Are we stupid?

It’s a question I sometimes ask myself. Are consumers stupid? Are we perhaps a bit insane? Should our mothers allow us out unaccompanied?

Some while ago we had a visit from a desperate consumer who wanted our help. She was a mature woman with a long, reasonably successful career in business. Now she was running her own store. She was the sort of person I really admire. She’d saved some money from her mainstream job, had quit and had invested it in a small start-up business and then worked very hard to make a success of herself. Until she made catastrophic mistake.

She had a regular customer, a man who would often visit her store, would have a chat and would then buy a few things. He sounds like the perfect customer.

After several visits the situation changed a bit. He visited the store one day and told the owner about a project he was working on and that he needed some capital. Would she lend him some money? She gave it some thought and because he was a nice guy, spent money in her store and had a nice smile she said yes, he could borrow the money. Off they went to the bank and she transferred the money directly into his account.

Guess what? He didn’t pay her back. My heart sank. But you and I both knew that was going to happen, didn’t we? You don’t lend money to strangers. Don’t we all know that?

A year later she was in my office asking me if I could think of any way to help her get money back.

My first question was simple. You put this in writing, didn’t you? No, she said, it was just a verbal agreement. My heart sank further. How would she ever be able to prove that she’d lent him the money, how much she’d lent him or what plan there’d been for him to repay her?

I plucked up some courage and asked the big question. How much did you lend him? “One point four”, were her exact words. I felt a little better. I was about to suggest that she forget the loan and give up because, well, it was only P1,400, wasn’t it? To someone running a successful store that’s not enough to ruin the business and she’d probably spend more trying to recover the money than the amount she might get back.

But I didn’t say that. I didn’t say it because of the expression on her face. My heart started sinking again. Rapidly. “Exactly how much did you lend him?”, I asked.

“One million, four hundred thousand Pula”, she said.

My heart sank so low that I was close to calling my cardiologist.

I think I was very restrained. I didn’t laugh out loud, my jaw didn’t drop to the floor, I didn’t get up and start shaking her. Instead I sympathized, told her that I suspected that it would be very difficult to recover the money without any evidence that she actually lent it to him but recommended an attorney that I trust who might have some ideas. The problem is simple. If she ever managed to get him in front of a magistrate or judge he’s just going to say that it was a gift between friends or perhaps even lovers and that she’d agreed he didn’t need to pay back the money. He could come up with any story that seemed plausible and she wouldn’t be able to prove otherwise.

I also think I was very restrained because I didn’t ask the women for her mother’s phone number so we can arrange to have her locked in her bedroom until she grows up and develops some common sense.

It’s important to note that this woman isn’t stupid. She had a successful career and then had the intelligence needed to start a small business. But she’s clearly catastrophically naïve.

It’s similar for the people who join Multi-Level Marketing schemes like Amway, Herbalife, Tupperware and pyramid schemes like World Ventures. They’re not stupid but they are gullible. Even when they’re presented with the facts that the companies very quietly reveal in the income disclosure statements they either ignore them or develop complex denial mechanisms to avoid the uncomfortable truth. Almost everyone who signs up for the schemes either makes no money or even loses money from doing so.

And then there are the victims of scams. The scams we’ve all seen about the daughters or widows of West African millionaires who need help transferring money out of their country, amazing job offers in exotic places or expressions of love and desire from strangers on Facebook. Are the people who fall for these scams stupid?

Yes, some of them obviously are but the majority are just gullible. Gullible enough to fall for that initial email of Inbox message. And that’s exactly why these scams are so successful. The scammers actively seek the most gullible people.

Cormac Herley, a researcher employed by Microsoft, wrote a paper (link to 553kb pdf download) in 2012 entitled “Why do Nigerian scammers say they are from Nigeria?” that examined these scams. He wrote:

“An email with tales of fabulous amounts of money and West African corruption will strike all but the most gullible as bizarre. It will be recognized and ignored by anyone who has been using the Internet long enough to have seen it several times. (…) The initial email is effectively the attacker’s classifier: it determines who responds, and thus who the scammer attacks (i.e., enters into email conversation with). The goal of the email is not so much to attract viable users as to repel the non-viable ones, who greatly outnumber them.”

The scammers send these ridiculous emails to millions of potential victims, and they’ve discovered that the best way to maximise their success rate, to get the highest proportion of victims to cough up cash, is to make that first message as ridiculous as possible. If they do that, then only the MOST gullible people will respond. The people likely to respond to those emails are the ones worth the scammer’s time. Make the first email as stupid as possible and the victims will select themselves.

Stupidity isn’t the biggest threat we face and no, most consumers aren’t stupid. But a lot of us are deeply, dangerously gullible. And the only way to combat that is by developing a national skepticism. Are you prepared to be part of the movement?

