Hey Youtube, Jim here.
Welcome to the Top10Archive!
We all grow tired of seeing your insert-supplement-name-here friend talk about all these products they’re
using and how much healthier and better they are because of it, and what’s worse is they
want you to buy and sell them too.
To preach their message to your entire social media circle.
“Just get five friends to sign up.
You did it, didn’t you?
It’s easy!”, and before you know it all of your friends hate you, everyone bought
a bunch of product they can’t sell, and the company you all “work for” has made
a ton of money.
Whether it’s nutritional supplements, lipsticks, home and health products, or even makeup,
these pyramid schemes grow huge for a reason.
These are the Top 10 pyramid schemes that made millions.
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10.
SeneGence SeneGence is a cosmetics and skin care company
that, over the past few years, took over many young women’s Instagram and Facebook feeds.
It’s sold in the U.S., Canada, Australia, Indonesia and the UK, among other countries.
Their first year, they earned $1.7 million in revenue, increasing to $3.8 in their second,
and this was back in the early 2000's.
It all started with a no-smear lipstick called LipSense.
It was all over the place!
Once you saw your friend Kelly selling LipSense and saying you could do it too, you called
and she told you how much the start-up package was and she sponsored you as your “upline
seller”, and from that point on, any order you made she cashed in on.
So you want in on that too, right?
And you get your friend Samantha to sign up and you become her upline seller and you get
some money every time she orders.
There are no sales quotas unless you want to earn commission off your downlines, then
you have to spend at least $200/month to qualify.
The structure within the company raises doubts and concerns for those who study pyramid schemes,
though this is a company that does indeed sell a ton of product.
With a $250,000 donation to the Donald Trump's inaugural committee in 2017, we have to assume
that the company is still continuing to make bank.
9.
Nu Skin Enterprises Ah, more supplements, more skin care.
Nu Skin sells under the Nu Skin and the Pharmanex brands.
It was also created in Utah, but in 1990, six years after its founding, they began their
operation in Canada.
Soon after they were in Hong Kong.
Now, they have over one million independent distributors and reached $2.25 billion in
revenue according to a 2015 report.
Safe to say they were wildly successful.
However, they’ve seen troubles when others have observed their marketing strategies.
The FTC investigated and Nu Skin reached settlements with several states that had accused them
of overstating their distributors’ income.
In 2016, they paid $47 million in settlements for operating a pyramid scheme in a Utah federal
court.
They paid even more for bribing an official with funds from their charitable division.
8.
Herbalife This was the big thing seven or eight years
ago.
Everyone was doing it!
They actually made it look cool and interesting and some of our most fit, healthy friends
jumped on this fad.
However, the fad led to a windfall of accusations of hardcore scheming.
After their net revenue hit approximately four and a half billion dollars, courts went
after them ruling them an illegal pyramid scheme, they faced class action lawsuits and
presentations against them, including documentaries.
Though the company was bringing in net revenue of four and a half billion, their sales leaders,
as they called them, were making very little.
Most made about $5 a month, while others even lost money.
Despite it all, Herbalife stayed alive even after settling the class-action suit for $200
million.
Sadly, many of the recipients of the large sum were actually such happy Herbalife customers
that they bought more Herbalife products… that, I will never understand.
7.
Advocare Looking better, whether with cosmetics or
dietary supplements is clearly an offer modern society has a hard time saying no to.
Dietary supplements can make the big bucks nowadays.
Advocare has been in business selling them since 1993.
From shakes to pills and supplements, the majority of people who buy the stuff are distributing
them or are the mother or brother of someone who does.
Still, it sells quite a lot, with sponsorships and endorsements from famous athletes and
celebrities.
Like other pyramid schemes, in Advocare, you can make money selling products or from purchases
made by your downline recruits.
Sadly, the average annual income for distributors in 2012 was less than $2,000.
Of course, they’re making cash off distributorships themselves, alleging to have sold 350,000
of them from 2003 to 2010.
This is probably how they reached their $400 million in revenue.
6.
Arbonne Arbonne is another company in the skincare
industry, selling their direct-sales distributors based around the world.
It was founded in the mid-‘70s and headquartered in Irvine California.
In 2009, a court in Indiana declared that Arbonne had violated federal law.
Unlawful marketing?
Bad company payment?
Try discrimination.
