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FTC’s Operation Empty Promises Video On Scams And Frauds

March 16, 2011

A reader sent me the following video from the Federal Trade Commission. Operation Empty Promises is the FTC’s effort to inform people about scammers and the frauds they run.

I liked the list of things any potential business owner should know or do before signing up:

  • Study the disclosure document and proposed contract.
  • Interview current owners in person.
  • Investigate claims about your potential earnings, and ask for them in writing.
  • Shop around. Compare opportunities.
  • Listen to sales presentations with a critical ear.
  • Get the seller’s promises in writing.
  • Consider getting professional advice.
  • Check out the company with your local consumer protection agency, state Attorney General’s Office, and the Better Business Bureau, not only where the company is located, but also where you live.

Prospects who get approached to join businesses like MonaVie and TEAM should pay heed to the recommendations from the FTC. In my opinion, anyone who did their due diligence would stay far, far away from the likes of Orrin Woodward, Dallin Larsen, Brig Hart, TEAM and MonaVie.

The burden of providing proof is on the MLM company and the System leaders. Don’t take half-hearted responses from them as a definitive answer. Get the proof you need before joining.

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33 Comments leave one →
  1. MichMan permalink
    March 17, 2011 2:34 am

    There is also this action from the FTC, along with commentary by an mlm lawyer (who used to represent TEAM btw)

    Sleeping Giant Wakes Up…sort of
    from THE MLM ATTORNEY by Kevin Thompson

    FTC recently launched a new consumer protection initiative titled “Operation Empty Promises.” Out of the new cases referenced, there was only one that I found somewhat informative for MLM companies. The case has a little to do with the sales of support materials. In summary, if a success system is being sold, the FTC wants to see some appreciable results. How much success needs to be produced to pacify the regulators? Nobody knows. In FTC vs. Ivy Capital (see below for the full version of the lawsuit. Warning, it’s incredibly boring), the FTC is seeking to shut down Ivy Capital and suing approximately 40 other defendants (mostly shell companies and corporate executives) for making false claims about the efficacy of a training tool purportedly designed to help people create online businesses. The allegations regarding training materials are below (note, they’re all in sequential order below; however, I’ve trimmed some paragraphs in between to keep it simple):
    (BEGIN QUOTE)

    Since at least 2007, Primary Defendants have marketed a program that will purportedly help consumers create, develop, market and run their own successful Internet business from home.

    Primary Defendants’ sales representatives typically do not mention Ivy Capital in the initial sales calls, but instead tell consumers they are calling on behalf of “The Success Team” or the “Internet Success Team.” .. .

    Primary Defendants’ success and earnings claims are false because the vast majority of purchasers of Primary Defendants’ program are unsuccessful in establishing Internet businesses, and thus are unable to earn any money. . .

    Sales representatives typically offer the programs at three price levels: “conservative,” “moderate,” and “aggressive,” and they encourage consumers to select a level that reflects the ccmsumers’ eagerness to make money and commitment to the program.

    Primary Defendants generally charge from $2,000 to more than $20,000 for their business coaching program. The exact price of the program typically depends on the amount of credit consumers have available on their credit cards.

    Within days, weeks or months of purchasing the program, consumers discover that it is nearly impossible to establish a profitable Internet business, even if they work substantially more than five to ten hours a week and follow all the steps of the program. The coaches provided by Primary Defendants give little or no substantive guidance. Many of the videos included in the program package contain merely commonsense advice or inspirational stories. . . .

    In numerous instances, . . . Defendants have, directly or by implication, made misrepresentations regarding the performance, efficacy, nature or essential characteristics of their products and services, such as:

    consumers who purchase and use Defendants’ products and services are likely to earn thousands of dollars per month from their Internet business endeavors; within six months a purchaser’s Internet business will generate income equal to or greater than the amount they paid to purchase the program. . .
    (END QUOTE)
    What’s the moral of the story?

    First, it’s a good idea to be immediately transparent about the company being supported. If you lead with tools and cleverly back into the main company, it might be construed as misleading. In Ivy Capital, the FTC is alleging that people were representing themselves as being with “Success Team” instead of Ivy Capital.

