Talk:Frank VanderSloot: Difference between revisions

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Revision as of 16:23, 21 May 2012 editRoadpeace (talk \| contribs)59 edits →Pyramid Selling, Multilevel Marketing, and Direct Marketing.← Previous edit		Revision as of 17:02, 21 May 2012 edit undoRoadpeace (talk \| contribs)59 edits →Pyramid Selling, Multilevel Marketing, and Direct Marketing.Next edit →
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	::The concepts of "pyramid scheme" (illegal) and "pyramid selling" (questionable but perhaps legal) both typically have to do with requiring some type of investment with the hope of getting several others to make the same or similar investment, thereby receiving back far more than the original investment. These types of schemes are risky, and they often damage people's lives. The risk is that after someone makes their investment, they may not be able to entice someone else to make a similar investment. They stand to lose everything that they invested. Pyramid selling, by its very nature, needs some kind of investment by its participants to build the pyramid. In Melaleuca's model there is no investment of any kind, nor is any inventory purchased. Melaleuca's model could never be deemed "pyramid selling" because it lacks any investment or outlay of cash.		::The concepts of "pyramid scheme" (illegal) and "pyramid selling" (questionable but perhaps legal) both typically have to do with requiring some type of investment with the hope of getting several others to make the same or similar investment, thereby receiving back far more than the original investment. These types of schemes are risky, and they often damage people's lives. The risk is that after someone makes their investment, they may not be able to entice someone else to make a similar investment. They stand to lose everything that they invested. Pyramid selling, by its very nature, needs some kind of investment by its participants to build the pyramid. In Melaleuca's model there is no investment of any kind, nor is any inventory purchased. Melaleuca's model could never be deemed "pyramid selling" because it lacks any investment or outlay of cash.

	::Many MLM companies do indeed use a very similar model, requiring participants to purchase product inventory and entice others to purchase inventory. They try to legitimize their model by requiring the resale of the inventory to others. This methodology has been upheld to be legal and is called “multilevel marketing” (MLM). Melaleuca's model is the antithesis of both “MLM” and "pyramid selling" because there is no investment by participants and no reselling of product. There are, in fact, no multiple levels of distribution whatsoever. The company sells directly to the customer. Because of that, it cannot be accurately called either "MLM" or "pyramid selling". That's why it is called "consumer direct marketing". Melaleuca’s model could correctly be described as "referring selling", but it does not engage in multilevel selling or pyramid selling.		::Many MLM companies do indeed use a very similar model, requiring participants to purchase product inventory and entice others to purchase inventory. They try to legitimize their model by requiring the resale of the inventory to others. This methodology has been upheld to be legal and is called “multilevel marketing” (MLM). Melaleuca's model is the antithesis of both “MLM” and "pyramid selling" because there is no investment by participants and no reselling of product. There are, in fact, no multiple levels of distribution whatsoever (). The company sells directly to the customer. Because of that, it cannot be accurately called either "MLM" or "pyramid selling". That's why it is called "consumer direct marketing". Melaleuca’s model could correctly be described as "referring selling", but it does not engage in multilevel selling or pyramid selling.

	::According to the , pyramid selling is “a practice adopted by some manufacturers of advertising for distributors and selling them batches of goods. The first distributors then advertise for more distributors who are sold subdivisions of the original batches at an increased price. This process continues until the final distributors are left with a stock that is unsaleable except at a loss.”		::According to the , pyramid selling is “a practice adopted by some manufacturers of advertising for distributors and selling them batches of goods. The first distributors then advertise for more distributors who are sold subdivisions of the original batches at an increased price. This process continues until the final distributors are left with a stock that is unsaleable except at a loss.”

Revision as of 17:02, 21 May 2012

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I just added a link to this article: It raises WP:BLP issues, but I think it's fairly reliable, and as long as we describe it as 'allegations' rather than state it as fact, I think it can go in the article. Robofish (talk) 19:43, 23 February 2012 (UTC)

Criticisms

Currently, over 50% of the criticism section are direct quotes from the subject. It should probably be focused on detailing the criticisms as opposed to the subject's responses. Additionally, I am not sure the wording conforms to community guidelines. This page will likely receive additional traffic as the subject is the media attention. However, I am not very sure what should be done. Trabisnikof (talk) 01:35, 16 May 2012 (UTC)

I have added a summarized version of some of the complaints leveled against him, as including a section that has him responding to accusations without stating what he was accused of is pretty absurd. WhoIsWillo (talk) 02:55, 16 May 2012 (UTC)

Additionally, I think the criticism should probably be moved to it's own section, as it doesn't really fit the content that surrounds it, and it's the main reason why people will be visiting the page now. WhoIsWillo (talk) 18:48, 16 May 2012 (UTC)

Pyramid Selling, Multilevel Marketing, and Direct Marketing.

There seems to be a little confusing about exactly how Melaleuca works, and I think this is important for the article. Some sources say it is a pyramid selling model, such as the Mother Jones one and the Salon.com article. Pyramid selling links to Pyramid scheme, which is not what these sources are saying. It looks like they are describing multilevel marketing, which is different enough that it's legal. Although that term has very negative connotation, I can't really find any difference between what Melaleuca does and the strict definition of multilevel marketing. Melaleuca itself uses the term direct marketing, which is a very vague article in this context. As far as I can tell, they are not explaining that it's different from multilevel marketing so much as emphasizing that the seller doesn't have to keep the product on-hand, hence direct. Since most secondary sources, even fairly flattering ones such as the Forbes.com article use some variation of multilevel marketing I think we should go with that. This official video makes it very, very clear that they use a multilevel marketing model. Just because they call it something else, it is screamingly obvious that it is a multilevel marketing company. Grayfell (talk) 05:55, 18 May 2012 (UTC)

Response. "Pyramid selling" is indeed a very negative term. Why use a term that libels the reputation of Melaleuca as well as libels the name of Frank VanderSloot when it does not at all describe the business activities of the company?

