03x29 - Multi-level marketing

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[bright tone]

[upbeat rock music]

♪

[cheers and applause]

- Welcome, welcome, welcome

to "Last Week Tonight."

I'm John Oliver.

Thank you so much
for joining us.

And for the last time
before the vote on Tuesday,

we begin with the 2016 election,

or, as you may know it,

"Of Course Election Day
is November 8th,

"the Latest Possible Date
The Election Could Fall On.

"This Must Be The Universe
Punishing Us

"For All The Masturbating
We've Done,

And It Was A Lot" 2016.

Now, the two candidates

spent most of this week
furiously campaigning.

For Hillary Clinton, that meant
calling in help from Beyoncé

and Jay Z, who she thanked

by ruining one of his songs
in front of him.

- Jay memorably said something
we should all recall:

Rosa Parks sat
so Martin Luther could walk.

And Martin Luther walked
so Barack Obama could run.

And Barack Obama ran

so all the children could fly!

- Cool.

I have to say, with--

with that cadence, flow,
and swag,

Hillary Clinton is truly
the Hillary Clinton of rappers.

Now, as for Donald Trump,

the human equivalent
of a clear plastic bag

filled with cheeseburgers

and Confederate flag
belt buckles,

he spent the week
making a visible effort

to restrain himself.

- Stay on point, Donald,
stay on point.

[laughter]
- Yeah, Donald Trump!

- No sidetracks, Donald.

Nice and easy.

Nice...

- Even Trump's inner monologue

has the tone of a serial k*ller

stalking his prey
at a food court.

"Stay on point.
They haven't seen you yet.

"Be nice and easy.
You're just here for a Cinnabon.

Nice."

And just before we taped,
there was breaking news

regarding those new emails found
on Anthony Weiner's computer

that started a shitstorm
last week.

The FBI has apparently
finished reviewing them

and has said they warrant no new
action against Hillary Clinton,

which is a big deal,

although watch Trump campaign
manager Kellyanne Conway

try to minimize it
in truly incredible fashion.

- I don't believe that it's
politically good or bad

information for our campaign.

We have not made this
a centerpiece of our messaging.

- Seriously?

Seri--in the word cloud
of your campaign,

"email" is right up there
with "wall," "Mexicans,"

"big league,"
"[unintelligible],"

"sniffle," and "wrong."

And look.
[cheers and applause]

Who knows
if this new information

about the emails
will change any minds?

The truth is,
if you're still undecided,

I honestly don't know
if I can help you.

For a treat,
our main story later

won't have anything to do
with this election.

But you do have to vote,

even if you live in a state
where you think it won't matter,

because there are some
important things

to vote for down-ballot--

you know, the races
that you don't think about

until you're
in the voting booth

and find yourself thinking,
"Oh, comptroller?

"Shit, I did not study for that.

Well, I'll hope this person's
not a n*zi."

But it's not just candidates.

In many places, there are also
important ballot initiatives

to consider, from raising
the minimum wage

to legalizing marijuana,

to which I say, "Dank,"

uh, to the death penalty.

And there can be
confusing language.

For instance, Nebraska
is voting whether to repeal

an earlier repeal
of the death penalty.

So voting to repeal
will actually reinstate it,

which is, I would say,
un-dank.

So--so you should prepare
before you vote,

and it's actually easy.

If you Google "view my ballot"

and type in your address,

you can see who or what

is on the ballot in your area.

And after that, you can type
"dog dressed as a walrus"

into Google as a little treat
for yourself,

because now
you actually deserve it.

The point is that there is a lot
to consider on Tuesday,

and then, barring recounts,

this nightmare of a campaign
will be over,

which is good,
because this election

hasn't so much appealed
to our better angels

as it has groped
our better angels,

mocked their weight,
and called them sixes at best.

We are at point where this man

has a genuine shot
at the presidency,

despite having blown up
a political party,

undermined confidence
in our electoral system,

declared open season
on journalists,

and unleashed a river
of racism and misogyny.

Also--and I feel like
we've lost sight of this--

he has really stupid hair.

It--it's important
to remember that.

It is frankly hard to believe

that there was a time

when people thought a Trump
candidacy would be funny,

but there was such a time.

Because as you may remember,

three years ago,

I guest-hosted "The Daily Show."

And, well, there is something
you should see.

