Individuals throughout regional Australia are promoting a curious Japanese machine that “electrolyses” faucet water and guarantees “triple well being” for the drinker.
Proponents of the multi-level advertising scheme promise six-figure salaries however most recruits by no means make a revenue. Many extra are ending up in severe debt.
It’s late at night time when Kate*, a single mum from outback Queensland, sees a put up pop up in her social feed.
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There’s a younger lady in a cowboy hat, claiming to dwell a lavish life with cash constituted of a brand new scheme, that’s “somewhat bit completely different”
Keen to search out out extra, Kate joins the non-public Fb group tied to the scheme.
Twelve thousand members sturdy, it’s known as the Rural Freedom Motion – and is described as a “group of rural people who find themselves searching for to learn to create a web-based earnings and construct a legacy for his or her future.”
Pinned to the highest of the web page is a video of the identical lady. The group’s founder, Kylie Stevenson.
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“If you happen to’re searching for a possibility to interrupt free from the normal 9-5 grind and create a lifetime of monetary freedom,” the put up stated, “you then’re in the proper place”.
“I believe that was what bought me,” Kate says.
“I used to be all the time looking for a technique to become profitable as a mum. I might tried each MLM (multi-level advertising) identified to man.
“I am like, proper, so I have to look greater than Tupperware.”
She scrolled by the stream of constructive content material.
On a regular basis rural ladies, promised “private development” and an avenue to “comply with your desires” briefly video sermons.
Kylie was speaking about making severe cash.
Ten thousand {dollars} a month. 100 thousand {dollars} a month.
“You’ve got bought a younger sheila, residing her finest life, floating round, camp drafting, flash automotive, flash horses, simply working for herself at a younger age,” Kate remembers pondering.
“Who would not wish to do what she’s doing?
“I used to be just about sucked into it.”
Multi-level advertising schemes contain people instantly promoting merchandise, normally by leveraging social networks. Individuals earn commissions from each the gross sales they make and the gross sales made by others they recruit. Assume Amway and Tupperware.
In Kate’s case, she’d signed as much as promote water.
Extra particularly, a Kangen alkaline water ionizer and filtration machine.
The units are distributed by a 50-year-old Japanese direct-sales firm known as Enagic, which describes it as an “antioxidant machine”.
“Our ardour is to rework the faucet water in your house into pure wholesome electrolyzed-reduced and hydrogen-rich ingesting water,” the corporate states on its web site.
Thus far, there may be little scientific proof that the machine’s alkaline water has any well being advantages.
Kate was rapidly funnelled into the Enagic universe and inspired to enroll.
For roughly $6,500 she purchased a Kangen 8 water ioniser, and a field of untamed turmeric capsules, generally known as Ukon.
In common dwell “masterclasses” contained in the Rural Freedom Motion group, members are inspired to purchase multiple machine, so that they ‘skip the queue’ in a fancy fee construction designed by the corporate.
Kate didn’t have spare cash, and was fearful about her credit standing, however she says supporters of the Rural Freedom Motion advised her a few fee plan she may entry instantly by Enagic, who provide finance to purchase their merchandise.
Publicly out there data on-line reveals if people fail to make funds in the time-frame, the ten per cent each year rate of interest jumps to 25 per cent.
Regardless of repeated makes an attempt to get data from the corporate about these loans, they declined to reply.
The community Kate joined additionally recommends loans by a payday lender, Ausloans in Strathalbyn, South Australia, which advertises unsecured private loans that may appeal to very excessive rates of interest.
The proprietor of Ausloans Strathalbyn can also be an Enagic distributor.
Ausloans Strathalbyn failed to reply to requests for remark.
Ultimately, Kate borrowed instantly from Enagic.
When Kate purchased the product, she obtained a distributor quantity.
She was in. All she wanted to do to make her a reimbursement, and repay her mortgage, was to begin making gross sales and recruit different distributors — then they’d be in her ‘downline’ and begin kicking up commissions.
