EXPOSE: MLM BASHERS TACKLE THE WATCHDOGS!!!
(Note: These Bashers Cost You 2OO Recruits Last Year)
www.mlmsurvivor ran by Ruth Carter website registered to Sue Perkins
See MLM Lies in Action = MLM Survivor Yahoo Groups
MLM BASHERS THAT ARE IN THE (SAME AS SCAM ARTISTS) = BROWN TYPE
Pleas note that they never list real names... that is usually a good sign of foul play
LEN CLEMENTS MARKETWAVE ONE OF GOOD GUYS = DARK BLUE TYPE
YOUR EDITIOR ROD COOK WITH COMMENTS ON IDIOT REASONING = RED FOR MAD!
Editors note: This game from a Yahoo group ran by Ruth Carter (an alias), www.MLMSurvivor.com She is an MLM basher! She wrote a book about the tape and training game after being working for one of the big Diamonds in Amway in his tape business. When Dateline did their "expose" on Quixtar they they didn't even mention her despite interviewing her. Doesn't that tell us something? I exceptionally dislike her because I helped her two years ago when we both got email bomb attacked. I helped her out by shutting down one of the servers blasting her. The disgraceful ##$%%^&% would not even say thank you (never again will I HELP HER!). What I hate about MLM Survivor is she AND her stooges never attack real criminals and scam artists that rip people off big time. If MLM survivor tangled with real crooks might get email bombed like I did last week . The MLM Bashers and liars don't ever admit there are Any Good MLM companies. MLM Survivor... www.mlmsurvivor.com creating myths and lies. The top 3 MLM Bashers in Google and other search engines cost you 2 million good recuits a year!
EXPOSE: MLM MYTHS AND LIES ON MLM SURVIVOR
From: MWave2@aol.com
Date: 16 Jun 14:18 (PDT)
To: Rodger@mlmwatchdog.com
Subject: Len Clements (MarketWaveInc.com) in battle with MLM Bashers
______________________________________
==================Innocent Stooge for MLMSurvivor.com
In mlmsurvivors club@yahoogroups.com, jonathon blake <pseudo_daoist@y...> wrote:
> Wendy wrote:
>
> a) How do you differentiate between "legitimate network marketing opportunity" and "MLM Scam"?
>
> FWIW, by _current_ FTC standards and definitions _all_ the currently operating MLMs and "Network Marketing Companies" are pyramid schemes. [Less than 70% of the retail sales of product are to true, third party customers, which is the standard established by the 1979 Amway decision.]
>
> The practice of paying an individual [who is not an employee] who referred a customer that purchased something, is illegal under federal statute. [Look at how many MLM companies have suggestions to do that, in their sales manuals.] Ed. Note: MLM companies don't have employees so right away we know this is not a student of the business making this statement. Len: Rod is right. Almost all states have What's called "sales referral laws" which is what Jonathon is referring to. However, few state have ever tried to apply these laws to MLM opportunities. The State of Iowas did in a case against "American Professional Marketing" and the court rejected the basis for the State's case.
>
> Are you sure you can find an actual example of an MLM or "network marketing company", that does not violate either of those two datapoints?... ED. Note: yes easy, read below Amway, Mary K, Avon, PrimeAmerica, Keller Williams and many others have more customers (and millions of dollars of customer sales) than distributors. They aren't the only ones!
>
> ... Is the MLM retail sales orientated, or recruit a downline orientated? The latter will fail the 70%/10 customer rule, that the 1979 Amway decision implied was acceptable. [Based upon the Omninutrtion (?sp) case, that is not a safe-harbor defence.] The former _might_ survive, but under the FTC definition of "retail customer", no _current_ mlm is in compliance with that rule.
>
> jonathon
Ed. Note: Jonathon you are shooting "Ruth" in the foot on her board! AMWAY has about 3x (or more now) as many customers as distributors. Following your logic and misinterpretation of what the FTC does, Alticor, Amway or Avon are the safest MLM companies in the world followed by Mary K, Melaluca, and about a 100 others. If you have more customers (THAT DO NOT BELONG TO THE PAY PLAN) than distributors in total count of the company Wow! Why do you think P&G gets nuts about AMWAY? It is not the number of distributors buying soap! It is the number of customers buying the soap! I am sure that AMWAY/Quixtar will appreciate you presenting they are A SUPER LEGAL MLM company because they have lots and lots customers. Better censor him Ruth, like Len - Blasphemy!
