The Death of Lifetree World

Do you remember Lifetree World?

They were the Multi Level Marketing scheme that I tried to warn people about in 2016 and 2017. They were based in Manchester and people who joined had to buy their shopping through them. They ended up buying stuff they didn’t want or need, and it was produce that had been discontinued.

There were delivery problems, scandals with the ‘prize cars’ and a lot of unhappy people who joined the scheme. Even while the scheme was falling apart, people were promising it was all fine and soon they would be selling fresh produce and delivering the next day. For a while they tried to sell cable packages, until it turned out they shouldn’t be.

I showed how the prize cars were actually hire purchase and couldn’t be given away. Defenders of Lifetree world explained I was wrong, despite the evidence. See the blog post I wrote in July 2016 with all the problems exposed.

Screenshot 2016-07-09 19.38.08Screenshot 2016-07-09 19.42.58

People couldn’t get their bonuses from the company and I warned people not to put more money in. Lifetree world responded by trying to get people to put even greater amounts of money in so they could climb the pyramid more quickly. Some of the reps’ experiences are documented in this blog post.

People started leaving in droves, realising the company was doomed.

In March 2017 Lifetree World went into liquidation. You can see the documents at Companies House.

Dissolved

On 28th December 2018 Lifetree World was finally dissolved. You can access the documents at Companies House if you want to read all the details for yourself.

What sort of damage did Lifetree World leave when they disappeared?

The car

The Dacia Duster car that they had was returned to the finance company with more money owed on it than it was worth. This left the finance company out of pocket.

dacia

statement

Suppliers

Lifetree World had a rocky history with their suppliers, one even sued them for non payment of bills. At least they managed to settle that before the whole company collapsed. When the company was liquidated £13,996 was owed to suppliers who will never see that money again.

The Landlord

The building that LTW operated from was a small building on an industrial estate in Manchester. Here is a picture of it.

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There are many suites in that building and LTW rented Suite 2. They were unable to pay their rent and owed their landlord £3,000.

Taxes

LTW owed £30,600 in VAT and other tax. This is money that will not be able to be collected.

Gateway account

As with all MLMs, money is paid to reps through a complicated system. Instead of the company paying people direct into their bank account, they pay it via a convoluted system which usually ends up with the reps having to pay to get their money out. LTW used a company called Gateway. Towards the end, reps found they couldn’t get their money out. They were told it would be ok, it was just a glitch. Some worried reps speculated that the owners had cleared out the money and disappeared with it.

The liquidators tried to find out how much money was in this account. They didn’t have much luck.

gateway

Previously, the LTW bosses had told the liquidators there was £11,000 in the account.

gateway2

Director/shareholder loans

A director loan is an amount of money that the owners of a company can pay themselves. They should pay it back into the company later. It is something to do with delaying a tax bill. Unsurprisingly, the directors of LTW had taken out some money when there was some. They had taken £281,746. There was no sign of this being paid back to the liquidators.

The reps

The people that signed up under LTW with the promise of earning huge amounts of money were owed £74,992. This amount consists of unpaid bonuses and unfulfilled orders. I don’t know how many people that would affect. Even if there were a few thousand reps, the average payment due to each one would have been significant.

The reps are the real tragedy here. They invested their money in products they didn’t need, waited days or weeks for them to arrive and many instantly regretted their decision to join. They had trouble leaving and getting any sort of refund. Often they recruited friends and family with lies of the success they could make in the scheme. A lot of them felt stupid and naive for getting involved in the scheme.

The only ones I don’t feel sorry for are the high earning professional MLMers who made a lot of money quickly by recruiting a lot of people, knowing most of them would fail. Once they left the sinking ship, they took their ‘teams’ with them to the next big promising scheme where they will continue recruiting and draining money from fresh victims.

The death of LTW should serve as a warning to anyone in an MLM or anyone who is thinking of joining one. They are run by people who are out to make money for themselves and often it all ends abruptly with no warning for the poor reps at the bottom of the pyramid. Time and time again we see these companies closing and people left out of pocket that still keep trying their luck with other similar companies. This is not how a responsible company should behave. They show no respect to the reps and no regard for how they are affected. The reps are the customers and they are paying money into the scheme to keep it afloat. I just wish they could see it.

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Behind the headlines- analysis of a pro-MLM news article

I have become aware of a newspaper article that detailed how a woman had risen from being a desperate, poor single mum to a successful, rich business woman thanks to her involvement in a Multi Level Marketing (MLM) scheme. Regular readers of this blog will be aware of how unsuccessful most people are in this type of scheme. Was this woman one of the few real life success stories or was the article just regurgitating the MLM fairy story that is so often fed to new recruits?

Let’s have a closer look at the article. The link to the Daily Mail article is here. One of the principles of this website is to not make personal attacks so I won’t be identifying the woman involved by name, and I won’t make any disparaging personal comments about her. This article will just analyse the truth behind the claims that are presented in the newspaper.

cash strapped

The above snippet is at the very beginning of the article and, already, the inconsistencies are there. It starts by saying she is ‘turning over £1 million’ and also ‘on track to make £1 million a year’. These statements have quite different meanings. How long has it taken her to ‘turnover £1 million’? What does ‘on track’ mean? We have seen MLMers make ‘on track’ claims before. It just means it is what they are aiming for, what they hope to achieve. It is this hope that keeps them clinging to their MLM long after everyone else can see it isn’t working.

This exact same story has been repeated in The Sun and this is their headline-

sun

How successful is she really and what is the truth behind the claims?

She doesn’t have ‘a staff of 400’ for a start. The 400 reps are tied to The Body Shop At Home to sell their products and are reliant on the company for brochures, advertising, products etc. They are sales reps with no employment rights. Officially they are considered self employed contractors for the company. They do not work for the rep in the story at all.

