Len Clements Commentary

February 21st, 2008

In the "Creative Consumer" column on the ABC News web site, ABC News Consumer Correspondent Elisabeth Leamy has followed up to her "How to Avoid Work-at-Home Scams" article from a week earlier with one reciprocally discussing "Legit Work-From-Home Jobs" (at least that's what's suggested by the title). Within the column, which focuses almost exclusively on MLM, Ms. Leamy attempts to assist the reader in distinguishing between "Illegal Pyramid Scams and Legitimate Multilevel Marketing."[*]

The ABC News article can be read here.

Associated Press (AP) Business Write Paul Foy has had his XanGo article titled "Company Builds $1 Billion Juice Business" picked up by several major news outlets in the past few days, including Business Week, US News, Washington Post, Fox News, and MSNBC (all online editions) as well as Forbes.com and numerous local news providers. Some provide the subtitle "Exotic 'Super Fruit' Juice Spawns $1B Nutrition Business for One Company; Experts Doubtful."

The AP article can be read here.

Forbes then followed up with an exclusive XanGo article of their own simply titled "Drinking The XanGo". This article, oddly dated 2/25/08 (4 days from now), is highly critical of exaggerated medical claims alleged to have been made by XanGo distributors.

The Forbes article can be found here.

Commentary:

What is most disturbing about the latter Forbes article isn't just the examples sited of blatant disease treatment claims being made by XanGo reps, but the comments added by XanGo supporters that follows it. One such defender interprets the various testimonials quoted in the article as the "voicing of personal experiences protected by our Freedom of Speech, (and) First amendment rights." Indeed, this wholly inaccurate and dangerous concept is what is taught by XanGo leaders in the field and apparently sanctioned by XanGo corporate (considering it's stated on the "Magic Wand" audio CD - one of the most enduring and prevalent XanGo marketing tools). Neither the FDA nor FTC allow for disease prevention or treatment claims to be made about a dietary supplement, even in the form of a personal testimonial. The author, senior staff writer Helen Costner, also asks of XanGo's co-founder Gordon Morton what I have been asking for years. That is, what about claims made in open meetings and on the Web, where a Google search for the words "XanGo" and "cancer" currently returns over 270,000 hits (an all time high) with those connected to sales pitches both numerous and easily discernable. All, as Ms. Costner points out, "despite a compliance department at HQ that keeps a lookout for such things?" Mr. Morton's alleged response was, "I can't monitor individual conversations". Normally I'd suspect that such an answer - so non-responsive as to almost be a non-sequitur - was taken out of context and not the complete response. Except, this is pretty much the same kind of response I also received when I asked this question of XanGo corporate back in 2004.

Before anyone fires off another flame mail asking what I "have against" XanGo, let me be clear on this point. I like XanGo! In fact, other than one ill-conceived attempt to patent mixing the rind of the Mangosteen with any other fruit juice (which did not withstand a legal challenge), they appear to be one of the best run companies in the industry, and have made a lot of very right decisions. But why they continue to be so dismissive and cavalier about medical claims is disturbing. Why they don't have a massive compliance education campaign underway, and a zero-tolerance policy in place, is baffling. Especially considering they have already receive a Warning Letter from the FDA - the one strike allowed before the feds usually go all "SeaSilver" on you. I continue to comment on this not because I'm trying to "take down" one of my "competitors", but because I don't want them to be the next SeaSilver! What Ms. Costner seems to be asking is, Why can anyone with a web browser, such as a Forbes magazine columnist and I, find so many reps making so many such claims, so easily, so quickly, but XanGo's "compliance department" cannot? That's a great question!

The AP piece on XanGo isn't the first negative treatment of an MLM company by author Paul Foy. He has also written articles on Usana, and Amway. In his XanGo article he calls on discredited anti-MLM zealot Jon Taylor to comment on their pay plan, which doesn't demonstrate much objectivity. Taylor's conclusion, of course, is that XanGo's plan is indicative of a pyramid scheme. Foy, of course, offers nothing as a rebuttal (except XanGo's denial). Foy also quotes a nutritional exert who states, "My big concern with XanGo is that the business has gone a long way without showing any benefit in human trials", but offers no challenge to the obvious folly of such a comment. Virtually no marketer of a dietary supplement would want to substantiate a medical benefit lest they cause the FDA to change its classification to "unapproved new drug". Furthermore, no company is going to spend the time and money (potentially into the millions) to conduct clinical trials on a product based on a substance found in nature than can not be patent protected. Thus, XanGo executive Joseph Morton's comment, "I didn't have to have it confirmed in the New England medical journal before I would listen.", which Foy quotes in his opening paragraph, is not unreasonable.

Foy spends the bulk of his article attacking the anti-oxidant capacity of Mangosteen juice, but then quotes XanGo's own R&D manager as agreeing that such ratings are a "numbers game" and should be dismissed. So what was the point? Foy then mentions only in passing XanGo's assertion that there's more to a juice than simply its antioxidant rating. So then, shouldn't validating that statement have been the focus of the article?

In Ms. Leamy's (ABC News) previous column from a few days ago, about "How to avoid work-at-home scams", she states the astonishingly spurious comment, "Anytime a business opportunity requires you to spend money in order to start making money, that's a telltale sign of fraud." Ms. Leamy must see "fraud" it pretty much every business opportunity that exists!

A point by point response to her article can be found here.

Ms. Leamy's column is optimistically subtitled "People Often Confuse Illegal Pyramid Scams and Legitimate Multilevel Marketing". She's right. They do.

And sometimes they write columns for major news providers.

Len Clements
MarketWave, Inc.

*See also the free video lesson by Lou Abbott on "Pyramid Schemes vs. Legal MLMs"

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