The Forbes article you mention is clearly an article about Frank VanderSloot, not an article on Melaleuca's business model. There is no evidence that the author of the Forbes article spent any time at all researching Melaleuca's business model. It is doubtful that she would consider herself an expert on that issue. An argument was made in Forbes the month following the month that the article appeared that pointed out that calling Melaleuca a "pyramid selling organization" was inappropriate. (Forbes Counter) While Forbes may be a reliable source for some things, its calling Melaleuca a pyramid selling organization was criticized immediately. Using an article that was immediately disputed by those who know more about the issue than the author seems to be unfair and significantly biased.

PYRAMID SELLING AND PYRAMID SCHEMES

The concepts of "pyramid scheme" (illegal) and "pyramid selling" (questionable but perhaps legal) both typically have to do with requiring some type of investment with the hope of getting several others to make the same or similar investment, thereby receiving back far more than the original investment. These types of schemes are risky, and they often damage people's lives. The risk is that after someone makes their investment, they may not be able to entice someone else to make a similar investment. They stand to lose everything that they invested. Pyramid selling, by its very nature, needs some kind of investment by its participants to build the pyramid. In Melaleuca's model there is no investment of any kind, nor is any inventory purchased. Melaleuca's model could never be deemed "pyramid selling" because it lacks any investment or outlay of cash.

Many MLM companies do indeed use a very similar model, requiring participants to purchase product inventory and entice others to purchase inventory. They try to legitimize their model by requiring the resale of the inventory to others. This methodology has been upheld to be legal and is called “multilevel marketing” (MLM). Melaleuca's model is the antithesis of both “MLM” and "pyramid selling" because there is no investment by participants and no reselling of product. There are, in fact, no multiple levels of distribution whatsoever (Melaleuca video). The company sells directly to the customer. Because of that, it cannot be accurately called either "MLM" or "pyramid selling". That's why it is called "consumer direct marketing". Melaleuca’s model could correctly be described as "referring selling", but it does not engage in multilevel selling or pyramid selling.

According to the Free Dictionary by Farflex, pyramid selling is “a practice adopted by some manufacturers of advertising for distributors and selling them batches of goods. The first distributors then advertise for more distributors who are sold subdivisions of the original batches at an increased price. This process continues until the final distributors are left with a stock that is unsaleable except at a loss.”

The Cambridge Dictionary Online defines pyramid selling as: “in business, when someone buys the right to sell a company's goods, and then sells the goods to other people. These people then sell the goods to other people.”

Melaleuca’s business model clearly does not fit either definition.

Not only is Melaleuca’s business model not pyramid selling or MLM, Melaleuca’s business model is specifically designed to prevent pyramid selling and multi-level marketing. What Makes Melaleuca Different.

DIRECT SELLING & MLM VS. DIRECT MARKETING

There's a great difference between "direct selling" and "direct marketing." Both types of selling are represented by different national associations.

Direct selling is defined by the Direct Selling Association as: "the sale of a consumer products or services, person-to-person, away from a fixed retail location, marketed through independent sales representatives who are sometimes also referred to as consultants, distributors or other titles."

Since no "person-to-person" sales occur in Melaleuca's model, Melaleuca's methodology could never accurately be described as "direct selling."

Multilevel Marketing (MLM) is defined by the Direct Selling Association as "a type of compensation plan found in direct selling."

Since MLM is by definition is only done by direct selling companies, and Melaleuca is not a direct selling company it cannot be an MLM.

Direct marketing "is the business of selling goods or services directly to the public e.g. by direct mail, telephone, Internet sales, catalog sales, rather than through retail outlets." According to the Direct Selling Association, those activities (internet sales, telephone sales, etc) are specifically not Direct Selling. Virtually none of Melaleuca's sales occur "person-to-person." Virtually all of Melaleuca's sales occur through a physical catalogue or online catalogue. Sales occur on the internet or via the telephone directly with the company.

According to Misplaced Pages, direct marketing "is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate directly to the customer, with advertising techniques such as mobile messaging, e-mail, interactive consumer websites, online display ads, flyers, catalog distribution, promotional letters, and outdoor advertising." This describes Melaleuca's business as all of Melaleuca's sales occur through either physical catalog or online catalog and occur over the telephone or through the Internet, and all of Melaleuca's messaging to its customers occurs through, their published catalog or through mobile messages, e-mail, interactive consumer websites, online display ads, flyers, etc.

Melaleuca is clearly a direct marketing company but not a direct selling company.

Multilevel marketing has legal definitions as defined by several state statutes. All of the legal definitions from the various states refer to different levels of distribution. Louisiana: LAC 16:111.503 (2010); Maryland: Md. Business Regulation Code Ann. S 14-301 (2010); Massachusetts: ALM GL ch.93, S 69(a) (2010); Montana: M.C.A. S 30-10-324(3)(c) (2010) Melaleuca does not have any multiple levels of distribution. In Melaleuca's model, product moves directly from the company to the customer. Therefore, Melaleuca's model does not fit any existing state definitions of Multilevel Marketing.

Describing Melaleuca's business model as "pyramid selling" is highly problematic in that it would not only be inaccurate, it is perhaps libelous because of the extreme negative connotation of that term. Using the term "MLM" to describe Melaleuca's model may not be libelous, but is clearly grossly inaccurate. RoadPeace (talk) 10:23, 21 May 2012

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