MLM SCAM INFO

Is every MLM a scam?


Hey, I have the best Opportunity For You!

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Greetings everyone!

I’m delighted to be here to bring you some good news that could change and reward you financially for the rest of your life. Did someone invite you to delve in a new business or opportunity so overwhelmingly excited to share and joined in? Oh well! the internet abounds with plenty of such opportunity and you are usually left on the thinking of whether to join or not?

Like mushrooms.

MLM and networking were like mushrooms sprouting in every corner of the real and the virtual world. The concept of a product created by companies that instead of spending their money on either enhancing their products and media marketing they focus more on developing schemes they will pay on commissions and other compensation systems to build their sales force. According to one source, commissions up to 58% goes to the sales team. That’s awesome, isn’t it? Seems to be better than some profit-sharing schemes of some NYSE or NASDAQ listed companies. In fact, these networking companies hardlyneed an e-commerce site built to offer their wares. They greatly rely on their human team media crawling and sprouting like… yes, you got it right – just like mushrooms!

The stigma that lingers.
The long history of scams has plagued the business that hinders what supposed to be its flourishing glory. In 2003, when the internet based ‘pyramid scam was disclosed by the US Federal Trade Commission wherein customers were made to pay a registration fee in joining what was then called the ‘internet mall’ who offered huge commissions in exchanged of packaged goods and services with facilities provided such as internet mails and all, the internet commerce began the series of schemes and scamming. And in 2006, Ireland became the center of schemes activity by Cork & Galway into the so-called ‘liberty scheme’ patterned from the eight-ball scheme model which later named to ‘Speedball’ and ‘People in Profit.’ it grew into its European neighbor Germany were payment transaction have been taking place to skip and evade Irish taxation law.The same scheme spreads through the United Kingdom in the year 2008 & 2009 under the scheme name ‘Give & Take.’

Today, the MLM industry have grown into a $120-$130 billion dollar industry and there’s no indication that its going to stop as long as there are people who’s visions and goals was to work and earn a living. As long as people are getting something out of it. As long as there are products and consumers. As long as business goes on. MLM through rewards and schemes will be here.

Mumbai’s QNet Game Changer Nabbed

 

In Mumbai, India, the company that said they stand behind the ideologies of the great humanitarian activist Mahatma Gandhi has been gong through some hot waters.
The Mumbai police have frozen bank accounts of Mumbai’s Qnet franchise company, Vihaan Direct Marketing and its organizers in Mumbai namely: Haresh Bhadra (37), Suvija Pai (36) and Monish Bhandarkar (31) who have duped investors and admitted they have received invested money ranging between Rs 30,000 and Rs 7 lakh which basically involved hefty thousands and hundred thousands of US dollars. The group operates by persuading investors to distribute QNet products such as QNet’s Himalayan Crystals and metals such as QNet’s Titanium Metal Treatment which the organizers claimed to have miraculous healing powers in treating various ailments and diseases including cancer.

MLM as a hidden pyramid

Pyramid schemes are bad. And illegal. You won’t take part in one, right?

But guess what, every MLM is a hidden pyramid.

Is every MLM a hidden pyramid scheme?

 

You know what a pyramid scheme is? You give your money to someone, usually an organization, and lure others, make them give money to you. Usually the money is not transferred directly to you – it goes to organization, the person that recruited you gets some, yu get some, your whole “upline” may get some

So basically it is – give your money to us, and find more suckers that will do the same. And if you find many of them, you eran big buks. And if you find many suckers, that in turn will find even more suckers, you will get rich

Does it resemble you something?

Yes. The MLMs work in a similar way.

But MLM is NOT a pyramid! You say.

So, lets see whether MLM is or is not a pyramid scheme.

No listen closely, this is a good story:

Imagine that someone invents a pyramid scheme. You need to pay money to get in, and then recruit others that will give money to you etc.

Imagine you need to pay $100, and get others to pay $100, so you make some cut of their money, and your upline take some part of it too.

Is it pyramid right?

Now, imagine you but pencil, for $100, and then sell pencils, each for $100,  and recruit others to make it so. The pencil is just an ordinary one worth one dollar. Yet, you bought it for $100, and look for people that will sell it for $100.

Now tell me – is it a pyramid scheme, or an MLM?

Does it have product? Yes. Is the product worth it’s price? No. But, it is an MLM.

What is the difference? Just the $1 pencil?

And what if instead of pencil you would sell one potato for $100? Or a bottle of water?

But those are imaginary examples! you say.

Okay.

Lets consider real examples.

What if you take fruit juice, put into fancy bottles, that resemble wine bottles and sell it in packs of four for $135?

What if you take vitamins, and sell them for ten times the usual price?

What if you take alaskan blueberries and salmon, make supplements of it and sell for high price? Does it matter that those berries do not grow at Alaska?

Of course, you need a good dose of bullshit to sell some overpriced stuff. Magic berries, rare ingredients, cancer-curing effects in anecdotal evidence. The super-concentrated washing powder.

