INDIAN MLM AND NETWORK MARKETING SCAMS: October 2011

Pyramid and Multi level marketing schemes are anything but illegal. There are few legal MLM businesses; however they are made to fit into the legal framework compliant of the local laws.

Readers might be surprised on how I term them illegal irrespective of how genuine their business is or how life changing business model they employ because of the underlying mathematics the pyramid schemes employ, all the pyramid schemes finally collapse.

Hypothetical Example:

In a typical MLM scheme, one is required to deposit an initial subscription fee or required to purchase a product. Let’s take an example of the subscription fee being Rs. 10,000

It is illegal to just collect money, so many fly-by-night MLM operators promise to sell products worth the subscription fee. 99.99% of the time the value of the product will be inflated highly.

Typical examples of MLM products are ebooks, training material, forex trading material, herbal products, skin rejuvenating creams, health products, solar products etc

Now you are required to sell the same set of items to two people in a pyramid fashion.

10 Lies of MLM Marketing - Proxy for Pyramid and Ponzi Schemes

Here are the 10 BIGGEST lies of MLM Marketing

LIE #1. Better business opportunities than all other conventional business and professional models

Truth: According to well proven facts and the underlying mathematics, less than 1% of the people make sustainable income from the MLM business. For everyone else, this is a loss making opportunity.

Lie #2: Network marketing is the most popular and effective new way to bring products. Consumers like to buy products on a one-to-one basis in the MLM model.

Truth: Personal retailing -- including nearly all forms of door-to-door selling -- is a thing of the past, not the wave of the future. Retailing directly to friends on a one-to-one basis requires people to drastically change their buying habits. They must restrict their choices, often pay more for goods, buy inconveniently, and engage in potentially awkward business relationships with close friends and relatives. In reality, MLM depends on reselling the opportunity to sign up more distributors.

Lie #3: Eventually all products will be sold by MLM. Retail stores, shopping malls,
catalogs and most forms of advertising will soon be rendered obsolete by MLM.

Truth: Fewer than 1% of all retail sales are made through MLM, and much of this is consists of purchases by hopeful new distributors who are actually paying the price of admission to a business they will soon abandon. It is those innocent and gullible victims who part their hard earned money to begin this new era of business only to realize the loss it impounds both financially and emotionally.
Its real products are distributorships that are sold through misrepresentation and exaggerated promises of income. People are buying products in order to secure positions on the sales pyramid. The possibility is always held out that you may become rich if not from your own efforts then from some unknown person ("the big fish") who might join your "downline."
The market dynamics are similar to those of legalized gambling, but the percentage of winners is much smaller.
Lie #4: MLM is a new way of life that offers happiness and fulfillment.
It provides a way to attain all the good things in life.
Truth: The most prominent motivational themes of the MLM industry, as shown in industry literature and presented at recruitment meetings, constitute the crassest form of materialism. Fortune 100 companies would blush at the excess of promises of wealth, luxury, and personal fulfillment put forth by MLM solicitors. Pictures of their team leaders next to BMW’s and Mercedes don’t mean they actually own them. You can also get a beautiful picture of yours next to Ferrari when you visit car parking of Star hotel in your town.
Lie #4: MLM is your way to freedom
Truth: Robbing Peter to Pay Paul isn’t way to freedom, but maybe a way to a prison. When the scheme goes bust eventually, you lose money, you lose friends and most importantly you lose confidence.
Lie #6: Success in MLM is easy. Friends and relatives are the natural prospects.
Those who love and support you will become your life-time customers.

Truth: The commercialization of family and friendship and the use of "warm leads" advocated in MLM marketing programs are a destructive element in the community and very unhealthy for individuals involved. People do not appreciate being pressured by friends and relatives to buy products. Trying to capitalizing upon personal relationships to build a business can destroy one's social foundation.

Lie #7: You can do MLM in your spare time. As a business, it offers the greatest flexibility
and personal freedom of time. A few hours a week can earn a significant supplemental income
and may grow to a very large income, making other work unnecessary.

Truth: Making money in MLM requires extraordinary time commitment as well as considerable personal skill and persistence. Beyond the sheer hard work and talent required, the business model inherently consumes more areas of one's life and greater segments of time than most occupations. In MLM, everyone is a prospect. Every waking moment is a potential time for marketing. There are no off-limit places, people, or times for selling. Consequently, there is no free space or free time once a person enrolls in MLM system. While claiming to offer independence, the system comes to dominate people's entire life and requires rigid conformity to the program. This is why so many people who become deeply involved end up needing and relying upon MLM desperately. They alienate or abandon other sustaining relationships.

Lie #8. MLM is a positive, supportive new business that
affirms the human spirit and personal freedom.

Truth: MLM is largely fear-driven. Many occupations are routinely demeaned for not offering "unlimited income" Working for others is cast as enslavement for "losers." MLM is presented as the last best hope for many people. This approach, in addition to being deceptive, frequently discourages people who otherwise would pursue their own unique visions of success and happiness. A sound business opportunity does not have to base its worth on negative predictions and warnings.

Lie #9. MLM is the best option for owning your own business and attaining real economic independence.

Truth: MLM is not true self-employment. "Owning" an MLM distributorship is an illusion. Most MLM contracts make termination of the distributorship easy and immediate for the company. Short of termination, downlines can be taken away arbitrarily. Participation requires rigid adherence to a "duplication" model, not independence and individuality. MLM distributors are not entrepreneurs but joiners in a complex hierarchical system over which they have little control.

Lie #10: MLM is not a pyramid scheme because products are sold.

Truth: Though sale of products is legal under Money Circulation Scheme, buying products whose value has been inflated makes it barely legal. The schemes are pseudo pyramid schemes and

INDIAN MLM AND NETWORK MARKETING SCAMS

Saturday, October 22, 2011

Speakasia is a ponzi Scam! Exposed by Bloomberg UTV

RMP INFOTEC violating IRDA Norms

Mathematics of Pyramid and MLM Schemes

10 lies of MLM Marketing- Proxy for Pyramid and Ponzi Schemes

Thursday, October 20, 2011

India - The land of MLM Scams