, no, those are two different categories.

Speaker 38 The business builders that we've described there are people who are business builders throughout the course of the year, have described themselves as business builders. Right.

Speaker 38 So the inactives are the inactives. So

Speaker 35 I don't know how you can look at that and and say that that's not helpful. I mean

Speaker 35 those are folks. I want to know this is telling me nothing.
I don't know where

Speaker 35 the point I was trying to get at was that a snapshot of how people self-identify at any given moment says nothing about their behavior or experience.

Speaker 35 Folks who become inactive over the course of a year, half of all participants according to Joe's numbers and a hell of a lot more according to others, those people may have started out hoping to earn a living, but couldn't, and gave up after investing God knows how much money.

Speaker 35 And those claiming to be full-time business builders, the pie chart doesn't tell me if that's working, if they're earning any money at all.

Speaker 35 Collecting that data would be helpful and useful information, if it mattered at all to these companies' bottom lines. But it doesn't.

Speaker 35 I tried again to get Joe to address this, and that's when Joe blew my mind by redefining another term. How many people who are attempting a full-time job in an MLM become inactive?

Speaker 38 First, it's not a job, number one.

Speaker 39 It's not a job.

Speaker 38 But it's not a job. It is an activity.

Speaker 35 Okay, so this entire season has been just some silly dream we had. MLMs are like bowling or beauty contests.

Speaker 35 That's funny because the whole time, based on promotional materials and videos and interviews we've done with countless people in the industry, we were under the impression that this was a business opportunity, a way to make money, a job.

Speaker 35 And we weren't the only ones. Michelle Gay of Lime Life and countless other pushers of this model think so too.

Speaker 22 You know, direct sales is work.

Speaker 35 It is amazingly rewarding work, and it's work you can do during flexible hours.

Speaker 43 This is net work marketing, it's not net sit marketing, it's not net play marketing, it's not net think about it marketing, it's not net one day I'll get to it marketing, it's net work marketing, and most people miss the W, the work part.

Speaker 44 Share up with everybody and start, you know, making tons of money like myself while staying home with your kids, never missing a moment with them.

Speaker 44 So, I'm working less and I'm making three times the amount of income, y'all. Three times the amount of income, almost four.

Speaker 35 And leaders for making the big bucks, they never stop going to events, they're always constantly learning, learning, learning. I recognize how

Speaker 38 you know

Speaker 35 strategic, and smart, and savvy, and hardworking this group is and as a result i make sure that our sales field is paid their worth

Speaker 38 it's not employment this is a direct selling activity why do you like this business model i think that you and perhaps others with all due respect have fallen and your skepticism is probably indicative of this i think you've fallen into a little bit of a trap And the trap is being skeptical of the business model only because it's a little bit foreign to you.

Speaker 35 It's not foreign to me.

Speaker 38 And I think you came at it with a degree of skepticism, if I could suggest that. And part of that is as a result of, look, we're used to walking into a mall or a store and making a purchase that way.

Speaker 38 We think of companies or products as legitimate, or for that matter, opportunities as legitimate, much more readily when we see advertising, when there's a Super Bowl commercial, or they're advertising in the newspaper or what have you.

Speaker 38 And because this model doesn't do that, people go at this with a degree of skepticism.

Speaker 35 Why is my question?

Speaker 38 It's a model that works. For whom? It works for the companies.
It works for individuals who are getting involved. It works for people that I have met and spoken to.
And I think if

Speaker 38 there's one flaw in the way that our business model has been structured over the years, is that we were too attentive to the distributors in the sales force and not aware enough of who those ultimate consumers were when they were outside of the sales plan.

Speaker 35 Well, doesn't that seem backwards in a capitalist society? That seems like the first thing you'd be concerned with is who's buying at the end?

Speaker 38 I think it's one of the things that has been unique about the model, and it's been one of the things that has been the least understood and is still the least understood.

Speaker 38 And why, in fact, today, as a result of the attention that people like you and others have given the model and the lack of understanding, is that there is a clear movement and a clear understanding on the part of certainly DSA members that we collectively have to do a better job in making sure that we can establish without question

Speaker 38 that people outside the plan are using the product or that people inside the plan are in fact using the product and that they're not just purchasing large amounts of inventory for other reasons to get higher commission levels sort of on the easiest way to do that would be to get rid of the incentive why why have uh purchase quotas why have why did you open your business when you opened it i mean there are reasons are you doing a show about podcast companies

Speaker 35 At this point, when Joe used the pee wee Herman tactic of, I know you are, but what am I, Dan decided to tag me out and get us back on track with that troublesome bill, H.R. 3409.