The inevitable lack of new prospects

This quote from Wikipedia may be also applied to MLMs, doesn’t it?

As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.

 

But pyramid schemes are illegal, and MLM are legal! You say.

Yes, pyramids are illegal in many countries.

MLMs are legal in most countries. But, do you know, there are some othher countries that banned MLMS?

Anyway – MLMs are mostly legal – so what? Jumping from a roof on your head to and on concrete is also legal. It probably won;t make you happy though.

 

Jobs, organizations are in pyramids shape too! you say

Yes. They are. You have an owner, or CEO, then executives, chiefs and common workers.

But in a JOB you get paid for your work. Not the other way round.

 

Greed in both

In pyramids, people think: if I pay money to get in, and get many suckers to join too, I will make money. The suckers below will pay for my success.

In MLMs people think: If I buy products (even if those are overpriced or not needed by me) and get many “downlines” to join too, I will make money. Get rich. Earn passive income. Walk the beaches of the world.  The downlines below will pay or work for my success.

 

Why are pyramids bad

The 1997 rebellion in Albania was partially motivated by the collapse of Ponzi schemes; however, they were widely referred to as pyramid schemes due to their prevalence in Albanian society.[

On 12 November 2008, riots broke out in the municipalities of Pasto, Tumaco, Popayan and Santander de Quilichao, Colombia after the collapse of several pyramid schemes. Thousands of victims had invested their money in pyramids that promised them extraordinary interest rates.

 

Why are MLMs bad

False promises.

If you are told, that you can earn lots of money, just by buying products and finding six (or one, or two) people that will do the same…  Sound good, right?

What if you were told to put money into somebody’s else pocket until you find other people that will put money into your pocket? And you  – most probably – will loose money, not earn? It would not look so good, right? But they will not tell you this – or they would recruit no one 🙂

 

 

 

The Empty Promises of Lien Ket Viet

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Top executives of the Hanoi based Lien Ket Viet were arrested last Saturday, March 12, 2016 for apparently swindling around 45,000 people in Vietnam involving pyramid scheme scams. Among those arrested were Lien Ket Viet’s Chairman of the Board, Le Xuan Giang and deputy general director Nguyen Thi Thuy.

Vietnam’s Lien Ket Viet
Lien Ket Viet was a Vietnamese marketing and trading company distributing dietary supplements and health care devices. Established in the year 2010, it has been granted a license to operate by Vietnam’s Ministry of Industry and Trade to operate as a multi-level marketing company in the year 2014. But various fraud were discovered when the company involved in its campaign Vietnam’s Ministry of National Defense to gain popularity and confidence from members and customers.
The products.
Among the company’s bestsellers were various types of dietary supplements that goes along with detox machines and other health aids for which some were later found out to be fake and does not necessarily offer any health benefits at all. The starter package for membership which costs around $384.85 were required by recruiters from its lured members.
The operation.
The company operates through a series of chain recruitment scheme requiring membership with an equivalent deposit to guaranty entry and access as the new members likewise do to their own recruits as they promised lucrative earning potentials selling and distributing the products. Recruiters promised members attractive bonuses and commissions as the company amassed around VND1.9 trillion or the equivalent of US $85.2 million from deposits of members that joined the company. Lien Ket Viet operates all over Vietnam with its 21 branches in 19 provinces.
Since last year 2015, thousands of members have claimed to be scammed by the company and demanded their deposits and earnings be returned to them at once.
Case updates.
Seven of the top executive officers of Lien Ket Viet were currently in custody to answer for the various fraud cases filed against them.

Multitel & the Baladjay Conspiracy

Rosario “Rose” Baladjay from photo capture by Rappler

In 1998, Rosario A. Baladjay or simply called ‘Rose’ to her colleagues and business associates registered her company, the Multinational Investors Corporation (Multitel) with the Philippine Securities & Exchange Commission as a lending investor company which under the SEC rules should only provide up to a maximum of 19 lenders only. This safeguard was done as a ruling by the SEC to discourage the company to operate under the illegal pyramiding scheme.

The Multitel multiplication.

As early as 1988, Baladjay initially enticed participants to the organization to each invest voluntarily from  Php2,000($45) up to Php10,000($222) from its investors at the prevailing interest rate return of 1.08 monthly or 12 percent per annum with purpose of lending the accumulated money to businessmen at 2.5 percent a month or 30% per annum. The investment becomes an instant boom and investments to Multitel was exploited and amassed. Baladjay was able to accumulate as much as Php100 billion or roughly around $2.5 billion from nearly 2 million participants during the term of its business.

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The Multitel‘s Double Your Money’ scam.