The Voice - Consumer's Voice

Is this award genuine?

Good day Richard.

I just received an invitation from the international Star Award For Quality and would like to ask you to assist in its authenticity. It seems to be a very good award and opportunity and would like to get more information before I make any payment as per their request.

Thanks and looking forward to your usual support.

I believe that this “International Quality Summit Award” scheme, run by a company in Spain called “Business Initiative Directions” is deceptive. As far as I can establish there are no genuine criteria used to identify the companies that are selected for the awards. I believe that it’s no more than a money-making scheme by the organisers.

Many people had received surprise emails from BID over the last few years, announcing that they’d won an award and inviting them to collect it at gala dinners in exotic places such as Paris, New York and Geneva. It was never entirely clear how they’d won, how winners had been selected and what qualified Business Initiative Directions to award anything to anyone.

BID charge companies €4,200 (about P50,000) to receive the award and that doesn’t include the travel costs associated with flying to Geneva. It just covers attendance at the gala dinner, some certificates, a prize and some photographs of people accepting these dubious awards. I’ve done the maths and I suspect that BID make a huge amount of money, probably about P30,000 from every “award” they give away and that’s what the whole thing is about.

I can think of many better ways to spend the P75,000 that it would probably cost to receive this dubious award. Why not invest the money in an upgrade to your web site, some quality marketing or better still, an awesome Christmas party for your staff! Don’t forget to invite me too!

Should they check everything?

I took my car for service at a garage in Lobatse on the 28th of June. Then I travelled to Francistown on the 1st of July only to find out that the battery is boiling. I took the battery to a specialist because it was still under warranty and they told me the car was over charging but they gave me a new battery nonetheless. I took the car to another garage from the same chain in Francistown and they told me I had to pay P850 for diagnosis.

My question is isn't it that when the car goes for service they are supposed to check all the faults in the car?

Firstly, I’m impressed that the battery specialist gave you a new battery even though they probably didn’t have to. That’s the sign of a good company, that they’ll bend the rules a little bit for a customer. I’m sure you’ll be using them again in future.

Regarding the garage, no, I’m not sure they are obliged to check everything in your car. A routine service just checks a few basic things unless you’ve asked them to check something in particular. They can’t really be expected to check every component in your car in the couple of hours a routine service takes.

However, I’m not an expert so I contacted a friend who is. I asked him your question and he said “No, they would check the battery for water levels and clean terminals but to do a charge test would be an additional item (in most franchises).”

I suggest you go back to the garage that serviced your car (or a better one if you know of one) and ask them to check the electrical system in your vehicle before something much worse happens.

Will these schemes make you rich?

Last week it was Herbalife, the week before it was Amway. They’re two of the largest Multi-Level Marketing schemes in the world and they make a tremendous amount of money. Well, the people at the top of the pyramid do but that’s all. Their own published earnings statements show that the overwhelming majority, at least 90% and many experts think more than 99%, either make nothing or even lose money from joining them.

Maybe you’ll stand a better chance with one of the smaller schemes instead of these MLM titans?

No, they don’t work either.

What about World Ventures, or as it now calls itself, Dream Trips?

We’ve been warning people about the World Ventures pyramid scheme since 2009 when they took over an earlier pyramid scheme called Success University. World Ventures and Dream Trips promise fantastic holidays in exotic places but they’re rarely clear that none of these holidays are free. You have to pay to join the pyramid and then all you get are discounted holidays. You still have to buy the holidays, just at a slightly cheaper price. And here’s a thing. A discount isn’t a product, it’s a reduction in the price of a product but maybe that’s just me being pedantic. What World Ventures is really all about is paying to join a pyramid-structured scheme in which you do your best to recruit multiple layers of people beneath you, just like any other pyramid or Multi-Level Marketing scheme.

The interesting thing is that, like Herbalife, World Ventures publish an "Income Disclosure Statement" (124kb pdf download) in the USA every year and just like Herbalife their 2015 statement makes interesting but disappointing reading. Yet again the vast majority of the money is earned by a very small proportion of the people, the ones at the top of the pyramid.

Referring to what they call their “Independent Sales Representatives” (“IRs”), they report that "22.24% of all IRs earned a commission or override, while 77.76% did not". In other words, more than three quarters of all their American recruits made nothing from the scheme. Nothing at all.

Furthermore, more than two thirds of all the money is made by the 3.7% at the top of the pyramid. 84% is earned by the top 19%. To put it another way, 81% of the recruits who earn money have to share just 16% of the money.

So like the other schemes, if you're at the top of the pyramid you're doing very well. The 1 in 14,000 people at "International Marketing Director" level earned an average of $409,280. The 1 in 20,000 described as "National Marketing Director" have an annual income of $238,645.

