Many people rather wrongly believe that Herbalife is not a ponzi scheme. If they follow their method of business or business model then they could understand their ponzi scheme. This is what written by a Herbalife member.
Herbalife has 4 very attractive income streams.
The first being retail sales and is very quick to put in place? Basically when you join the company you are given a discount on the products and supply your family and friends the products at retail price.
Your discount range is between 25–35–42 and 50 percent, these discounts increase the more work you do.
The second part of the business is wholesale payment direct from Herbalife themselves, this is where you introduce someone to the company and teach them about the business, Herbalife will pay you for the work they do, the amount you are paid depends on your discount level and their discount level.
The third way is also another direct payment from Herbalife called royalties, to qualify for this payment you must help team members qualify for supervisor and you will receive a 5% payment for the work of them AND their team.
The fourth and final payment is called bonus, this is when you get into the higher levels of Herbalife you are paid an additional income from your supervisors ranging between 2% to 6%.
By this description of the business model one could understand the ponzi scheme of Herbalife. Mind everyone that Herbalife is also a member of Indian Direct Selling Association like Amway, Tupperware, Forever Living Products, Avon, and others.
SOME GENTLEMAN ASKED THIS QUESTION TO ME ON QUORA AND HERE IS MY ANSWER.
Way back in 1998. when Amway India started its operations in India, one of my friends invited my family to attend the introduction programme of Amway which is presenting a good business opportunity. My wife and I attended the meeting. After fifteen minutes into the meeting, my wife announced that it was time to leave.
I asked her reason.
She explain ed that the products available at that time with Amway are not useful for regular day-to-day usage. Secondly, she is a lecturer and she could not think of peddling these products to friends and relatives visiting their homes to sell them. Thirdly, being a lecturer how could she ask her friends and relatives to become members of a scheme, which is outright looks like a racket. She clearly stated that it was not our cup of tea.
Though I was a law graduate by that time, I was not aware that there was an enactment called Prize Chits and Money Circulation Schemes (Banning) Act, 1978 which prohibits the chain schemes and ponzi schemes. Later I realised it is a bigger racket than it looked and started filing criminal cases against such companies like speakasiaonline, NMart, GoldQuest, Gemini Techno and scores of other fraudulent companies.
At that time only I learnt that a criminal case was filed against Amway and the AP High Court delivered a judgement stating that Amway’s business model is illegal. The beauty of the judgment bowled me out. It clearly stated as to how the business model is illegal and how the Amway is making easy and quick money and how it is inducing the members to join its 6–4–3 scheme with the promise of get quick rich.
Later, it was found out that there are several such companies including Herbalife, Tupperware, Oriflame, Avon, New York Max Life Insurance, and others under the umbrella of Indian Direct Selling Association. All these companies are doing the same business model and our spineless politicians remain mute spectators to the daylight loot of the country by these companies.
Finally, I wish to say one thing. One need not burn one’s fingers to learn that it is fire. Simple common sense is enough.
Kolkata: The Enforcement Directorate on Friday attached
assets worth Rs 293 crore in connection with the Rose Valley chit fund scam
case in which thousands of people were allegedly cheated in West Bengal and
Odisha, officials said.
The central probe agency's regional office here issued a provisional attachment
order under sections of the Prevention of Money Laundering Act (PMLA) and with
this fresh action, the total attachment in this case stands at Rs 1,950 crore
(market value).
"The latest attachment order is on assets worth Rs 293 crore (market
value)," senior officials in the agency said.
The Enforcement Directorate (ED) had registered a criminal FIR against the
firm, its Chairman Gautam Kundu and others in 2014 under the PMLA. Kundu was
arrested by the agency from here in 2015 and he is currently in judicial
custody.
Multiple charge sheets have been filed in the courts in Kolkata and Bhubaneswar
by the ED in this case.
The group had allegedly floated a total of 27 companies for running the alleged
chit fund operations out of which only half-a-dozen were active.
It is alleged that the firm had floated the scheme by promising inflated
returns on investments between 8 and 27 per cent to gullible investors in
various states.
The company had allegedly promised astronomical returns to depositors on land
properties and assets and bookings done in the real estate sector. It is
alleged that the company had made "cross investments" in its various
sister firms to suppress its liabilities towards investors.
