Friday 6 May 2016

The unbelievable

It sounds obvious but you shouldn’t believe the unbelievable.

Let’s start with fuel treatments. A number of companies will tell you they have a product that will do remarkable things to your car. Some say they’ll improve fuel efficiency, others that they reduce emissions.

Syntek's "Xtreme Fuel Treatment" product claims both. This product has been sold by a number of people around Botswana for a couple of years. Their South African web site makes a number of claims about the product including that it: “dramatically reduces the amount of harmful emissions produced by your vehicle or equipment”, “prolongs engine life” and that it “increases fuel mileage and economy.” They also claim that it “changes the surface structure of the fuel to achieve a more efficient combustion process."

But is there actually an evidence that these claims are correct and this product works?

Absolutely none. I asked a number of their local distributors for some evidence that might justify their claims but I was disappointed. The so-called “evidence” that the distributors sent me was nothing of the sort.

They also operate as a pyramid-structured Multi-level Marketing scheme. Just as important as selling their worthless product is the need to recruit more and more people in the lower levels in order to make money flow up to the higher levels.

The truth is that there is absolutely no evidence that their product does anything at all apart from make a few people at the top of their distribution pyramid very rich.

Another Multi Level Marketing scheme that most of us have encountered at some point is Herbalife. They sell a range of so-called health products and are just as well known for their enthusiasm for recruiting more and more people into their pyramid. However, my favourite aspect of Herbalife is that they are required in some countries to publish their member’s income figures and a few weeks ago Herbalife released their 2015 earnings figures (441Kb pdf file) for their US "members".

The results are interesting. Interesting but not surprising. In fact it's the same old story. Almost all of the money is earned by a tiny proportion of the members.

Here are some specifics, taken directly from Herbalife's own figures.

80.2% of the members, that's 437,152 people, are just people who buy their products and don't have a "downline". These are the people on the bottom rung of the pyramid, the ones who buy products from Herbalife but probably don’t sell them on to other people.

The most interesting group is those people who earned commission from selling Herbalife products to the people below them in the pyramid, their “downline”. These are the "Sales Leaders With a Downline". In the USA in 2015 there were 68,768 of them. These are the people that Herbalife offer as examples of the riches you can earn from joining Herbalife.

But there are no riches.

Of these people, the top 10% earn nearly 90% of the cash. At the other end of the scale, the bottom 90% earn just over 10% of the money. The group earning between $1 and $1,000 in 2015 (that's 62.5% of the entire group) actually earned an average of just $303.

And that's their income, not their profit. That's before they paid their expenses, the phone bills, the transport costs and their electricity bills. Nobody knows how much that comes to but I bet it’s more than $303. I bet almost everyone makes a loss.

So yet again it's the same old story. If you want to make money from Herbalife you need to be at the top of the pyramid and you’ll never get to that level. The people already at the top need you and everyone else to stay at the bottom level so they can get that 90%.

Do you really want to make rich people richer? That's all you do when you join Herbalife.

Another MLM that I think is much more dangerous is called Longrich. They’re another pyramid-structured business so, like Herbalife, you’re highly unlikely to make any money from it but what worries me most is the range of products they sell. For instance, they claim that their "Nutri V Rich" product is "anti cancer, improve and prevent diabetic, high blood pressure, and other terminal diseases." They also say it’s "almost 100% effective in treating a range of conditions such as high blood pressure, fatty liver, diabetes mellitus (type 2 diabetes), obesity, gastritis, liver disease".

Making claims like that is illegal in Botswana. They are described as a “prohibited advertisement”, contrary to Sections 396-399 of the Penal Code. It’s criminal.

Longrich aren’t the only one. “Healthy Habits”, who seem to have inherited some of the promoters from Syntek, are also marketing their products, market a range of clearly magical drinks. Their web site says that they have “the most powerful health building components in the world” and that they are “bridging the discordance between our ancient, genetically determined biology and today’s nutritional needs.”

It’s worth re-reading that last sentence and trying to find any sense is what they say. I certainly can’t.

These charlatans claims that their magic tea can “prevent diabetes” along with asthma, depression, fever, hangover, headache, insomnia and stress. They also claim that it reduces cholesterol, moderates blood sugar levels, enhances your immune system and can “increase sexual function”. The list goes on and on, it seems there’s nothing they’re not prepared to claim their silly tea can cure.

The simple truth is that there is no product that can do all of these things. If there was, a Nobel Prize for Medicine would have already been awarded to the discoverer and probably the prize for Peace as well.

All of these claims, whether they’re about fuel efficiency, health or if they suggest you can become wealthy by joining their pyramid, they’re all false. They’re all unbelievable and like I said before, that’s something you should never believe.

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