Something that jumps out at me, and also to other readers (see the comments at the end of the article) are the inconsistencies. She claims to be nearly a millionaire, or at least owning a million pound business, or maybe just being in charge of some people who have sold £1 million worth of product, either way, she is claiming to have a ‘rags-to-riches’ story. She is boasting about being really rich. If she is so rich, why is she hoping to get on the property ladder? And why is she planning on getting married in 2 years time? If she is so rich and successful, why doesn’t she just buy a house and get married whenever she likes? She sounds like she is still financially behaving like a non-rich person.

Perhaps houses are really expensive in Aghalee and it is impossible to get a deposit for such an expensive are? A quick search on Rightmove, however, will show you that you can buy a 4 bedroomed house for £125,00 or £220,000.

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If she had a million pounds, she could buy that house outright. Obviously she doesn’t have even £220,000, so she would need a mortgage. A mortgage could be obtained for this house with a £20,000 deposit. The thing with mortgages though is that you need to be able to prove a steady income, and MLM schemes would not count. The woman in this article seems to have been given a paid position in the company- managing the reps in the Northern Ireland division. Perhaps she is waiting until she has 6 months of payslips to prove her income?

If my theory is correct, the woman hasn’t accrued a fortune and anything she is able to afford now will be due to her paid employment, nothing to do with being a success in the MLM business.

The reality is more likely this-

Woman finds herself struggling for money, and out of desperation joins an MLM.

She finds it hard to make any money but realises her chances are better if she can recruit a lot of people. These people then spend money on products and starter kits, making profit for the MLM and raising the profile of the woman.

She qualifies for numerous incentive holidays with the company. I have tried to find out how much product people have to buy/sell to get this incentive but there are no details available anywhere. It is impossible to access any terms and conditions for the company. You have to express an interest on the website for a rep to contact you and then you can start finding out more.

She was successful in recruiting a lot of people.

Her recruiting got the attention of the MLM bosses who offered her a paid position.

Now, with a steady income, she is able to start saving for a mortgage deposit and then apply for one.

She can now start saving for a wedding.

 

My version of the woman’s story isn’t so exciting. Why would a misleading article like this be written in two different newspapers? The cynical part of me thinks that the ‘story’ was provided by the rep to the papers in an attempt to recruit more reps. One of the papers even has a video embedded of the rep explaining how great her ‘opportunity’ is.

In conclusion, this rep’s story is a non story and could result in more people joining an MLM scheme where 99.7% of people lose money.

If anyone wants to refute what I have said here, please comment below. Perhaps there is proof that the rep is actually very successful and has earned £1 million. If so, I would be very happy to look at it and issue a correction here.

 

Further Reading

Timeless Vie article on a real life experience of a Body Shop At Home rep.

Anti-MLM Coalition have a real life story of an ex-rep.

Bot Watch article on why conventional companies turn to the MLM model. Mentions Body Shop At Home.

A Reddit post on someone’s bad experience with Body Shop At Home.

 

What is happening to Forever Living?

In this post I will present some facts and evidence to you but I will leave it for you to make your own conclusions.

People have been wondering what is happening to Forever Living for a while now. Timeless Vie speculated about its future two years ago. See what they had to say here and here.

Timeless Vie said that Forever Living were reaching saturation point. They said that a company approaching saturation point would either introduce new products, or new markets. At the time of their article, FLP were trying to sell aloe vera products to horses. Since then they have brought out a new beauty range and this year they have rebranded their most popular drinks. Also, members seem to be increasingly chasing foreign markets.

Timeless Vie described some new rule changes that had been made to make it easier to achieve ranks. This has continued to be the case.

Lifecycles

The lifecycle of any living organism always follows roughly the same trajectory, whether it is a colony of bacteria or a species of animals. MLMs have often used this trajectory to show how well their company is doing, and they encourage people to join based on where their company is right now.

Have a look at some examples.

Here is someone trying to recruit people into Pink Zebra

pink zebra

Let’s have a look at that chart

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They are suggesting that all you have to do to be in the top 2-3% of earners, you just have to join at the right time. Research shows it is incredibly difficult to earn any money in an MLM, so reps will be doing all they can to get themselves any advantage they can.

The chart above stops at stabilisation. Let’s see what science has to say about population survival charts that this chart is based on. Here is a chart documenting the rise and fall of a colony of bacteria.

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Here is what is happening to the human population in industrialised countries.

humans

In MLM terms, this means that initially there is a lot of excitement about a new company, loads of people join in pre-launch. They get more people to join and spend their money, they spam their friends and family and everyone gets bored of it. After a while the people who joined leave faster than the rate of people joining. This is the start of the death/ declining phase, or oversaturation.

I wonder where Forever Living Products are on this chart? Let’s look at some evidence. How has the UK company being doing financially over the last few years? Companies House has all the details we need on this. The money brought into the company is documented every year.

The 2017 report that looked at the company for  2016 has this to say

panic

This bit tells you how much profit they made in 2016.

profit

For a detailed breakdown of where the money came from, have a look at this

This shows the company earned a lot of money from things like success days and details

This shows that the company made a lot of money from success days, training materials and ‘delivery revenue’. The sales of goods has declined from 2015.

Let’s lay out the total turnover from over the past few years.

2011-£23,878,750

2012- £27,167,812

2013- £34,726,349

2014- £58,993,590

2015- £106,489,238

2016- £80,066,133

2017- we will find out in October this year.

That just looks like a load of numbers. I prefer charts and pictures to show what is happening. Here is a graph showing the above figures.

chart

I wonder what this chart will look like at the end of this year when the 2017 figures are shown? We can look for clues. One of the things that Forever Living do each year is share some of their profits with the top people who brought in the most money and recruits to the company. If the cheques are smaller this year, that would indicate a decline in profits.

What did those cheques look like in 2016? The evidence for them is everywhere, as it is a good way to lure in new recruits. It makes it look like people are successful and it is possible to earn loads of money.