The SEBI had probed the company before the ED and the CBI registered cases
against the group.
The ED has pegged the total volume of the alleged irregularities at Rs 15,000
crore.
An attachment order under PMLA laws is aimed to deprive the accused from
getting benefits of their ill-gotten wealth and it gets confirmed after an
order by the Adjudicating Authority of the said Act.
More than half a century of quantifiable evidence, proves beyond all reasonable doubt that:
what has become popularly-known as'Multi-Level Marketing'is nothing more than an absurd, cultic, economic pseudo-science.
the impressive-sounding made-up term 'MLM,'is, therefore, part of an extensive, thought-stopping, non-traditional jargon which has been developed, and constantly-repeated, by the instigators, and associates, of various, copy-cat, major, and minor, ongoing organised crime groups (hiding behind labyrinths of legally-registered corporate structures) to shut-down the critical, and evaluative, faculties of victims, and of casual observers, in order to perpetrate, and dissimulate, a series of blame-the-victim rigged-market swindles or pyramid scams (dressed up as'legitimate direct selling income opportunites'), and related advance-fee frauds (dressed up as 'legitimate training and motivation, self-betterment, programs, recruitment leads, lead generation systems,' etc.).
(Blog readers should be aware that I have tried, without success, to interview Joanna Lumley and get her side of the serious matters which I set out in the article below. I personally suspect that she has been ensnared by the offer of a large donation to one, or more, of her numerous favourite charities. That said, in the 'Utility Warehouse' video linked below, Joanna Lumley very specifically introduces herself by name and speaks as though she is personally guaranteeing the authenticity of the company and its so-called 'life-transforming MLM Income Opportunity').
Part-transcript of a 'Utility Warehouse' recruitment video, 2017
"Becoming a Utility Warehouse partner is easy and risk free
Even the joining fee is fully refundable
If you have second thoughts after your training you'll get it back no questions asked.
You can work on your business part time, full time or from time to time.
It's like a mini franchise, but without any financial risk or stock to buy.
Spend a few hours per week building your business and you will quickly find yourself earning an extra few hundred pounds each month.
Keep going, work a little harder and you could earn thousands of pounds extra each month
You don't need to be a salesman, a utility expert or a workaholic, just organised and committed and passionate about helping others to save money and building a better future for yourself
And you won't be thrown in at the deep end - you'll get help every step of the way with free training an experienced mentor and local support groups who will share their knowledge and experience with you.
Every time you introduce a new member to Utility Warehouse, you'll get paid.
The more new members you introduce: the more you'll earn, it's that simple.
And what's more you will continue to get paid a % of their Utility bill for as long as they stay a member.
That means every time they boil a kettle, switch on the heating, make a phone call, you'll get paid.
But it doesn't stop there.
If the members you introduce become a partner like you and sign up the people they know you'll get paid again - a small part of their utility spend every month.
That could mean a regular extra income for life.
And there's another reward that I really love - seeing more and more people share in the success of Utility Warehouse, not just cutting their household bills, but as a partner fulfilling their ambitions and dreams.
There's no limit to how far or how fast your business can grow.
Start small with the people you know and grow big with the people you don't.
Tens of thousands of people have already become Utility Warehouse partners and are reaping the rewards financially socially and through gaining new skills and confidence.
It's a purple army that is leading a revolution in the way that people buy their utility services.
A few weeks ago, via some concerned third parties, I was put in contact with a young woman in the UK who wishes to remain anonymous. She told me that she had recently become involved in an upsetting incident with a middle-aged guy who was excitedly boasting (at a private social event) that he was 'making good money as aUtility Warehouse Distributor.' Hewas shamelessly prospecting other guests and even the catering staff at the event venue. My contact intervened by discreetly suggesting to a prospect whom she knew and who seemed interested in joining, that this approach sounded like a pitch for a pyramid scheme. Unfortunately, she was then pointed out to therecruiter (by the prospect) who immediately approached her and took her aside. In an arrogant fatherly tone, the recruiter advised her to keep her nose out of something that she didn't understand, insisting that the 'Utility Warehouse MLM Business Model' is 'endorsed by Joanna Lumley and other celebrities' - including 'Richard Branson and Warren Buffett.'
