The lies and dark secrets top Forever Living managers are hiding

We’ve been writing about the MLM industry for years, and yet the audacious lies that people who work in them tell to recruit and sell still astound us.

Sadly though, these lies clearly work, as they continue to find new victims (though thankfully the MLM industry does seem to be slowly dying).

So we thought we’d demonstrate just how blatantly some of the senior reps in one MLM – Forever Living – are lying, and the dark secrets they’re hiding, to illustrate exactly why you should never believe anything someone tied up with an MLM says about their ‘business’.

Trethowans
Trethowans

Here are some of the lies and deception we uncover in this article:

  • Managers lying about their downline’s profession to make them seem more impressive.
  • FBOs with ‘insolvent’ businesses being feted on stage as successes.
  • Top UK managers (one claiming to be “debt free”) secretly hiding directors’ loans worth hundreds of thousands of pounds.
  • A top UK manager whose business isn’t just in liquidation but who is in default of her company debt repayments.

Some may seem fairly minor, but all contribute to one simple fact: you can’t trust what an MLM rep says or does. And even for the top MLM reps, the ‘success’ you see isn’t always what it appears to be.

And most importantly: if the top Forever Living reps, who got in the business years ago and have ridden the boom years, seemingly need to get into debt to make the business work for them, what chance does a new recruit today stand?

(If you want to learn more about the reality of the earning potential in Forever Living, you can see their own income statement here. As you’ll discover, an incredible 88.6% of all the people signed up to Forever Living in 2018 earned nothing.)

The ‘teacher’ who is actually a school assistant

So what about the lies that Forever Living managers are telling?

One thing you’ll notice if you follow their social feeds is that Forever Living managers are fond of boasting about the broad mix of professionals flocking to join their successful teams. You’ll often see them talk about doctors, teachers, nurses etc.

This is an attempt to give the business credibility. After all, if someone as well-educated as a teacher or doctor has joined, then it must be a good opportunity, surely?

The problem with these boasts is that not everyone has doctors and teachers in their downline. So what they do then it seems, is simply to stretch the truth a little. Or just outright lie.

As an example, here’s a post from one of the UK’s top Forever Living managers claiming to have a teacher on her team:

To demonstrate this isn’t just a one-off mistake, here’s another post by the same manager claiming the same Forever Living Business Owner (FBO) is a teacher:

And another:

Not content to leave the boast there, the manager then goes one step further, claiming that this FBO isn’t just any old teacher, but “working up to Head Teacher”:

So what’s the truth? Here’s the LinkedIn profile for this FBO:

As you can see she’s not a teacher, as claimed, but a part-time school assistant. So she’d certainly struggle to work her way up to head teacher!

Of course the manager must know she’s not really a teacher. But it hasn’t stopped her apparently lying to make her downline sound more impressive. And the FBO is clearly comfortable with the lie too as, rather than correct the mistake, she has shared some of the above posts on her own profile.

This ‘successful’ FBO can’t even afford to repair or replace her car

And not only is this Forever Living Business Owner evidently NOT a teacher, but she’s also clearly not earning what she’d hoped for in Forever Living.

In April 2019, the manager above boasted that this FBO was “on track for £3,000+ by the end of the year.” And in a post on 2 January 2020, she claimed the FBO had “…joined Forever for the lifestyle it can give her, a new car, financial security…”.

And yet since mid-February the FBO has been forced to catch the bus with her children because her car “broke down and is gone”, and she apparently can’t afford to replace it.

That’s no surprise though when she reveals on Facebook that, despite begging her manager, “I need to increase my income by £2000 per month, NOW” at the start of January (as you can see in a post above), she said she only earned £87 in February.

Yes, just £87. And this is despite clearly working hard at the business – including hosting mentoring power hours at 6am, and attending evening online training. If you subtract business expenses from that £87, we suspect she’s actually lost money.

That £87 is also tragically far from the “£3,000+” she was on track to, according to her manager.

Of course, her lack of financial success didn’t stop Forever Living inviting her to give a training session at their Success Day in November 2019 on her business strategy:

Remember, this is a woman who, despite holding down a part-time job AND working as a FBO is unable to repair or replace her car – and earned just £87 from her Forever Living business last month. (Please note, this observation is not meant to shame this woman, but simply to demonstrate the deception that goes on within MLMs.)

As an aside, it’s worth noting the kind of activity this FBO recommends (clearly sanctioned by Forever Living as she’s training on their stage) to succeed in the company:

  • Send 400 dear neighbour letters.
  • Contact 20 people from your WDYKL (who do you know list) EVERY DAY.

It’s this kind of scammy bombardment that makes people loathe MLMs, and contributes to the popular anti-MLM Facebook groups.