Speaker 39 To me, and to I think a lot of outside observers, it appears that you are trying to set up a definition for what a pyramid scheme is so that you can look at that definition.

Speaker 39 You can say, see that, we didn't do that, and I can show you the different reasons why. Sure.

Speaker 35 Point them out, right? Yeah, absolutely. All right.

Speaker 38 Would you like to hear again my interpretation? My concern and my understanding of the intent of the legislation.

Speaker 38 It is to make sure that when an individual who's involved in the plan also personally uses the product and/or

Speaker 38 members of their sales organization use the product legitimately for their own use and receive something. There's no way to transition to the business.

Speaker 35 Can I finish my statement?

Speaker 39 I have to interrupt and say there's absolutely not no model. There is no way.

Speaker 39 to make that distinction.

Speaker 35 How would you

Speaker 39 possibly be able to tell whether someone is buying something

Speaker 39 to try and hit a commission or whether someone is buying something?

Speaker 38 I would send you back to some of your research and look at some of the actions that have been taken against pyramid schemes when there have been very clear factual situations that have been alleged by the prosecution and ultimately in some of them proven in in some of those circumstances that people were in fact claiming to use the product themselves but were not and law enforcement was clearly able to identify the fact that these people were not using that that product if a person is purchasing a thousand dollars worth of toothpaste each month and suggesting that they are using it for personal use on its face that is

Speaker 38 that is clearly not doable.

Speaker 35 I'm not law enforcement, but in fact

Speaker 35 when a law enforcement

Speaker 35 tracking mechanism is not the companies you represent tracking

Speaker 38 that's up to the companies to do it.

Speaker 35 It's up to you you represent them.

Speaker 38 No, no, there's a presumption of innocence in our situation and our system of government, which I'm sure you understand.

Speaker 38 And if a law enforcement agency or others makes a determination that this is a likely pyramid scheme, as in any criminal or other civil case, they are obliged to provide evidence.

Speaker 38 And part of that evidence, which would be allowed under this potential law, is to say, look, this is a sham. You're not really engaged in personal use.

Speaker 38 And then to prove that they're not engaged in personal use.

Speaker 38 Now, to answer your question and your thoughtful question, yeah, there is an obligation on the part of companies and the association to some extent, to the extent possible, to determine that in fact companies are engaged in real sale of product to real people.

Speaker 39 And that's why companies have large compliance departments that there's a compliance department within a multi-level marketing company is what you're telling me.

Speaker 39 And I need to rely on it, and I need to rely on their compliance department to make sure that they're doing the right thing.

Speaker 35 No, no, no, no, no, no. Okay, well, then who is it?

Speaker 39 Who is overseeing the compliance department?

Speaker 38 Again, you're going down this sort of path that you have an agenda that is understood. And I understand.

Speaker 35 But are you looking at it?

Speaker 35 Let's just be clear about what our agendas are.

Speaker 38 Okay, at this point, and your agenda is clearly to question and suggest that no matter what these companies do, it's illegitimate.

Speaker 35 I wish I could say that.

Speaker 38 And that's that's not the case. I wish I could say that.

Speaker 39 Well, here's what I've seen from your industry. Yeah.

Speaker 39 I wish I could say that.

Speaker 35 I wish I could say that

Speaker 39 my intentions weren't pure because it would mean that I hadn't seen what I'd seen, that I hadn't seen people suffer, and that I didn't care, right?

Speaker 35 Yeah.

Speaker 38 Well, I've seen plenty of people too, and I care, and I've seen the way that this business model has affected people's lives in the thousands, positively.

Speaker 35 You care in the case.

Speaker 38 So you can talk about your care, and I can talk about mine, and I can talk about the devotion of the association and individual companies to do the right thing.

Speaker 35 As frustrated as I was with our chat, I gotta say, Joe was a real trooper. He stuck around for two and a half hours and was gracious in the face of me basically refuting every claim he made.