Before she could get away from him, the 'Distributor' told my contact thatlast year 'Utility Warehouse' had paid out more than £20 millions in commission to its 'Partners' and that he was only 'inviting other people to share in the company's success.' At this point, my contact felt so uncomfortable, that she made her excuses to her hosts, and left. When she got home, she began to look on the Net and found the ongoing discussion of the 'MLM' phenomenon on the Mumsnet forum where recruiters are affectionately referred to as 'Bots' (as in robots).
In the past, 'Utility Warehouse' has wheeled-out various top British celebrities as useful idiots in propaganda videos. Furthermore, after I posted a brief article last year warning about 'Utility Warehouse,' a reader contacted me privately who felt terribly let down by the fact that the BBC's Terry Wogan (who passed away in January 2016) and her favourite comedy stars, Dawn French & Jennifer Saunders, had all been involved.
Thus, just a few days ago, I telephoned Joanna Lumley's agents, Conway Van Gelder, who gave me the contact details of the star's personal assistant, Lisa Baker. I then sent my urgent concerns about Joanna Lumley's involvement with 'Utility Warehouse' in a private e-mail via Lisa Baker who sent me a disturbing reply.
Dear Mr Brear,
Thank you very much for your email last week regarding Joanna Lumley and the Utility Warehouse Ltd. We have referred your enquiry to Tom Walker at the Utility Warehouse.
With all good wishes,
Lisa Baker
PA to Miss Lumley
A quick Google search revealed that Tom Walker is a RADA-trained former member of the Royal Shakespeare Company, who apparently is now reduced to making promotional videos for 'Utility Warehouse.'
The Honourable Charles Wigoder (b. 1960)
Mr Walker, did not contact me, but after I sent a follow up e-mail to Lisa Baker, just a few hours later, I received an unsolicited e-mail from none other than the Honourable Charles Wigoder - the son of a life Peer (hence the 'Honourable' title) and boss of 'Utility Warehouse.' In fact, Charles Wigoder owns 20% of 'Telecom Plus/Utility Warehouse PLC' - making his personal stake in the company currently worth around £200 millions.
I understand that you have been attempting to contact Joanna Lumley in order to discuss your longstanding concerns about the harm and damage which most MLM companies cause to those who participate.
The honest truth is that I had exactly the same concerns when someone first suggested I looked at Telecom Plus a little over 20 years ago. As one of the UK’s leading entrepreneurs, with a hard earned reputation for integrity in all my business dealings, being tainted with the so called ‘pyramid selling’ brush was the last thing I needed….but I was persuaded to do so and am deeply glad that I did.
And whilst you may be right about MLM businesses in general, you are wrong about us.
By way of example:
(i)Of course not everyone who signs up as one of our Partners goes on to build a significant residual income – but with us, anyone who tries the business and decides (for whatever reason) that it isn’t right for them, can receive a full refund of the joining fees they have paid; the churn/loss ratio looks very different when virtually none of the new Partners who join actually make a loss!
(ii)Most MLM business require a constant stream of new recruits in order to create income for those higher up the chain; with us, the incomes of all our Partners can continue growing without a single new Partner being recruited, as more people become Members, and as existing Members take more services from us.
If you are genuinely interested in learning more about our business model, and why we have become a powerful force for good in the UK, I would be very happy to meet. I am on annual leave for much of July, but we could perhaps get something in the diary for the second half of August.
I have cc’d my PA (Lucy) who can make the arrangements.
Firstly, it is interesting to note that Charles Wigoder is a champion Contract Bridge player.
(Briefly, for the benefit of Blog readers who might not be familiar with the game of Bridge,it's a sophisticated version of Whist complete with its own terminology and etiquette: https://en.wikipedia.org/wiki/Glossary_of_contract_bridge_terms . Bridge involves dealing the entire pack of playing cards to two pairs of partners who then make bids in turn as to how many tricks each thinks his/her pair will win against the other pair based on the strength of the hidden hand each holds. Each playing partner attempts to communicate to the other the strength of his/her hidden hand via the strength of his/her bids. Bridge is one of the few card games which actually involves a very subtle form of cheating: tone of voice, facial expression, gestures, etc. Officially, in Bridge tournaments, secret signs between partners are frowned on, but they are inevitable. The highest bidder wins the contract also establishing which suit will be trumps or if there will be no trumps. The contract winner then plays both his/her own hand and that of his/her partner - the 'dummy' - whose cards are laid on the table. There is a large amount of skill involved in leading your cards, and those of your dummy, in the right order. The highest points are scored when you win the number of tricks you contracted you would, but you can lose if you fail to achieve the contract).