The ‘successful’ FBO whose business accounts are in the red

Of course, the ‘teacher’ isn’t the only example of Forever Living reps seemingly lying about their success. Here’s a congratulatory post about a FBO from another of the UK’s top managers this January:

So this FBO has apparently done so well she’s been singled out by Forever Living for one of their ‘elite’ suitcases and stage recognition.

Unfortunately, Companies House don’t agree. In fact, her accounts up to 31 March 2019 tell a very different story, showing that her business’ liabilities are greater than its assets. In accounting terms, this means her company is insolvent:

Interestingly the business of the Forever Living manager who shared the gushing post above is also effectively insolvent, with a whopping £14,490 shortfall of assets according to her accounts on Companies House.

The “debt free” senior manager who owes her business over £205k

You probably won’t be surprised to learn that the above FBO isn’t the only Forever Living ‘success story’ paraded on stage with financial skeletons in her closet.

Like many MLMs, Forever Living reps are fond of sharing gushing recruitment posts in which they boast about all the benefits they’ve enjoyed since joining the company.

Here’s one such recruitment post from the Forever Living manager who apparently lied about the teacher in her team:

As you can see, she claims to be currently debt free (“I could never be debt free – I am”). Again, this contradicts the evidence from Companies House. Here’s an excerpt from her business accounts:

This shows that she owes her company over £205,000 in a director’s loan. According to gov.uk, if you are unable to repay the director’s loan to your business within a set time frame, you must pay 32.5% tax on it. Which for £205,180 would give this Forever Living manager a tax bill of £66,683.50. That’s not what we would call “debt free”.

And yet this manager is frequently used as a poster girl for success in Forever Living – even appearing in their promotional videos.

What is a director’s loan?

At this point we should probably explain what a director’s loan actually is.

If you own a Ltd company (as the manager above does), the money in your Ltd company bank account doesn’t technically belong to you. But you can get access to it through a director’s loan.

HMRC defines a director’s loan as any money taken from your company that isn’t either a salary, dividend or repayment of expenses, or a repayment of any money you have loaned or paid into your company. This money is recorded in your director’s loan account (DLA).

A director’s loan isn’t subject to tax when you take it out, but you need to pay it back. If you pay it back within nine months and one day of your company’s year-end, you won’t owe any tax.

But if you miss that deadline, your company will need to pay additional Corporation Tax at 32.5% on the amount outstanding. (HMRC will repay this extra 32.5% to the company when the loan is finally repaid).

If you don’t repay your director’s loan then you may need to pay personal tax at 32.5% of the loan amount. This is not repaid by HMRC when the loan is repaid.

What is ‘bed and breakfasting’ and what are the penalties?

Sometimes company directors have no intention (or ability) to repay their directors’ loans, or the tax on it. So instead they repay the loan before their year-end, only to immediately take it out again. This is called ‘bed and breakfasting’.

Under the bed and breakfasting rules, if a company director repays a loan in excess of £10,000, they cannot take out another loan over this amount for 30 days. If you do, the entire loan will be taxed.

Loans that are taken outside of the 30 days can still be taxed if they’re over £15,000: if you take out a loan over £15,000 and, before you repay it you already intend to take out a future loan over £5,000 that isn’t matched to another repayment, then the bed and breakfast rules will apply.

Be warned that if HMRC decide that a director’s loan is not actually a loan but a salary, then they’ll charge Income Tax and National Insurance on the sum.

Failing to repay your director’s loan has serious penalties. If your failure to repay it places your company in financial difficulties and it has to be liquidated, the liquidator can chase you for repayment. In extreme cases, you could even up in court or be made bankrupt.

Several of Forever Living’s top UK managers owe their businesses large sums of money

Interestingly the manager above is not the only top Forever Living manager with an enormous director’s loan that they appear to be unable to repay – and instead simply move forward each year.

Here are the details of the director’s loan of one of Forever Living’s top UK managers:

As you can see, she currently owes her business over £402,000. But this is dwarfed by the amount owed by another top manager who currently owes her company over £750,000:

These eye-watering loans were originally taken out in the Forever Living glory years, when senior managers could expect to receive large bonus cheques every year. And they have been used to fund envious lifestyles that they showcase on social media to recruit people into their downlines – including buying status symbol houses.

But sadly the glory years have seemingly gone, as have the impressive cheques for most of these women (the manager owing over £205,000 hasn’t received a bonus cheque since 2017). So they appear to be left carrying over their enormous debt every year, hoping they’ll one day be able to pay it off.

But of course, you’d never know that if you saw them being celebrated at Forever Living events, or boasting about their fabulous lifestyles on social media.

This successful rep’s business is insolvent

Another Forever Living manager who often graces the stage at their Success Day events, leads training sessions for them, and appears in their promotional videos is also hiding a BIG, secret debt – and worse.

