This guest post is submitted by Dan McCrum, the FT’s US investment correspondent.
Hoisted from the web archives of the wayback machine, lets take a look at what 4u4meletsdream.com had to offer back in 2004.
In February it looked like this:
In October though, there was a subtle change:
Did you spot it? The online system that 2 moms had used to help others achieve financial freedom was still available, it was just now offered by Online Business Systems, totally different you see from Global Online Systems.
Both were promoters of Herbalife, that nutritional supplement direct seller which says claims by a dastardly short seller that it is a pyramid scheme are the stuff of nonsense.
Global Online Systems would recruit distributors for Herbalife, and help the internet beginners build their own empire of diet shakes. Of course a turnkey website is not cheap, but when customers were urged to switch to Online Business Systems in September 2004, there were price cuts!
From the site:
+ Until September 15th, the cost to upgrade to your new OBS business tools (for those currently using GOS) is FREE! Not only that, but your first month’s service fees will also be included for FREE. Your monthly fees in the future will be only $39.99 USD. To the right, you’ll find a link to detailed instructions on how to cancel your old system tools – in order to avoid paying for services you won’t be needing anymore, it’s very important that you do this right away!
+ The costs of all of your new OBS system tools have been greatly reduced so that everyone can take advantage of what we have to offer. Everyone will get a recruiting site, administration system, training site, retailing site, and voicemail system for only $100.00 USD. The costs associated with the Global Online Systems tools were over $300.00 USD and the monthly fees exceeded $60.00 USD per month!
Why the change, a Herbalife man might have asked, well, the Q&A had the reason:
Why did we leave Global Online Systems?
A team of leaders wanted to develop enhanced automated marketing tools to improve our system while decreasing the cost of running our businesses. Our goal was to provide our groups with higher-tech marketing tools so our distributors could manage their businesses with greater efficiency. The Online Business System includes automated lead management technology, advanced recruiting/retailing sites and improved training manuals.
One of the greatest changes we’ve made within our new Online Business System is the superior quality of our Decision Package. Our Decision Package includes an information booklet, a DVD, an audio CD and a Video. It was developed by a team of professional writers, video producers and the Online Business Systems Leadership Team. Once you see it, you’ll understand how this new Decision Package will help you build your business to the next level.
But about those Moms. The Canadian Competition Bureau had taken a look at Global Online Systems and didn’t like what it found:
It was a “scheme of pyramid selling”, and the two directors, Deborah Stoltz and her sister Marilyn Thom paid a C$150,000 fine in November of 2004. A prohibition order also prevented them from taking part in any more schemes of pyramid selling:
For the purposes of this agreement, a scheme of pyramid selling means a multi-level marketing plan that includes any of the following elements:
(a) participants in the plan give consideration, including cash or any other benefit, for the right to receive consideration when others are recruited into the plan who, in turn give consideration for the same right. For greater certainty, consideration may include profit derived from the sale of all marketing material including all videos, audio tapes, distribution packages and promotional booklets.
The rest is in the prohibition order.
That judgement is in line with Canadian Law, but it didn’t specifically apply to Online Business Systems, which has a totally different name and was run by the daughter of Ms Stoltz, Nicole Dahl and husband Shawn Dahl.
Team Dahl went on to become one of the most important distributors in Herbalife’s network, gracing the cover of its 2009 magazine when they entered the elite Chairman’s Club, so we were sure that Herbalife checked it out and made certain everything was above board, before the company took steps to cut Online Business Systems out of its network of distributors in February this year.
The company gave us this statement:
We believe this story is yet another desperate example of Pershing Square’s reckless $1 billion bet against Herbalife, which according to recent media estimates currently represents an approximately $350 million loss for Mr. Ackman’s fund.
Herbalife’s 350-strong global Distributor Business Practices and Compliance team takes proactive and responsive measures to identify, research, and address each and every infraction of Herbalife’s Distributor Rules and applicable regulation and law. Their efforts range from counseling and education to sanctions such as suspensions, fines, and even termination of distributorships. The vast majority of Herbalife distributors are successfully creating long-term customers through the daily consumption of our nutrition products and the unique support they provide.
We’ve asked Online Business Systems, Ms Stoltz, Ms Thom and Mr & Mrs Dahl for comment, but no response has yet arrived.