Thus, Wigoder's opening bid in which he pretends to be my partner (by apparently admitting to suspecting that most 'MLM' companies, apart from his own, have been the fronts for pyramid schemes) is obviously not that of someone who is entirely convinced that he's holding a strong hand, but strangely he's confident that I'm going to accept his disguised invitation to play the role of dummy.
Instead of entering the 'Utility Warehouse' rabbit hole: in the rest of this article I'm going to stay well above ground and calmly lay on the table exactly what it is that the Honourable Charles Wigoder and his associates don't want Joanna Lumley, or the public, or regulators, or law enforcement agents, or legislators, or journalists, or satirists, to uncover.
For a long time I've proposed the formula that the universal identifying characteristic of pyramids and Ponzis is that they have no sustainable, or significant, source of revenue other than their own participants who are tricked into handing over their money (and sometimes their time and effort) in the false-expectation of future reward. Pyramids and Ponzis can, therefore, be more-accurately described as dissimulated closed-market swindles. That said, by their very nature, all pyramid and Ponzi schemes have been presented as perfectly lawful ,and viable, enterprises with an external source of revenue. Over the years, the methods of dissimulating pyramids and Ponzis and making them appear to have legitimate external sources of revenue have become ever more mystifying and sophisticated, but their hidden quantifiable results have remained exactly the same. i.e. The schemes' instigators make a fortune, and virtually everyone else loses. Recently, I've come to the conclusion that it is probably even more-accurate to describe Pyramids and Ponzis as dissimulated rigged-market swindles.
In blame the victim 'Multi Level Marketing/Prosperity Gospel ' cultic rackets, the innocent looking products/services' function is to hide what is really occurring - i.e. The operation of an unlawful rigged market where effectively no ill-informed (transient) participant can generate an overall net-profit, because the market is in a permanent state of collapse and requires its (transient) participants to keep finding further (transient) participants, ad infinitum.
Meanwhile a tiny well-informed (permanent) minority rake in vast profits by selling into the rigged-market at fixed-prices (and sometimes by also charging sign-up fees) and by controlling all key-information concerning the rigged-market's actual catastrophic, ever-shifting results in respect of its participants.
Although miraculous cure-all quasi-medical pills and potions, and household, and beauty, products have been prevalent, it is possible to use any product or service to dissimulate a rigged-market swindle a.k.a. pyramid scheme. There are even some 'MLM/Prosperity Gospel' rackets which have hidden behind well-known traditional brands (albeit offered at controlled high prices) others have hidden behind travel products, as well as financial, and insurance, products, cash back cards, etc. I believe there is now an 'MLM'racket based on cannabis products in the USA
Behind all theproducts/services,bedazzling celebrity endorsements,commercialcamouflage, mystifying mathematics and Utopianimagery, in 'MLM/Prosperity Gospel' rackets there has been no significant or sustainable source of revenue other than never-ending chains of temporarily bedazzled contractees of the'MLM' front companies. These front-companies always pretend that their products services are high quality and reasonably-priced and that they can be sold for a profit based on value and demand.In reality, the underlying reason why it has mainly only been 'MLM'contractees who buy the products /services (and not the general public) is because they have been led to believe thatby doing so, and by recruiting others to do the same etc. ad infinitum, they will receive a future (unlimited) reward.
Put in very simple terms,'MLM'has been form of mind-numbingly complex economic 'alchemy' behind which bedazzled and befuddled victims have been peddled infinite shares of their own finite money.
I've been examining the 'MLM'phenomenon for around 20 years. During this time, I've yet to find one so-called 'MLM'company which has voluntarily made key information available in an easily understood form to the public concerning the quantifiable results of its so-called 'income opportunity'.
The key-information which all 'MLM'bosses seek to hide concerns the overall number of persons who have signed contracts since the front companies were instigated and the retention/net-profitability rates of these contractees.
