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And here's a good time to explain exactly what Advantage Conferences is. According to its web site, it's "a higher-learning educational products company that helps individuals on a massive scale improve their thinking as regards 'wealth.'" In the company's online flash presentation, Darnell claims that Advantage's business model is a unique, time-tested formula sculpted by brilliant marketing minds over many years.
"We are federally protected with the official trademark on this type of compensation...so we are the players in this particular kind of compensation," he says.
Well, actually, they're not. There is no federally protected trademark on this business plan, which Darnell calls "reverse margin" and a bunch of other things. Others call it by other names such as "pyramid" or "Aussie 2-Up."
Advantage's products include business books and CDs, but the flagship is the Millionaire Mindset Conference.
Here's how it works: Once Bob pays $10,000 to go to the Millionaire Mindset Conference, he is considered an Advantage "rep." Bob is qualified to make $7,000 off of each person he recruits at the $10,000 level. But that commission doesn't kick in until the third person he recruits. The commissions for the first two go to a person above Bob (hence "Aussie 2-Up").
You can join Advantage for $60, but you don't get the conference at that level. Candidates are encouraged to join at the $10,000 level. This allows them to make the most money by "selling" the conference.
In the flash presentation, Darnell suggests that it's a waste of time for anyone to join at any level other than $10,000. He says that start-up cost is "a joke" when compared to the higher costs of buying a franchise restaurant. And what if a candidate balks at the entire concept?
"This is not for everybody. Most people want to stay where they're at in their mediocrity and their complacency," Darnell explains. But if you don't want to be mediocre, you will do whatever you can to pay that $10,000, even if you have to borrow it. And what of the perceived difficulty of getting your first three recruits? In one case, Darnell suggested that new recruits imagine a gun pointed at their kids' heads, and that their lives depend on getting those recruits. Under those circumstances, anyone will come up with a plan.
But last November, Darnell ran into a problem. When he tried to hitch his remarkable business formula to the Dallas Better Business Bureau's post, the Bureau smelled a pyramid.
The Bureau asked Darnell for proof that ten Advantage reps had made at least $7,000. Darnell provided the names of ten people and no hard financial data, which the Bureau concluded did not constitute "proof." The Bureau also criticized Darnell's advertising claims. So Darnell rejoined the ranks of U.S. citizens and sued the BBB in the very court he previously claimed had no jurisdiction over him. He accused the Bureau of defamation, business disparagement and negligence, among other things.
In October 2005 the Bureau's online report of Advantage included the following: "This company has an unsatisfactory record with the Bureau due to its failure to modify, substantiate or discontinue advertising; concerning copyright and trademark protection claims; earnings; and evidence that the company primarily engages in promoting a pyramid scheme."
In his lawsuit, Darnell accused the Bureau of defamation. In its response to the suit, the Bureau stated: "Not only did the BBB have 'evidence' that [Advantage] is primarily engaged in promoting a pyramid scheme, but that evidence is overwhelming...Any claim by [Advantage] that commissions are paid only on 'sales' of the conference is nothing more than form over substance. These sales occur only inside the pyramid."
The Bureau's response also states: "Unlike Amway, whose compensation plan stressed that retail selling was essential, [Advantage] has no requirements whatsoever that a representative make any retail sales of the conference -- or any other product -- to non-participants...Not surprisingly, there has not been a single retail sale of the conference thus far; i.e., every attendee of the conference has been an [Advantage] representative interested in the income opportunity of large commission income."
And: "[Advantage] exerts tremendous psychological and economic pressure on a new representative to make the large initial purchase...Accordingly, AC itself describes the failure to purchase the conference as 'business suicide'...Playing upon greed and fear of losing a good deal is a common psychological tactic employed by pyramid schemes."
After suing the Bureau, Darnell gave a deposition and several affidavits explaining why Advantage was legitimate and how the Bureau did not have the facts.
Darnell stated in one affidavit: "[Advantage] is not a pyramid because no purchase of the conference or business opportunity is required to be able to sell conference tickets. To sell a conference ticket, a rep needs to pay a $59.95 independent contractor fee...Additionally, it is important to emphasize that [Advantage] screens out individuals who are looking for a get rich quick scheme and that there are many individuals who wanted to purchase a conference ticket and sell conference tickets who were not allowed to."
Advantage begins its highly selective qualification process with an online "interest form," which begins by asking a candidate if they are "serious about earning" $100,000, $250,000 or $500,000 a year. The candidate must then read a "Getting Started" overview touting Advantage's ingenious compensation plan. This overview states that many candidates fail the final selection plan, which is a personal interview with Darnell.
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