Weekend Reading: Crazy MLM Scams Edition

I’ve been following an incredible story in the U.S. where the blogger behind Lazy Man and Money had his identity revealed and received death threats for exposing a multi-level marketing (MLM) scam.

LifeVantage, makers of a diet pill called Protandim, has gone to great lengths to discredit the author of Lazy Man and Money – creating websites and videos that debunk the “myths and lies” that were exposed (Google “Lazy Man and Money” and check out the search results).

Read how Lazy Man’s identity was revealed and why his family was the target of a mafia-style threat from LifeVantage’s “protectors”.  It’s an unbelievable story.

Other bloggers have gone after quasi-pyramid schemes like World Financial Group and Primerica – financial services companies who seem to make more money recruiting others to sell underneath them.

The posts have over 100 comments, many from staunch defenders of these companies, and still get comments years after the original articles were published.  I’m willing to bet these organizations have set up Google alerts to identify negative reviews and then send a team of employees to comment anonymously in defense of the company.

Rachelle Berube was sued for defamation for calling League REIT a scam and warning potential investors of a ponzi-scheme.  She saw League was advertising a guaranteed 10-15% annual return and decided to look into it herself.

After posting what she found out on her blog and in a forum, she was hit with a $2.6M lawsuit.  Read more about the downfall of League REIT in this excellent Globe and Mail piece by Tim Kiladze.

I applaud these bloggers for putting their necks on the line to make consumers aware of potentially harmful, deceitful, and unethical business practices.  Another excellent consumer advocate is my Toronto Star colleague Ellen Roseman.  Her latest book is called Fight Back: 81 Ways to Save Money and Protect Yourself from Corporate Trickery.

I also have to give a shout-out to Tom Harrington and Erica Johnson, hosts of CBC Marketplace.  The show is in its 41st season and continues to help expose scams, misleading marketing claims, and customer service nightmares to protect consumer rights.

One episode looked at the oil change chain, Economy Lube, and revealed that the service technicians were trained to upsell you on services you didn’t need – transmission fluid change, brake fluid flush, etc.  Customers who thought they were going in for a $19.99 oil change were getting charged over $200 for services that weren’t needed and sometimes weren’t even performed!

Check out the archives here.

Have you ever fallen victim to a scam?  Or exposed fraudulent activity?  What else should consumers be wary of?

 

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10 Comments

  1. Loonie Lover on May 29, 2014 at 11:02 pm

    I was involved in an MLM many years ago. It could have been one of the worst financial decisions I’ve ever made, but luckily, I came to my senses fairly quickly and got out of it before it cost me too much.

    Since then, I’ve been “targeted” a few times by other people who had drunk the Kool-Aid. It’s amazing how people can suspend disbelief if they think there’s an easy way to make lots of money. The way those companies manipulate people is beyond shameful.

    • Echo on May 30, 2014 at 10:00 am

      The sales pitches can be very convincing so it’s easy to see why people are tricked into signing up.

    • FraudBuster on November 23, 2014 at 8:51 am

      Multi-Level Marketing is an economic cancer that preys on millions of gullible marks every year. With the widespread availability of high-speed internet, most of mainstream society has become increasingly aware of the fraudulent nature of MLM. Like religious cults, this has impacted their ability to recruit new marks. Most have been forced to move “downmarket,” focusing on immigrants and uneducated low-income demographics. However, these entrants usually lack the financial resources and contacts to contribute much to the schemes, and generally drop out very quickly. While there are always be a core of dupes that repeatedly fall for these schemes, the disinfectant of the internet is gradually driving these cult-like frauds to the fringes of society.

  2. Max on May 30, 2014 at 8:58 am

    So why is the government allowing these types of criminal activities to go unpunished in a supposedly civilized society?

    • David on May 30, 2014 at 9:46 am

      Ah government…….. now there is a ponzi scheme if ever I saw one, especially this government. Their only interest is to protect their jobs and expense accounts and get re elected……… game over.

    • Echo on May 30, 2014 at 10:02 am

      Because they walk the fine line of what’s legal and what isn’t, and if they come under scrutiny they’ll simply pack up and move to a more friendly State or Province. Utah is home to the most MLM companies due to lax laws on direct selling and pyramid schemes – http://www.mlm-thetruth.com/markets/markets/utah-mlm/

  3. zak on May 30, 2014 at 9:56 am

    Wow… I only followed one link from Lazy Man’s post and am already stressed for the guy! Life is too short for such nonsense…or MLMs! 😉

    • Echo on May 30, 2014 at 10:03 am

      I know! I’m glad he exposed the company but now this is getting out of hand.

  4. Rick Manjin on May 30, 2014 at 2:18 pm

    For the last 20 years as interest rates on safer, government, guaranteed interest paying and compounding investments were paying over 12% and now are at best 4.00%, more and more schemes, scams, and so called experts, professionals promising high returns of 8.00% to 10% or more per year have grown.

    5 year GIC’s at best are paying 3.00%, longer term provincial strip bonds are paying 4.00% at best and other longer term government bonds are paying 3.70% at best.

    I don’t know how people expect to earn much higher 8% to 12% annual returns year in and year out.

    I just think it is a sense of too much optimism, ignorance, desperation or being misinformed about what the current real world reality is about.

    I just saw a news story about a few weeks back about many investors reaching for yield buying C rated corporate bonds which are very bad credit quality bonds paying 8.00% or more per year.

    It is two desperate parties matching themselves up with each other. One wanting 8.00% plus a year and companies that can’t borrow from lenders like banks, mortgage companies, others like hedge funds etc. going after the small, yield hungry investor.

    It will not end well. This is a given as time will pass.

  5. My Own Advisor on June 1, 2014 at 8:06 am

    Geez, that is nuts. I mean, good on the blogger but wow…

    It takes guts to put out content that shoots down unethical business practices but I guess it minds us/bloggers/everyone publishing content online, never to publish something without thinking through the potential consequences.

    Long live CBC Marketplace and hope Ellen keeps fighting the good fight.

    Hope you’re having a good weekend,
    Mark

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