When rigorously investigated, the overall hidden net-loss churn rates for'MLM' income opportunities has turned out to have been effectively 100%. Thus, anyone claiming (or implying) that it is possible for the average participant to make a living in an 'MLM,' cannot be telling the truth and will not provide quantifiable evidence to back up his/her anecdotal claims.
Some of the biggest 'MLM/Prosperity Gospel'rackets (like 'Amway'and'Herbalife') have secretly churned tens of millions of losing participants over decades and they've also been widely-described as 'commerical or business cults.' Interestingly,'Amway' offersinsurance and also once hid behind utilities supplied by'Enron.'
There is already a large body of documentary evidence proving that'Utility Warehouse'adherents have been, and are being, exposed (without their fully-informed consent) to co-ordinated devious techniques of social, psychological and physical persuasion, designed to shut down their critical, and evaluative, faculties - dissociating them from external reality in order to exploit them and prevent them from complaining. Lying at the dark heart of the 'Utility Warehouse'cult has been the classic guilt-producing closed-logic controlling narrative. This constantly tells 'MLM'converts that only those who exclude all negativity and continue to believe totally that they will achieve the future redemption of financial freedom, can achieve financial freedom. Thus, all those who lose money and quit must not have believed totally and only have themselves to blame.Tellingly, the bosses of'Utility Warehouse'have never disclosed the actual results of their so-called 'MLM Income Opportunity,'because if they did, no one in their right mind would want to sign up. Instead they have focused attention on a minority of apparently successful and satisfied shills, whilst'Utility Warehouse'(just like'Amway'and 'Herbalife') has been peddled as an 'income opportunity,'and not a net-income opportunity.
Further research has been published by my associate Robert FitzPatrick (President of Pyramid Scheme Alert). This clearly shows that 'Utility Warehouse'has been copied from various US-based pyramid schemes dissimulated as 'MLM/direct selling income opportunities' hiding behind utilities.
The Texas-based MLM, Stream Energy, which sells gas and electric utility services in Texas and in Georgia, has been sued for operating a pyramid scheme. The civil suit, which is seeking class action status, claims that Stream misrepresents income potential, misleads consumers to invest as salespeople, is causing the great majority of "sales people" to lose money and is destined to collapse.
The suit notes that the ratio of Stream customers to salespeople is now only two to one. Therefore, the income potential could only come from recruiting other sales people in an endless chain fashion. In such a plan, only a very small number can be successful and all others are doomed to failure. Stream's pay plan is a typical MLM that pays earlier investors with funds invested by new ones in an "endless chain" plan.
The lawsuit will be eerily familiar to consumers who have watched the MLM industry. Stream is a type of MLM similar to Pre-Paid Legal, the now defunct Excel Communications, the travel scheme, My TravelBiz.com that was prosecuted as a pyramid scheme in California, and the telephone scheme, ACN which has also been prosecuted in Canada and Australia, but was able to continue based on rulings by judges. These schemes offer payments based on the number of new sales people recruited and each salesperson must also have a small number of retail customers to be qualified for commissions.
By using the endless chain pay plan the scheme can drive a large number of sales, though almost no sales people actually earn a profit and virtually none actually earn a profit for "direct selling." Excel, for example, recruited 500,000 American salespeople in one year at one point and quickly became the 4th largest long distance phone service in America. Yet, 80% of its salespeople were quitting each year. It quickly spiked and declined rapidly, eventually going bankrupt, ruining all distributors and all shareholders. Pre-Paid Legal also enjoyed fast growth, but now is in steep decline, with recruiting slowing and the ratio of "retail" customers to salespeople narrowing. My Travel Biz became the 17th largest travel agency in America, though virtually none of its salespeople actually earned a profit from retail travel sales. The big earners were making money off all the other sales people's investments.
In these cases, the products are sold at competitive prices, but each salesperson must pay upfront and monthly fees in order to participate in the chain. The net result is to produce a large base of customers, but the incentives and promises made to the salespeople – which produce the sales – turn out to be false. The salespeople are churned in huge numbers as they discover that it is mathematically impossible for them to build their own large downlines.
Most other MLMs – which constitute a variation on the pyramid selling model – have virtually no retail customers at all and they usually hype grossly overpriced products. 40-60% of those high prices are then transferred to the top of the pyramid. In those cases, the MLM companies do not track retail sales at all, though they may officially claim that each salespeople is required to make retail sales.
