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Debt and Multi-level Marketing

Debt and Multi-level Marketing

Stories about participants in MLMs getting into debt are pretty common. We took a look and found lots of information. We learned how common debt is for MLM participants, why people turn to borrowing, and that it’s not a good idea. In a survey of […]

FTC Guidance on Business Opportunity Claims

FTC Guidance on Business Opportunity Claims

In January of 2018, the Federal Trade Commission of the United States released guidance on how multi-level marketing companies and participants should talk about business opportunities. The FTC is one of the government agencies which regulates all kinds of businesses, including multi-level marketing companies. Why […]

Real Costs of Selling Paparazzi

Real Costs of Selling Paparazzi

Costs to get started

To get started a new consultant needs to purchase a starter kit. These include marketing materials, 35-200 pieces of jewelry, and “business tools.” The lowest priced kit is $99.

Starter Kit Options

Inventory costs

The Paparazzi model encourages buying inventory for you to sell. The goal is to sell the purchased inventory at a profit. This is can be risky. What if you can’t sell it?

Paparazzi’s return policy is extremely limited. It only allows returns within 3 days for defects and damage. If a consultant can repair the jewelry isn’t eligible for return. End customers (not consultants) have 10 days to return damaged products. An inventory buyback is available to consultants (for less than the purchase price) but there are many strict rules.

Purchasing lots of inventory upfront is risky. Certainly a better option is to eliminate the need for consultants to purchase inventory up front. Eventually, this is an option for consultants. It is possible to sell jewelry directly through a consultant’s individual website. However, all consultants must buy upfront inventory via a starter pack in order to become a Paparazzi participant.

Maintaining status as an active consultant

You must purchase 50 units of personal volume to maintain active status. The costs for this PV in $5 jewelry is about $70 each month.  You must be an active consultant to show up in the consultant finder, to be eligible for commission checks, and to receive other benefits.

Paparazzi compensation plan - personal volume requirements
Compensation Plan Details

Also, Director levels (and up) must meet their “organizational requirements” by personally sponsoring 3+ active consultants. Sponsors may tell consultants to purchase additional inventory. Pressure to buy additional inventory can be confusing and cause inventory loading.

Costs of doing business

Running a business is expensive. It’s important to look at all of the expenses. Here are a few expenses that can really add up:

  • Tax preparation, money management, accounting
  • Event, event planning, parties, food, drinks, decorations
  • Admission/booth space at fairs, markets, or storefront locations
  • Stuff for selling online (camera, lights, software, backdrops)
  • Shipping, packaging, cards, pens, supplies

Finally, an often overlooked expense the time you spend selling. Though it can be fun, selling Paparazzi takes many hours and is a big investment of your time. A question you should ask yourself: is this the most effective way to spend your time? Is the return on your time enough that you wouldn’t be better of spending time on another job or opportunity? These questions are hard to answer without data on how much sellers earn. To date, the company hasn’t released anything like an earnings disclosure statement.

No affiliation with PaparazziAccessories. Please contact us with corrections, updates, or questions.
Source: https://paparazziaccessories.com/join/

dōTERRA 2017 Earning Disclosure Statement

dōTERRA 2017 Earning Disclosure Statement

No affiliation with dōTERRA. Please contact us with corrections or questions. Source: https://media.doterra.com/us/en/flyers/opportunity-and-earning-disclosure-summary.pdf Income disclosure statements also known as earnings disclosure statements help explain how much money people make selling DoTerra. They also explain which levels make money. The statement doesn’t reference any of the […]

Missing Disclosure Statements

Missing Disclosure Statements

We need your help! We’re looking for earning or income disclosure statements from the following companies: Paparazzi AccessoriesSenegence (Lipsense)Younique These documents do not tell the whole story. However, this data helps people decide if it makes sense to join and sell the products. It is […]

Safety and Dangers of Essential Oils

Safety and Dangers of Essential Oils

Essential Oils can be dangerous. People selling the essential oils for companies create articles and guides in order to sell more oils. This can make it difficult to find good truthful information about safe ways to use oils. Additionally, members selling dōTERRA and Young Living will often falsely claim that oils can treat conditions or cure diseases.

It can be difficult to find the truth about essential oils even if you do careful research. This is because of the way search engines and ranking algorithms work. They surface articles and websites based on how large numbers of people act — but in this case, large numbers of people are working to sell more oil. To learn more about this check out our post on how MLMs break the internet.