    Second, the return policy needs to be easy to understand and easily accessible. In Ivy, they had a confusing 3 day return policy.

    Third, if you sell support materials, and there’s representations about the efficacy of those materials i.e. these materials can help you earn $X in Y years in company Z, it’s important that there be demonstrable proof of the results being represented. How can a company accomplish this? Strong statistics.

    Finally, exceed all expectations regarding the value proposition. The best prevention against a regulatory action is the presence of happy customers. If the value proposition is fair and the materials deliver as advertised, there will be minimal complaints and no issues. Yes, there will be duds that buy the materials and do nothing; thus, skewing the averages down. However, if a segment of people that use the materials consistently outperform other segments in the organization, it would provide excellent proof in the event of an inquiry regarding the efficacy of the materials.

    http://www.themlmattorney.com/sleeping-giant-wakes-up-sort-of/

  2. webelieved permalink
    March 17, 2011 7:05 am

    A LIST OF QUESTIONS TO ASK IF YOU ARE LOOKING AT BUILDING TEAM/LIFE COACHING/ORRIN WOODWARD’S BUSINESS

    1. PROOF OF INCOME
    Ask for your for successful/promoted upline’s tax statement because you are going into business partnership with them. You would clearly look at the financials before you invest your time and hard earned money. You want to see the net income, not gross (which is what they’ll tell you about). What is left over on their tax statement after expenses. That would be the part they pay taxes on and is spendable income.

    2.CONTRACT TO SELL PRODUCT
    Get the contract from the Corporation you are selling for in my case Monavie, and take it to your attorney.

    3. TOOL SALES CONTRACT
    Get a copy of the tool sales contract written by the Company (in my case TEAM). Before you invest any time/money. For future money to be earned from sales of tools, cds,books, dvds, seminar tickets etc. Take this to your attorney before you sign it to look over. You wouldn’t go into business or work for someone without having a contract that you have taken to your attorney to read before you sign it, right??? Does it have a clause they can change contract whenever they want? If it does then run, as it is no contract.

    4. VERIFY SUCCESS
    Ask what level is the successful person is at and how long they have been in the business?
    Verify by tax returns, ask to see profit sharing statements and verify expenses through tax returns. Do not take ” i am new” for an answer.

    5. ASK YOUR ACCOUNTANT
    Ask your accountant if she has prepared tax returns for TEAM clients and have they made a profit or loss…?

    6. INCOME DISCLOSURE STATEMENTS

    A. PRODUCT COMPANY-
    Get an income disclosure statement on how many people are in your business and how many are at each level and what they make……printed, updated from the corporation.
    ( Monavie)

    B.TOOL COMPANY (in my case TEAM/ORRIN WOODWARD/LIFE/ COACHING OR WHATEVER THEIR NEXT NAME WILL BE)
    Get a INCOME DISCLOSURE STATEMENT from the Tool Company, (in my case TEAM) Printed on Company paper disclosing
    1.NUMBER INVOLVED IN TEAM
    How many people are involved in business? PRINTED
    2.TEAM Income
    How many people are making profit sharing money from sales of
    tools/cds/books/seminars? How much? At what levels?
    PRINTED by Team.
    i.e. Directors,Profit Sharers, Round Table and Policy Council Members
    3.COMPANY PROFIT
    How much $$$ is TEAM bringing in overall in profit and how much is being paid back to distributors building the customer base?
    4.PAY CHECK FORMULA
    What is the Formula they use to decide your pay? How will you be paid in the future on tool income ,cds,books,seminars ? Get a copy of the formula printed on Team literature.
    5. SPECIAL DEALS
    Are there any special deals I can qualify for? i.e. Can I or does my upline recieve profit sharing from other peoples’ teams they did not build ?
    6.THIRD PARTY ACCOUNTING
    Do they have a third party accounting firm that oversees all or their financials, are they reputable? or is Team overseeing themselves and just wanting you to trust them?