The Stream Energy model builds in a requirement for a small number of retail sales, giving an appearance of greater validity. Some news analysts are blinded by the large number "sales" these schemes produce. They also do not understand the pyramid pay plan that tricks the participants into losing their investments and wasting their time and effort.
'Utility Warehouse'has recently begun to offer insurance products ( but still acting as an agent for another company) and has publicly advertised this.
Classically of an'MLM'racket, only persons under contract to 'Utility Warehouse'can make purchases viathe companywhilst escalating commission rewards have been offered to allUtility Warehousecontractees provided they sign up at least 6 new contractees (although previously it was 3 new contractees). Thus, in the end, the possibility of future 'commisssion' rewards have been offered to all contractees on purchases which they make themselves and on the purchases of anyone they might recruit and on the purchases of anyone their recruits might recruit, etc., ad infinitum. Thus, basic common-sense reveals that no 'Utility Warehouse' contractee should be trusted when it comes to any anecdotal statement which he/she makes about his/her activity; for in order to have chance of recruiting, no matter what their actual experience, they all likely to recommend the company and to claim to have saved, and/or made, money.However, many people who have abandoned the company, tell a very different story.
The deeply-mystifying 'commission' reward system has been presented in 'Utility Warehouse'promotional material as being without limit and a proven means of attaining 'financial freedom for life,'but remember, no accurate easy-to-understand data has been disclosed concerning the overall results of the so-called'Utility Warehouse MLM income opportunity.'
Bearing the above in mind, this is from the UK Fraud Act 2006 (section 3)
3Fraud by failing to disclose information
A person is in breach of this section if he—
(a)dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and
(b)intends, by failing to disclose the information—
(i)to make a gain for himself or another, or
(ii)to cause loss to another or to expose another to a risk of loss.
'Utility Warehouse' currently claims 41 700 'Partners/Distributors,' selling Utilities, insurance, etc., to 600 000 'members/customers,' but it can't be repeated enough that even'members'(who are in the anti-chamber to the real fraud) are also offered rewards on the purchases they make themselves as well as the possibility of'commissions' for signing up a minimum number of new 'members'and the possibility of 'commissions' on the purchases of their future recruits, etc. ad infinitum. Thus, if we divide the current number of 'Members' by the current number of 'Partners/Distributors,' on average each one has only a paltry 13 'customers.'
'Utility Warehouse' is currently offering to pay an up-front head hunter bounty of £200 for each new recruit an existing recruit signs up. This dodge again has been copied from US-based 'MLM' rackets. What the promotional material doesn't make clear is that these head hunter payments are a 'commision' advance on what the new'customer' recruit should (in theory) ultimately hand over to the company. Thus, if the new recruit drops out and doesn't continue obediently to buy via 'Utility Warehouse,' the recruiter has to give his £200 bounty back to the company.
Tellingly, part of 'Telecom Plus/ Utility Warehouse' is a subsidiary debt-collection company which has already fallen foul of UK energy regulators due to its misleading appearance and bully-boy tactics.
In order to become a'Partner,'a 'Member' also has to pay a sign-up fee. For years this was around £200, but since I posted my article highlighting this last year, the sign-up fee for 'Members' was suddenly reduced to around £100, but apparently for non-'members' it remained at just under £200. The company has offered to refund the sign up fee if a 'Partner/Distributor' signs-up 12 new recruits. Significant sign-up fees to participate in trading schemes are prohibited by law in the UK. In reality, manyUtility Warehouse members have been merely participants who haven't been able to recruit 6 more members (let alone 12), but many have been obediently buying via'Utility Warehouse'and trying to recruit others, based on their false-expectation of future reward . Whilst, the overall churn rate ofUtility Warehousecontractees (based on the accumulated number of persons who have signed contracts with the company since it was first instigated and the number of persons under contract currently) has not been disclosed in an easy to understand form.
In reality, the number of recruits required to be found and maintained for any of the existing 41 700 'Utility Warehouse' so-called 'Partner/Distributor's to earn a minimum-wage net-income (let alone financial freedom) is considerable. However, the number of recruits required to be found and maintained for all existing so-called'Partner/Distributors' to earn a minimum wage net-income, is astronomic.