Of the small proportion who made any money, the average income was just over $1,300 a year (about P13,000) but that's not a good indication of what the average recruit will earn because the figures are distorted by the tiny proportion at the top who earn a fortune. The median income level is a much better illustration of what you can expect to earn. That's a meagre $150 per year.

And yet again, these amounts refer to income, not profits. These figures are before the recruits took account of all the money they had to spend on travel, accommodation, electricity, internet access and the coffee and drink they had to buy when they did their best to recruit other victims into this scheme. The evidence suggests that most people earn less than they spend trying to make the money. So they lose money.

And don’t forget that less than a quarter of all the recruits earn anything. These figures just refer to the 22% of victims who earned anything at all.

So no, you won’t make any money from joining World Ventures or Dream Trips, you’ll just waste a lot of money, energy and time. Don’t take my word for it, their own figures say so.

Ok, what about Tupperware? They have real products, don’t they? Do people make money from them?

Again, no. The figures Tupperware revealed in their 2016 Income Disclosure Summary (39kb pdf download) in Canada were equally poor. To begin with, almost half of the 37,000 distributors were described as “Inactive, meaning that they were “participants that have earned some commissions from the sale of products, but have not achieved a minimum of $500 in personal retail sales”. Of the remainder, almost all of them, 94%, were in the lowest category of “Consultant”. They earned the equivalent of just P3,800 in a 10-month period. Again that was income, not profit, not taking into account the costs of selling all those plastic products.

Only 40 out of the 37,000 Tupperware distributors in the entirety of Canada earned more than the average annual wage. 97% of them made less than one-tenth of the average wage.

Tupperware, like Amway and Herbalife, is extremely top-heavy. 53% of all the money earned went to the top 6% of the people, leaving less than half of the money to be shared by the other 94%. You can see how uneven it all is.

Here’s the secret about Multi-Level Marketing schemes and their cousins, pyramid schemes. They’re all the same. They’re all based on a Get Rich Quick promise that’s actually a deception. While the people selling the scheme will promise holidays, exotic lifestyles and wealth this is all are lies. These promises are simply not true and many of the people doing the recruitment know this. They know they’re not making any money and that the only way they might do so is to recruit other people into their position, to suffer the way they do.

Over the years we’ve examined dozens of Multi-Level Marketing and pyramid schemes and they’ve all been the same. They’ve all, every single one of them, ended up with people poorer, more miserable and with a trail of alienated friends, relatives and colleagues who’ve been pestered into joining the scheme. Not once have we encountered a scheme that has made anyone money. Not once. So why would the next one be any different?

The Voice - Consumer's Voice

Why is it so much?

Good Morning Mr Harriman, I need help. I got a loan from a microlender, it was P3000. I have paid it for about six months in instalments of P220, but last month I wanted to top up to P16000 and before the loan was credited someone bought my plot and now I had the money I wanted. I went back to try and stop the loan but they said it was too late so from the P16000 they credited me P12000 and cleared the amount I owed before.

Right now I wanted to clear it but they are telling me the settlement amount is P21000. I don’t know maths, I wanted to know if I was credited P12000, why is the settlement that much or there is something that I don’t understand.

They said its that much because I did not even pay one instalment from the top up that I tried so much to stop. Please help me understand. Thank you.

Yes, this does sound outrageous but I suspect it’s legitimate, if that’s the right word for such an abusive, exploitative and wicked loan.

The only limit that the law currently applies to loans is the so-called “in duplum” rule which says that when a debt is settled, the interest cannot be greater than the capital amount outstanding. In your case you borrowed P12,000 (after they repaid your former loan) so the maximum possible settle amount could be P24,000 and they’re below that, even if only slightly.

Your problem is that when you signed the second loan agreement you committed yourself for the duration of the loan and also to their terms and conditions that presumably said that could charge an enormous settlement fee if they felt like it. Think about it from their point of view. They were eagerly anticipating all those lovely, lucrative monthly repayments that they could spend on beer, cigarettes and parties. By trying to cancel the loan you came close to losing them that money and they wanted compensation for that.

This is a good example of why we urgently need a right to a cooling off period whenever we take any loan, whether it’s from a bank, furniture store or micro-lender. And we need it now.

Is Helping Hands worth joining?

I was approached by a friend who told me that I should join Helping Hands and can make money. Is this true?

Helping Hands International is a pyramid scheme. The people marketing the scheme describe it as a “non governmental organization” attempting to “empower the less privileged people and orphanage homes”. They also claim that joining the scheme will offer “passive income”, new cars, laptops, a “house of your own”, free trips abroad, loans of up to P500,000, scholarships and “residual income for life” but none of this is true.