Speaker 35 Because we have evidence contradicting almost every claim he made. But Joe, for sitting and talking with us, we are very grateful.

Speaker 35 We have heard narry a peep

Speaker 22 out of

Speaker 35 proponents of this business model.

Speaker 35 Why do you think that is? I don't know. It's a good question.
We have not heard.

Speaker 38 Maybe nobody's paying attention to it.

Speaker 38 Ouch.

Speaker 35 We did hear via email from Michelle Gay of Lime Life, and she mostly expressed irritation that we didn't include her in the show from the start. before we began investigating her company.

Speaker 35 Given that Lime Life doesn't seem to be super up on their ethics in general, we patiently explained to her how that would have been unethical.

Speaker 35 We can't do an honest, candid exploration of how a company does business by first telling the company that we're looking at them. Once we saw what we saw, we reached out.

Speaker 35 Had we come up with nothing, then she'd have nothing to worry about, in which case, I'm guessing she'd be happy to talk to us. We wrote Michelle back, begging her to prove us wrong.

Speaker 35 to stand up for her workforce, honor and defend her company and her products and her business model. We asked for numbers.
How many beauty guides are there and how many lose lose money?

Speaker 35 How much money does she make, etc. She responded that we should guess.
Quote, here's my question to you.

Speaker 35 What percentage of each dollar goes to the commission payout, to gross profit margin, and to me? Given this anger you seem to harbor, I assure you that you're wrong.

Speaker 35 Okay,

Speaker 35 I'm not going to guess how much money you make, Michelle. Amway also got back to us, but the communication broke down when they began offering hearsay evidence to counter our claims.

Speaker 35 For example, remember the Amway rules that Vinandel and DeVos presented as a defense during the FTC trial? Amway claims those rules were always in place from the beginning.

Speaker 35 But the two people who would know for sure are dead. So we asked for some sort of proof, some documentation.
They provided none and wished us luck.

Speaker 35 Not one company came to us with any evidence that our findings, or those of Robert Fitzpatrick or John Taylor, or any of the experts we referenced, were wrong.

Speaker 35 They all offered lines like, this is sensationalism, not journalism, and our sales force is happy.

Speaker 35 And then sliding all the way down the pyramid-shaped business model thingy we're looking at, to the folks at the bottom, surely those folks on the ground, the ones Joe and all the MLM owners keep telling us are super content and successful and not complaining because there's nothing to complain about, surely those testimonials would pour in, whether true or not.

Speaker 35 But nope. Of the thousands of tweets, reviews, and emails we've gotten, we've counted around 10 anonymous notes from people claiming to be currently, happily involved with an MLM.

Speaker 35 We'd gone into this hearing horror stories of cease and desist orders or defamation suits, but all we heard were crickets.

Speaker 35 That may be in part due to our impeccable reporting, but we also found out via private message on our Facebook page that Limelife conducted a Facebook live event for their beauty guides, in which the owner, Michelle, directed her minions to ignore us, to stick with her, believe only her, her, and carry on business as usual.

Speaker 35 Which, if you've ever watched a cartoon, is exactly the sort of directive you'd expect from an evil genius facing a worthy opponent. Here's the thing I do know.

Speaker 35 The losses, be they large or small, depending on who you ask, suffered by folks who get into MLMs, they aren't total losses.

Speaker 35 I mean, they are to them, and much of the time, those losses are on a balance sheet as credit card debt, which compounds with interest.

Speaker 35 But I say they aren't total losses because someone has that money. To someone else, that's a gain.
And that someone else is whoever is sitting at the top. Your credit card debt is in their coffers.

Speaker 35 This podcast company isn't my first foray into entrepreneurship. When I was 18, my dad and I rented a small, long-shuttered drive-through credit union in Owasso, Michigan, and turned it into a cafe.

Speaker 35 I was struggling to finish high school after dropping out. No colleges wanted me, and given that I'd worked in cafes since I was 14, we thought it could be an avenue to me getting back on track.

Speaker 35 I also got a dog at the same time. And I ran that cafe, shoddily, for three years until we closed, as most new restaurants do.

Speaker 35 That loss, Joe Mariano and his cronies would argue, was no different than money's loss to an MLM.

Speaker 35 And it is my great pleasure to be the moral authority here because I believe there is a huge difference.