The Republicans better have
something pretty special

up their sleeve.

- Donald Trump,
just last week,

he confirmed
to the "National Review"

that he is again considering
a run in 2016.

- Do it.

Do it.

Look--look at me.

Do it.

I will personally write you
a campaign check now

on behalf of this country,

which does not want you
to be president

but which badly
wants you to run.

[audience moaning
and exclaiming]

Now, now, now--

now, in my defense,

I have no defense for that
and was hoping to think of one

before finishing this sentence,

which--oh, shit, it's over.

But--but look, listen.

I-I-I want to believe

that American
will reject Donald Trump,

that our innate sense of decency
will kick in

like some sort
of moral autopilot.

But I have been
spectacularly wrong before,

because as you might remember,

eight years ago, I was working
as a correspondent

for "The Daily Show,"
and, well,

there's something
you should see.

- Cubs fans are considered
a subset of the stupid.

- Oh, absolutely, John.

I mean, they've had 100 years

to figure out that
what they want

will never happen,
yet they still yearn for it.

- And that is stupid.
- Yes. It's very stupid.

- Because, uh, the Cubs
will never win.

- No, that's right, John.

The Chicago Cubs will never,
ever win the World Series.

- No.

- I'm an idiot.

But that clearly shows
no outcome is certain.

So if you are thinking you don't
have to show up to vote

on Tuesday because there is no
way the impossible could happen,

take it from somebody who has
learned from painful experience,

you are wrong about that.

And now this.

[trumpet fanfare]

- This is WITN News
Early Sunrise.

- Just keep swimming.
Just keep swimming.

- Here's our costumes
this morning.

- Hap--happy Halloween.
Note the stems.

- Now, you're supposed to dress
up as your favorite thing,

so I dressed up as wine.

- [laughing]

- So, I mean, is that
not perfect?

- This is Prince over here.

- Ha-ha!
Got my guitar.

Wha!
And it's even got the symbol.

- Yeah, it's awesome.

You did a great job.

- [laughing]
I know, right?

We need a chill on this, uh,

fog machine
right now, you guys...

- Ooh, ooh.
- 'Cause you can't even see us.

- In spots
such as Uvalde, Cotulla,

uh, Pleasanton, Gonzales--

boy, this is much tougher

with short
Tyrannosaurus rex arms.

- Yarr, it be
a nice weather today.

We be looking
at some beautiful weather

to start our Halloween
in our work week.

It is a spooktacular night

here in the heartland.

Yarr, we be sailin'
the high seas

with some gorgeous conditions.

- CBS this morning
is gonna have more

on the big stories
of the day.

- The man who fired
several sh*ts

with a semiautomatic r*fle

of the south
and of the parking lot

at a Sports on Tap
about 12:30 Saturday morning

is still not in custody.

- Moving on,
for our main story tonight,

I would like to talk to you
about an exciting opportunity.

I just need 30 minutes
of your time to explain it,

but it has the potential
to transform your life.

I'm talking about multilevel
marketing companies, or MLMs,

companies like Mary Kay,
Rodan & Fields,

Nu Skin, Amway,
and Herbalife.

They sell different products,

but generally, MLMs have
two main things in common.

First, you don't see them
on store shelves.

You buy them
through distributors

like, uh, friends, uh, family,
and coworkers.

And secondly, those distributors
are always looking

for more people to join them.

And they have
a pretty attractive message.

- Why Herbalife?

- Because you get
to be your own boss.

- Earn extra money.
- Work from home.

- Raise your own children.

- You can name your own hours.

- Make part-time
or full-time money.

- Paying the bills.

- Share this video
with ten people...

- That you care about,
that you love, that you adore,

that you admire--




- Come on.
What are you waiting for?

- 100 people.
Share with everybody.

They want what we have.
We got it.

- Okay, hold on.

I-I'm supposed to share that

with ten people
I love, adore, and admire.

That's a tough ask.
Let's see.

Um, there are the judges
on this season

of "Project Runway."

That's three.

Uh, oh, there's Tim Gunn.

That's obviously four.

If you count Tim Gunn twice,
that's five.

But I'm still five short,
and I am out now.

And before you brush
this industry off,

you should know,
collectively,

it did around $36 billion
in retail sales

last year in the U.S.