=========================Len Clements Comes Back Again
Jonathon,
There is absolutely no federal law that prohibits an MLM company from paying commissions on personally consumed product. In fact, the "70 Percent Rule" was merely dicta supplied by the courts in the FTC vs. Amway decision (1979), and the FTC has since clarified (in a letter to the DSA on 1/14/04) that "The amount of internal consumption in any multilevel compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme." They go on to explain that the motive for buying the product is the key factor. That is, if a distributor purchases product because they genuinely want it, the FTC has no problem with an MLM company paying commissions on that sales volume. If, however, they are making a product purchase as a token act simply to meet a sales quota, and would otherwise have not purchased the product, that would be indicative of an illegal pyramid.
The only federal case where personal consumption was declared non-commissionable was the Webster vs. Omnitrition case before the 9th Circuit Court of Appeals (the most overturned appeals court in U.S. history - the same court that recently declared the Pledge of Allegiance unconstitutional). Even in this case, where the court did nothing more than throw out a previous summary judgment in favor of Omnitrition and remand the case back to the lower court, the opinion on the personal consumption issue was again dicta and created no law.
Finally, there is current legislation being lobbied by the DSA, with congressional sponsorship, that will (if passed) declare personal consumption legally commissionable on a federal level. In the mean time, Texas, Kentucky, Oklahoma, Louisiana, Ohio, and the Canadian government have laws that does specifically recognize internal consumption as being legally commissionable.
Len Clements
MarketWave, Inc.
=========================A Basher named kublaiKant jumps in!
Len, Len, Len
You are being misleading. Perhaps negligently - but misleading nonetheless.
In addition to Omnitrition, the United States District Court for the District of Nevada followed Omnitrition in the Equinox case. Long before Omnitrition, the courts in People v. Bestline, State v. Schrader, People ex. rel. Hatigan v. Dynasty Systems Corp., State v. Phase II Systems, Inc., State ex. rel. Webster v. Membership Marketing Int'l, all essentially agree with the Webster court's explanation that the lack of retail sales is the sine qua non of a pyramid scheme.
Tellingly (and despite your quote from a letter to the DSA), the FTC shut down Five Star Auto Club under the following definition:
Here kublaiKant takes off on a silly rant about FTC settlements that are not law.
"'Prohibited marketing scheme' means a pyramid sales scheme, Ponzi scheme, chain marketing scheme, or other marketing plan or program in which a person participates under a condition that he or she make a payment, directly or indirectly, to receive the right, license or opportunity to derive income as a participant primarily from: (1) the recruitment of additional recruits by the participant, program promoter or others; or (2) non-retail sales made to or by such recruits.
'Retail Sales' means sales of products, services, or Business Ventures by Defendants, their successors, assigns, agents, servants, employees, and those persons in active concert or participation with them to third-party end users. Retail Sales do not include sales made by participants in a prohibited marketing scheme or multi-level marketing program to other participants or recruits in that scheme or program or to such a participants' own accounts."
In the Equinox case, the used a slightly different wording of the same rule which was also used to shut down Trek Alliance (both members of your beloved DSA, by the way):
"Pyramid scheme" means a sales scheme, Ponzi scheme, chain marketing scheme, or other marketing plan or program in which participants pay money or valuable consideration to the company in return for which they receive:
1. the right to sell a product or service; and
2. the right to receive in return for recruiting other participants into the program rewards which are unrelated to sale of products or services to ultimate users.
For the purposes of this definition, "sale of products or services to ultimate users" does not include sales to other participants or recruits in the multi-level marketing program or to participants' own accounts."
Not only is Webster in line with the same essential way courts have treated this issue for the last thirty years but TWENTY states have statutes that do not allow a scheme to operate where bonus or commissions are primarily sold on products consumed by the participants themselves: New Mexico, Maryland, Utah, Virginia, Massachusetts, Arkansas, Tennessee, Mississippi, Hawaii, Florida, South Dakota, Arizona, Ohio, North Carolina, Missouri, Kansas, Indiana, Georgia, Minnesota and Colorado. ED. NOTE: WOW! There must have been 20 new MLM laws passed my since last research and review Jan 2004! Either that or the wigged out writer is fibbing! OH YES THEY ARE FIBBING..... RANDOMLY Let's look at Maryland law since
kublaiKant says it is supposed to prevent payment of commissions on self consumption of MLM products.
MY GOODNESS, THE WRITER ABOVE MUST HAVE FABRICATED HIS STATEMENTS!