Speaker 35 The money we were out went into the the bank accounts of our employees, kids who needed it to pay for college.

Speaker 35 It went to a food supply company that provided us flour and eggs from local farmers, and that flour and those eggs went into the bellies of our customers, keeping them alive.

Speaker 35 And it went to my rent, $300 a month to share one of the nicest apartments in the county. I had my own bathroom.

Speaker 35 On the other hand, Katie from episode 6, the money she lost went to Mary Kay. Mackenzie's money went up the line at Limelife.

Speaker 35 The woman who called in to say that she's hidden from her husband the fact that she lost $25,000 to Herbalife, despite never having touched any of their products, all she or anyone in her family has to show for that money is a dark secret.

Speaker 35 Shame.

Speaker 35 Herbalife, though, they have that $25,000. Same goes for the tens of thousands of folks who've tried selling leggings for LulaRowe.

Speaker 35 What they have to show for it are basements upon basements upon garages upon sheds, stacked full of boxes filled with unsellable leggings.

Speaker 35 And there's no eccentric madman like William Penpatrick milling about outside to take it off their hands.

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Speaker 35 It's that time of year again. The holidays are coming fast.
And if your kids are anything like mine, that wish list is getting pretty long.

Speaker 35 Let's be honest, some of the things on that list make us stop and think, like a smartphone. Do they actually need all that stuff to stare at? Well, no, they don't.
Just get them a gab.

Speaker 35 I got one for my kid. It has tracking, which I only look at every once in a while because I don't like to spy on her.

Speaker 35 It has a phone number, very helpful, and it has a list of people you can text that I approve. Plus, I can spy on the text, which I don't do, haven't had to yet.

Speaker 35 But if something weird comes in on one of those texts, I do get a notification. And then I look and it's just some dumb YouTube makeup video that the Gab phone doesn't let you watch.

Speaker 35 So win, win, win, win, win, win. I love it.
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Speaker 35 Visit gab.com/slash the dream and use code the dream for a special holiday offer. That's gabb.com slash thedream.
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Speaker 36 Why choose a sleep number smart bed?

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Speaker 38 Can I make my site firmer?

Speaker 35 Can we sleep cooler?

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Speaker 35 So, what can we do? Start talking. To ourselves, admitting that maybe we got in over our heads and it wasn't our fault.

Speaker 35 To our friends and family, acknowledging our vulnerabilities and lessons learned. And to the powers that be.

Speaker 35 You can write your state representatives, easily found on the house.gov website, and tell them to vote no on H.R. 3409 or any other bill that serves to protect MLMs and not the people funding them.

Speaker 35 And you can write Joe directly.

Speaker 38 Send any information to me, Joe Mariano, M-A-R-I-A-N-O. The website is www.dsa.org.
Feel free to send me an email. I'll give you the simple one.
It's joe, j-o-e, at d-s-a.org.

Speaker 35 Where are your young living

Speaker 35 oils? Yeah, can you show them to me? Sit tight.

Speaker 35 Back in Owaso, my grandma Ruth and Amy, though they long ago realized MLMs are not a path to riches, they still buy MLM products from friends and family.

Speaker 35 They both believe in the healing properties of essential oils from a Christian company called Young Living Oils. What do you use these for? Oh my goodness.

Speaker 35 You use them to inhale for different problems that you might have. These you put on, what we do is we put it on like a collar or something like that.

Speaker 35 And when you're out places, then you don't usually pick up anybody's colds or anything.

Speaker 35 They believe in the health benefits of taking a proprietary blend of very expensive vitamins sold exclusively through Life Vantage.

Speaker 35 My grandmother still lauds Herbal Life Shakes for helping my grandfather lose weight. And I get it.
We're from a part of the world where big business has upended business on Main Street.

Speaker 35 The main street that politicians are always talking about. We had one of those.
Quaint. In fact, there used to be a little town out here on the road our farm is on.

Speaker 35 It had a post office, a fire station, and a one-room schoolhouse that my dad went to. But then cars made it easier to get to the bigger towns nearby, and so it disappeared.

Speaker 35 Same with Bannon's family-owned grocery store once we got a Kroger.

Speaker 35 Things are impermanent, and businessmen are shysty, so are politicians. Michigan is a state pockmarked with cancer clusters.