You probably know someone

who is considering
joining an MLM

or who already has
and is posting about it

ten times a day on Facebook
or Instagram.

And if you do know
someone like that

or have considered
signing up yourself,

this story is important,

because let me explain how
the system is supposed to work.

Generally, distributors have
two main ways to make money:

sell the product itself,

whether it's, uh, makeup,
vitamins, or health shakes,

and earn money on those sales;

and--and this is key--

recruit other people
into the company

and get money
based on their sales

and the sales of people
they recruit in turn.

Just look at Vemma.

A few years ago,
a hidden camera

caught a then-distributor
for that company

walking a prospective recruit

through just how easy it can be.

- Okay.

- Okay, okay.

- Wait, you "kind of"
get your money back?

That's as reassuring
as hearing a doctor say

he kind of knows
where your appendix is.

Oh, it's probably somewhere
near the spleen.

And if you are thinking,
"Well, hold on.

"That business structure
sounds familiar.

Isn't that a pyramid scheme?"

well, there was a journalist
waiting outside

to ask the exact same question.

- It's not an illegal
pyramid scheme.

It's a direct-selling
network marketing company.

- Is it shaped like a pyramid,
the business structure?

- It is shaped
like a pyramid, yes.

- But you're saying it's not
an illegal pyramid scheme.

- It's not an illegal
pyramid scheme.

- Oh, I get it.

So it's not a pyramid;
it's just pyramid-shaped.

You know, like a Dorito

or an Angry Bird

or just a pile of bullshit.

But--but let's put
that pyramid question aside

for a moment,
because from the outside,

these companies do have
the trappings of legitimacy.

Many have high-profile
celebrity endorsers.

Vemma had noted science expert
Jenny McCarthy.

Uh, Advocare has esteemed
ball thrower Drew Brees.

And an MLM called
Max International

had this guy.

- After more than a year
of due diligence,

Gena and I joined
Max International

as home-based distributors

and media spokespersons.

- Oh, to be a fly on a wall
while Gena and Chuck

were poring over the numbers

during that year-long
due diligence session:

Gena with an adding machine,

Chuck randomly kicking stuff.

It'd be like watching
Lennon and McCartney

write "Sergeant Pepper."

Still, for many MLMs,

the biggest celebrity
is their founder,

who can enjoy cult-like status.

Just look at JR Ridinger,

CEO of Market America.

At company conferences,
the guy makes quite an entrance.

- Ladies and gentlemen,

J...

R...

Ridinger!

- ♪ Ah, I want
to watch you bleed ♪

♪ Welcome to the jungle

♪ We take it day by day

♪ If you want it...

- Okay, fourth-string
wedding chapel Elvis,

calm the f*ck down.

And that's just his walk-on.

Once he gets going,

he puts on a real show,

demonstrating
how you can pump money,

uh, dramatizing the rat race

by sweatily running around
in a giant wheel,

and screaming at the gravestone
of Joe Nobody,

who never fulfilled
his true potential.

- Joe, come on, man.

The dreams you told me about--

we can actually do them now!

We don't have to wait, man!

It works!

And I'm doing it,
and I want to help you do it,

because it's so good!

Joe, this is amazing!

We can--we can have
vacations and sailboats.

And we can have multiple homes.

And you can give your wife the--

the--the jewelry
that she deserves, man!

You're gonna be a hero!

Come on, Joe!
Let's do it!

Get up, Joe!
Get up!

Before it's too late--
get up!

- Holy shit.

All I can say is thank goodness
funerals don't have

a "speak now or forever
hold your peace" section,

because he would be
at every cemetery

delivering
motivational speeches.

"She lived a good life."

"f*ck you!
Your grandmother died a loser!

"Come back to life, Ethel!

"You can still have that yacht!

Come back to life!"

And the--the dangling
of vast lifestyle improvements

is at the heart
of the MLM pitch.

Uh, their materials
feature flashy cars

and luxury travel
that you can achieve.

And just watch a distributor
from Youngevity

walk you through
a future dream scenario

in exquisite detail.

- In two years, this is
what's gonna happen to you.

You are gonna--

you're gonna drive
to your work.

You're gonna walk
into your boss's office.

You're gonna sit down,

and you're gonna quit
your job.

