True enough, there are companies that disguised themselves as MLM (multi-level marketing), but MLM as an industry is not a scam. Who says?
Says the Ministry of Trade and Industry of Singapore, the U.S. Federal Government, and similar ministries in different countries. Since year 2000, the Ministry of Trade and Industry of Singapore has permitted MLM companies to conduct their business in Singapore.
Dating back in 1979, the U.S Federal Government has already ruled that the MLM industry is legal via In re Amway Corp. However, saying the MLM industry itself is legal, doesn’t equate that all MLM companies are operating legally. Just like any industry, the huge potential and lucrativeness of the MLM industry has attracted its fair share of MLM scams.
By MLM scams, I mean companies disguised as MLM, but operating MLM Scams, a.k.a Pyramid scheme. The recent case, also the company that runs the biggest Pyramid Scheme fraud ever in Singapore, Sunshine Empire, has attracted eyes on the issue of MLM and Pyramid Scheme.
So what’s the difference between Legitimate MLM Model and MLM Scam (a.k.a Pyramid Scheme)?
With that said, MLM is Not the same as Pyramid Scheme. If you’ve confused by external sources on these different models, I’m going to strip both models bare and give a scientific, and no-hype explanation of it.
Below is a model of a MLM Scam a.k.a. Pyramid Scheme.
In a Pyramid Scheme, money is earned basically on the signing up of people into the scheme, without the movement of a product, or a product of value. Money is paid to enter the scheme, and a percentage of the sum is given to the en-roller, with no exchange of goods. There are MLM Scam companies with products, but are products of no real value.
What I mean by product of NO value is – paying $600 for a basic T-shirt or $2000 for a coffee cup. You have to ask, will people pay $600 for a basic T-shirt, or $2000 for a coffee cup, even without being compensated? If people only buy the products to get into this scheme, then the product is of NO value, and this is a pyramid scheme!
Below is a model of the Legitimate MLM Model.
In a legal MLM model, there are exchange of valuable products. Product which are worth the value price, and people would buy the products, with or without being compensated. People join a legitimate MLM program, because firstly, they like the product. The product may have been beneficial to them, or they see the huge market demand of the product.
Secondly, they bought the some products to use, and they also bought a few more to market out to customers. They are paid a commission based on the sales volume they generate, by moving products to customers who like the products too.
Thirdly, they recruit sales agent into their team, and train them how to market and move the products to consumers too. When their sales agent made a commission, they earn a small percentage of their agents’ commission, so to give them more incentive to continue train their agents.
Lastly, after their sales agents are trained on marketing of products, they are then trained on recruiting their own sales agents, and train the new agents how to market the products, and also recruit their own agents. This is a real and powerful business.
Building a legitimate MLM business will give you and your loved ones a walk-away residual income, a business you can call yourself, and a business you can pass on to your loved ones.
Joining an illegal pyramid scheme or recruiting people into similar MLM scams, will NOT ONLY make you broke and hated by people, it also make you a Criminal (at least under Singapore Pyramid Scheme Law).
I hope this will help you understand the difference between a legitimate MLM model, and an illegal Pyramid Scheme.
If this information helps you, go on and share it with your friends, if they have been hurt by illegal MLM Scams before, or if they always think that ‘MLM is illegal / Pyramid Scheme’.
Today, you knew the answer, and the answer shall set you FREE!