Unlike Multi-Level Marketing schemes like Amway and Herbalife, this scam has no products and the business model is entirely based on recruiting people beneath you and them recruiting people beneath them with the promise of money magically flowing up the pyramid in your direction. That’s a pyramid scheme.

I had a WhatsApp conversation with someone selling Helping Hands recently and I asked him “So you earn money by recruiting other people? I don't have to sell anything, just recruit more people?”. His answer was simple. “Yes Sir”.

They’re also liars. Their advertisements claim that they are “in partnership with Bill Gate Foundation, Hyundai Motors, Apple Corporation, HP” but in reality, there are no such partnerships.

So in summary, this is nothing more than a pyramid scheme run by people who tell lies. Like all pyramid schemes Helping Hands International will eventually collapse, leaving its victims disappointed, embarrassed and poorer. Do you really want to be a victim? Please warn your friend and anyone else they might have tried to recruit. Spread the word and help protect them!

Will Herbalife make you rich? No.

Last week we looked at Amway, one of the world’s biggest Multi-Level Marketing schemes and asked the same question. Will Amway make you rich? Or will it make you any money at all?

The answer was simple. No. You won’t become rich by joining Amway and the odds are that you’ll probably lose money if you join the scheme.

Maybe you think I’m biased and this all based on my uneducated, ill-informed opinions? That’s certainly what several Amway distributors, or “Independent Business Owners”, “IBO”s have told me over the last few years and in particular over the last week. My opinions are, according to them, ignorant and biased. Actually this isn’t based on any opinions at all, it’s based on the figures that Amway are required to publish every year in the United Kingdom. When the UK authorities tried to close down Amway a decade ago, Amway dramatically cleaned up the way they did business over there and they started publishing an annual “Earnings disclosure statement” that showed how much their recruits actually earned. The latest statement, published in 2016 that covered the year ending in September 2015 made very sad reading. Only one out of almost 40,000 IBOs made more than the average annual wage from their Amway business. The vast majority of them had an income of less than 3% of the average annual wage. And that’s just their income, not their profit. Those miserable amounts are before they paid their internet, phone, electricity bills and their rent. It’s before they bought all the marketing material, attended all the workshops and seminars and before they spent all that time desperately trying to persuade people to join the scheme. The reality is that when these things are considered it’s reasonable to think that almost everyone, probably more than 99% lose money rather than make it from joining Amway.

So what about the other Multi Level Marketing schemes. Is it the same with them? For instance, will you make money if you join Herbalife? Will you make money from distributing their health, nutrition and weight-loss products? Will you make money from recruiting other people beneath you if you join Herbalife?

Again the answer is no.

Like Amway, Herbalife publish a “Statement Of Average Gross Compensation” (441kb pdf download), this time in the USA and guess what, it's the same story. The income most people make is trivial and almost all of the money is earned by just a tiny proportion of the members.

According to their 2015 statement, more than 80% of Herbalife’s 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. They buy products from Herbalife but there's no evidence they sell it to other people and they certainly don’t make any money.

The most interesting group is those people who earned commission from their “downline” sales, the people beneath them. These are what Herbalife refer to as "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, three-quarters of all the money was earned by the top 3.5%. The top 10% earned 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 in the year.

And again, like with Amway, that's their income, not their profit. That's before they paid all those expenses, their phone bills, transport costs and their electricity bills. So just like Amway, the chances of anyone making money by becoming a Herbalife distributor are almost non-existent.

But that’s not the biggest problem with Herbalife. The problem is that Herbalife distributors can be dangerous. Very dangerous.

I’ve had conversations with people selling Herbalife products that have included some remarkable claims. One advertised in a local publication that he had solutions to “Problem with asthma, BP, heart, arthritis, face, ulcers, diabetes, weight”. I contacted him and asked if he really could help with heart problems. “Surely”, he said, “We help with reversing heart conditions”.

Someone else told me that their products could help with weight loss, weight gain, “blood circulation, back pain and joint, period pains and skin prblm”.

Another told me that as well as improving “digestive health”, “heart health”, “dire health threating conditions” and offering “immune solutions”, his products were “very helpful with a lot of various ailement and serious health conditions” and could, get this, improve someone’s CD4 count. In other words he was claiming that his products could help someone with AIDS.

These are all incredibly dangerous, false claims to make and guess what? All of the people making these claims were doing their best to sell Herbalife products here in Botswana.

I contacted Herbalife on all of these and other occasions and asked them what they felt about the claims their distributors were making. Every time they seemed to be appalled and promised they would to kick these distributors out of their pyramid. But is that good enough? If these claims had been made by just one rogue, delusional distributor then we could probably overlook it. But the fact that this has happened several times and that they’ve told a series of lies about their products suggests something different. One even claimed that their products were “approved” by the Botswana Bureau of Standards, which was nothing more than a bare-faced lie.