  3. webelieved permalink
    March 17, 2011 7:09 am

    p.s. DO not take anything less than proof as an answer. Make sure you are getting concrete, written, verified answers. Do not just take” oh when you get there we will tell you, or that’s not important”. Make sure documentation is printed from the company not just told to you by your upline guru!!!!!! I wish I would have asked these questions when I had been shown the opportunity. It would have saved me a lot of time, money and heartache!!!

  4. Speak Your Truth permalink
    March 17, 2011 7:09 am

    Amthrax~Thanks, Finally They are cracking down!

    Valuable Information that will make people CRITICALLY THINK, and ASK the right questions rather than jump in on the emotional “Dreamy~Weamy” stuff, that these scams such as Team/Life “business opprotunity-be your own boss” that depend on to create their victims.

    It is comforting knowing that there are finally cracking down on these scams that rape people of their money, effort, and time, which most will never recover their loses. I have a feeling this is going to make some people walk on a few egg~shells. What a great resource for ALL those whom have been BURNT!

    FROM FTC WEBSITE: WHAT YOU NEED TO KNOW

    By law, business opportunity sellers must give you specific information to help you make an informed decision about the offer. For example, you’re entitled to written disclosures from sellers of business opportunities where the initial costs are more than $500. The disclosures must include the following information to help you check out the opportunity:

    1)The names, addresses, and telephone numbers of at least 10 previous purchasers who are close to you, geographically – so you can arrange to visit them and check out the opportunity in person.

    2)The number and percent of previous purchasers who have made as much or more sales, income, or profits as the seller claims you can make – so you can tell how likely it is that you will do that well.

    3)An explanation of how the seller knows how much previous purchasers have made, and how any claims about sales, profits or earnings have been calculated – so you can tell whether the basis for the claim is reasonable.

    So to all you out there reading, do your homework, and don’t take any slippery answers~ the Team has objections (CD) for everything to YOU get to stop thinking and asking questions, they practice this and are very skilled at it.
    Do Not Take their word for it! Take it from many who have experienced this for years!

    HOLD THEM TO THE LAW!

  5. Speak Your Truth permalink
    March 17, 2011 7:13 am

    P.S.~ Even if you don’t spend $500 on the initial sign up day, YOU WILL spend way more than that within a very short time!
    So Remember the “OPERATION EMPTY PROMISE”

  6. Speak Your Truth permalink
    March 17, 2011 7:14 am

    @webelieved
    GREAT POST!

  7. webelieved permalink
    March 17, 2011 7:31 am

    Wanted to say, i bet none will give you these answers except the run around. Team leaders would never show you their tax returns as we all know the amount of money and time it takes to build TEAM. Also check out their planners, how much time is your RT members working??? I know for me it was a 24/7 job practically, with very little time off, If we weren’t gone we were on the phone, or computer or doing paperwork. Our kids never saw us, as we were gone all the time. Many leaders homeschool, and I would guess it is the only time they get to really see their kids. Meeting after meeting to go to. Ask their kids how much time they see their parents. Also there are very few RT, PC compared to the numbers lining their pockets….. a truthful ids from TEAM profit sharing as well as an independent accontant investigation of the pay plan would be interesting……..huh?

  8. webelieved permalink
    March 17, 2011 7:50 am

    You will spend $500 a month for sure in tools, gas, meetings, cds, books, travel expenses. Great info.. I wonder how the FTC would feel about a company that steals from it’s distributors, lies, makes false promises for years, teaches their distributors how to product load, and then takes the distributors customers, money and time invested for years, and gives them to someone else. Wonder if that’s legal???? Hmmmmm………… I would guess right now people are getting pretty pissed off at the scammers of the world!!!!! I would say no, no , and no to the 3 questions above. None were given to us. But there were a whole lot of verbal promises given about residual, ongoing, b type business income….build the community……..blah blah blah for years from the TEAM LEADERS…..Orrin and the gang.

  9. I Quit ( and glad I Did) permalink
    March 17, 2011 9:53 am

    If every prospect truly follows this blueprint the “exploding growth” (bullshit) will literally stop overnight! This info would never support the claims of the “opportunity”. IMPOSSIBLE!
    I LOVE IT!!!

  10. I Quit ( and glad I Did) permalink
    March 17, 2011 9:56 am

    AMEN!