They refused to employ a woman because she was deaf.
They paid $30,000 to her as a settlement and had to institute policies and training to,
well, not discriminate people.
If they skipped this basic step, I can’t imagine what their overall business plan looks
like.
Of course, in 2017, a couple raised a lawsuit alleging that it was an illegal pyramid scheme,
but the case was later dismissed.
Arbonne products are priced high and this makes their direct sales an uphill battle.
Still, the company chugs along, untouched, with global revenue of $500 million from over
seven countries.
5.
USANA Health Sciences Founded in Utah in 1992, USANA was a bit ahead
of Herbalife and most pyramid schemes we know of today.
They create dietary supplements and skincare products manufactured in West Valley City,
but they are sold all over the world.
They use an “associate” system for sales and distribution.
In 2015, it was the largest multi-level marketing company in the world by revenue, showing around
$918 million.
You’d think this would make their beloved “associates” rich!
But, as it works in pyramids, the money goes to the top and the associates at the bottom
made less money than they spent on the initial qualifying purchase.
Sounds like a bad business endeavor.
In 2007, Barry Minkow, a fraud investigator, and previous stock-fraud felon, submitted
a report to the SEC, the FBI, and the IRS accusing the company of operating an illegal
pyramid scheme.
USANA sued Minkow for defamation and the suit eventually ended up in a settlement.
Despite undergoing investigation, the company still remains active today.
4.
LulaRoe A more recently-founded MLM, this company
sells women’s clothing.
As always, new distributors must buy a lot of inventory to get started.
The whole, “you gotta spend money to make money” claim.
Lularoe is one of the worst cases of this.
To get started as a distributor for LulaRoe, you have to buy $6,000 worth of inventory.
Six thousand big ones worth of printed and patterned apparel of which you can’t choose
a single piece, but are still expected to sell.
However, you bought at 50% off so make the difference, right?
Moral of the story?
Sell or go broke.
That’s how an MLM company selling clothing goes beyond the $1 billion mark, which LulaRoe
did in 2016.
It’s such a bad deal for the distributors that the company actually has over a dozen
lawsuits open against them from former distributors.
3.
Mary Kay We all know Mary Kay.
It’s a pyramid scheme that’s pretty much right out in the open.
Harper’s Magazine has even referred to it as “The Pink Pyramid Scheme” in print,
but despite the adorable name, joining it is still ill-advised.
The reason?
Just like all the others, making any money within the pyramid means either you founded
it or you got literally everyone you know to join too.
Every time your friend Denise joins, you get a cut!
Every time Denise makes an order, you get a cut!
Are they actually making sales to people outside of Mary Kay?
Who really knows, because most sales usually happen between the company and their distributors
while the products are just a story.
How good, you ask?
Try $3.7 billion worth.
2.
Jeunesse Finally an east coast company!
Jeunesse is huge, selling not just to, but also the idea of youth, which its name alludes
to.
Its products are created with a base on stem cell innovation, DNA repair, and other research.
It has a bad rep of keeping all the money at the top, with the founders, top-level sales
reps, and executives.
It’s not bad like the other ones are bad.
Jeunesse goes beyond selling a bunch of unnecessary stock to a lot of desperate people.
It’s been accused of doing backroom deals, laundering money, evading taxes, forced work
for no pay, and lots of other legal offenses.
That will definitely lead to big revenue, and Jeunesse has reached a fair amount of
it, reaching $5 Billion in cumulative worldwide sales.
However, their list of income streams is just as long as that of their suspicious activity,
such as inappropriate health claims, confusing compensation plans, the troubled legal history
of its founder, and many more.
1.
Amway Amway has been subject to investigations for
as long as it has been selling health, beauty, and home products.
Which is actually forever because it is supposedly the oldest and largest MLM company.
From your “just use a pea-sized amount” toothpaste to other things you can buy for
much cheaper at the store.
In 1979, it was declared to not be a pyramid scheme because its distributors were not paid
for recruiting others.
This definition of “pyramid scheme” declared by the FTC still holds today for other multi-level
marketing companies.
Amway was ordered to change a few things but overall came out on top.
Since then, others have come at them with accusations and in 2010 the company settled
a class-action lawsuit in California for $100 million, again agreeing to make changes to
its business model.
Like the rest of these schemes, it didn’t make a dent in its 9.5 billion revenue.