Here are some articles we’ve vetted to learn more about the dangers of essential oils and how to use them safely

WebMD articles talking about the safety of essential oils including tips on who should and should not use oils, what applications make sense, allergies, and more!
WebMD: Essential Oils; Natural Doesn’t Mean Risk Free

WebMD: Dos and Don’ts of Essential Oils

Women’s Day explains the dangers of some essential oils as well as their relationship to this type of company (DoTerra and Young Living). Also mentions how they can be used effectively.
Women’s Day: Dangers of Essential Oils

Refinery29 story about a diffuser with essential oils causing a woman chemical burns. “I was unaware that the vaporized ‘diluted’ oil from my diffuser could also be dangerous…”
The Terrifying Reason This Woman Was Burned By Essential Oils

LuLaRoe Lawsuits – News Roundup

LuLaRoe Lawsuits – News Roundup

Pyramid Scheme Allegations CBS News story with detailed information around the $1 billion lawsuit filed in October alleging LuLaRoe is a pyramid scheme. Also references LuLaRoe’s own legal action against critics. https://www.cbsnews.com/news/lularoe-is-accused-of-being-pyramid-scheme/ Fortune.com article explaining LuLaRoe and referencing the lawsuit filed in October alleging LuLaRoe […]

Making Money with dōTERRA – Compensation Plan

Making Money with dōTERRA – Compensation Plan

According to the official dōTERRA compensation plan, advocates make profits on the dōTERRA items sold to retail customers or preferred members. Profits are the amount sold over wholesale costs. Additionally, advocates can make money on bonuses paid based on the wholesale purchase volume of the […]

Is Du North Designs a pyramid scheme?

Is Du North Designs a pyramid scheme?

It’s hard to tell if Du North is a pyramid scheme… and that’s not a great sign.

Du North Designs sells leggings directly and through distributors. Most of their business and their stated business model is “Multi Level Marketing.” MLMs share many qualities with Pyramid Schemes but are a bit different. Because MLMs and pyramid schemes are so similar it can be hard to tell them apart.

The US Government’s Federal Trade Commision has more information about pyramid schemes to help us track this down.

How to spot a Pyramid Scheme:

  • Large profits are based primarily on recruiting others not on the real sale of goods.
  • Recruites are forced to buy more products than they could sell often at inflated prices.
  • People at the bottom (new recruits) make excessive payments for inventory that accumulates in their basements.
  • Many schemes will claim product sells like crazy — but actually sales are only occuring between people inside the structure or to new recruits. Check for inflated prices.
  • Commissions for recruiting new distributors, no legitimate product or service, OR separate up-front membership fee (having a product/service doesn’t remove all danger).pyramids (not a scheme)

How does Du North stack up?

  • If you look carefully at the policies for Du North distributors get bonuses, from recruiting others to purchase inventory.
  • Recruits are encouraged to buy thousands upon thousands of dollars of merchandise to join Du North and stay active.
  • It’s not possible to directly sell the merchandise without first purchasing an expensive ($99+) “starter pack.”
  • Du North says the clothes are worth more than they are. Check out ebay.com for Du North for current market pricing by checking sold listings.
  • There are direct commissions for new distributors. The amount of inventory purchased by recruited distributors determines the bonus. You can get more money if the new recruits buy more. None of the compensation bonuses listed depend on any sales only inventory purchases.
  • There are costs to join. Du North packages and sells initial inventory, website access, and materials for selling in a “starter kit.” You cannot become a distributor (get a website, do direct sales, etc) without purchasing one of the starter kits.
  • You cannot remain active to continue online sales or recruit without purchasing at least $300 in inventory each quarter (no matter how much is actually sold).
  • Du North does have policies to avoid too many distributors in one area, but there are many exceptions (previous direct sales/MLM experience, request waiver, etc).
Ebay versus Du North leggings pricing
Ebay (Left), Du North (Right)
Products on Ebay are selling for more than 30% less than the prices on the DuNorth pages

Yes, Du North probably is a Pyramid Scheme

Pyramid schemes will disguise themselves as MLM or direct sales companies. It appears that Du North Designs is doing that because of the red flags above. Whether it’s a pyramid scheme, a scam, or just an unhealthy business, Du North shares many bad qualities with Pyramid Schemes.

To recap, these qualities make it a dangerous opportunity and everyone should probably avoid Du North Designs.

What do you think?

More Resources

Investopedia: What Is A Pyramid Scheme

How Pyramid Schemes Work

Du North Designs Policies

LuLaRoe Return Policy Updates and Hidden Costs

LuLaRoe Return Policy Updates and Hidden Costs

BuzzFeed and Inc Magazine reported changes to LuLaRoe’s  return policies which is bad for consultants. People must buy lots of inventory to get started selling with LuLaRoe (see: Getting Started with LuLaRoe). This seems okay because the company had a return policy which claimed to cover […]