- The video discusses multi-level marketing companies (MLMs) like Mary Kay, Rodan and Fields, New Skin, Amway, and Herbalife
- MLMs have two main characteristics: products are not sold in stores, but through distributors, and distributors are always looking for more people to join them
- MLMs often promote the idea of being your own boss, earning extra money, and working from home
- The video questions the legitimacy of MLMs and their business structure, comparing them to pyramid schemes
- MLMs often use high-profile celebrity endorsers and charismatic founders to promote their products
- The video focuses on Herbalife as an example of a major MLM, highlighting its sales pitch and controversies surrounding its health claims and founder's response to criticism.

- The video discusses the questionable practices of Herbalife, a company that sells nutritional products.
- The video highlights claims made by Herbalife distributors about the effectiveness of their products in treating serious medical conditions, which are likely false.
- The video explains how Herbalife's compensation plan incentivizes distributors to buy and accumulate large amounts of product, leading to financial strain and excess inventory.
- The video suggests that Herbalife may operate as a pyramid scheme, where distributors primarily make money by recruiting others rather than selling products to actual customers.
- The video mentions the recent investigation by the FTC into Herbalife, which filed a complaint alleging that the company's compensation program resembles a pyramid scheme.
- The video criticizes Herbalife CEO Michael Johnson's response to the investigation and highlights the growth of Herbalife in Latino communities.

- The video discusses the issues and dangers associated with multi-level marketing (MLM) companies, using Herbalife as an example.
- It highlights the deceptive tactics used by MLMs, such as making bold product claims and pressuring distributors to recruit more people.
- The video also mentions the stockpiling of products and the difficulty of making a profit in MLMs.
- It criticizes the lobbying power of MLMs and the lack of government regulation in the industry.
- The video concludes by calling for awareness about the dangers of MLMs and the need to educate people about their deceptive practices.

The video discusses the dangers of multilevel marketing and encourages viewers to share the video to raise awareness. The hosts use humor and a pyramid analogy to emphasize the negative impact of these schemes.

The video discusses the issues and dangers associated with multi-level marketing (MLM) companies, using Herbalife as an example. It highlights the deceptive tactics used by MLMs, such as making false product claims and pressuring distributors to recruit more people. The video also mentions the stockpiling of products and the difficulty of making a profit in MLMs. It criticizes the lobbying power of MLMs and the lack of government regulation in the industry. The video concludes by calling for awareness about the dangers of MLMs and the need to educate people about their deceptive practices.

Las compañías de mercadeo multinivel aclaman ser negocios legítimos, pero algunas parecen ser terriblemente... piramidales. John Oliver y Jaime Camil nos demuestran como funcionan. 

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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 MLMs.

Companies like Mary Kay, Rodan and Fields, New Skin, Amway, and Herbalife.

They sell different products, but generally MLMs have 2 main things in common.

First, you don't see them on store shelves, you buy them through distributors, like friends, family, and coworkers.

And secondly, those distributors are always looking for more people to join them.

And they have a pretty attractive message.

That you care about, that you love, that you adore, that you admire.

A hundred people, share with everybody, they want what we have, We got it.

I'm supposed to share that with 10 people I love, adore, and admire?

There are the judges on this season of Project Runway, that's 3.

And before you brush this industry off, you should know, collectively, it did around $36 billion 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 10 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 2 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 in turn.

A few years ago, a hidden camera caught a then distributor for that company walking a prospective recruit through just how easy it can be.

Then you and I would help those 3 friends sign up their 3 friends and get their 700 dollars.

Then we help those 9 people sign up their 3 to see friends and they get a 700.

So everyone kind of gets their money back.

That's as reassuring as hearing a doctor say he kind of knows where your appendix is.

Oh, it's probably somewhere near the spleen.

And if you are thinking, well, hold on, that business structure sounds familiar.

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 network marketing company.

Is it shaped like a pyramid, the business structure?

But you're saying it's not an illegal pyramid scheme?

So it's not a pyramid, it's just pyramid-shaped.

You know, like a Dorito, or an Angry Birds, or just a pile of bullshit.

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 endorsers.

Veeamer had noted science expert 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, Gina

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'd 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.

At company conferences, the guy makes quite an entrance.

I wanna watch you bleed ♪ ♪ Welcome to the jungle We're taking it day by day ♪ ♪ If you wanna...

♪ Okay, fourth-string wedding chapel Elvis, calm the fuck down.

Once he gets going, he puts on a real show, demonstrating how you can pump money, dramatizing the rat race by sweatily running around in a giant wheel, and screaming at the gravestone of Joe Nobody, who never fulfilled his true potential.

The dreams you told me about, we can actually do them now.

It works and I'm doing it and I want to help you do it because it's so good.

We can have vacations and sailboats and we can have multiple homes and you can give your wife the jewelry that she deserves, man.

-...-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, fuck you, your grandmother died a loser!

And 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 Young Jevity walk you through a future dream scenario in exquisite detail.

In 2 years, this is what's gonna happen to you.

You're gonna drive to your work, you're gonna walk into your boss's office, you're going to sit down, and you're going to quit your job.

You're going to explain that that little pyramid scheme thing that you almost got terminated for last year, you're now an entrepreneur, and you're going to be doing that full-time.

