The Neverending Curse of MLMs

"If you decide to quote me or use my name in any capacity for any of your articles, I’ll be sending the piece to my solicitor."

Hi,

It’s weird to me that in 2023 we still have people falling for multi-level marketing schemes (MLMs for short).

There are Netflix documentaries about them, countless articles, and last year we did an Armchaired and Dangerous episode on them.

Then you check a ticketing website like EventBrite and see this shit flying into New Zealand next week:

Diego Endrizzi, flying to New Zealand to promote an MLM.

“WEWE” is the outfit.

As in “wee wee”. As in going number one at the toilet. It’s all in the name.

Thanks Novotel Christchurch Airport for hosting it. Stellar work, Novotel.

I spent all of last year writing about greedy megachurches with greedy leaders — and you can see all that same stuff reflected in the world of MLMs (which is what WEWE is). They all rely on getting bums in seats, so the few people up top can make all the money.

Because MLMs exist all over the world, I thought we could use WEWE as a quick example and recap on MLMs and what they are, because friends and family and people you know and love will be getting sucked into this scheme — and schemes like it — wherever you live in the world.

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First things first — what the hell is an MLM, or a Ponzi scheme, or a pyramid scheme?

A Ponzi scheme is one that uses money from new customers to pay returns to existing customers, rather than paying returns from genuine income derived from selling a useful product.

The scheme can only work if there is a steady stream of new customers, or the existing customers don’t withdraw their money.

A pyramid scheme is a Ponzi scheme that uses multi-level marketing to recruit new customers.

The key factor is whether there is a real product that is generating profits.

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WEWE’s “Real” Product vs WEWE’s Pyramid Scheme:

WEWE Global’s main website says it’s a “Crypto Multi-Service Platform”. You should instantly be alarmed at the word “crypto”, which is essentially a scam of its own.

Their main product is ‘Cloud Minting’ — which is allegedly generating profit by mining cryptocurrency. A customer buys a computer in the cloud, which pays back 10% of the purchase price every month for 30 months, thereby tripling the investment.

But then right down the bottom of this page is — and I quote — “the main selling point” (putting your main selling point so low on the list is certainly an interesting choice):

If the main selling point is the referral bonus… it’s a pyramid scheme.

WEWE’s ‘Payplan Summary: Everything You Need to Know’ article says there are many rewards, including the Direct Bonus, Infinity Bonus, Matching Bonus, Global Pool Bonus, Fast Start Bonus, Runner Builder Pool, Car Program Bonus and Quarterly Rewards.

The simplest bonus is the direct bonus:

This indicates that investments from new members are being paid to existing members. It’s a Ponzi scheme.

Although they use the word ‘turnover’ (which should mean purchases of real products coming from real customers), it is clearly referring to money coming from new investors.

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Also this thing is just so clearly dicey.

Baiba Broka is head of WEWE legal, and is the former Justice Minister for Latvia. She was also detained in July 2019 on suspicion of fraud in her role as University of Latvia deputy rector for legal affairs.

Baiba Broka going “Uh oh”.

Oh, and this link shows you what you get when you sign up for WEWE Global — five short videos, one of which is about compliance by Solandia Jurdi. She says that lyopay.com lists their licenses — but lyopay only lists several shell companies in various countries. There is also a link to a privacy policy of a completely different company called ‘Inspired Adventures’. Someone forgot to update the link.

WEWE’s Terms and Conditions are also a total mess — big parts almost identical to other MLM or cryptocurrency ‘investment’ companies. If you search for ‘shall not unduly influence or in any way entice prospects with representations as to possible income or business development, or payment of any compensation’, Google finds International Networking Business Solutions, BitherCash, iKonique Global, Starfest Direct and Sky Tech Globe.

Sigh.

To get some more insight I reached out to Danny de Hek, who the New York Times recently called “The Crypto Ponzi Scheme Avenger”.

Danny’s been keeping a close eye on a number of dicey schemes, including one called the HyperVerse: “For the last 12 months I’ve been exposing the Ponzi scheme HyperVerse, it is estimated that $4 billion has been lost to people that invested in this ‘crypto opportunity of a lifetime’,” Danny told Webworm.

He went on to say that many of those pumping HyperVerse have now jumped ship to schemes like WEWE global:

“One of the biggest multi-level marketers in the world who is promoting WEWE Global is Kalpesh Patel who has moved to Dubai. He recently travelled to South Africa running a promotion similar to Diego Endrizzi, who is travelling to five locations in New Zealand and Australia in February.

These events are used to recruit new leaders and entice crypto investors into an opportunity of a lifetime. It is all multi-level marketing. They do not have a product or a service. They are selling a promise and a hope of big returns.

Don’t be fooled by these men in suits who use crypto terminology. They are the scumbags of the planet, they are the modern day thieves who will rob you blind.

The people that are falling victim are not youngsters, they are people heading into retirement who are trying to get their head around crypto, the blockchain, the ecosystem and the Metaverse.

Many of the people that contact me on a daily basis have invested their retirement money and lost the lot. They didn’t seem to fully understand what they had invested in. They trusted a friend or a family member who encouraged them to invest.”

Danny has created around 150 YouTube videos (in his entertaining, unique style) exposing various Ponzi schemes. He hasn’t done a video on WEWE yet — but it’s in the works: “I can tell you they are in the top five Ponzi schemes happening at the moment,” he says.

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This isn’t the first time WEWE has been hawked in New Zealand. Self-styled investment guru Jonathan Callinan gave a presentation in November last year.

(A very funny disclaimer appears here in his presentation for a grand total of about two seconds).

I reached out to Jonathan about WEWE, asking “I am currently looking in the Wewe MLM, and understand you recruited people into WeWe. I wanted to know if you are still involved in recruiting for this scheme, and if so, are you bothered by the pyramid scheme nature of this business.”

He replied:

I asked if this was his official comment, and he replied “yes”… but confusingly followed it up by saying if I used it, he’d be involving his lawyer.

So yeah.

WEWE. Don’t do it.

If a company name literally sounds like piss, stay away.

People get sucked into these things because the scheme appears to work for them. While the pyramid is expanding quickly, it’s quite possible for early investors to make a profit if they withdraw their money soon enough.

Once the withdrawals exceed the new investment, the scheme will collapse and most people will lose their money. It’s a wealth redistribution system, not a wealth creation system.

And while not all MLMs are explicitly scams, even the more ‘legitimate’ ones are usually not profitable for most of their members, and the reality of earning from them is almost always much more complicated than suggested.

In short: Don’t get involved in any scheme where you’re asked to recruit other people, especially when the product is murky (and less important than the recruiting).

If you’re being asked to aggressively recruit, you’re probably a member of a megachurch, or an MLM — which are actually pretty similar. Charismatic leaders, a compelling story, and “secret knowledge” that unlocks a meaningful, wealthy life.

But any wealth goes straight to the top. A few may profit, but everyone else will be crushed.

David.

PS: Charming Jonathan Callinan just sent me another email which ended with: “I’m willing to guess that LYOPAY (nor WEWE Global - the DAO pertaining to the company) would not tolerate their name being used in any type of slanderous fashion either.”

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This free Webworm (public service journalism) is made possible thanks to paying subscribers. Thankyou. Really. You keep the lights on.

And please share this, especially if you have friends or family that start talking about WEWE, or any scheme that sounds too good to be true. Because chances are, it will be: www.webworm.com/p/wewe