2015 Global Rally in Singapore

There were 97 cheque earners from the UK in 2015.

This was on the cover of FLP’s magazine. This is the highest earner in the UK. We’ll call her number 1.

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The following images are accessible from the FLP website and have been widely shared by a lot of reps in order to make their company look successful and to make it look profitable for people.

Another top earner, we’ll call her number 2.

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This one of the mid earners. She’ll be referred to as number 3.

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Number 4 is also a mid earner.

This one was number 8 in the UK in 2014. In 2015 she qualified for a cheque at the rally as the 11th biggest cheque earner.

yawn

There were loads more cheques presented, I have only put three here as examples. Another indicator of success of the reps is the amount of people being promoted up the ranks. In FLP’s magazine for April 2015 they have listed the people being promoted to Managers in March.

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Here are the names that were promoted to Assistant manager-

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And these are most of the supervisors. There are about 250 supervisor promotions.

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Let’s see what their success day looked like when everyone got back from their cheque sharing extravaganza. They call the trip abroad, the Global Rally.

 

2016 Global Rally in Johannesburg, South Africa

We would expect the cheques to be bigger for the three reps whose cheques we have seen. This is because the company’s revenue was much higher this year than the previous year. Let’s see what they were in 2016. The cheque details for all the money awarded can be found on this slide share website. There were 176 cheque earners from the UK at the 2016 event.

Here is number 1’s cheque. It is about $12,000 less than the previous year. Proportionately, it is about the same as 2015.

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Here is number 2’s cheque. It is an increase of $325,054.54. That’s a massive increase of 48%.

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Number 3’s image was taken from a website of an FBO trying to entice people to join based on the large cheques.

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This cheque is a huge 1061.63% increase! Ten times her previous cheque!

 

 

 

 

 

Number 4.

yawn2

Number 4’s cheque has increased by a whopping $92,387 and she’s gone up a place in the cheque leader board. She must have been feeling pretty successful at this point.

These are the promotions for that month.

2016 promotions

supervisors1

supers

Again, there are about 250 supervisor promotions, the same as the previous year.

 

2017 Global Rally in Dubai

You can access the British cheque earners and their amounts at Forever Living’s own site. There were 108 cheques awarded.

 

Number 1’s cheque reduced.

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Number 2’s cheque reduced

nat

Number 3’s cheque also reduced.

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Number 4’s cheque has also reduced and she has dropped down to number 18 in the cheque league table.

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Let’s have a look at the promotions this year.

2017 promotions

sparce

Notice the massive drop in supervisor promotions. 2015 and 2016 both had about 250 promotions at this level. Now there are only 28! A massive drop.

2018 Global Rally in Dallas, USA

To see the cheques that were awarded this year, go to Forever Living’s website.

Number 1 must be very disappointed with her cheque of $756,687.82.

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Number 2 got this

nheeley

Number 3’scheque is much lower than last year.

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Number 4 qualified to go to the rally but she didn’t qualify for a cheque this year. She must have been pretty devastated at that because all her team will have been expecting her to get one. I think the expectation is that the ‘business’ should grow year on year and once you start earning cheques, it should really take off. The cheques and recognition process is so public that their decline is out there for all to see.

I tried to find a list of promotions but it seems Forever Living don’t publish them anymore. Have a look at one of their online magazines.

A Bot Watcher has told me that Bob parker, the UK and Ireland boss of Forever living publishes the reps’ names for their promotions. The most up to date ones are here-

bob

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Some graphs

There is a lot of information to digest above. I’ll put it in some graphs to make it clearer.

Here is an illustration of the three people’s cheques from above.

global

Here are the number of promotions awarded in May of each year.

proms

 

‘Supervisor’ is the first promotion that a rep in Forever Living gets. The numbers have gone from a steady 250 a month, down to 28, and now 17. These are the bottom rung of the pyramid structure. Without enough of them, the whole structure won’t be able to support itself and could topple.

All of these bottom FBOs will be looking to the people at the top and will be watching them get their cheques. We know that the cheques are becoming smaller each year, but new joiners won’t necessarily be doing much research into the situation. They could well be being blinded by the cheques and aspiring to earn one themselves.

Let’s dig a little deeper into the cheque earners I have shown you above. FBO number 3 is actually number 10 in the UK. She is the tenth highest earner in Forever Living in the UK and as such, is considered successful. Her Facebook page has some inspirational posts. In the following images, she shares her thoughts on Forever Living’s future and her experience of it so far.

lies

lies2

Do we think things are getting better and better for Forever Living? How are things going for our person number 3? The tenth highest earner? She has registered her business activities with Companies House so we can go over and have a look at how successful she is.

Oh, she’s not doing so well. In August last year there was a meeting and a resolution was made.

special

Her company has been voluntarily liquidated. It went through the courts in May 2018 and a liquidator was appointed. Here are the last accounts that summarise what has been happening.

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I’m no accountant (would love to hear from one), but it looks to me like a tax bill of £115,586.10 couldn’t be paid, resulting in the company being £63,078.10 in debt.

Whilst this person was in Dallas, holding a giant cheque and trying to recruit people off the back of her ‘success’, she was actually in quite a bit of debt. And this, remember, is the UK’s number ten in the list of earners.

I am not gloating at this poor person’s failure. I am sure it has been dreadful for her and extremely stressful. I feel more sorry for the unsuspecting people who might sign up under her, hoping to earn some money under her mentorship. What hope do they have of obtaining a promotion or earning any large cheques if one of the most successful people in the company is not earning anything?

Just one more photo before I leave you to ponder the direction this company are heading in.

A ‘success day’ from 2018, held in the London Paladium. Photos from this event show a less than half full room, or they just show the very front or corner, to make it look more full.

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This would have been unthinkable in 2016 when there were events in 4 different major cities in larger arenas and better attended.

How do you think the company is doing? Are there another 40 years in it as they are promising?

Why do traditional businesses turn MLM?