One last thing about Herbalife. With the exception of pregnant women, the elderly and people with certain very specific medical conditions, none of us need to take the sort of supplements that Herbalife offer. Just buy some fruit instead.

My view is that Herbalife is even less appealing than Amway. Amway’s household goods are at least useful. Herbalife? Well, you can guess my view of them by now.

The Voice - Consumer's Voice

How do I stop being blacklisted?

How do I escape the fact that I am blacklisted? Sometime in 2011 I lost my job and was paying the furniture shop monthly for items I acquired on hire purchase. Upon realizing that I was unable to continue paying every month due to unemployment I requested the same shop to repossess the items and set me free from the chains of misery (bad payer record). Efforts to have the same items repossessed failed up until I had to go for years without paying. It wasn't intentional and only to find out that I’m blacklisted. My question is how do I deal with this? Are there any means of clearing my name and continue with paying now that I secured another job?

Unfortunately, you can't "escape" from being "blacklisted" because there's no such thing as being “blacklisted”. The records held on you by credit reference agencies simply reflect what happened in your past. It will show any bank loans you’ve had, hire purchase agreements you’ve signed, bank accounts you’ve opened, your complete financial history. That allows other lenders to make a reasoned judgment on lending you money.

You fell behind with your instalments and the store is entitled to submit that to the credit reference agencies because it's true, isn’t it? When you finally finish paying the debt they'll also record that as well. Maybe then you’ll present a more appealing profile to possible lenders.

More importantly, asking for the good to be repossessed won’t help you at all. In fact, it will only make the situation worse. The value of the goods you bought is now only a small fraction of their original price and an even smaller fraction of the total credit price you agreed to pay. Once the store adds on penalties and interest to your account, the amount repossessing and selling goods will raise will have very little effect on the amount you owe. The choice you have is whether you want to owe them money while you have the goods or whether you want to owe them money while keeping the goods. I suggest you keep the goods and contact the store and agree a repayment plan that satisfies you both.

Should I join Bitcoin?

Lately someone has been trying to convince me to join Bitcoin and I told them I have to ask you it's legitimacy first. Please advice. Thank you.

Bitcoin is a currency, but not like any currency we've known before. It's a digital currency, other times called a virtual currency or a cryptocurrency. There are no coins or notes with Bitcoin, no bits of metal or paper. Nothing you can put in your wallet or purse. Bitcoins exist purely in cyberspace and that’s confusing. What also confusing is the terminology used with Bitcoin. Terms like "blockchain", "distributed ledger" and "Bitcoin mining" are hard to understand unless you're an expert. There's also the simple confusion that your money is "out there" somewhere and not in your pocket.

Like all currencies Bitcoin’s value can go up but it can also go down. For instance, if you’d bought Bitcoins in November 2013 you would have lost 78% of your "investment" by January 2015. The value of a Bitcoin has now increased again but there’s no reason to think it will always go up.

Then there are security concerns. The technology underpinning Bitcoin is highly secure but anyone who says that a particular security system is fool proof doesn’t know their history. All security technologies will eventually be broken and if a flaw is ever discovered in Bitcoin's security mechanisms it would be valueless instantly.

The fact that it's completely unregulated is another concern. If a conventional currency like the Pula, dollar or Euro showed signs of failing, central banks can do things to support it but with Bitcoin, there's nobody to help you.

Another issue is that when you spend Bitcoins there are no payment protection mechanisms available to you. There are no rights to refunds. no chargeback mechanisms and Bitcoins are completely untraceable, that’s why they’re so useful to criminals and terrorists.

I think Bitcoin is fascinating and something like it is probably the future of money but you shouldn’t see it as an investment. If you have some money you can afford to lose then go ahead, otherwise you should be much more careful.

Will Amway make you rich? No.

No.

Maybe I should just stop there? Do I need to go any further? Ok, maybe I do.

Amway is one of the world’s biggest Multi-Level Marketing schemes. Originally founded in the USA in 1959 it has a long history of selling a wide range of things including household goods, health and beauty products and foodstuffs. These products can’t be bought in stores but instead are bought and distributed via a multi-level recruiting mechanism. If you join Amway, not only will you be able to buy the products but you’ll also be encouraged (often very forcefully) to recruit people beneath you and you’ll then encourage those new recruits to recruit others beneath them. They call that your “downline” and the series of people above you will be your “upline”.

You can see why many people think of Amway as a pyramid scheme and it’s an accusation that’s has been made many times since Amway became the global company it is today. On various occasions government regulatory agencies around the world have investigated them, most notably in the USA, Canada and the UK. In each of these countries regulators either prosecuted them for crimes such as tax evasion and customs fraud, price fixing, and misrepresentation.