Again in the most simple terms, 'Utility Warehouse'has been peddling an unoriginal, pernicious financialfairy story - ie. endless recruitment + endless payments by the recruits = endless profits for the recruits.
Bearing the above in mind, one more time here below is the link to, and part-transcript of, a current'Utility Warehouse'promotional video featuring Joanna Lumley which, once you know the truth, is revealed as a classic tragicomic 'Prosperity Gospel'preachment - offering vulnerable prospective converts an exclusive ticket to a (non-existent) future secure Utopian existence (in exchange for their critical and evaluative faculties). Ironically, this illusary filmed ritual-performance has been bought and paid for with past and present 'Utility Warehouse'worshippers' own cash:
"Becoming a Utility Warehouse partner is easy and risk free
Even the joining fee is full refundable
If you have second thoughts after your training you'll get it back no questions asked.
You can work on your business part time, full time or from time to time.
It's like a mini franchise, but without any financial risk or stock to buy.
Spend a few hours per week building your business and you will quickly find yourself earning an extra few hundred pounds each month.
Keep going, work a little harder and you could earn thousands of pounds extra each month
You don't need to be a salesman, a utility expert or a workaholic, just organised and committed and passionate about helping others to save money and building a better future for yourself
And you won't be thrown in at the deep end - you'll get help every step of the way with free training an experienced mentor and local support groups who will share their knowledge and experience with you
Every time you introduce a new member to Utility Warehouse, you'll get paid
The more new members you introduce: the more you'll earn, it's that simple
And what's more you will continue to get paid a % of their Utility bill for as long as they stay a member
That means every time they boil a kettle, switch on the heating, make a phone call, you'll get paid.
But it doesn't stop there
If the members you introduce become a partner like you and sign up the people they know you'll get paid again - a small part of their utility spend every month
That could mean a regular extra income for life
And there's another reward that I really love - seeing more and more people share in the success of Utility Warehouse, not just cutting their household bills, but as a partner fulfilling their ambitions and dreams.
There's no limit to how far or how fast your business can grow.
Start small with the people you know and grow big with the people you don't.
Tens of thousands of people have already become Utility Warehouse partners and are reaping the rewards financially socially and through gaining new skills and confidence.
It's a purple army that is leading a revolution in the way that people buy their utility services.
Why don't you join them?
It could earn you financial freedom for life."
Meanwhile back in the adult world of quantifiable reality, and for those persons with fully-functioning critical and evaluative faculties, this is from the 'Utility Warehouse's'current annual report :
"In March, we launched a number of films featuring Joanna Lumley as the new face of Utility Warehouse, explaining who we are and the benefits we provide to those looking to save money (by joining as a new Member) or make money (by becoming a Partner). These new tools were well received, and we have since seen an encouraging increase in the number of new Partners joining the business.”
In reality, there is no independent evidence that 'Utility Warehouse'actually offers cheaper services. As for “making money (by becoming a Partner)”, here’s what the annual report states:
"Distribution expenses include the share of our revenues that we pay as commission to Partners, together with other direct costs associated with gathering new Members which are included as part of the Customer Acquisition Segment result for the year. These reduced slightly to £21.1m (2016: £21.4m), mainly reflecting lower energy commissions following the industry wide gas price reductions at the start of the financial year, partly offset by increased commissions paid to Partners from the increase in new Members and services."
The annual report also stated that
"annual revenue is £740 million, with 600,000 customers and 41,700 distributors.”
So, £21.1 millions was paid out among the 41,700 'distributors, ' but that’s a mean average of £506 per year, or less than £10 per week. However, this figure, as pitifully low as it is, is still grossly misleading. Sellers have had to sign up a minimum number of buyers before they get paid any commission, so probably most got no payment at all. The company does not disclose anything about 'Distributor'income, except to state:
"Whilst it is more challenging for Partners to gather new Members and build their Utility Warehouse businesses when there are such large pricing differentials in the energy markets, we have been pleased to see many of them still achieve significant success during the year by focusing on the unique strengths of our proposition and the exclusive benefits we offer."
One revealing reference appears in the 2013 annual report: ('Utility Warehouse'never repeated the data in future annual reports)
"DISTRIBUTION CHANNEL
The number of new Distributors joining the business between April and December last year averaged around 900 per month. Since then, we have seen a significant increase to around 1,300 per month, taking the total number of registered Distributors at the year end to a record high of almost 39,000 (2012: 37,263)."