Multi Level Marketing generally differs from traditional business models. MLM has ‘independent contractors’ that buy the products and sell it to make a profit for the company. They often spend a lot of their own money on products to meet targets necessary to earn commissions. They pay fees to be members of the company and pay for ‘conferences’ and ‘trainings’, again, making money for the company.

It is common to find these MLM companies saying that they are cash rich and debt free. Of course they are, they have very little overheads as they leave the marketing and selling to these ‘independent contractors’. These MLM companies can sell products at an inflated price because it doesn’t matter that it is essentially an unmarketable product on the open market. They know the people caught up in these schemes will buy the products anyway. The product becomes just a way for the reps to earn a higher position in the pyramid.

We are used to seeing poor or average quality products being sold in MLMs. Which is why it can be puzzling to see a traditional business with well known, or even loved, products in an MLM way. Let’s have a look at some examples. Here, I attempt to research what the reasons are behind the MLM decision. Ultimately, this is an opinion piece as I attempt to draw conclusions from the evidence.

The Body Shop

The Body Shop was established in 1976 by Dame Anita Roddick and had solid ethical foundations. Then in 1994, it branched out into MLM and ‘The Body Shop at Home‘ was launched. I wonder why? I thought initially that the company might have been struggling financially, but this is not what Companies House information says.

bodyshop money

I have asked The Body Shop why they started an MLM branch. It does seem like quite a risky move to make, considering their strong stance on ethics, cruelty free products and their current marketing slogan…

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Mars

Yes, that’s right. Mars, as in the chocolate company. It has an MLM branch called The Cocoa Exchange. They were formerly known as  Dove Chocolate Discoveries. They call their reps ‘curators’. They talk about uplines, and amounts needed to sell to remain ‘active’. They sell online and do parties at home. They sound like any other MLM, except their product is a well known brand. They started in 2007.

Mars have their products all over the world and they can be found in any number of shops. Why on earth would they feel it necessary to follow the MLM model? I found this article in ‘Confectionary News.com‘ where they go some way in explaining the decision. They acknowledge that not many large companies have strayed into MLM and it admits there is a stigma involved in this type of selling. They say that this way of selling fits in with Millenials and their love of companies like Uber and Etsy. They say that there is a need for people to have an extra income. Because Mars don’t make money from the starter kit, they think that they are avoiding the pitfalls of most MLMs. They say they are different to other companies because they don’t promise to make people into millionaires.

Twice in their FAQ section on their website they mention earning a 6-figure income.

Mars claim that the aim of their MLM is to generate sales to customers of their products and to provide an income to the reps. They will certainly be successful in generating sales, but whether anyone apart from Mars makes any real money is yet to be proven.

choc

(Photo: Mars)

Neal’s Yard Remedies (Home) Ltd

Neal’s Yard remedies sell essential oils and beauty products. This company have high street shops, as well as an MLM arm. Again, I am surprised. Look at their ethical claims

neals yard

The company started in 1981 and branched out into MLM in 2009, see Companies House for their details. It seems the UK company owns the Neal’s Yard company in the US. Peter Kindersley was director when the MLM branch started and he loaned the company £486,616 indefinitely.

Peter clearly has a very large influence over the company but I can’t find any previous links he has had with MLM. He has been involved in a lot of businesses, but they have all been in publishing or organic farming. I have looked into the actions of his wife, Juliet, and there is no sign of MLM in her history either. She is an environmental activist and is often seen working alongside her husband.

I wonder if someone sold the idea of MLM to Peter as an ethical and great way for people to earn money, empowering them and generally being a force for good? Neal’s Yard was doing well financially when the MLM side started up, so it wasn’t an act of desperation from a struggling company.

There are no income statements from NYR but the sales and profits continue to grow for the owners. I wonder how the owners would feel if they realised how badly their ‘consultants’ are doing financially, and how unethical their company really is.

Anne Summers

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Anne Summers was established in 1970 in UK. They sell lingerie and sex toys and have a high street shop presence. In 1981 Jacqueline Gold (current chief exec) started the MLM wing of the company. It is said that this is due to the laws relating to presenting sex-toys in a shop. A shop selling sex toys needs to be licenced as a sex shop. If the proportion of toys to other stock is low, it can be classed as a retail shop. By selling in people’s home, this technicality becomes irrelevant.

Jacqueline said in this interview that she came up with the idea of MLM for her company when she attended a Tupperware party.

Tupperware

Tupperware products were invented in 1946 and didn’t sell well in shops initially. Their website says that the products were so innovative, customers needed to see demonstrations to understand how the products worked. In the 1950s the concept of selling Tupperware in homes really took off and the company became very successful.

These days people know how to operate the products and they can be found in shops, alongside similar products made by other companies. It would seem that there would be no need now for an MLM side. I guess there is also no need to remove that aspect of the company because it has become so well known and it continues to make a very large income for the owners.

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Brownie Wise, the woman behind the ‘party plan’ concept for Tupperware (from Tupperware.com)

AVON

avon

AVON are a very well known brand and are often held up as an example of why MLM isn’t such a bad thing. The company was started by a travelling book salesman, David McConnell. It was initially women selling perfumes door to door and earning a commission for their efforts. Technically, this is called Direct Selling.

In recent years they adopted the MLM model and allowed people to recruit into their team and earn commission based on their team’s performance. They were members of the Direct Selling Association, but ended this relationship in          2014, citing a fear of being associated with pyramid schemes. It seems AVON were concerned that the DSA were not worried about MLM companies having a low proportion of real customers, and that the real customers were the reps themselves. They have had many battles to contend with in recent years, see Pyramid Scheme Alert’s article here.

The article above discusses the fact that sales are falling but rep numbers are increasing, lending doubt to the legitimacy of the ‘business model’. Without the sales to the reps themselves, how well would the company fare? AVON are in a difficult position of being involved in something they find uncomfortable, but seem unable to extricate themselves from it.