[cheers and applause]

You're gonna explain that

that little
"pyramid scheme thing"

that you almost got
terminated for last year--

you're now an entrepreneur,

and you're gonna be
doing that full-time.

- Whoa, whoa, whoa, whoa.
Back up, back up, back up.

Did you just say
"pyramid scheme"

and then
"almost got terminated"?

- And then you're going
to go out to the parking lot.

You're gonna get
into your silver Mercedes

that Youngevity has paid for,

and you're gonna drive home--

oh, no, wait.

Actually, first you're
gonna drive to the bank.

- I'm--I'm sorry.
I-I hate to dwell on this,

but you definitely said
"pyramid scheme" back then.

But--but I'm sorry, now we're
suddenly going to the bank?

- And you're gonna walk
into the bank,

and you're gonna deposit
your coding bonus.

[people cheer]
And the lady's gonna say,

"Will that be checking
or savings?"

And you're gonna say,

"Eh, I don't really care.

I get these all the time."

- And then the lady's gonna say,
"Ha-ha, that's fantastic,

but I actually need to know
which account this goes into."

And you're gonna say,
"Makes no difference to me."

And she's gonna say,
"But I can't deposit this

"unless you specify
which account.

It's policy."

And you're gonna say,
"It's all gravy."

And she's gonna say,
"How about checking?"

And you're gonna say,
"I'm loving it."

And she's gonna say,
"Do I need to get security?"

And you're gonna say,

"The account ending in 8424,
please."

Now, Youngevity told us
that that woman's claims

"are not authorized
by the company"

and are
"against Youngevity policy,

which forbids income claims,"

although that video was taken

at one of their official events.

And the woman, Denice Chenault,

is featured with her husband
on the company website

with the words "Denise and Tom
Chenault ARE Youngevity."

And come on.

You don't let someone
embody your company

if you don't agree with them.

If Flo turned out
to run a dog-fighting ring,

Progressive would wipe her
off their website immediately.

And by the way,
you know that's coming.

You can see it in her eyes.

There are dead dogs
dancing in there.

But--but you cannot deny

the picture that she paints
is enticing.

Who doesn't want
to tell their boss

to go f*ck themselves?

Half my staff would do it
right now, if they could.

But MLMs hold out the hope
that if you work hard,

you can take control
of your life,

start your own business,

and help your family.

But how real is the opportunity?

Well, let's take a look at just
one of these companies in depth:

Herbalife.

You saw its pitch earlier.

It was the one that you
were supposed to send

to 10, 20, 100 people.

It sells nutritional supplements

like shakes and vitamins,

and it's one of the biggest
MLMs around

with net sales
of $4.5 billion last year.

It has, uh, celebrities
who talk up its benefits,

from superstar athletes
like Cristiano Ronaldo

to pretty much the last person

you're expecting to see
in this piece.

- Well, first of all,
you have a great product.

That makes all the difference.

- And we got to tell
everybody you're

a product of the product.

- Well, I am a product
of the product.

It has every combination
of things that I like.

It's a very good product,

uh, delivered
by really good people.

- Yes, that is
Madeleine Albright

talking to Herbalife's CEO

claiming she's
a product of the product.

So forget studying at Columbia
and Johns Hopkins.

If you want to be like the first
female secretary of state,

just chug a couple
of vanilla-adjacent

nutri-shakes a day
and thank her in the morning.

Oh, and about those products,

in its early days,
Herbalife was accused

of overstating
their health benefits,

claiming in the '80s
that one product

helped relieve everything,
from venereal disease

to tumors to bed-wetting.

And back then, their founder,
Mark Hughes,

was asked by a Senate
subcommittee to answer experts

who'd called his diet products
into question,

and this was his response.

- I think if they're so expert
in weight loss,

why were they so fat yesterday?

It seems to me--

and I'm not trying
to make any jokes,

but I do think that they
ought to use our product.

[laughter and groans]

- First, he seems great.

But--but second,

why would anyone in the '80s

take Herbalife to lose weight?

They had cocaine.

Come to think of it,
we also have cocaine.

The point is, cocaine is
an effective weight-loss option.

It's not where I thought
I was going with this,

but it is where
we have ended up.

Now, to be fair,
that was 30 years ago,

and a lot has changed
at the company since then,

although when ABC News filmed
some Herbalife distributors

just two years ago,

they found some claims that seem
to echo the company's past.