Finally, there is a reason why this rule is in place. If the products are either not real products or are sold with a premium to fund the pyramid bonus thereby making them difficult to sell on the retail market to non-participants, then the only way a participant can achieve a return on investment is to recruit more participants. That takes us back to Koscott and Dare to Be Great and you have an illegal buyers' club pyramid scheme. When the vast majority of the products are just purchased by the so-called "distributors" it is an illegal recruiting scheme and it is mathematically certain to disappoint most participants. ED Note: Twelve states have Buyers Club laws (Feds None) and nothing in either the Koscot or Dare To Be Great decisions say a word about "Buying Clubs." Rest of the paragraph is weird too what is he/she talking about based on what? This is babbelty goop as Len notes below.
Two questions for you Len:
(1) If only a small portion of the products and services are sold to non-particpants then where is the money coming from? Ed. Note: Go look at the stats of companies and customers especially Amway why do you think they really did not care about the # of customers? BECAUSE THEY HAVE TONS for years and years they have been collecting customers and converting distributors that quit into customers because they like the products. Nice of you to support Amway.
(2) If an MLM's products are real products sold at a reasonable retail price why shouldn't the FTC require most of the products to be sold to non-participants? Why should they, since the FTC has said in public conferences that is not a major issue if legitimate products are being sold.
KublaiKant
=======================
First, in response to Ruth's remarks:
Ruth said: "Also, in the interests of full disclosure, it is the largest appeals court that renders the largest number of decisions, by a substantial margin. Percentage-wise, about as many of its decisions are overturned as any of the other appeals courts."
Not true, Ruth. From 1992 to 2003, the average percentage of Ninth Circuit Court decisions overturned by the Supreme Court was 73.5 percent as compared to an average of 61 percent by the all the other circuit courts of appeal combined. ED. Note: The Ninth Federal Court of Appeals has been the equivalent of "censured" by the Supreme Court 3 times for bad decisions. Other Appeals Courts = zero
Len said: "Finally, there is current legislation being lobbied by the DSA, with congressional sponsorship, that will (if passed) declare personal consumption legally commissionable on a federal level."
Ruth said: "Yes, rendering any product-based pyramid scheme "legal." Great consumer protection legislation!"
We've already went around and around on this issue several months ago, Ruth. I provided you with evidence that this proposed legislation would not protect illegal pyramid schemes, and the term "product based pyramid scheme" is an invention of your cohort Jon Taylor. He uses this term synonymously with "multilevel" or "network" marketing companies, which have already been declared legal on a federal level, and in all 50 states.
You then chose to bow out of the debate, and told me privately that you would disallow my postings if I were to continue the discussion on your board.
In response to "kublaikant" remarks:
You are correct in that there were many federal cases previous to Webster vs. Omnitrition that pointed to a lack of sales to bona fide end users (Koscot, FundAmerica, and Unimax are also great examples) as indicative of a pyramid scheme, and there have been several since. Obviously, there have been more federal cases that just Omnitrition. The point I was trying to make, which within the limitations of this forum I admit I did not make clearly, was that the Omnitrition case created only an *opinion* (not law) and all subsequent cases (that I have reviewed, which have been many) have sited the 9th Circuit's opinion as their precedent. In other words, *no other federal court* has, subsequent to the Omnitrition case, entirely on their own, produced the same opinion.
Furthermore, the other pre-Omnitrition cases you cited, some dating back 30 years, are no longer relevant to current day MLM law (and the FTC has recently demonstrated their concurrence with that position, which I'll get to in a moment). As recently as the early 90's MLM companies routinely required $39 to $100 "distributor kits" and various other distributor specific, mandatory expenses (i.e. required training, admin fees, etc.). Today, most such kits are under $30, peripheral mandatory expenses have been eliminated, and roughly half of all MLM companies have no required kit purchase at all. Since retail customers are now afforded the ability to enroll as a rep for free, or for a small token fee, it now behooves them to do so and get the product at wholesale rather than retail. Therefore, many bona fide "retail" customers now appear as "distributors" on the books. Several states, and the FTC, have recognized this trend.
Final point on this issue: My response to Jonathon was to rebut his claim that there were laws in place that forbid paying commission on internally consumed product. All of the cases you cited created no law, but only legal precedent. You seem very astute in the ways of the law, so surely you understand the difference between a law, and a legal precedent, which is substantial.