  11. March 17, 2011 5:53 pm

    I’d like to add a part of my experience that’s directly related to Webelieved’s post – I have asked, respectfully my upline and her upline how much are they making off of Monavie/TEAM. (Note, we are in an informal meeting at our flat, along with my husband, I have been in for a few months and not making any money.) They flat out refused to tell us what they’re making, and just said that they were at Star 1000 at the time, and for me to look it up on the Monavie IDS. Then they gave the reason for *NOT* telling us the answer – to avoid jealousy if a person is making too much money, or to make a person feel discouraged about the income. At the time, I assumed that it was a very personal question (after all, you just don’t go up to the average Joe and asked what their income is, it’s rude!). Now as I look back, if I’m going to be in a business, yes, I’d like to know the in’s and out’s on the income, the expenses, etc.

  12. March 17, 2011 6:19 pm

    That is true, the true amount is never, ever revealed, because if they are revealed, everyone would be running the other way screaming bloody murder. I believe this is part of the reason why the meetings are so hyped up, they’re to make you excited and feeling good so that you don’t mind paying for them bloody tools.

    Another thing that sticks out in my mind, is that I’m visually impaired. I find it so much easier to have an electronic note-taker (it’s a small white recording device that allows recording of any conference meeting for up to 4 hours) whenever I go to a meeting and am required to take notes. Since I’m slow at this stuff, I simply use my electronic note taker. Well, I saw on the back of a seminar ticket that no recording devices are allowed. So my upline talked to Claude Hamilton and explained my vision impairment, and he said no, it’s something to do with copyright laws, and some people even if they have paid for the seminar but didn’t come would want my recording, and if I offered that to people, then we’d have a team of lazy people. Well, number one, nobody would know about me recording, and number two, I’d be doing it for MYSELF ONLY because of my VISION PROBLEM.

    Money, money, money, money, MONEEYYYYYYYY (haaa ha ha ha ha ha haaa!)

  13. Speak Your Truth permalink
    March 17, 2011 7:45 pm

    Izzy
    First off, I’m totally discusted that they wouldn’t let you have your recorded, that is criminal. What were they afraid of that you would take their .25 information and share with others like they tell you to do anyway?

    2 reasons they won’t tell you their income:

    1 That is the standard operating answer that “it is rude” and “you wouldn’t ask your boss what he makes”, and my favorite one is “you wouldn’t believe if I told you!”
    2nd reason;
    I would say they are too embarrassed to admit what they were making.

    Jealousy you have got to be kidding me, of what their star 1000 income? Especially in every plan (2-3000 per month) they would say that in every plan and from stage they do the same, dropping all kinds of income claims, hinting their incomes. Them shysters!

  14. March 17, 2011 7:57 pm

    As my upline said, the speeches are copyrighted, and there’s a chance that we might share the info with another person who didn’t make it to the seminar. I forgot to make another point, all the sessions are recorded, and made into CDs for selling – not free, SELLING!!!! – hence, Woodward’s famous quote “Bad advice is free & readily available, but good advice is rare & requires an investment.”

    Investment means money 😉

  15. webelieved permalink
    March 19, 2011 1:45 pm

    Izzy that is so discusting, that you couldn’t use your recorder. I am speechless!!!

  16. Speak Your Truth permalink
    March 19, 2011 4:10 pm

    You know Izzy you reminded me of something, this was a long time ago, there were a few deaf people that were real intelligent and the team would not provide an interpreter for them because it was going to cost them money, this made us angry. They had to bring someone along just so they would understand what was going on. I forgot all about that, just shows how greedy they really are!

  17. March 21, 2011 7:32 am

    Roy Cooper, NC AG has FHTM (only MLM on list) under investigation as part of Operation Empty Promises

  18. switch permalink
    March 22, 2011 7:13 am

    Sound familiar “LIFEsavers”, “teamers”, or whatever you want to call yourself?

    How about empty promises on the Walmart of the internet?…or

    “I will promise you that they’re going to announce the next “HUGE THING” ready to launch at the next major!”….or

    “For only $15, you can “reserve” your spot now on the team!” “The sooner you reserve your spot, the better spot you’ll have!” ….or

    “Seeing how you’re about to reserve your spot, you’ll be “grandfathered” in on the team! AND, you’ll only have to pay $39.99 to get your business up and going!!!”