“They promote it in a method that you’ll make the cash again to pay for this mortgage, that is an funding,” Kate says.
“You simply must promote this many and you will have it paid off inside two months. And , you are in that headspace.”
Secrets and techniques to success
The way in which the scheme works is supposed to be easy.
The extra salespeople you join, the extra gross sales you and your crew will make.
The upper you rise by the ranks, the extra fee you get.
However whereas guarantees of six-figure incomes and legacy funds abound, Enagic’s personal “efriends” publication makes it clear that solely a handful will ever attain this degree — with just one or two of the 1000’s of Enagic sellers in Australia making the listing every month.
Earnings disclosures for Enagic within the US additionally present only a few people make vital earnings from promoting the units.
Ninety-nine per cent of members there make lower than $US14,000 ($21,000) per yr, and 60 per cent make a median earnings of $285 per yr. This doesn’t embrace what folks have spent on merchandise or gross sales “teaching”.
The Rural Freedom Motion and its disciples preach that “six-figure” month-to-month incomes are attainable to anybody who tries arduous sufficient and follows their plan.
As a result of Enagic doesn’t launch earnings disclosures in Australia, there isn’t any knowledge out there on precise earnings right here.
As time went on, Kate started to be taught that it was not all about promoting water ionisers.
“They’re like, you have to put your self on the market,” she stated.
“Mainly, promoting your self and your life, probably not the product.”
She was advised to subscribe to a web site providing teaching that may be key to her success.
It’s known as The Freedom Period, and it’s run by the highest Enagic sellers in Australia. The creator of the Rural Freedom Motion is of their “downline” and kicks commissions as much as them.
Kate started having second ideas.
“I used to be feeling like a dick, I did not wish to put this on my Fb,” Kate stated.
However she was $6,500 in debt, so she watched The Freedom Period “masterclasses” and tried to remake herself on social media to generate curiosity and gross sales.
The Freedom Period
It prices $99 per thirty days to entry The Freedom Period coaching assets, which promise to impart the secrets and techniques to internet online affiliate marketing success.
“We’re devoted to the continuous uplevelling of YOU, our household,” the web site states.
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“The Freedom Period is a house for individuals who are bored with giving their life drive to constructing another person’s dream.
“Shatter the constructs of hustle, burnout, unfulfillment and shortage to recreate a brand new world the place all of us rise and thrive collectively!”
Kate stated the location offered detailed directions.
“On Monday, do a put up about travelling,” she remembers.
“On Tuesday do a put up about your loved ones, on Wednesday do an inspirational quote, on Thursday, blah, blah blah.”
The ABC has independently accessed the subscription-only web site, to get a first-hand take a look at the playbook of the multi-level advertising machine.
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In a single part, subscribers are supplied with a “seven step script template” to cope with potential recruits.
They’re instructed to “construct (a) connection” with people on-line.
“Add her as a pal in your private web page”, it instructs.
“Love coronary heart her remark and comply with the scripts under.”
There is a sequence of scripted chat message templates to ship to “leads” taken with becoming a member of the scheme.
Hey babe! How are you? Thanks on your message!
I’m so grateful to be within the on-line house and to create FREEDOM, TIME & WEALTH for my household!
I’d like to share the steps I’ve taken and lots of others to create a a number of 6 determine enterprise on-line, what has made you attain out at this time?
One chat message template refers to an invented boyfriend, “Justin”, who has “retired” from the mines due to the vendor’s MLM success.
Superior! Thanks for sharing this with me!
I completely relate, having retired Justin final yr from the mines, I perceive how arduous it feels if you end up sacrificing your time for cash.
I’d like to share extra information with you on how I’ve been in a position to change my life, when do you assume you’ll have a while to look at a fast video?
I’m so excited to have the ability to join with you and information you to create life in your phrases!
One other describes the enterprise as going past “conventional gross sales”.
Hey babe, I’m positive you really liked the video, it may be somewhat complicated what we do on-line as a result of it’s not conventional gross sales!