(Photo credit to AVON)

 

Swarovski

The MLM branch is called Touchstone Crystal.

This company is known for the crystals they sell. They were founded in Austria in 1895 and turned to MLM in 2006 under Dan Cohen and Elizabeth Dipaolo. Dan is a descendent of the original founder of Swarovski. Elizabeth is described as being the Vice President in 2018.

This Direct Selling article describes the start of Touchstone Crystals. The article describes how in 2009 Swarovski started in MLM with kits where people made their own jewellery. The reason given for this venture was that the company were looking for innovative ways to make their jewellery more accessible to the public. Apparently this experience of MLM showed the company that ‘the opportunity was great’. I am assuming this means that it made money for the company.

In 2010 finished pieces of jewellery were introduced into he home parties. This is where Elizabeth DiPaolo was brought in to oversee the MLM side of the company. The Direct Selling 2011 article above says this of Elizabeth-

swarovski

All I have managed to find out about Liz is that she previously worked as Vice President for an MLM called Princess House Inc. She will have brought her knowledge of how profitable MLMs can be for the company.

It looks like Swarovski moved into MLM with reasonable intentions, ie to sell more products. When Liz became involved, it is probable that she explained how profitable MLM could be to the company. I guess we will never know if a discussion was had with Dan about how damaging MLMs can be to the people who participate in the scheme. There are no Income Disclosure Statement to show how poorly the ‘Glambassadors’ are doing financially.

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(Image from Touchstone)

Usborne

Usborne originated in the UK as a publisher. It was founded in 1973 by Peter Usborne.

In 1978 Usborne books started being distributed in America through The Education Development Corporation. (Source) In 1989 Usborne started using the MLM model in the US. At the same time as having reps sell his books in parties and fairs, he was selling to Amazon and large chains of shops. This strategy started to fail and the business was in danger of shutting down in 2012. There had been 9 years of decline and the reps were not happy. They saw Amazon as unfair competition. In 2012 Randall White took the decision to stop selling to Amazon, and just sell the books through the MLM way and a few toy shops and specialist bookshops. See this Business Insider article about it.

This is what Peter Usborne had to say about the move to almost exclusive MLM selling.

“We weren’t involved in the decision,” says Usborne, who continues to do business with Amazon in the UK and elsewhere. “Randall just told me he’d done it. He quite likes a fight, and I think he was looking down the wrong end of a shotgun. It looked pretty grim for a while, but now it seems he’s the wind in his sails.”

After making the change the company started improving financially, reversing the downward spiral it was experiencing.

In 1992 the MLM branch was set up in the UK called Usborne Books at Home and School. This company is now showing as a dormant company, as it has from when it was set up. It seems to be trading as a subsidiary of Usborne Publishing Ltd. I’m not sure about the significance of this and would like to hear from anyone who might know what it means.

In 1993 The American Publisher Scholastic took a 26.25% share in Usborne Publishing.

In the UK Usborne books can be bought on Amazon, in bookshops and in supermarkets. The books are very easy to get hold of, which raises the question of why there is a need for an MLM section? Who would buy from a rep when there is more choice and less hassle, and possibly a cheaper deal to be had in a shop?

I have searched and searched for why Usborne is MLM in the UK and I cannot find any statements anywhere. What a wasted evening! All I can do is take a guess. The inspiration may have come from the US where Randall White was using the method to sell his books. It wasn’t going so well for Randall in 1992 so it couldn’t have been just that. Maybe Scholastic had a hand in the move, the dates would fit.

Whatever the reason behind the decision to go MLM, it is working for the UK. Peter Usborne said in a talk he gave that the Home part of the business was doing very well. The number of reps seems to be growing. This is despite the books being widely available in retail outlets.

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(photo from Usborne)

Conclusion

Pyramid or Multi Level selling is a very good way for a company to make money. The company will very rarely lose when it adopts this way of selling its products to people who will buy products and market them for free. The only downside to this model of money making is the poor ethics associated with it. People are realising more and more how bad it can be for the people involved in it who are trying to make a living.

A company should have to answer for their decision to make money through potentially exploiting people and causing financial problems for thousands of people. Hopefully as MLM becomes more widely understood by the public, it will become less popular for traditional large corporations to dabble in.

 

Pyramid Schemes and Multi Level Marketing Explained

I have just done a radio interview about pyramid schemes and why they are a bad idea. I only had ten minutes so I struggled to get in all the information. Click on the image below to listen to it. I am at 1.32.

 

 

Here, I cover the information I gave, with references and further information that I couldn’t cram in.

What is a pyramid scheme?

It is useful to think of pyramid schemes on a spectrum. Just before you get to pyramid schemes, there is Direct Selling. This is where people sell things and get a commission from the sales. Like a double glazing salesperson who goes door to door and gets a cut of the sales. That is perfectly legal, although it can be hard on the salesperson to earn money if they don’t sell much.

On the other extreme, after pyramid schemes, there are Ponzis. These are schemes where people pay a fee to join. They have to recruit to people and they recruit two people, and they recruit two people. When the pyramid is a certain size, all the joining fees from the people on the bottom rung go to the person at the top. They then retire with a large amount of money and everyone moves up a rung. To be successful and leave with money, 64 people would have to pay the fee. Quite often, not al the spaces can be filled and the whole thing collapses. An example of a Ponzi is the Airplane game.

Ponzi schemes are illegal in the UK. In Albania in 1997, there was a civil war due to a Ponzi scheme collapsing. Two thousand people died and a government was toppled.