So, if 'Utility Warehouse'was recruiting 1,300 a month or 15,600 a year with a total annual number 37,263, that’s 42% of the total were recruited in the same year. So, at £200 a recruit, that was £3.12 million just in sign up fees gained for that one year 2013.
For 2016, the company said it had 41,700 total'Partner/Distributors.'42% of that number (new recruits signed up in same year) is 17,514 new recruits, generating £1.75 million in sign-up fee revenue at £100 each. That’s also a significant % of the total commissions paid out to the recruiters.
If each'Partner/Distributor' buys the average amount paid by the“customers”for services, £1,230 per year, and the company pays 2.85% of revenue for “commissions”, then the newest recruits (17,514) each bought £1,230 in a year’s time, or £21.54 million in total in services.
Overall, the company paid 2.85% in 'commissions'on revenue. So, if there were 41,700'Partners/Distributors'in 2016 and each bought the 'average' amount in services, £1,230, then these peoplethemselves generated £51.291 millions in revenue. With 2.85% of that being transferred back to them, then another £1.46 millions of the'commissions' came from the 'Partner/Distributors.'
Typically, of an 'MLM Compensation Plan,' the 'Utility Warehouse' version is deeply-mystifying and guaranteed to shut-down the critical and evaluative faculties of anyone examining it who doesn't understand that its real function has been to shut down the critical and evaluative faculties of not just ill-informed victims of the scam, but also those of ill-informed observers (including regulators, journalists, etc.).
In total, the above figures show that at least £3.21 million of the “commissions” came from the sign-up fees and purchases of the existing“Partner/Distributors”, or 15% of the total paid out.
In this case, the available data shows that at least 15%, of the rewards come directly from the pockets of participants in the pay plan themselves. This is only by counting the portion of the payments assigned to'commissions.' If you use the gross profit figure, that is, the amount of revenue over the cost of the utilities the company resells, the amount that the'Partner/Distributors'generate is much more.
The company has a gross profit of about 18% after it pays for the utilities. So, if the 'Partner/Distributors'generate £51.291 millions in revenue from their own personal purchases, then the company actually gains over £9.2 million in gross profit from purchases of these peoplethemselves, in addition to the £1.75 million gained each year in new sign up fees.
In reality, all the revenue has always derived from the 'Partner/Distributors', since they are recruiting, on average, 13 'customers' each. Of course, many of these 'customers' were recruited bynon-salaried participants who long since quit, because few have actually received anything for their time and effort. Remember, they were required to find a minimum number of 'customers' before they qualified for 'commissions.' On the average of the approximately £7000 gross annual revenue which 6 recruits would bring in for the company, the 'Partner/Distributor'would have got back the average of less than 3% (or below £4 per week) minus their own operating expenses. However, the company would have reaped just over 15% in profit (i.e. approximately £20 per week).
In other words, behind all the reality inverting 'UtilityWarehouse is powerful force for good' propaganda has lurked a constantly-churning de facto slave workforce obtained by getting useful idiots to endorse the fraudulentunlimited income offer and make it seemimpossible that the company could be a cruel fraud.
In summary:
42% of claimed'Partners/Distributors'at year end are recruited during the year.
This reflects an annual churn rate approaching 50%.
The annual churn-rate builds up eventually producing an overall rate approaching 100%
We still don’t know the quitting rate specifically of those that join each year (ie the last ones in)
The mean average gross-payment to 'Partner/Distributors'is £506 per year, or less than £10 per week.
The company pays out only 2.85% of its revenue in 'commissions'
Based on the minimum sign up fees for the newest recruits and the mean average purchases by the“customers" (£1,230 per year), at least 15% of all “commissions” paid to the “Partner/Distributors”come out the 41 700 'Partner/Distributors' own pockets, but in the end, all the revenue is coming from a never-ending chain of 'Utility Warehouse' contractees no matter how they are arbitrarily labelled on their take it or leave it contracts.
This brings me onto thecultic/advance fee fraudaspect of'Utility Warehouse' and its connections with a so-called'Mindset Master', Wes Linden,but I will cover this in a follow up article - which no doubt the Honourable Charles Wigoder, his associates and their attorneys, will not appreciate.