However, Amway is not actually a pyramid scheme, at least not technically. A pyramid scheme is usually defined as a business where the majority of the earnings come from the recruitment of other people lower in the pyramid and where the income from selling products is either minor or non-existent. In Amway’s case there are lots of products to buy. Whether they’re any good, or if they’re worth the money you pay for them, is another issue. Many Amway distributors will tell you that their products are good but, my observation is while this might be true, very often the same or better products can be obtained either at the same price or more cheaply via conventional channels. The spaghetti that Amway sell is certainly high quality and is made according to the traditional Italian bronze die method but Woolworths sell the same thing. And cheaper too.

My biggest concern about Amway is that Amway distributors, known as IBOs, Independent Business Owners, is that when they try to recruit you, they don’t mention the luxury spaghetti and beauty products, but something else. I know this is true because very occasionally I get the approach from someone I vaguely know (and who clearly doesn’t know me very well) who wonders if I’d be interesting in “an exciting business opportunity”. They’re selling a way to make money.

The problem is that this simply isn’t true. You can’t make a fortune or even a small amount from joining Amway. And don’t think I’m asking you to take my word for it. I’m asking you to believe Amway themselves.

About ten years ago Amway were investigated by the UK Government’s Department of Trade and Industry who sought to ban them. This case was eventually dropped but only after Amway dramatically modified its business practices. As a result of this, Amway in the UK are now required to publish income data for their IBOs and that’s where we get the evidence, the evidence that shows how little people actually make from joining the scheme.

The “Amway earnings disclosure statement” (195kb pdf download) they published in March 2016 but which refers to the earnings people made between October 2014 and September 2015 make very poor reading.

The statement says that during this period in the UK they had 20,678 "Retail Consultants", people who are “developing a customer base through product retailing”. They also had 18,915 "Certified Retail Consultants" whose job was to “maintain a solid customer base through product retailing and introduce others to the Amway Business Opportunity”. Finally they had 59 "Business Consultants" whose job was to expand “the business by supporting and training RCs and CRCs on retailing products and building their Amway business”.

The average income figures for these groups were, I'm afraid, pathetic.

Retail Consultants had an average income of a mere £40 per month which is £480 per year, Certified Retail Consultants averaged only £106 (£1,272 per year) and the 59 Business Consultants only brought in £1,954 each month (£23,700 per year).

That last figure, the earnings for the Business consultants might sound impressive but for reference, the average annual income in the UK in 2015 was £27,456.

So the top group were, on average, earning less than the average worker, despite being the ones who presumably were working themselves harder than anyone else in the Amway pyramid. The statement also goes into a bit more detail about those 59 Business Consultants. Only one of them had reached “Diamond” status during the year, the level where they earn more than £50,000. Only one out of nearly 40,000 people in the business operating in a country of 61 million people.

That really is a very sad set of statistics.

But it gets worse. The statement refers to “income”, not profits. They don't take account of the costs involved in running an Amway business, of recruiting people beneath you, paying for electricity, phone, travel and internet costs. Nobody really knows how much Amway IBOs spend on such things, apart from the IBOs themselves, and they rarely tell the world about that because they’re too busy trying to recruit other people to make some money from them joining. However, the estimates I’ve seen suggest that 99% or more people who join schemes like Amway actually lose money rather than make some.

In short, even in a large economy like the UK hardly anyone makes even the average national wage if they join Amway. So why should we think it would be any more lucrative in Botswana, a country with a comparatively tiny population?

And what about the other Multi Level Marketing schemes that are constantly appearing? Surely if even the largest of them can’t offer people an income, how can you expect the little ones to do so?

The lesson is very simple. Multi Level Marketing schemes will cost you money, not make you any. The evidence shows that.

The Voice - Consumer's Voice

I’ve been blacklisted!

Good day. I am currently listed at CRB for default in a loan payment at a certain bank. I don't have a problem with being listed. But it's the length of time I am concerned about.

I took the loan in 2007 and due to circumstances I wasn't able to pay. But in 2011 I found a job and resumed payments but I'm still blacklisted even now. Even though I've been paying the loan every month. What can I do?

I’m sorry to hear about your difficulty but I’m glad you’re doing your best to repay your debt. So many people get into difficulties and try all sorts of tricks to avoid repaying which only makes things much, much worse for them.

Credit reference bureaux like CRB don’t actually “blacklist” people, they just hold records of what happened to people and this allows potential lenders make a decision based on the history they see a customer has developed. A potential lender can consult the bureau and will see that you took a loan, perhaps you later defaulted but also that you later recovered and settled the debt. That will give them a good picture of how much risk you’ll present to them if they decide to lend you money.

In your case, where I think you’re still repaying the loan and the debt remains unsettled, then that's what the credit history will show and will form the basis of the decision they take. Given that you had a problem and haven’t completely resolved it yet, you’ll be seen as relatively high risk. I imagine this might change once you’ve settled the debt.