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Between Ponzi schemes and direct selling, you have pyramid schemes. These are defined by the Fair Trading Act 1973, under the section called ‘Part IX Pyramid selling and similar trading schemes’. The law calls these schemes ‘Trading schemes’ that have to comply with the pyramid selling regulations. It talks about the pyramid structure of the schemes. In 1996, when the Trading schemes laws were being updated, there was an attempt by Amway ( a large multilevel marketing scheme) to have the term ‘pyramid scheme’ defined as an illegal scheme. The Government stated that they saw the terms ‘pyramid selling’ and ‘multi level marketing’ as interchangeable.

trading schemes

It doesn’t sound very good though, to say that you are in a pyramid scheme. It would be very hard to recruit people if you said you were in a pyramid scheme. The Direct Selling Association (DSA) are a trade association and promote these schemes, trying t make them appear respectable. Of course, they wouldn’t want to put off people joining their schemes so they say this on their website.

dsa

I challenge them to show me where in law it says pyramid schemes are illegal. I believe in fact checking and looking at the evidence and I will be happy to change my statements if they are wrong.

So what is a pyramid/multi level marketing scheme? The 1997 consultation document makes this clear-

what is

More simply, this means that people are in a trading scheme if they sell products, usually in their home, and recruit others to do the same. They can earn commissions from the sales of the people they recruit, and also get bonus payments. The structure is pyramid in shape. To be considered legitimate, they must adhere to a set of rules. These are The Trading Schemes Act 1996. The Pyramid Selling Schemes Regulations 1973 , and later The Trading Schemes Regulations 1997  lay out the conditions that a scheme must follow to be considered legal. If any of the conditions are broken, the scheme is illegal. Importantly, the law says that the definition of a ‘trading scheme’ remains the same as in previous legislation.

“trading scheme” has the same meaning as in Part XI of the Fair Trading Act 1973.”

These are the conditions-

Part 3. Adverts for the scheme must say the name of the company, describe what is being sold, and give the statutory warning.

Part 4. A written contract has to be given to anyone joining up.

Part 5. The contract can be cancelled within 14 days. People must be told of their financial obligations for the first year. Further minor contract details.

Part 6. When someone leaves a scheme, they are entitled to a refund for the products bought in the previous 90 days.

Part 7. Some technical rule about refunds.

Part 8. People in these schemes must be given receipts from the company for every transaction.

Part 9. Rules about commission payments once someone leaves a scheme.

Part 10. People cannot pay more than £200 in the first week of joining a scheme.

Part 11. People who join up are under no obligation to buy anything unless it was clearly stated in their initial join up agreement. They should not be tricked into buying anything.

Section 1, part 3 of The Trading Schemes Act 1996 says that trading schemes must provide products or services to external customers. The participants can’t just purchase products for themselves.

That is quite a list of rules that a company must adhere to be considered legitimate. You can see why it is difficult to determine if a scheme that is being presented to you is ok or not.

These schemes cause problems for people, regardless of whether they are legitimate or not.

These problems are-

  1. Dr Jon M Taylor analysed the statistics of MLMs and found that participants typically lost money in 99.9% of cases. He concluded that gambling on roulette gives 286 times more chance of winning money than earning anything in Amway. These statistics were presented to the Federal Trade Commission.

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Image from MLM-The Truth Website.

2. People lose money through paying for training, going to conferences, buying their own marketing products, petrol costs from driving everywhere, buying nibbles and drinks for in-house parties, buying samples, buying prizes for raffles, buying products for themselves, paying for stalls at fairs.

3. People in these schemes follow the Law Of Attraction where they are taught to believe that bad things happen if you have bad or negative thoughts. They also believe that good things happen if you exclusively concentrate on positive things. The Law teaches that if you want something, you can have it if you want it hard enough and visualise it enough, sending out the correct ‘vibrations’. You are encouraged to act rich if you want to be rich. The theory is that you acting all successful will attract success and will attract recruits who want to be like you.

Hence you see memes like this

thoughts

People in these schemes become afraid to think of their failure and will not allow themselves to focus on the money they are losing. This type of dangerous thinking could be called a mind control technique. People stop themselves from being critical and lose the ability to be rational. This is a very dangerous state to be in. It keeps people in these schemes longer than they would otherwise stay.

Another side effect of this way of thinking is that people are encouraged to cut contact with people who are being critical. I know people who have lost brothers, sisters and children through these schemes. They were taught that the negative vibrations from these people would bring failure. This further isolates people and they surround themselves by other scheme members who are all believing the same thing.

A further problem with this type of thinking is that when people inevitably fail, they will blame themselves. They will have attracted the failure to themselves. This makes them feel ashamed and they will often try to forget about the whole thing, and not come forward to speak about their experiences. So the deception continues. When people leave a scheme, they often find themselves ostracised from the group, who now see the person as a failure who could bring them down. They are now left feeling like a failure, lost friends/ family and no support group. This can make people feel terribly isolated.

4. People in these schemes are often seen making false health claims for the products they sell. This is because the products are expensive due to the added amounts that are needed to be fed up the pyramid. The sellers become desperate to make sales so that they cam achieve their monthly targets and to earn money themselves. The products are nothing special so people will lie about how good they are, breaking advertising laws and encouraging people to ditch their medications in favour of their snake oil.

Truth in Advertising (TINA) have documented some false health claims they came across with MLM products. They found that of the DSA member companies in the USA“( 97%) have made or are making — either directly or through their distributors — claims that the companies’ products (which include supplements, as well as devices, clothing, and skin care products) can treat, cure, prevent, alleviate the symptoms of, or reduce the risk of developing diseases or disorders, in violation of the law.”

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Who joins these schemes?

Anyone can be vulnerable to joining one of these loss making schemes. People who need money and are not getting what they need from their current situation could join. They are vulnerable because often it is a trusted person who approaches them to join and people don’t think their loved ones would lie to them. Often, people are promised that it is easy to earn money, just follow the system, recruit people and you will be successful. Examples are held up of the few people that earn large amounts of money.

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Image from TINA.org

It is easy to see why people would want to try pyramid schemes when their current situation is less than ideal.

Intelligent people and professionals are sometimes targeted because they can lend credibility to the company. I have seen adverts on Facebook aimed at NHS staff, trying to recruit them to sell MLM products and the opportunity.