We give attention to constructing our private model, so taking folks on the journey to create extra freedom by sharing our values & way of life and we leverage the platform for the entire training, studying, assist, gross sales & paperwork!
A number of the enterprise is automated, so our job is actually crafting content material for social media (we are going to educate you this ability)
So many individuals go on a fantastic private improvement journey in our group too!
In case you’re needing somewhat extra time or extra information, right here is our hyperlink to our unique group!
Kate joined The Freedom Period and downloaded the assets.
“I printed every part out, I had a folder and I used to be following it,” she says.
However nonetheless, there have been no ‘leads’.
“I used to be beginning to see that this is not as simple as they’re making it out to be,” Kate says.
So she reached out to her mentor and founding father of The Rural Freedom Motion, Kylie Stevenson, for steerage.
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The self-appointed “branding skilled” was the lady who appeared on the again of the ute, within the put up that first bought Kate .
Kylie has claimed on her social media accounts that she joined The Freedom Period a number of years in the past and has risen by the ranks of Enagic ever since.
In 2023 she advised followers she was on observe to obtain “$5,000 USD each month for the remainder of [her] life” by “legacy” funds.
Her Instagram web page is plagued by testimonials from ladies in rural Australia, who sing her praises as a mentor.
“Having Kylie there, in entrance of us, paving the best way…helped me a lot in realising I’m the place I should be, it’s okay, she’s bought us,” one follower says.
“If you’d like magic in your life, look no additional,” says one other.
Kate’s expertise was completely different.
“There have been fairly a couple of instances the place I’d simply ship her a message, (saying) look this is not working,” Kate stated.
“And it was extra, you are not doing the work, that is why it isn’t working.”
Kate endured. However even when she finally had folks taken with signing up, she hit one other hurdle – her conscience.
“I simply could not do this to anyone else, I wasn’t going to see someone else go into debt,” she says.
The ABC contacted Kylie Stevenson for a response, however she declined to remark.
We despatched by a sequence of questions in regards to the enterprise construction and earnings knowledge, and whether or not it was affordable to recommend to people getting concerned that they might quickly be incomes $50,000 {dollars} a month.
She didn’t reply to the questions and suggested she was getting her lawyer concerned.
Kristie and the Wealthy Mystic Man
Kylie is a relative lieutenant in contrast with Kristie Ord and her husband Clint Morgan, two of Australia’s largest Enagic distributors.
Alongside Rebekah Femia, Kristie and Clint are the “government crew” behind The Freedom Period web site that new recruits like Kate are directed to affix.
In a video out there to paid subscribers, Kristie describes her personal determination to go away her company job, residing pay cheque to pay cheque, to create a life she had “solely ever dreamt about”.
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Rebekah and Kristie appear sure that something is feasible.
“The system as we all know it … wasn’t actually designed for us to truly thrive.
“If you happen to’re right here,” she says, “you’re a freedom seeker.”
“You’re going to be taught all of the instruments to truly create a private model so that you will be paid to be your self.
“It does not matter the place you are at in your journey, it does not matter how a lot debt you could have. It does not matter what’s occurred in your life,” she says.
Kristie and Clint have 1000’s of individuals of their “downline”, and declare to have made thousands and thousands in gross sales.
By The Freedom Period web site, they share gross sales ways, templates for emails and social media posts, and even a chatbot to “convey your advert copy again into compliance.”
Neither Clint or Kristie are listed on The Freedom Period’s enterprise information by ASIC.
A person from Wallabadah in rural New South Wales is listed because the director of a enterprise known as “The Freedom Period”— however he advised the ABC he was not taken with talking and had nothing to do with it anymore. His associate is an Enagic distributor.
Within the advantageous print of privateness coverage on The Freedom Period web site, it says “this coverage and the usage of this Website are ruled by Cypress regulation”.
Cyprus is a identified tax haven, and a search of presidency information there reveals an organization known as “The Freedom Training Period Ltd”, with Balazs Kardos, the world’s primary Enagic salesperson, listed as a Director.
