Yesterday, the same reader emailed me to inform me that Yeshiva World News was carrying the story, which they received via The Lakewood Scoop. The company filed for Chapter 7. Given the current business model of selling money --gift cards or most recently checks according to some readers--the "failed business model" as some readers are kindly calling it, was bound to hit the proverbial wall. The companies original business sold groceries and toiletries from a website for which you needed a $29.99 membership to even be able to view the choices and claimed you could supposedly save 50% and have the non-perishables shipped to your door with free shipping.
It is a real shame that we see so many people put their time and energy into businesses for which there is little, if any, gold at the end of the rainbow. Oftentimes, involvement with such businesses results in strained relationships with friends and family, to say nothing of financial loss or lost opportunity--time lost that could have been used to pursue a steady income rather than chasing a dream. Worse yet is when people just don't get it. A post on the Lakewood Scoop needs a serious lesson in economics and diversification. He (or she) writes:
Who said it was a scam? It was a failed business. They had everyone asking for refunds at once! Of course they go under. When everyone goes to withdraw money from a bank at once they go bust too! Is every bank a ponzi scheme? Ask any business that accepts returns, I’m sure if every person that bought something in walmart in the last 90 days would ask for a refund, they wouldn’t have issues too!
Those with any business acumen will realize that you can't compare banks of the pre-depression era to Walmart, a company that delivers product on the spot to a diverse customer base, to a company that was selling money for less than its face value to a crowd of BELIEVERS. And, wow, are there some true believers posting over at the Lakewood Scoop.
Some readers are suggesting that frum publications better monitor their ads. Others are suggesting Rabbonim not let MLMs into the community. My opinion should come as no surprise, but I don't think it is of any use to put Rabbonim or frum publications in the business of giving a heksher on businesses or ads (although weeding out the ridiculous could be a service), and I believe that the power exercised over business in more right wing communities is already often beyond the pale. There is plenty of censoring. I believe in certain Israeli communities because of tzniut concerns, women cannot advertise perfectly legitimate service businesses.
The real issues are deeply ingrained in a culture that puts the cart before the horse, so to speak. The issues of desperation for parnassa, a lifestyle that is out of sync with the average income level, integrity, etc, are issues that will have to be addressed in order that such scans don't hit like a ton of bricks. Censoring advertisements or shutting out every MLM for being an MLM alone (let's not forget that some MLMs do sell product and aren't "Get Rich Quick" Scheme), isn't going to make a dent when people too many people are hard up for funds. Address that issue, and you might get somewhere.
However, next time I receive an email asking me if I could look into a possible scam, I definitely will. Representatives for this company had yet to advertise in any of the publications I receive in print. There is one company I have seen advertised for which I think people should beware, but I can't remember the details. If you are searching for a better electric rate, start with calling area utility companies, not using a company you know nothing about.
Finally, I'd like to point my readers to a letter to the Yated from Rabbi Eli Teitelbaum zt"l on MLMs and the frum community. Seems his words are every bit as important now as they were back then when the Yated gave free advertising to a lady promising to solve the frum world's money woes by selling some non-FDA approved product for which I deleted the name of the company in my post, and no longer recall what type product she was selling that would solve so many problems.
GET-RICH-QUICK” SCHEMES
Dear Editor,
Reader beware! In last week’s Readers Write column of the Yated, someone suggested a solution to the parnassa crisis by joining some MLM (Multi-Level Marketing) company making the latest rounds. Once again, I must warn all the readers that these MLMs have been tried since the time of Mesushelach and the only thing they will do for you is get you deeper into the quicksand and add to your pain and troubles.
I’m sure they’ll tell you that they are different than all the rest and provide you with names of people who are making millions. It’s time people realize that there is no treasure chest hidden at the end of the rainbow and the moon is not made out of cheese. There is no quick and easy way to riches unless you inherit it.
Many people were in Amway (also known as Scamway) for many years and never made the riches they were promised. The average monthly gross income for active distributors of Amway for January 1998 was $88. This was before expenses. Anyone who dangles a diamond-studded chain in front of your eyes is only trying to draw your attention. It’s like waving a red kerchief in front of a bull. We must never allow our greed and need for money to short-circuit our normal thinking process and common sense.
Unfortunately, many have lost both their time and life-savings by investing in these MLMs. For those who want to learn more about these so-called “get-rich-quick” schemes or MLMs, I suggest they read the book “Behind the Smoke and Mirrors,” by Ruth Carter, or “False Profits,” by Bob Fitzpatrick before investing their money.