It is important to realise that anyone is vulnerable to being recruited. The best protection is to educate yourself. Stay one step ahead and be as aware as you can. If you are on Twitter or Facebook, follow me or the MLMtruth coalition. There are a few campaigners you can add to the people you follow. Keep these scams at the forefront of your mind and you may be better able to resist.

What to do if a friend is involved

This can often be a very difficult situation. Your friend may be asking for your support and may be desperate to make a success of it. They may not know of the full facts around MLMs and may not be willing to hear it.

I wrote a blog post full of tips that you can look at for ideas on how to deal with your situation. Have a read of it here.

If you have a friend who goes from one scheme to another, get them to read this article on how to choose their next one. You may not be able to help them leave just yet, but you might be able to stop them joining one of the more ridiculous ones.

If your friend is maybe open to the idea of listening to reason and they want to hear what you have to say, get them to read this or this.

If you would like more of an insight into what is going on with your friend, you would do well to read up on cults. Pyramid schemes have been described as commercial cults or greed cults. Once you read up on why they are cults and how they work, it can be quite concerning. However, it will give you a good understanding of the behaviours you might be witnessing. Have a read of Steve Hassan’s work. He has written two really good books on the subject called Combatting Mind Control and Freedom of Mind. Margaret Singer has a good book on the subject too, called ‘Cults in our Midst: The continuing fight against their hidden menace’.

Cultwatch explain how cults work, and they delve into commercial/greed cults.

Steve Hassan has a website about cults that you may find useful.

I have written a piece on MLM and cults with John Evans from Juice Plus Lies website.

How to fight MLM

Become a Bot Watcher and join the team. You might be able to help us or the coalition if you have any skills or experience that might be useful in our cause. Perhaps you could help with some research or advise us.

If you have had an MLM experience, consider telling us about it and we can get your story out there to warn others.

Write emails to complain if you see something dodgy going on. Complain to fairs that allow MLM stalls. Complain to schools if they allow MLMs anywhere on the premises. Write to your MP if you feel things need changing. I have some letter templates here to help you guide your writing.

Report dodgy health claims to the ASA and get the advert pulled. Blog post on understanding about health claims.

Order something from the coalition’s little shop to help our cause and help spread awareness.

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Take the cup to work to spread the message. Keep cards in your pocket to slip to people that you might hear being prospected. Someone we know has been slipping the cards in library books aimed at MLM reps!

Please contact us if you need any advice with any of the issues discussed in this article.

If you come across a Ponzi scheme or a pyramid scheme that you suspect is an illegal one, complain to Trading Standards via their Consumer Line. You can also report illegal schemes and fraud to Action Fraud. They are part of the police.

All you need to know about Inteletravel

Update- March 20th 2019 InteleTravel UK have been granted ABTA membership and are now pursuing ATOL membership. This Travel website has more information. Botwatch is glad that any customers of these reps will be properly protected now if their holiday goes wrong.

Update- since writing this article, Inteletravel have gained membership of IATA. I have left the old information in to illustrate what the situation was at the time of writing. This membership will have no bearing on U.K. reps.

 

We have been contacted by some very concerned people who have been involved in Inteletravel. Let’s call them Ian Cognito and Ivor Fakename. They joined Inteletravel because it looked like a great MLM to join.

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That sounds good. Anyone can join, pay their fee and do a few hours of reading at home. They watch a little video, get given a website and call themselves independent travel agents.

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Looks good doesn’t it? You don’t often come across an MLM that is risk free.

Let’s have a look at the Trust Guarantee.

guarantee

I guess that’s quite a lot of small print, but would be necessary to ensure that people really were putting in enough effort. It wouldn’t be fair if people joined up and didn’t try, just to get their money back would it? Except the guarantee isn’t fair because it is impossible for members to achieve these criteria.

Ian tried to complete point 3. He had to register with a preferred partner and sell one of their packages. Except that there is only a little booking platform and you cannot join it without being a member of ABTA. Ian wasn’t even allowed to register with them. Point 7 isn’t possible either because you can’t register with them without having ABTA membership.   Ian says that when he phoned up Inteletravel to complain about this, they didn’t even know what he was talking about.

Here is an official facebook post on Inteletravel’s Facebook page in February explaining that people can’t book, or even contact the ‘preferred partners’ until they have ABTA membership.

tara1

 

They shouldn’t really be promising holidays like this then,

hot deals

 

ABTA, IATA and ATOL

ABTA are a travel association that have a code of conduct and protection for people who book holidays through ABTA members. If a person buys a holiday through an ABTA member and then, if when they are on holiday, the company shuts down, there is a process whereby the holiday maker will be brought home or their holiday can continue. Most holiday providers in the UK will only sell their packages through agents that have this membership. This ensures that the holidaying population are protected from being sold holidays by amateurs and scammers.

Inteletravel have been promising ABTA membership is coming soon. They have been promising this since 2015. See this email sent in early 2017. Their website still says they will be getting ABTA approval in 30-45 days.

abta

 

ATOL are the organisation that offer travellers financial protection for air travel. Recently, people who were customers of Monarch received help when they were abroad during its demise. Inteletravel are not ATOL protected.

 

Perhaps reps shouldn’t be posting adverts like this then

intellies

IATA protected? IATA stands for International Air Transport Association. See here for what membership gets you if you are a travel agent. You don’t have to have it to be a travel agent but it has benefits around offers and payment. It lends credibility to a company to have this membership. I searched their website and found Inteletravel are not members.

Which makes me wonder why Inteletravel have the logo on their slides.

join

And in this communication to reps

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In this group chat where reps are concerned about the IATA status not being true, the company explains it to them.

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If IATA are ineffective and not needed, why are Inteletravel acting as though they are members? I would not be concerned about the IATA status affecting sales in the UK, but rather, why is there the deception around whether they are members or not? For a contemporary discussion of the issues, check out this forum for work at home travel agents.