- This Herbalife distributor
in New York City

told us the story of a woman
who overcame

an inoperable brain tumor

thanks to Herbalife.

- New recruits were told
Herbalife products

helped to treat
heart disease...

- And even helped one woman
get pregnant.

- Well, that is
obviously bullshit.

Nutritional shakes
cannot help you get pregnant.

There are only three liquids
that can do that:

a glass of merlot,

the honey-smooth music
of Sade,

and good, old-fashioned jizz.

And--and people--

people might be making
claims like that,

because they are desperate
to move excess product.

You see, broadly speaking,

under Herbalife's system,

uh, distributors can get bonuses

and massive discounts
on products

based on how much they buy,

which can be a huge incentive
to buy in bulk.

For instance, let's say
you're selling Herbalife's

disgusting creamy
chicken soup powder

for $13.35 a box.

The cheaper you can buy it
from Herbalife,

the more profit you could make.

But to stay qualified
for those higher discounts,

you have to keep buying product,

and it might not be easy
to sell that extra soup

because, A,
it's a little pricey,

and, B, we actually tried it,

and it tastes
like the wood shavings

inside a gerbil cage.

And as one former
top distributor will tell you,

if you're just
accumulating product,

that can lead to a problem

common enough
to have a special name.

- We'd call it
garage qualified.

They would stack as much product
as they can in their garage,

and at some point, they would
realize that they have to quit.

- So people buy product,
more than they can--

than they can sell.

It sits in a garage.
What happens?

There's got to be an endpoint
here at some point.

- When they run out of money,
there's an endpoint.

- Exactly.

So Herbalife
may be an industry leader

in worthless crap
people stick in their garage

along with, of course,
the PT Cruiser,

the car that looks like
a sporty version of a hearse.

And as a distributor,

it is not easy to figure out,
exactly,

how you are going
to make money.

Just watch this Herbalife video
from a few years ago

explaining one narrow part

of their insanely convoluted
compensation plan.

- Okay, here we go.
Take a look at this example.

Now, when E places a $4,000
buy-in-point order at 42%,

this counts
as personal volume for you.

But since this qualifies E
to Supervisor

with a one-month qualification,

that volume
now becomes encumbered

for everyone in the upline.

And remember,
each upline distributor

needs to accumulate 1,000
unencumbered volume points

if they want to qualify
for Supervisor as well.

- It's simple!

And if you accumulate 10,000
unencumbered volume points,

those are grouped
into an unencumbered batch,

which qualifies
Benedict Cumberbatch

for one unencumbered
cucumber cummerbund.

And while, yes,
that is absolute nonsense,

it makes exactly
as much sense

as everything
that came before it.

In fact, to hear another former
Herbalife distributor tell it,

your main focus in the business
might be less on products

than on the people below you.

- You don't make money
from selling products.

You make a little.
Not much.

Not enough to pay the bills
that are racking up.

You make money
from signing people up.

- Of course.

It's like that famous
salesmanship motto

from "Glengarry Glen Ross,"

A-B-S-T-C-O-S-T-O-S.

Always be selling the concept
of selling to other salespeople.

And at this point,

that "pyramid scheme" question
that we set aside earlier

has to be addressed,

because in broad terms,
if distributors' earnings

come primarily
from selling products

to actual customers
outside of the company,

that is probably
a legitimate business.

But if those earnings come
primarily from selling product

to the distributors
you've recruited below you

and their sales of product

to the distributors
they've recruited below them,

all within the company,
that may be a pyramid scheme.

And any business
that is set up that way

has a big problem for a reason
that--and I will warn you--

does involves math.

- Almost all of these schemes
tell you that you can make money

by just recruiting
three or four or five.

Let's say five.

Then you let the five
do their five.

That gives you 25.

What they don't show you

is that you could only
do that 13 cycles,

and you would exceed
the population of the Earth.

- It's true.

Within 14 cycles,
you run out of people,

and that is assuming
that everyone on Earth

wants to be
a protein shake distributor.

And I can think
of at least a few people

who have better things to do.

Uh, Alan Alda, for instance,

or Malala Yousafzai,

or Morten Harket,
lead singer of A-ha.

The guy is still swimming
in "Take On Me" money.

He doesn't need this shit.