    What a deal….

    Anyone up for the Tuesday night open today? Should be interesting.

  19. Speak Your Truth permalink
    March 22, 2011 7:38 am

    Switch
    You are a hoot!
    LIFEsavers~ one thing you can buy those at the store for .35, not 35 dollars!
    The flavor is much better too!
    The L.I.F.E Teamers experience leaves a bitter taste in your mouth!

    I really am curious what the FTC will say about “their” outdated as of yesterday, “Director Compensation.” Boy they must be real busy trying to keep up with Amthrax’s blog!

    Transparent Leadership?

  20. Speak Your Truth permalink
    March 22, 2011 2:36 pm

    There really is some good information in this post, that should be very helpful to the soon to be and already are a “customers”!

  21. Speak Your Truth permalink
    April 1, 2011 11:21 am

    Switch
    What about the PROMISE of PASSIVE, RESIDUAL, ON-GOING, B-TYPE, WILLABLE , FOR THE REST OF YOUR LIFE INCOME,WHEN YOU BRING THE NUMBERS TO THEIR SYSTEM??
    Then steal that very income from those who DID bring the numbers to their system, that would add up to millions of dollars for them?
    More Promises;
    “You Own and Have Control Over How Much Your Make, By Your Performance”
    “You Own Your Own Business”

  22. April 25, 2011 10:50 pm

    Team and Mona Vie offers nothing but empty promises, there so-called “opportunity” is nothing but a load of heaping bullcrap…Orrin and Chris are nothing but liers, cheaters and
    charlatans (swindlers)…there no better then Bernie Madoff…I hope the the FTC and the IRS goes after them–cause when they do I won’t feel one bit sorry for them..damn SCAMMERS..get a real job..

  23. Speak Your Truth permalink
    April 26, 2011 9:31 pm

    Dick
    I AGREE! That would be a Day of Celebration!!

  24. Dick Hertz permalink
    April 26, 2011 10:45 pm

    Thank you Speak Your Truth. I look forward to that day.

  25. Speak Your Truth permalink
    April 26, 2011 11:14 pm

    Dick
    I have seen you on here before but don’t recall if you shared any of your experience. Can you share a little, that is if you are comfortable with it.
    I can tell you have seen right through the Shysters! I am glad you are free!

  26. webelieved permalink
    April 27, 2011 7:48 am

    Yeah D.H. Please tell us your story. The more the merrier.

  27. Dororthy permalink
    April 27, 2011 10:57 pm

    This commenter requested that her comments be removed from this site.

  28. Dick Hertz permalink
    April 28, 2011 7:46 am

    I used to be Mona·Vie distributor til I quit on the March 16, 2011, I never made one dime doing it and it. I tried it and it just isn’t for everyone..

  29. Speak Your Truth permalink
    April 28, 2011 1:53 pm

    Thanks for sharing that Dick, I really hope you didn’t lose too much!

    ‘It just isn’t for everyone’~ I would say it isn’t for ANYONE! (except the greedy PC scammers) but that is their lame excuse to challenge you and justify to themselves. They are too arrogant to admit or believe people have figured them out!

    It never ceases to amaze me that NO ONE involved (including us), ever payed attention to the fact that over 99% LOSE money.
    You think it would be obvious, and I don’t know if those that have never been involved; fully understand this.
    The business is completely based on playing peoples emotions, not logic!
    They do NOT want you to THINK for yourself!
    You simply trust, repeat what is said, apply their ‘proven’ methods of inventory loading (without question because of edification of the guru’s~they have done & know everything) by moving people up the bonus levels as quickly as possible so people are fooled into thinking their is ‘money to be made’ you TRUST everything, and don’t suspect that it wouldn’t be a ‘Real Viable Business.’
    They used to use the ‘handling objection:’ “If it was an illegal/scam then all these ‘Fortune 500 Companies’ wouldn’t be involved and they would have figured it out, don’t you think?”~Stop thinking technique, that gets the ‘prospect’ to stop asking dumb questions, they think; at least that is the intention!
    It is a perfected step by step deceptive scheme!