Speaker 35 The hotspots for these being along the Saginaw River, which feeds the smaller Shiawassee River, which runs right through the middle of Owasso.

Speaker 35 People believe the government is poisoning them on purpose because, famously, they did.

Speaker 35 And doctors, they're in cahoots with big pharma, so put them in the untrustworthy column as well.

Speaker 35 The only people left in the trustworthy column are relatives, friends, and neighbors, who are selling my grandmother a miracle essential oil and the chance for a more prosperous future.

Speaker 35 They don't know she's already rich, the honest way.

Speaker 35 That's it for this season of the dream. But don't worry, I'll be back soon with another season.
It won't be about MLMs, but it will be about something just as fun.

Speaker 35 If you have topics you'd like us to cover, please send us an email at thisisthedreampodcast at gmail.com.

Speaker 35 The Dream is a production of Little Everywhere and Stitcher, written and reported by me, Jane Marie, Dan Gallucci, Mackenzie Gassab, Lyra Smith, and help from Claire Rawlinson.

Speaker 35 We're edited by Peter Clowney. Our fact-checker is Michelle Harris.
The Dream is mixed by Mike Richter. The Dream is executive produced by Laura Mayer, Chris Bannon, Dan Gallucci, and me.

Speaker 35 Special thanks today to Bill Irwin, Shirley Liu, Ron Gaskill, Amy Fitzgibbons, Dave Giles, Jordan Bell, Stephanie Karauki, Matt Most, Christine Richard, Michelle Solarier, Doug Brooks, Bruce Craig, and once again, Robert Fitzpatrick.

Speaker 35 We appreciate you subscribing, rating, and reviewing the show wherever you listen.

Speaker 37 Hey guys, it's Paige from Giggly Squad, and if you're anything like me, holiday shopping has officially started. And you know where I'm going? Ulta Beauty.

Speaker 37 They have the cutest gift sets right now, like the Sol de Janeiro, Shea Rosa, and Cheer Perfume Mist Trio. It smells so good.
I've been misting it everywhere, on me, on the street, on my pillow.

Speaker 37 It's a whole vibe. I'm obsessed with the Tarte Kindness Cafe collector set.
It's packed with everyday makeup must-haves, and it's honestly too cute to wrap.

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Speaker 37 An Ulta Beauty gift card is the perfect gift for everyone. So whether you're gifting your bestie or yourself, make the season yours and head to Ulta Beauty today.
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Speaker 4 Medicate is a British clinical skincare brand trusted by dermatologists for visible, age-defying results without compromise.

Speaker 2 And right now is the best time of the year to try it.

Speaker 9 Medicate's 30% off during their Black Friday sale.

Speaker 10 If you've been curious about retinol, start with Medicaid's Crystal Retinol Night Serum.

Speaker 15 It's award-winning, ultra-gentle, and proven to work 11 times faster than traditional retinol, smoothing wrinkles, brightening dark spots, and firming skin without irritation.

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Speaker 14 And if you want that lifted, deeply hydrated feel, Medicaid's newest innovation, Advanced Pro Collagen Plus Peptide Cream, delivers visibly rejuvenated skin while reducing wrinkles.

Speaker 28 This is the moment to elevate your routine.

Speaker 10 Medicate's 30% off Black Friday sale is happening now through Tuesday, December 2nd.

Speaker 30 Visit medicate.us.

Speaker 32 That's M-E-D-I-K-8.us and save 30% on age-defying skincare.

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Speaker 35 Hey, dream listeners, it's finally here. The dream plus, where you can get every single episode of our show with no ads.
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Speaker 35 This helps keep us independent. And your contribution will help change the way every listener hears the dream.

Speaker 35 We'll be able to take out the ads that we don't even know are getting put into this show, which is annoying to both you and us. We're also going to have an amazing discussion board.

Speaker 35 The interface has it cataloged under AMA, Ask Me Anything. But I don't love rules.

Speaker 35 So what I did is started a bunch of threads like ask Dan and I questions, general chit chat, just to make friends and stuff.

Speaker 35 And every time I've been in charge of a discussion board, I've made a tab called women be shopping. And it's there.
And we're just going to talk about what we bought. It'll be fun.

Speaker 35 That's the dream.superca.com. Supercast.
Please, please go subscribe. It's five bucks.
It's less than a latte if you live in Los Angeles. See you there.