And Herbalife's CEO,
Michael Johnson,

has an interesting way

of deflecting that whole
pyramid scheme question.

- I go back to any company.

I started in Disney
as a director,

and then I went to be

executive vice president
and then president

of the international entity
of the company.

So I moved up
six or seven levels.

And at the top was sitting

the CEO of the company,
Michael Eisner.

Is that a pyramid?

Is that any different
than what we're doing here?

[laughter]

- Yes, it is
completely different!

Disney was a corporate ladder.

Those were all salaried
positions with benefits.

The company wasn't banking
on you personally

filling your garage
with cases of unsold DVDs

of "The Lion King 2:
Simba's Pride."

But Johnson could've made
a stronger "non-pyramid" case

in that interview if he could've
just shown how much money

distributors get
from selling product

to actual retail customers.

But conveniently,

Herbalife didn't keep records
of those figures.

Now, unfortunately for them,
the FTC recently finished

a multiyear investigation
into the company

and filed
a blistering complaint,

walking right up to the line

of outright calling it
a pyramid scheme.

Uh, they alleged Herbalife's

"compensation program doesn't
incentivize retail sales"

but rather...

Which sounds like, you know,

how pyramid schemes work.

And when people
pointed this out,

the FTC chair
made an amazing statement.

- You know, our focus
isn't on the label.

The word "pyramid" does not
appear in our complaint.

That is true.

They were not determined
not to have been a pyramid.

- Think about what
she just said there!

"Not determined
not to be a pyramid."

How is that not
a huge warning sign?

If the FDA announced,

"We have not determined cotton
candy not to be clown pubes,"

you would never risk
eating that shit ever again!

Now, now, who knows why
the FTC stopped short?

Perhaps it ensured Herbalife
agreed to a settlement

in which they neither admitted
nor denied wrongdoing

but did pay $200 million

and agree
to significant new changes.

But the contents of this
complaint are mind-blowing.

The FTC claims that...

In fact,
the FTC even stated:

Which implies they hadn't been
up till then.

And yet, amazingly,
Michael Johnson

characterized this
as a victory.

- Hey, we've got great news.

We've reached an agreement

with the U.S.
Federal Trade Commission

that ensures that our mission
to improve people's lives

will continue to thrive.

I have to tell you,
this is really good news,

and it comes at a time
when our business is growing

bigger and better
than ever before.

- Oh, f*ck you.

[cheers and applause]
He--he didn't just...

he didn't just polish that turd.

He put it in a bottle
and convinced people

that they could make a fortune
selling nutritional turds

in their spare time.

But look, whether Herbalife
is a pyramid, not a pyramid,

or not not a pyramid,

it is true
that Herbalife is growing,

and a lot of that growth
has come

from Latino communities
where Herbalife

has been aggressively expanding
for years.

They even bought a sponsorship
on the hit telenovela

"La Fea Mas Bella."

It--it's very subtle.

Just see if you can spot it.

- Mira...
[speaking Spanish]

- Look.
It's called Herbalife.

This is going to help you
have more energy,

and it's also going to help you
face all the problems you have.

Believe me.

- Really?
- I drink it every day.

And besides,
it's delicious.

- If that is happening
on the show,

I can't imagine the real drama
happening in the commercials.

[in exaggerated accent]
"Mr. Geico lizard,

"I want to save


but how can I when you are
sleeping with my wife?"

And the fact a large percentage
of Herbalife's business

comes from Latinos is a point
of pride for Michael Johnson.

- We call it
the Herbalife family,

and we're not
ashamed of that;

we're very proud
of that.

The Latino, the--
the blood, if you will,

the--you know, if--
it's in this company,

and it feels great.

- "Oh, I love the blood
of the Latino community.

"I just want to bathe in it.

"I want to bathe in your blood,
Latinos.

How's this sales pitch going?

I feel like it's going bueno."

[laughter and applause]

But to those supplying
that Latino blood,

it can feel less than great,
as this community meeting

of those who feel burned
by Herbalife shows.

- [speaking Spanish]

- [speaking Spanish]

- Her husband
continuously reminds her

about the $8,000
that she owes to them.

- [speaking Spanish]

- You know what?

Now might be
a good time to point out

when someone says, "Their blood
is in me, and it feels great,"

that is what
a f*cking vampire says.

And friends of yours may say,
"Well, that's just Herbalife.