This woman is one of the top five Forever Living Managers in the UK – so one of their most ‘successful’ FBOs. And yet, according to Companies House, her business is currently in liquidation.

And that’s not all. According to the liquidator’s statement, the company has an overdrawn director’s loan account of £53,047. And an agreement that this FBO made to pay back the loan at a rate of of £500 a month has been defaulted on.

Indeed, in the year between September 2018 and August 2019, this FBO repaid just £1,886.10 of her obligations:

As if that wasn’t bad enough, the business also owes £118,525.10 to unsecured creditors:

And while all this was happening secretly behind the scenes, she was appearing on stage for Forever, heralded as a success and delivering business training to other FBOs.

What other industries would allow someone with such a dramatic business failure to preach the secrets to success? Not many. But then not many industries have a failure rate of over 99% of participants, and rely on ignorance and lies to recruit more victims.

This ex-Forever Living rep is bankrupt – despite claiming to be a success

It seems Forever Living reps are quite fond of getting into debt – and then lying by omission by claiming to be a success. Here’s a post from a former top Forever Living rep who was kicked out of the company (as she admitted in a previous post) earlier this year for starting up with another MLM:

From this post you’d be forgiven for thinking this is clearly a successful leader who knows how to build teams who make money. And that’s just what she wants you to think.

However, the truth is that she appears to be subject to a bankruptcy order, filed at the end of last year:

Incidentally, this amazing new opportunity that she’s hawking in her post above is Modere (she’s careful never to actually name the business). Here’s what a great opportunity that really is:

As you can see from their income disclosure statement table above:

  • 63% earn less than $17 a month.
  • 30% earn less than $166 a month.
  • 5% earn less than $834 a month.
  • 0.5% less than $1,666 a month.
  • 0.41% earn less than $4,166 a month.
  • 0.23% earn over $4,166 a month.

But this is only part of the picture, because these numbers only include their active reps (people who sell or buy a particular quantity of product a month). And, as Modere state, “On a monthly basis, an average of 25.7% all active Social Marketers earned commissions”.

So the TRUE figures for earnings are that 74.3% of Modere reps earn nothing in an average month. And of course, all the earnings above don’t include business expenses.

Why MLM reps’ financial secrets are so important – and relevant

You might ask what someone’s business or personal accounts have to do with anyone else. And normally you’d be right – unless you are an employee, shareholder, investor or creditor, a company or person’s finances are their business, literally!

But when the purpose of that business, or that individual’s job is to recruit others to the same business, as in an MLM, their finances are relevant. Because they represent the truth of the opportunity that is being sold to others.

And when that truth is at odds with the lies that are told, and the fake lifestyle being promoted, then that truth needs to be known. Because hopefully, it will help prevent more vulnerable victims from being sucked in by the lies.

And the truth, as the above examples from Companies House show, is that even people at the top of MLMs like Forever Living are up to their ears in debt. Some even have insolvent businesses and are filing for bankruptcy.

Not that this surprises us – it merely confirms research published by the FTC which concludes that, on average, 99.6% of all participants in an MLM will lose money when business expenses are taken into account. (Forever Living was one of the companies included in this research.)

A 1980 investigation of the tax returns of the top 1% of Amway distributors in Wisconsin, USA also discovered that, “…the average net income after subtracting operating expenses for these 200 top Amway distributors was about minus $900.”

We have no doubt that these Amway distributors would have continued recruiting people with claims of a wealthy lifestyle paid for by the ‘opportunity’, despite accruing debt.

Don’t fall for the MLM lies

In our opinion, you have to be a special kind of heartless to knowingly owe your business hundreds of thousands of pounds, and yet recruit vulnerable people like struggling single mums with the promise that if they work hard enough, they can enjoy financial success.

And what kind of ethics can you have if you can claim to be “debt free” and stand on stage and train others to be a success, when you know that you owe hundreds of thousands of pounds, or worse – know that your business is in liquidation and you can’t even afford to make your agreed debt repayments?

The real truth is that, for as many as 99.6% of people, the MLM business model doesn’t work. Time and again, research shows that MLM recruits work for less than minimum wage (in some cases as little as 70 cents an hour). And when business expenses are subtracted they actually lose money.

MLMs don’t even disagree. When forced by law to publish their income disclosure statements, they show that the vast majority of recruits earn either nothing or a pittance. Again this is before business expenses are subtracted. Here are some MLMs we have investigated:

So please, don’t believe an MLM rep when they tell you they have an ‘amazing opportunity’ for you. Don’t believe any claims they make about their income or lifestyle, and certainly don’t believe everything you see.

Just like the ‘free’ car, nothing is what it seems in an MLM. And as you can see from the examples above, it appears that you can’t trust anything a rep who is trying to recruit or sell to you says.

As always, if there are an factual inaccuracies in our article, please contact us and we will happily correct them.

Photo by Chao Yan