When you do finally settle the debt, ask the lender for something in writing stating that the debt was settled and make sure they update your credit record as soon as possible.

Can I make him fix my engine?

On the 5th January, I bought a second hand engine from a dealer in Mogoditshane for P7,300. On the slip I was given a one month guarantee.

The engine was fitted in the car and I used the car for about two months. On the 21st April, while travelling I head a funny noise from the engine. I stopped by the road site to check, I could not see anything. I started the engine and the noise was there again. I moved the car but it failed to move. I then called a mechanic who came and assessed the car and said it had broken the tension bolt which affected the car timing and all the 16 valves had been bent.

I then consulted the mechanic whom I went with when I bought the engine and told him what happened. He told me that he informed the supplier. I then bought the parts that I was told to buy and the mechanic fixed the car. We had a meeting for me to understand what could be the cause that lead to this and the mechanic told me that it’s a factory fault because a he has never seen a tension bolt breaking in 20 years.

I also enquired with another mechanic and he told me the same thing that I was told by the first mechanic. In the process of repairing the engine I spend P4,500 on spare parts and P1,500 on labour.

Your advise will be highly appreciated so that I know if I can take this matter forward or not.

Unfortunately, I suspect you’re in a very difficult position here. The engine was second-hand when you bought it and was clearly offered with only a 1-month guarantee. The seller will probably argue that they sold it in good faith and were very open about its likely state so I suspect there’s not much you can do unless you have evidence that they lied about the state of the engine.

The lesson here is to be very skeptical about any item that comes with a warranty as short as one month. The warranty period on any item is the period that the manufacturer or seller is confident it will last. Anyone who thinks something will likely last only a month is probably correct. Do you really want to take that risk?

It looks like a pattern

It is wrong to form stereotypes?

Generally speaking, yes, I think it is. It’s obviously wrong to make sweeping generalisations about groups of people based on things they can’t change such as their gender, skin colour, ethnic origin, country of birth or sexual orientation. You could perhaps argue it’s slightly more acceptable, but still dangerous, to make assumptions about people based on things they can control such as their political and religious viewpoints.

But you certainly should judge people by what they do. By their actions. Ye shall know them by their fruits.

I think that goes for organisations as well as individuals. I think you can judge a company by the way it behaves.

Sensible, mature, grown up organisations behave like sensible, mature grown up people. They don’t have tantrums when people complain, they don’t get aggressive when someone criticizes them, they don’t start throwing things when the quality of their products and services are questioned.

Unfortunately not all companies are sensible, mature and grown up. Search through our blog and you’ll find a wide range of organisations who have been upset by things we’ve said about them and instead of having a dialog with us about their complaint, have instructed attorneys to threaten us with legal hellfire and damnation. Do I need to say that not one of these threats has ever gone further than those threatening letters? All they’ve done is cost themselves a lot of money in attorney’s fees. If they’d just grown up, picked up the phone and asked to come over for a chat we’d have been happy to oblige. Instead they behaved like a spoilt child in a supermarket who was refused chocolate.

Before we even get to the tantrum stage I still think you can judge a company by how it behaves every normal day of the week. Or how it allows its staff to behave. Or its agents.

Hotel Express International is a case worth considering. I don’t remember how many times people have complained about the conduct of Hotel Express International agents but I know that I’ve reported on the situation fifteen different times. Now sixteen.

The story is always the same. A reader gets a “cold call”, an uninvited phone call from a stranger in South Africa explaining the amazing benefits of paying to join Hotel Express International, offering them discounts on hotels, car hires and flights. As part of the sales process they ask for the potential customer’s credit or debit card details either “to keep on file” or to check whether they are eligible for “Gold” or “Platinum” membership. Every time, the readers claim, they most certainly did not give permission for Hotel Express to actually deduct money from their accounts but guess what, that’s exactly what happened. Without the customer’s explicit permission they get enrolled into Hotel Express International, their bank balance is debited and they then have enormous trouble getting their money back.

We’ve sent these complaints over to Hotel Express International and sometimes we’ve been able to help get their people’s money back but not always.

As well as being upset for people who feel they had their money taken without their consent I’m also surprised that people are still falling for the suggestion that you need to pay to join a scheme like Hotel Express International to get hotel discounts. You can get discounts for free. I stay in hotels in South Africa quite often and do you think I ever pay the full rate? Of course not.

Just for example, I needed to stay in Joburg some months ago and booked a suite, yes, an entire suite in a hotel at a discount of around 40%, just by booking using their web site. Was I required to pay to join a scheme to do this? Of course not. In fact, if you compare the rate I paid against the official “rack rate” the hotel quotes I saved 60%. I even once got a discount of over 80% in a hotel in Cape Town, just by signing up for a newsletter from the hotel chain. For free.

