I was asked to look into the facts and laws surrounding Valentus, the weight loss coffee company who also sell other healthy drinks, is it a legit MLM or a Scam, a Pyramid Scheme. There have been numerous stories, blogs and Facebook post asking the question of late so I thought I would use my 23 years experience online to dig in and find some facts.
- In MLM, it is possible for a recruit to overtake the person who recruited them, and end up making more money than them, well this has already happened in Valentus on a few occasions already, so that’s a good start for the company.
- In MLM, nobody makes any money until there is a sale: the company’s income derives from its customers, and so does the income of the company’s representatives. Another brownie point for Valentus, no sales, no income all the way up the upline.
- In a pyramid scheme, your place in the matrix is fixed. You cannot overtake your sponsor. Even if they do nothing after recruiting you, they will still make more money than you. (See #1)
- In a pyramid scheme, you are paid bonuses for recruiting other representatives, regardless of whether or not they achieve any sales or gain any customers. Because there is no income to the company, sooner or later this scheme will collapse. Valentus Reps only earn money from sales, the brownie points are adding up.
In the UK and most of the west Pyramid Schemes are illegal, a scam, so What is a Pyramid Scheme?
Direct selling or network marketing should not be confused with Pyramid Selling. Pyramid selling is illegal in the UK and many other countries and is a type of fraud which is disguised to look like direct selling. Pyramid selling is where recruits pay an admission fee to join the scheme to earn commissions on persuading other to join rather than supply any real investment or sale of products or services to the public. Pyramid schemes do not offer contracts to participants, cancellation rights nor the opportunity to buy back unsold goods – all of which are required under UK law. (New Update for the UK at bottom of page)
Okay, how does Valentus fall into the above? Does Valentus offer cancellations and buy back on unsold goods? Yes they do on all unopened boxes, do they sell products? Yes they do, as well as the SlimRoast coffee, they also sell an Energy Drink, A Detox, Immune and a Trim Product along with a spray called Max, Do reps get paid on a recruit if no sales are made? NO, Looks pretty good for Valentus so far doesn’t it?
Pyramid schemes seek to generate income to those who participate, from the recruitment of others. In a legitimate direct selling organisation income is generated by the sale or consumption of the product either by the salesperson or those in that person’s downline.
Legitimate companies rely on solid sales over time. A strong base of customers who love and use the products is important to continuing success. Well Valentus was the fastest growing MLM on the list in 2016 with a 1,000% growth in sales. another brownie point!
Scams like pyramid schemes, on the other hand, generally rely on people making a large upfront payment, from which the scheme promoter profits. People are then reliant on recruiting others into the scheme in order to recover their upfront cost and earn further income.
Multi-level marketing structures are commonly used for the distribution of goods and services in the direct selling industry. These structures may seem similar to pyramid schemes, but in reality they are substantially different and are more similar to a conventional corporate business model.
In direct selling new salespersons are contracted to organisations under independent contractor arrangements. They are usually required to make a modest payment the aim of which is to have the salesperson show a commitment to the organisations and for a quantity of goods and/or literature and stationery to facilitate the demonstration and sale of products to customers and prospective customers. In a pyramid scheme however there is likely to be a large upfront payment for products which will be generally overpriced and have little or no market value.
In a legitimate direct selling opportunity the rewards come from sales of products and services to consumers by salespersons and their recruits, called down lines.
Avoiding Pyramid Schemes
Before considering an opportunity, ask yourself these questions:
• Are start-up costs minimal?
• Can you return unsold inventory?
• Is income only possible from the sale of products?
If the answer to each is yes then you are probably considering a legitimate direct selling opportunity.
MLM schemes are in the business of selling goods to consumers. This is what makes them legal.
Well Done Valentus, In my opinion Valentus is a Legit Network Marketing company.
So there you have it. When you look at the differences, it is quite clear why pyramid schemes were made illegal in the first place; they’re just a scam. In contrast, network marketing is an excellent way of making money by recommending products and recruiting others to do the same; it is the 21st century answer to the franchise. It’s hardly surprising that 10% of new millionaires made their money in MLM… and who knows how many settled for just half a million, or less?
News Update for Valentus UK – As of today Nov 1st 2017, Valentus products are now fully compliant with UK laws, approved and legal products/ labelling /packaging , the company is now registered in Europe with an open Dublin Office, Netherlands warehouse and is licensed for retail in the UK with the news we have received.
This article is the opinion of the writer, some of the content and facts can be checked at the following links.