My MLM is different."

But there are echoes
of what you've seen

across this industry.

For instance, Herbalife
is far from the only company

that has made bold
product claims regarding health.

- When I started,
my body fat was 37.5,

and now it's
right around 16, 17.

- The pain and the lethargy

that go along with fibromyalgia
is gone.

- Three days
into the experience,

I was feeling, like,


- When I found out they had

a pet formulation
of Liquid BioCell,

that's when I knew I had
something very exclusive.

After putting Rembrandt
on Liquid BioCell Pet

for three months,
he started walking again.

- Okay, first of all,
obviously,

good boy, Rembrandt.

But second,
are you sure he didn't

just summon the energy to walk

because he was desperate
to get away

from the eye dropper
of liquid nonsense

you were shoving
in your pets' mouths?

And just like Herbalife,

MLMs can often have
Scientology-like levels

for you to ascend through.

Uh, with USANA,

uh, you may have gone
from sharer

to believer to builder

to achiever and beyond.

And at Kyani, you pass
through a series of ranks

with the names of gemstones,

as one distributor explained
at a company conference.

- I want to talk about
a millionaire mind-set,

because if you got involved
in Kyani to become a Jade,

you're selling yourself short.

If you got involved in Kyani
to become a Diamond,

you're not thinking
big enough yet.

If you haven't already
visualized yourself

a Double Black Diamond,

you need to kick yourself
in the rear.

- Now, "double black diamond"
is technically a skiing term

for particularly
dangerous slopes.

And I'm thinking maybe
you shouldn't choose a term

that basically says,
"If you even try this,

you'll go downhill fast and
may end up in a f*cking ditch."

And the
"garage qualified" issue

is not exclusive
to Herbalife either.

It's come up with multiple
other MLMs, including Mary Kay.

- I saw with my own two eyes
the warehousing of the product,

meaning they had basements
full of it or closets full of it

or garages full of it.

- Take a look at this.

Inventory from a consultant
who is leaving the company.

She agreed to show us
boxes of product

she said she bought
to keep her status.

- Wow.
So it seems some distributors

may have been more customer
than salesperson.

That's like finding out
Jamie Lee Curtis

was actually the one
eating all the Activia.

"I eat 146 containers a day,

and I shit
like a machine g*n."

And Mary Kay and Herbalife
will tell you

that stockpiling is uncommon

and you can return
unsold product for a refund,

but you should know
those refunds can be partial

or may involve resigning.

The point is,
MLMs may present themselves

as a great opportunity,

but your chance of success
is actually remote.

Just look at the income
disclosure statements.

Kyani's shows that just under


received a check
for $10 or more,

meaning that most
didn't even make that.

And Nu Skin's says around


earned commission checks,

which is actually worse
than it sounds,

because active distributors
represent

only around 36%
of total distributors.

So if you do the math,
which they conveniently didn't,

that would mean that 93%
of all Nu Skin distributors

receive zero commissions
from the company

in an average month.

So even if you have never
heard of Nu Skin before,

it may be paying you

just as much as it does


[cheers and applause]
Now, MLMs will insist

those percentages
are misleading.

They will tell you that
many of their distributors

aren't even in the business
to make money.

They just went to all
that trouble of signing up

to get discounts on their
amazing rhino ej*cul*te

or, as they call it, soup.

They'll--
[laughter]

They'll--they'll say individual
distributors like that Vemma guy

and those, uh, Herbalife reps
don't speak for them

and that their claims
are against company policies

and violators get disciplined.

And most importantly,

they will all insist
they are not pyramids.

And no one claims that
in a more spectacular manner

than JR Ridinger,
who has an airtight case

based on spelling the word
"pyramid" backwards.

- We're actually
the anti-pyramid,

the reverse pyramid,

the "dimaryp!"

We are in a dimaryp!

[laughter]

- He sounds like a cult leader

about to demand
his followers drink poison.

And it frankly doesn't help
that he looks like Jim Jones

to a genuinely creepy degree.

But it is hard for the FTC
to investigate these companies.

The industry
is large and opaque,

and pursuing a case
is a long, arduous process.

They've only brought around
two dozen pyramid scheme cases

against MLMs
in the last four decades.

And MLMs have surprising
lobbying strength.