Mr Kardos refers to Clint Morgan as a “actually shut pal and a enterprise associate.”
Neither Mr Kardos nor Mr Morgan have responded to requests for remark.
When the ABC contacted Ms Ord, she advised the reporter to contact Enagic instantly.
“Don’t harass us,” she stated.
Once we despatched detailed inquiries to Enagic’s consultant, they stated:
“Though all media enquiries are to be directed to Enagic, and to not its distributors, interviews are usually not performed.
“We have no idea the premise on your story or curiosity in Enagic or its distributors. Nonetheless, Enagic doesn’t assist or take part in media protection of that nature and reserves all its rights in that regard.”
The ABC reached out to greater than 30 present and former distributors linked to the Rural Freedom Motion who had signed as much as promote the water machines.
Most didn’t reply.
The few who did stated they had been “not “, or that it was “a very long time in the past” and so they didn’t have something to do with the scheme anymore. None of those that did reply had made their a reimbursement.
The ABC has discovered dozens of Fb teams akin to The Rural Freedom Motion that lie dormant and unused, all utilizing the language taught within the playbooks.
The teams hyperlink to web sites that are actually defunct.
MLM or unlawful pyramid scheme?
Multi-level advertising, often known as direct promoting or community advertising, includes promoting merchandise by private networks and recruiting different sellers.
“You receives a commission not only for what you promote, however you get a fee on the gross sales of people that you’ve got recruited into the organisation,” stated Professor Deanna Grant-Smith, College of the Sunshine Coast.
She has profiled and studied MLMs in Australia and stated MLMs aren’t unlawful, and a few folks do make plenty of cash.
“That authorized definition is throughout the truth that it’s in regards to the sale of a services or products. So it isn’t simply paying to enter,” Professor Grant-Smith says..
“There are incentives baked into the best way that you just earn your cash by bringing extra folks into the organisation.”
The Freedom Period enterprise is concentrated on bringing in additional distributors, in a roundabout way promoting machines.
And the ‘oblique advertising tactic’ is all about residing the liberty dream, a laptop computer way of life the place you get out what you set in and eliminate the 9 to five grind.
The query of whether or not an MLM reaches the extent of a pyramid scheme — which is an illegal technique of getting cash by recruiting infinite traders — is within the skill to make real gross sales from the product in query.
As a result of earnings disclosures are usually not out there in Australia for Enagic, it’s unimaginable to say.
“There’s some analysis that was carried out in the USA that means that 99 per cent of individuals make no revenue by multi-level advertising,” Professor Grant-Smith says.
“We additionally discovered that not solely had been folks not getting cash, they had been usually not factoring in all of their bills into the judgements they had been making about how a lot cash they had been making.”
In line with the US Federal Commerce Fee, as little as lower than one per cent of MLM members find yourself making a revenue.
“MLM makes even playing seem like a secure wager as compared,” the report says.
The Australian Competitors and Client Fee has the same warning.
“Whereas MLM schemes are authorized, sadly within the overwhelming majority of circumstances, the one individuals who become profitable from them are the creators,” a spokesperson says.
The CEO of the Client Motion Legislation centre, Stephanie Tonkin says that the distinction between an MLM and a pyramid scheme will be arduous to tell apart.
“I discover it very tough myself to establish the distinction,” she stated.
“Multi-level advertising schemes are authorized nevertheless it’s a advantageous line between [those and] a pyramid scheme.”
Kate continues to be paying off her debt to Enagic.
The water machine is in a field, and she or he simply threw out the unopened packing containers of untamed turmeric capsules.
“I needed one thing severe that was going to assist me,” says former Enagic distributor Kate.
“However yeah, it did not kind of work that properly.”
*Identify has been modified
Credit:
Reporters: Nathan Morris and Andy Burns
Story editor: Charlotte King
Illustrations: Lindsay Dunbar
Digital manufacturing: Nathan Morris