So why would you need to pay to get a discount when hotel give them away for free?

The bad news is that this isn’t just something from the past. Just a few days ago we received an email telling the same old story.

“I received a call from Hotel Express International selling me an ‘exclusive membership discount’ card for hotels, a call that successfully ambushed, conned and bullied me into unsuspectingly giving them my credit card details so the caller could ‘check if my card is good for acceptance’ by the company. Lo and behold, an amount of R4,265 was debited, without consent, from my credit account!”

To make matters even worse, he told us that a few days later he “received yet another call from them this afternoon wanting to sell me an additional card. I told him I do not need want an additional card. A lady called me shortly thereafter, again I told her I do not need another card. A few moments later I saw an alert on my phone for another debit of R4,265. This is an unauthorized transaction and I want it reversed before I take action.”

Action certainly is needed in his case. So far they’ve taken R8,530 of his money without his consent and that’s a lot of money. We’ll get in contact with Hotel Express International yet again and see if they can remedy this situation but frankly I’m not optimistic.

So here’s my suggestion. Don’t give your credit or debit card details to Hotel Express International. In fact, don’t give your credit or debit card details to anyone who called you. If you called them, it’s a different matter but in 2017, I think that any company that calls you and asks for your card details over the phone is acting suspiciously. And can you really trust a company behaving that way with your money?

Wouldn’t you rather spend that money on a heavily discounted hotel stay? A discount you didn’t have to pay to get?

The Voice - Consumer's Voice

Is the EU Business Register legit?

Hi. I received an invitation to insert my company details into the EU Business Register for 2017/2018. The invitation says that it will let companies in Europe know about my company. The email says that it’s free but do you think it’s worth it?

Certainly not. Please don’t consider this, not even for a moment.

The EU Business Register looks remarkably like the “World Business Guide", a scam we warned people about a few years ago. They also offered companies a listing in an online business directory service and like them I think that the EU Business Register is a scam. Even though the invitation you received says that “Updating is free of charge”, in fact the small print says that: “THE PRICE PER YEAR IS EURO 995”. That’s over P11,000. Worse still, it also says that the “TIME OF THE CONTRACT IS THREE YEARS” meaning you’ll be entering into a contract for more than P33,000, all to have your details entered into an online directory that nobody actually uses.

If I’m correct that this is the same people who ran the previous, identical scam (and I’m certain they are, they’re almost identical except for the name) anyone who refuses to pay up will start receiving increasingly aggressive threats from debt collectors and law firms until they hand over the payments they’re demanding.

The good news is that they’ll never actually take anyone to court because no sober judge or magistrate would force someone to pay to be abused like this. I can certainly find no record of the people running the previous directory actually entering a courtroom to do so. Nevertheless, let’s not give them the opportunity to harass people. If you do want to market your business you could spend the same amount on a decent web site that really might get you some business.

Is BitClub Network legit?

Someone is trying to recruit me to invest in BCN (BitClub Network). Apparently they are dealing with Bit coins. What are you views? Is this a genuine investment, is it a pyramid scheme?

Please advise for me to make an informed decision?

The BitClub Network describe themselves as "The most innovative and lucrative way to earn Bitcoin" and they suggest that Bitcoin mining is a way to make money. It’s a complicated issue but Bitcoin mining is the process of storing and validating Bitcoin transactions and possibly earning Bitcoins for doing so. However, the resources such as computing power required to do this are immense and it’s not something that you and I can afford to do.

They go on to say that "With BitClub Network you earn daily profits from our shared mining pools. We also have a referral program so you can get paid for anyone you refer."

Yes, it’s true that they do mine Bitcoins but that’s not really what they’re trying to sell you here.

The clue was in that last statement. They say that you “get paid for anyone you refer”. Doesn’t that sound like a pyramid scheme to you? In fact, I suspect it’s a Ponzi scheme, where any returns people get are paid directly from the people who join after them. I’m not the only one that thinks so. If you fight your way through the advertisements for BitClub Network on the internet you can find a number of people warning that this is a Ponzi scheme.

I urge you not to have anything to do with BitClub Network. It’s yet another scheme that, sooner or later, will collapse, just like all other Ponzi schemes and pyramid schemes do, leaving a few people at the top of the scheme rich but the vast majority a lot poorer than before.

Before anyone thinks I’m against Bitcoin, think again. I’ve said repeatedly that Bitcoin is a fascinating new form of currency that may well be something like the future of money. However, Bitcoin is incredibly volatile and unpredictable and worst of all, is completely unregulated. There’s no central bank, no NBFIRA, no consumer body that can help you if things go wrong. Is that a risk you can afford to take?