While not all MLMs are the same, one should always consult his own accountant before investing his money and never rely on the advice of those who sell the product or franchise. It’s important that you find out what the average monthly gross income after expenses is for active distributors and what percentages of them have remained in the business for more than a year.
Don’t rely on the claims of a few who say they are making lots of money or tell you that you must work very hard at it in order to succeed. What they often fail to tell you is how much time you’ll actually have to put in, and how difficult it is to sell the product which is also being sold by many others, or how cheap you can buy a similar product in a local department store. More often than not, they will exaggerate the “miraculous” powers of their product, claiming that you can’t buy anything compatible anywhere else. One wonders why they don’t sell these miracle products in all stores.
Here’s a simple piece of advice to follow. If it sounds too good to be true, then stay away, don’t believe a word they say, and run the other way. Just because someone claims that it’s not an MLM doesn’t mean it’s not. If it looks like a duck and it quacks like a duck, then it’s a duck, no matter what anyone may call it! Not all that glitters is gold!
Sincerely, Rabbi Eli Teitelbaum
Dear Editor,
Reader beware! In last week’s Readers Write column of the Yated, someone suggested a solution to the parnassa crisis by joining some MLM (Multi-Level Marketing) company making the latest rounds. Once again, I must warn all the readers that these MLMs have been tried since the time of Mesushelach and the only thing they will do for you is get you deeper into the quicksand and add to your pain and troubles.
I’m sure they’ll tell you that they are different than all the rest and provide you with names of people who are making millions. It’s time people realize that there is no treasure chest hidden at the end of the rainbow and the moon is not made out of cheese. There is no quick and easy way to riches unless you inherit it.
Many people were in Amway (also known as Scamway) for many years and never made the riches they were promised. The average monthly gross income for active distributors of Amway for January 1998 was $88. This was before expenses. Anyone who dangles a diamond-studded chain in front of your eyes is only trying to draw your attention. It’s like waving a red kerchief in front of a bull. We must never allow our greed and need for money to short-circuit our normal thinking process and common sense.
Unfortunately, many have lost both their time and life-savings by investing in these MLMs. For those who want to learn more about these so-called “get-rich-quick” schemes or MLMs, I suggest they read the book “Behind the Smoke and Mirrors,” by Ruth Carter, or “False Profits,” by Bob Fitzpatrick before investing their money.
While not all MLMs are the same, one should always consult his own accountant before investing his money and never rely on the advice of those who sell the product or franchise. It’s important that you find out what the average monthly gross income after expenses is for active distributors and what percentages of them have remained in the business for more than a year.
Don’t rely on the claims of a few who say they are making lots of money or tell you that you must work very hard at it in order to succeed. What they often fail to tell you is how much time you’ll actually have to put in, and how difficult it is to sell the product which is also being sold by many others, or how cheap you can buy a similar product in a local department store. More often than not, they will exaggerate the “miraculous” powers of their product, claiming that you can’t buy anything compatible anywhere else. One wonders why they don’t sell these miracle products in all stores.
Here’s a simple piece of advice to follow. If it sounds too good to be true, then stay away, don’t believe a word they say, and run the other way. Just because someone claims that it’s not an MLM doesn’t mean it’s not. If it looks like a duck and it quacks like a duck, then it’s a duck, no matter what anyone may call it! Not all that glitters is gold!
Sincerely, Rabbi Eli Teitelbaum
MLMs are the absolute worst. Both for the people suckered in and for all of their friends and acquaintances. My parents' very close friends got heavily involved in Amway many years ago. Their house was taken over by Amway products that they swore were "so much cheaper than the supermarkets." At one point they must have had a 2-3 year supply of certain goods. They literally ran out of space to store things. Every time my parents would get together with them or talk on the phone the conversation would turn to Amway and how my parents could make big bucks like they are and how my parents were fools for not "investing" in Amway. It got to the point where my parents stopped talking to them it was so bad. Sure enough they eventually lost so much money they quietly dropped it and never mentioned it again. Over the years they've fallen for many such scams with the same results.
ReplyDeleteIn my previous community many, many women got involved in Mary Kay. We were constantly getting phone calls for my wife to go to make up parties or, better yet, to host one (the hostess gets $50 of free make up!). Finally my wife went to one after enduring non-stop phone calls, emails, and requests at shul. It only got worse after that as the woman thought she had a new customer. But, she didn't want my wife to buy make up (though that was okay too), she wanted her to be as smart as she was and become a Mary Kay lady. After all, it's the ultimate job - you work from home and the money just pours in. You can even get a pink car!