Inteletravel used to be members of IATA but their membership was cancelled by IATA in 2007. I have asked IATA for a comment on why this was and what their status is now.

I am glad to see that members of this scheme are asking questions of Inteletravel and trying to ensure they are not being scammed. So many people were asking Inteletravel about ABTA membership that they issued this warning.

warning

That’s not very nice! Ivor decided he wasn’t going to be fobbed off and became suspicious of this warning. He told Bot Watch that Inteletravel informed their reps that ABTA wrote to them asking them to tell the reps to stop calling them. Ivor rang ABTA to check and was told that no such letter was written. Ivor found out that ABTA are having a committee meeting on April 13th 2018 to decide whether to allow Inteletravel membership. I have asked ABTA to clarify the situation. Watch this space.

However, Inteletravel are now telling people (before the committee meeting) that they have been given an ABTA number, they just don’t want to go public yet. The ABTA website shows that they do not have a number. This message is from one of the ‘directors’ (what they call the people high up in the pyramid) this April.

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Reps/ Agents/ Scheme members

What should we call people in this scheme? They call themselves Travel Agents, the MLM world calls them reps or Independent Business Owners. What do Inteletravel call their members? Have a read of this exchange between a disgruntled ex-rep and the company.

stumped

Customers. I can’t say I’m surprised. People who join up spend £526 in their first year.


Dishonest advertising

Because reps have a limited source of holidays they can offer and they are desperate to try and sell some to make some commission, many of them are tempted to lie in their adverts. Ivor explains how these reps/customers bend the truth to make their deals look good.

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Here is a price comparison for two room bookings, the top one with Inteletravel and the bottom one with Trivgo.

 

The room options for the Trivago option has been cut off. The Trivago option is for a more expensive room. This is not a fair comparison.

 

On this comparison, they have chosen a deluxe room for the online booking site. The Inteletravel price is not a fair comparison because this this could be for a basic single room.

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This comparison is unfair because the rep has put up the price before the price has even been finalised. A room hasn’t been chosen. This will put the price up. Probably to more than £381.13.


PlanNet Marketing

If £142 and then £32 a month seems pricey for an MLM, don’t worry. You can join a different company that has ‘partnered’ with Inteletravel. PlanNet Marketing. With PlanNet Marketing, you can join for £16 and pay £16 monthly. You do not need to sell any holidays. You can just sell memberships in a ‘society’ made up of people who want to be travel agents. Payments are based solely on the people you recruit. Here is their compensation plan.

pyramid

Readers at this stage might be interested to read up on what makes a pyramid scheme an illegal scheme in the UK. Here’s a snippet. (Fair Trading Act 1973)

fair

This is a bit wordy but what it means is this- People are not allowed to recruit you and charge a fee with the promise that you can just recruit others and earn money from it. Anyone that does this is running an illegal pyramid scheme.

Have a look at their Income disclosure statement.

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97.65% of their reps earn, on average, $69.95 a year. Considering that it costs $239.40 a year to be a member, this doesn’t look like such a great deal. 23.07% of reps earned nothing at all.


What to do now?

If you have read the evidence and decided you still want to join, then go ahead. If you are already a member and you are happy, great. If you are currently a member or you have left and you feel you want to take action, there are things you can do.

If you were deceived into joining the scheme and found you couldn’t make money, complain in the UK to

safer jobs

 

This is a company set up by the police to investigate scams and job fraud.

 

action fraud

 

Action Fraud is a branch of the police that investigates fraud like illegal pyramid schemes.

 

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Trading Standards can be contacted if you think a company has broken the law or acted unfairly.

 

 

 

001If you see a misleading advert you could complain to the Advertising Standards Authority who will investigate and have the ad removed if necessary.

 

You could tell your story by commenting below, to warn other people that may be looking at this company.


The continuing saga of ABTA membership

On Friday 13th April 2018, there was a meeting at ABTA about whether Inteletravel should be licenced with them. The reps have been told before this date that they have their membership and will be announcing it on Super Saturday on April 14th.

They really believe it and have been telling everyone that they will officially be announcing their membership. There are posts on Facebook like this-

On Thursday 12th April-

sup

On Friday 13th April-

super sat

Does anyone really believe that Inteletravel will get their ABTA number? I have no doubt that all their reps thinks they will. What will happen if/when they don’t get it? How are they going to explain it to everyone? I for one will be keeping a very close eye on things on Saturday and will report back here. Watch this space.


Super Saturday

Here is a Facebook conversation with someone who was at the Super Saturday event on 14th April.

It starts with an optimistic picture.

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Followed by an excited conversation. Red is at the event and her fellow reps are waiting to hear about it.

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They never got to hear about ABTA granting Inteletravel their certification. Because they didn’t get it. The meeting was held at ABTA yesterday and their application was denied.

What was Inteletravel’s excuse?

They are now saying their membership is ‘pending’ while their new UK manager ‘gets set up’. They are putting their faith in this one person to get them their membership. And they are saying they don’t need ABTA anyway.

They do need ABTA if they want to be travel agents in the UK. Come on Inteletravel agents, stop and think.

 

Sue’s Dalliance with The Body Shop at Home

The Anti-MLM Coalition

Sue Denim (not her real name) joined The Body Shop At Home about six years ago in Australia, and had a less than enjoyable experience.  She has kindly offered to share her story so that people considering joining can see what can happen.  I am not saying this will happen to everyone who joins or that all ‘consultants’ are going through this. This is her story and she wants you to understand what happened to her. I have written my words in red, and hers in black, to make for clearer reading.

I was fresh on 19, and looking for work. I’d never heard of multi-level marketing before — sure, I knew some of the companies by name, but I didn’t know that they were bad or that they prey on the weak. It was November 2012, so all the usual MLMs were putting out advertisements for their Christmas gear…

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