    They keep you way too pre-occupied on purpose with ‘your dreams’ and making the ‘big’ money to even question or study, the IDS.
    They repeatedly, show off ‘lifesyles’ to get you to think ‘”those who do the work~make it big, just like them.” “Do what we have done and you will have what we have.”
    It is all a LIE~they don’t tell you Orrin, owns & controls the system profit-sharing with ‘their secret paying-formula’, that is never disclosed, who knows if he changes it whenever he feels like it, how would you know?’
    Then the con will steal your money & team just like they did to us and others after years of effort and thousands of people!

    They DO NOT teach ANYTHING and barely mention the ‘income disclosure statement’; just you are required to give it to every prospect you STP to, that’s it period. No importance, just a technicality.
    It is hardly explainable the way these con’s get people to over look this!

    I learned it from Pyramid Scheme Alerts & Juicescam’s site!
    These shyster’s have mastered the ‘diversion techniques’ of those facts to even those who have been in for years~how embarrassing!

    They ‘Sell’ the ‘system’ only and totally distract you from the ‘product’ business, control your information imput and keep you so flippin busy you never have time to even think about the reality of facts!

    It is the grandest calculated, cover-up scheme ever!
    I wish the FTC & IRS would investigate their books, this isn’t a small little thing where a couple of people lost $20 bucks, many people have lost 10’s of thousands and the PC has made millions off of them!
    It is shameful to ever have been associated with such liars!

  30. May 7, 2011 6:22 pm

    Here is an article on the Huffington Post about Donald Trump’s “Trump University” being investigated/sued and labeled as a SCAM — http://www.huffingtonpost.com/2011/05/06/trump-university-scammed-customers_n_858587.html

    What is interesting about this is that his Trump University compared to the Team Life Orrin Woodward Tool Scam is a joke. I would much rather learn from Trump any day on Real Estate topics vs. going broke with Orrin’s Pyramid Scheme.

    The big question is this — why is the BBB and other consumer watchdogs out there harping about Trump when there are more serious fish to fry such as the orrin woodward, chris brady and tim marks pyramid kingpins?

    Basically, Trump University is being investigated/sued because the Better Business Bureau (BBB) received a number of complaints in multiple states. It would not be hard for the same thing to happen here if more people came out and filed complaints against the orrin woodward Team monavie Life Training MLM Scam.

    If the FTC and BBB compared apples to apples, they would jump on taking woodwards scam down in a heartbeat.

    Just ask Emily Lambert at Forbes Magazine: http://www.forbes.com/forbes/2008/0811/050.html She laid the ground work down a few years ago. Someone needs to finish where she left off!!

  31. Speak Your Truth permalink
    May 7, 2011 10:47 pm

    Will~ You are on to it! I hope they crack down on every scam their is, especially the Team but all of them! Enough is Enough with peoples hard-earned money being stripped from them ‘unwillingly!’ Have you read the new approach~ their very own MLM? No suprise, they have found away to ditch MV according to the post on Amthrax!

  32. humiliated permalink
    May 8, 2011 8:58 am

    Will, I would venture to say that Trump is a SOMEBODY while, in spite of what Orrin thinks, he is a NOBODY. I don’t like Trump and his “politics” so I hope that his schools get shut down, but it is interesting to see that people will take Trump on, “he who has access to high powered & expensive attorneys” but people seem to be more afraid of Orrin The Pipsqueak.

    I think you are absolutely right though, more people need to speak out against Orrin and his practices in order to get the attention of the FTC. Otherwise, Orrin will continue to cause devastation in people’s lives.

    People must also start accepting personal responsibility and thoroughly researching these “businesses” before they become involved in these “get rich quick” schemes. To this end, the more that people speak out in whatever form they choose, the more “recognition” the less likely it is that people will join. Silence is the MLMs best friend.

  33. brent hansen permalink
    October 7, 2011 1:30 pm

    Funny because “Empty Promises” seems to perfectly describe the way they enforce the law as well… hahaha!

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