It was all very comical in a tragic sort of way since these women swore they were making tons of money, but never bothered to calculate how much they had to spend on product (you have to keep up certain minimum orders) or how many hours they spent on presentations and other nonsense. Needless to say they all lost money and have rooms full of makeup probably to this day.
What was the most tragic/funny is that my wife has a very good full-time job and these women were telling her to leave it and become a Mary Kay rep since working full-time for someone else is a sucker's game - A Mary Kay rep only works for herself, works next to no hours, and the money just keeps on coming. Very sad.
I suppose it's also sad that people think we need rabbis to "solve" this problem. After all, they've already solved the tuition crisis and the shidduch crisis and the wedding cost crisis. I suppose it's now time for them to solve this one.
I agree with your main point, there will always be scams like this and suckers and the fact that frum people live far beyond their means just makes us all more vulnerable to these scams.
Bereshit 3:19: "By the sweat of your brow shall you eat food."
ReplyDeleteThere is no such thing as a free lunch, and there are no shortcuts. Occasionally, someone has a hiddush (new idea) which allows them to have a novel business - but the innovators are the ones who have to work the hardest!
We need to emphasise middot (values) - specifically the middah of loving work.
I'm certain your parents close friends aren't the dreamers we knew. Talk about straining relationships. That was before caller ID and my parents hated answering the phone and were afraid to go to any social event. Another mutual friend thought he was going to hear some sort of interesting guest speaker only to find himself at an Amway conference. Amway is the quickest way to lose friends bar none. Anything you have to pay to be involved with and buy into the dream is suspect in my book.
ReplyDeleteWhile Avon and similar companies selling product are unlikely to help anyone "get rich quickly", I have no issue with co-workers of mine who have politely put a catalog next to the printer at work. I've even order a pair of earrings or a Pampered Chef utensil that I liked. I steer clear of buying product from those who are convinced that this product is going to provide them the income they need to [fill in the blank] and think they are doing me a favor by trying to get me involved. But those who just quietly put their catalog out by the copy machine or set up a table at the shul boutique. . . that I can handle. Hence the MLM=Bad=Let the Rabbis Ban It so that we don't have to deal with the real issue is an unappealing "solution."
Yes, I believe that MLMs should be kept away from, far away from. But to be fair, there were/are a few of them that offered well-made products that were useful, and that lasted for seemingly forever, and could give the seller a profit over their expenses--Tupperware is one of those.
ReplyDeleteRabbi Teitelbaum's letter is certainly useful but I'd feel that more was actually being done if he had also announced that community-wide seminars on economics and budgetting and how to prepare and train for parnoseh were about to take place.
I remember "60 Minutes" had an expose of Amway way back in the '70s or '80s. I know that many younger frum people either avoid the "liberal media" or don't believe what they see and read. It's one thing to harbor certain political views; it's another thing to willfully remain ignorant because of those views.
ReplyDeleteA close friend was "selling" Amway about 25 years ago. She was never ending about it, the conferences she went to, the number of frum people involved, I should buy from Amway. Her husband was also closely involved. The years they wasted on Amway, believing this was a parnossah are a pity. Many people in Lakewood were taken in with this scam I'm sure. And the real loss was the magical belief that they were in business - that there's a shortcut that does not involve college and job skills. The conferences were no more than pep rallies to keep the victims in the game. Finally, after 20 years of marriage and many children, her husband figured out he had to go to college, got his master's in a therapy program, and promptly divorced his wife. Now that he had a real parnassah, he was marriageable at a higher level, and he promptly remarried and bettered himself financially.
ReplyDeleteThe first test is if a business is targeting only Jews. If it's a viable business model, it wouldn't need to be focused on Jews only.
ReplyDeleteIf it passes that test, then there are still many others - but considering how many of these endeavors are Jewish-only focused, I think that this simple smell test alone would help eliminate a number of them.
This company was not a Jewish owned company. I do believe those selling the gifts cards marketed mostly to the Jewish community.
ReplyDeleteAn MLM is a pyramid scheme. Money flows up to those that bring you in. Eventually, it collapses as it runs out of people to bring in.
ReplyDeleteThe guy that starts an MLM makes a killing.
The early on ones make good money.
Once it's made it to a Frum neighborhood to recruit EVERYONE, that easy money is past.
The comments on the Lakewood Scoop on this are heartbreaking. The mixture of naivete and brazenness make me lose hope for our brethren.
ReplyDeleteRabbi Avigdor Miller of blessed memory was famous for his public lectures, in which he accepted questions about any subject.
ReplyDeleteOne person asked him: What about Amway?
He answered: Don’t waste my time!
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