Whoa, whoa, whoa, whoa, back up, back up, back up.

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 Longevity 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 scheme back then.

And you're going to walk into the bank, and you're going to deposit your coding bonus.

And the lady's going to say, will that be checking or savings?

And you're gonna say, yeah, I don't really care.

And then the lady's gonna say, ha ha, 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 She's gonna say, do I need to get security?

And you're gonna say, the account ending in 8424, please.

Now, Young Jevity told us that that woman's claims are not authorized by the company and are against Young Jevity policy, which forbids income claims.

Although, that video was taken at 1 of their official events.

And the woman, Denise Chenault, is featured with her husband on the company website with the words, Denise and Tom Chenault are Young-Jevity.

And come on, you don't let someone embody your company if you don't agree with them.

If Flo turned out to run a dog fighting ring, Progressive would wipe her off their website immediately.

And by the way, you know that's coming, you can see it in her eyes.

-♪ ♪ -♪ But you cannot deny the picture that she paints is enticing.

Who doesn't want to tell their boss to go fuck 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.

Well, let's take a look at just 1 of these companies in depth, Herbalife.

It was the 1 that you were supposed to send to 10, 20, 100 people.

It sells nutritional supplements like shakes and vitamins, and it's 1 of the biggest MLMs around, with net sales of 4.5 billion dollars last year.

It has celebrities who talk up its benefits from superstar athletes like Cristiano Ronaldo to pretty much the last person you're expecting to see in this piece.

Well, first of all, you have a great product.

tell everybody you're a product of 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 Madeline 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 NutriShakes a day and thank her in the morning.

In its early days, Herbalife was accused of overstating their health benefits, claiming in the 80s that 1 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.

But second, why would anyone in the 80s take Herbalife to lose weight?

-...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 2 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 tuber thanks to Herbalife.

Whatever it is, the product did, it helped her a lot.

New recruits were told Herbalife products helped to treat heart disease.

24 years ago, I had a really congested heart failure.

I'm 40 years old, that's my first pregnancy.

Nutritional shakes cannot help you get pregnant.

There are only 3 liquids that can do that.

A glass of Merlot, the honey smooth music of Sade, and good old-fashioned jizz.

People might be making claims like that because they are desperate to move excess product.

You see, broadly speaking, under Herbalife's 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.

For instance, let's say you're selling Herbalife's disgusting, creamy chicken soup powder for 13.35 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 1 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.

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 sell, it sits in a garage.

There's gotta be an end point here at some point.

When they run out of money, there's an end point.

So, Herbalife may be 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 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 1 narrow part of their insanely convoluted compensation plan.

Now when E places a 4,000 volume point order at 42%, this counts as personal volume for you.

But, since this qualifies E to supervisor with a one-month qualification, that volume now becomes encumbered for everyone in the upline.

Remember, each upline distributor needs to accumulate 1,000 unencumbered volume points if they want to qualify for supervisor as well.

And if you accumulate 10,000 unencumbered volume points, those are grouped into an unencumbered batch, which qualifies Benedict Cumberbatch for 1 unencumbered cucumber cummerbund.

And while, 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.

Not enough to pay the bills that are racking up.

It's like that famous salesmanship motto from Glen Gary Glen Ross.

Always be selling the concept of selling to other salespeople.

And at this point, that 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 3 or 4, 5, let's say.

Then You let the 5 do their 5, that gives you 25.

What they don't show you is that you could only do that 13 cycles.

And you would exceed the population of the Earth.

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.

The guy is still swimming in Take On Me money.

-♪ ♪ -♪ And Herbalife CEO, Michael Johnson, has an interesting way of deflecting that whole pyramid scheme question.

And then I went to be executive vice president, and then president of the international entity of the company.

And at the top was sitting the CEO of the company.

Is that any different than what we're doing here?

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 2, Simba's Pride.

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 company and filed a blistering complaint, walking right up to the line of outright calling it a pyramid scheme.

They 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.

It sounds like what you're saying is that this company has all the hallmarks of a pyramid scheme.

The word pyramid does not appear in our complaint.

They were not determined not to have been a pyramid.

If the FDA announced, we have not determined cotton candy not to be clown pubes, you would never risk eating that shit ever again.

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 $200 million and agreed to significant new changes.

But the contents of this complaint are mind-blowing.

Which implies they hadn't been up till then.

And yet, amazingly, Michael Johnson characterized this as a victory.

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.

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 bought a sponsorship on the hit telenovela, La Fea Mas Bea.

This will help you have more energy and it will help you face all your problems.

If that is happening on the show, I can't imagine the real drama happening in the commercials.

Geico Lizard, I want to save 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 the Herbalife family, and we're not ashamed of that.

The Latino, the blood, if you will, you know, it's in this company, and it feels great.

Oh, I love the blood of a Latino community.

But to those supplying that Latino blood, it can feel less than great, as this community meeting of those who feel burned by Herbalife shows.

Llegué a perder la cantidad de 22,000 dólares.

En nueve meses yo perdí 16,000 dólares.

Her husband continuously reminds her about the 8,000 dollars that she owes to them.

So, si no te decías, tratabas de venderlo por lo que tú lo compraste, es una gran pierda.

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