You stated: "Tellingly (and despite your quote from a letter to the DSA), the FTC shut down Five Star Auto Club under the following definition:..."
It is true that in both the Five Star and Equinox cases the FTC defined legally commissionable sales as being those to non-distributors. However, you appear to be unaware of the FTC's actual position on this issue (internal consumption can be legally commissionable), and their reasoning for taking such an extreme position in these cases.
In the FTC letter (signed by the Acting Director of Marketing Practices, FTC, 1/14/2004) the FTC states in direct response to the issue you have raised:
"The Federal Trade Commission often enters into consent orders with individuals and companies that the Commission has determined have violated the FTC Act. To protect the public from those who have demonstrated an unwillingness to follow the law, these orders often contain provisions that place EXTRA constraints upon wrongdoers that DO NOT APPLY TO THE GENERAL PUBLIC. These "fencing in" provisions only apply to the defendant signing the order and anyone with whom the defendant is acting in concert. THEY DO NOT REPRESENT THE GENERAL STATE OF THE LAW.
"For example, when the Commission brings a pyramid scheme action, the case often concludes with a consent order. The scope and severity of the order will depend upon the facts of the case; however, most such orders contain definitions that exclude any sale to a participant in the business from the calculation of the venture's legitimacy. These definitions draw very clear lines for those who have demonstrated a willingness to violate the law, BUT ARE NOT INTENDED TO REPRESENT THE STATE OF THE LAW FOR THE GENERAL PUBLIC."
[All emphasis above is Len's]
You are incorrect in your assumption that the cases you sited reflect the law, or the current state of the FTC's position on this issue. Under the proper conditions (cited in my original post), paying commissions on internally consumed product is legal and NOT indicative of an illegal pyramid.
You stated: "...TWENTY states have statutes that do not allow a scheme to operate where bonus or commissions are primarily sold on products consumed by the participants themselves: New Mexico, Maryland, Utah, Virginia, Massachusetts, Arkansas, Tennessee, Mississippi, Hawaii, Florida, South Dakota, Arizona, Ohio, North Carolina, Missouri, Kansas, Indiana, Georgia, Minnesota and Colorado."
According to Gerald Nehra (mlmatty.com), who has practiced exclusively MLM law for over 15 years, "No state specifically prohibits the paying of commission by an MLM company on it's distributor's personally consumed product."
In deed, not one of the states you've listed states this specific prohibition. Take New Mexico, for example. Their anti-pyramid statute states: "... any... plan... by which a participant gives consideration for the opportunity to receive compensation which is derived primarily from any person's introduction of other persons into participation in the plan...". If a distributor is purchasing the product because they actually desire the product, then their "introduction" into the business was not a mandatory prerequisite for that sales volume to occur. Personally consumed product does not occur only upon the "introduction" of a new rep, and is not a required purchase in any MLM company operating today. In other words, whether or not this, or any state's statute, applies to any or all MLM companies is a matter of interpretation. That interpretation is left up to the courts, not you or I.
You stated: "When the vast majority of the products are just purchased by the so-called 'distributors' it is an illegal recruiting scheme..."
Again, that is your opinion, based on your interpretation of the law. Yet, you seem to state it as a matter of fact. The Federal Trade Association also seems to disagree with your interpretation. ED. Note: Amen!
As to your questions:
"(1) If only a small portion of the products and services are sold to non-participants then where is the money coming from?"
The "participant." But are they required to make that purchase? Would they have made the purchase even if there were no income opportunity? (many MLM reps are fanatical users of their products). Are the customers enrolling as distributors simply to save money? And since the act of participants earning on personally consumed product is NOT always indicative of an illegal pyramid, I have to ask - so what?
"(2) If an MLM's products are real products sold at a reasonable retail price why shouldn't the FTC require most of the products to be sold to non-participants?"
Already answered previously in this post, and this message board, ad nauseum.
Thanks for the challenging exchange, Robert. Um, I mean "kublaikant." :-)
Len Clements
MarketWave, Inc.
CENSORHIP STARTS HERE...LEN IS CUT OFF BECAUSE HE TELLS THE TRUTH
===========================
Subj: Message not approved: Current FTC Standards
Date: Wednesday, June 16, 2004 12:39:08 PM
From: paine_wwweb_r@comcast.net
To: MWave@aol.com
You're OUT. You know why?