There's actually a Direct
Selling Caucus in Congress

with more
than 40 bipartisan members,

including Jason Chaffetz,

who worked at Nu Skin
for more than a decade.

As for Herbalife, it has gone
to remarkable lengths

to protect its name,
uh, in Washington.

It's recruited
two former top FTC officials

to work for the company,

and it's willing to be
incredibly petty as well,

because remember that clip
of Herbalife victims?

That is from
an upcoming documentary

called "Betting On Zero,"

and when it played at a D.C.
film festival earlier this year,

the screening
had 173 empty seats

because an Herbalife lobbying
firm reportedly bought them out.

And that's not just petty;
it's stupid.

If you don't want people
to see a movie,

you don't need to buy out seats.

Just put up posters saying,
"Starring Shia LaBeouf."

Done! Job done.

Nobody's there!

But even if the government
did suddenly decide

to crack down on this industry,
which seems unlikely,

many MLMs have been
expanding overseas.

Here is a video from India.

- Let's march
towards 1 million,



- ♪ Herbalife

♪ Round the world

♪ Come together

♪ We are one

♪ Herbalife

- They are lucky Gandhi
isn't alive to hear that song,

because it would really
test his belief

in nonviolent protests.

"You know what?
f*ck it.

"Everybody pick up a rock

"and meet me
at Herbalife headquarters.

That song was unforgivable."

Just look online,
and you can find videos

of gigantic Herbalife events
around the world.

Uh, here is one
in South Africa.

Here is one in Mongolia.

Here's one in Venezuela.

Here's one in Malaysia.

And here is Michael Johnson
in Mexico, doing this.

- Buenos dias, Mexico!

[cheers and applause]

- Okay.
I don't say this lightly,

but that is douchebaggery
at a Double Black Diamond level.

[laughter and applause]

So the point is,

what can we do?

Because good,
hard-working people

are going to keep getting
caught up in these companies.

There has to be a way
to tell the world

about the dangers of MLMs,

and I think I might know

the perfect
distribution network.

And that is why tonight we are
starting our own pyramid scheme,

hashtag...

Because if someone you know

is thinking
about joining an MLM,

this is a huge opportunity,

and let me show you
how it works.

[hard rock music]

[cheers and applause]

♪

I want to tell you
about a fantastic product

for you to share
with friends and family.

The product
is this entire video

about why MLMs
are f*cking awful.

Let me break it down for you.

By sharing this, you can be
an independent distributor

for a leading web video
about the dangers of MLMs.

You can do this full-time
or part-time

and give your family
the lifestyle they deserve,

which is, frankly, not getting
caught up in this bullshit.

You need scientific proof
that it works?

We told a dog we were going
to produce this video,

and look,
the dog is walking now!

[cheers and applause]

Was it able to walk before?

Sorry, we don't keep
those records.

Here is how it works.

Simply watch this video

and then forward it
to five people

and then instruct them to
send it to another five people,

and so on and so on
and so on.

Within 14 cycles,
every single person on Earth

will have seen this
to the point

that we will need
to start f*cking

to create
more people to watch it.

Also, if every single person
on Earth is watching this video,

hello, Beyoncé.

[laughter]

I'm a--I'm a really big fan.

[grunting]

[laughter and applause]

And like MLMs,

we would like
to direct a message

to Latinos in particular,

so we will be uploading
two versions of this segment

to YouTube,
with one in Spanish.

But because I do not speak
Spanish, it will be subtitled,

and this--this portion
will be performed

by Jaime Camil
from "Jane the Virgin."

[cheers and applause]

Hola. Hola, Jaime.
- Hola, Juan.

- Hola.
- Coma estas?

- Um, you are clearly
a more attractive version of me

in every way,
aren't you, Jaime?

- Yes.
- Yes.

- Yes, I am.

- So, please,
share this video

to stop people getting involved
with these schemes,

because MLMs
are hurting people,

and we need to spread the word
about their dangers.

Send this to 20 people.

- 30 people, 100 people!

- What are you waiting for?
This system will work.

And it is not a dimaryp.

It's an anti-dimaryp.

This is a pyramid,
right?

- Right!
This is a pyramid!

both: We are in a pyramid!

- That's our show!
Share this video!

We'll see you next week.
Good night!

[cheers and applause]

[hard rock music]

[bright tone]