The following excerpts of your posts will illustrate
ED. Note: Next two posts "PW" (Again no names from these cowards) quotes from Len were from when he was censored last year]
----------
Message 22425 of 32379
From: "mwave43" <MWave@aol.com>
Date: Wed Jun 11, 2003 3:26 am
Since you are now censoring my posts, I won't waste time
responding further at the risk of putting forth the effort for nothing.
The last word is yours, Ruth. Have fun.
----------
and this
----------
Message 22426 of 32379
From: "mwave43" <MWave@aol.com>
Date: Wed Jun 11, 2003 3:36 am
Well, I'll be leaving now, so you can all just batter away at me
unimpeded. I'm sure you'll feel a lot better.
----------
and today
----------
Date: Wed Jun 16, 2004 3:02pm
Subject: Re: Current FTC Standards
> You then chose to bow out of the debate, and
> told me privately that you would disallow my
> postings if I were to continue the discussion
> on your board.
So you change the truth to suit your argument, which is really nothing
more than a personal attack on the owner of this forum. Not a good
tactic for maintaining posting privileges.
Ed. Note With all the Fabrications posted the moderator says this!!!! WHAT!
Oh, and the other reason I'm rejecting your posts:
Because you were warned.
PW
P-A-L
=============================Ed. Note: The following was a private email to "PW" from Len. He gave me persmission to to reprint it!
PW -
I tried to use some decorum on your folder. But privately, I'll say this:
You are so full of crap it's ridiculous!
I "bowed out" of your forum last year and gave your groupies the "last word" BECAUSE Ruth declined to debate me further, and refused to allow me to post any more responses to their attacks!
Ruth was the one that practically begged me to respond to her last rebuttal (re: the DSA sponsored legislation) and when I did SHE was the one that said "enough", and refused to counter my arguments. Now SHE brings up the same point that she was unable to refute last year, which I proved wrong. Go back and read your own damn forum.
Now you prevent me from exposing the lies being posted under the guise of not following forum rules? That's BS and you know it. The rules are, "Let us lie and mislead as many people as we want, and if you try to present any facts that will prove us wrong - you're OUT." Ironic, isn't it?
This isn't about protecting Ruth (she's a big girl, I think she can take care of herself), or the integrity of your forum, it's about making sure no one ever understands that you all really have no idea what you're talking about when it comes to MLM outside of your Amway experience. I'm sure you were looking for any excuse you could find to sensor my post. You are as blindly obsessed with your hatred of it as others are over their love for it. You claim to protect us from dishonesty, scams, and unethical practices, yet your own anti-MLM campaign fully embraces all of the same behaviors.
I was going to leave this alone after this last post and just walk away. But since Robert's *** well crafted garbage will now remain on your board unopposed, I'll refute it online and in the pages of the Network Marketing Business Journal, which has a readership of over 250,000 (as opposed to the 25 that would have read it had you posted it on your board. I told Ruth last year that I was going to keep her, her book, and her web site out of my "Anti-MLM Zealots" expose' (a series currently running in NMBJ), although I was on the fence about it.
You just knocked me off the fence. I won't tip my hand now, so I'm sure you'll dismiss this with a hearty laugh. We'll see who gets the last one.
Len Clements
MarketWave, Inc.
www.marketwaveinc.com
*** Ed. Note: Len thinks "kublaiKant" might be Robert Fitzpatrick, another MLM basher, Ruth is one of his groupies. He denies it, but I still think it is Robert Fitzpatrick. A real lawyer would have at least checked the state laws before posting fibs we saw above.
------------------- THE ANONYMOUS "KUBLAIKANT" POSTS AGAIN-----------------------....
> Pardon my tone, but you did NOT answer my
> questions posed to you in the last post.
> Moreover, mischaracterizing the issue throughout
> your response as you did and re-using the same
> strawman twenty times I find to be disingenous -
> at best.
Then the board monitor
PUTS THIS RIDICULOUS MESSAGE ON BOARD
Len will not be answering. He attempted to post a message that
clearly violated our rules, and he has been silenced. (As our rules
state, there is a double standard with regards to pro-MLMers. Insults
and argumentation in favor of MLM are not permitted here.
Additionally, when proMLMers make claims, they are expected to back
them up with verifiable evidence. We try to allow some latitude, but
when arguments start appearing claiming that black is white, rules
have to be enforced.)
However, you and everyone else are welcome to continue addressing him,
since he is allowed to read messages posted here.
PW P-A-L
ULTIMATE MLM FIBS WWW.MLMLMSURVIVOR