Multitel investments used the Ponzi scheme approach of “pyramiding” fraud wherein Multitel operated in which original investors being the top investors recruits other people as their downlines. Top investors recoups their invested money from the investment of their downlines. Most of the money gains and the only way a participant can recoup their investments was to sign up more people into the organization. But once recruitment stops, the investment recouping system will eventually collapse and by such time, those at the top of the pyramid have already recouped their investments leaving the rest below their lines to lose most of their money investments.  The mathematical odds on the certainty of the pyramid’s collapse on this type of pyramiding scheme was greater.  Losing investment money and recouping invested capital for the downline participants would most likely result in losing rather than gains. Therefore, the chance of losing invested capital in this kind of pyramiding scheme is almost inevitable.

The Multitel flock.

With the promise of the ‘Double Your Money’ gains and fast return of their investments, Baladjay was able to attract her flock of investors. With the launch of the ‘Double Your Money’ scheme, an equally attractive guaranteed package return on the investment at the interest rate of 4 to 5% monthly gains which was later raised to 60% per annum whereas regular prevailing baking interest rate was only 12% per annum have enticed participants to invest more. The investment becomes an instant boom and investments to Multitel was exploited and amassed. Baladjay was able to accumulate as much as Php100 billion or roughly around $2.5 billion from nearly 2 million participants during the term of its business. Many of those duped in the scheme were low-income bracket individuals as well as celebrities, overseas workers, members of religious associates, government employees and other influential people who aimed to get their investment to easily gain and multiply.

Another attractive scheme that Baladjay use to duped and entice investors was riding with the boom of telecommunication in the country at that time. Big companies like Nokia, Motorola and other telecoms company were exploited as subject of the Baladjay scam.  Exploring her luck in duping people to her company, Baladjay using the alibi of investing in Benefon, a competitor of Finland’s Nokia hooked her scamming business during the boom of the telecommunication industry in the country.

The Multitel crack.

But the Benefon project halted its operation when a case of syndicated estafa was filed against Baladjay and her incorporators in her Multitel company before the Makati court in the Philippines. The Philippine Securities and Exchange Commission (SEC) have issued multiple cease and desist orders to Baladjay and her companies but Baladjay continued to ignore these warnings.

In March of the year 2003, a court handed down a warrant for her arrest resulting from violation of the bouncing check law.  She was nabbed in her home province, Mangaldan, Pangasinan, a province north of the Philippines.  Since then, other suit and cases followed emerging from different parts of the country. So big that it reaches the Philippine senate to probe on it. The blown up cases resulted in death threats against her prompting the Senate officials to hold her in their custody during the process of the Senate probe. The case was uphold by the Senate and strengthened her cases with no bail recommended.

See also: http://www.sec.gov.ph/notices/notices/SEC%20Statement%20-%20Baladjay%20Multitel%20-%20Dec%2009%202015.pdf

And in line with the Philippine government’s effort to haunt down scammers and pyramiding initiators that crippled the lives of the people and affect the country’s economy as a whole, the Baladjay case was intensified. With no bail for her multiple cases of estafa, Baladjay was now currently detained at a women’s correctional facility in Mandaluyong City, Philippines. Upon the promulgation of the guilty charges in the court in Makati City, Baladjay and her cohorts were sentenced to 7 to 21 years of imprisonment or a fine of Php5 million for each of their cases or both.

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EM Goldex Scam: The Alluring Pyramid in Circles

The alluring glitters of gold has attracted many in different parts of the world.  But some have discovered illegalities in the operations of EM Goldex.  Below are some of these countries with revelations about the EM Goldex gold business:

The Interactive Gold Table Circle revealed by Estonia.

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In March 2013, Estonia’s Consumer Protection Board have investigated the business model and was convinced it was a pyramid scheme. Continue reading

USANA in China: Nutritionals You Can UNTRUST

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In China, MLM and pyramid schemes businesses are illegal and are prevented from proliferation. But in March 2013, USANA reports that 37% of its global revenue were transacted in China. Making China a major role player in USANA’s funding. If China government does not allow MLM, what’s the reason why USANA’s Chinese investors are getting the services of Harwood Feffer LLP, a NY based law firm specializing in consumer fraud and product liability to investigate USANA Health Sciences, Inc.

Continue reading

Lead System Network – LSN – is it a scam? My opinion.

At June 1st, 2014 LSN – LEAD System Network is going to launch. Now in may 2014 the Internet (well, at least mlm-prone part of it) is buzzing about it. What is is? Is it a scam or pyramid scheme or legitimate MLM?

LSN – piramid scam or MLM

Let’s think first, what is it? Is it MLM with good and useful product, or is it pyramid scheme, where people down the line pay for those up the line?

To decide we need to analyze the product (good solid and needed product indicates MLM, shady virtual useless product indicates pyramid scam). We also need to look at compensation plan.

Lead System Network: the product

The product here is a set of “marketers’ tools”. Many people do not look deeply at the product, they just talk about finding new downline members, But let’s see what we have here:

  • Autoresponder – if it is good autoresponder then it has some value (if you know how to use it), otherwise – there are some free autoresponders out there. So it needs to be good to be worth anything.
  • Blog. Well.. anyone can start a blog for free. On many platforms. And you must have something to write about, or it is useless otherwise.
  • Voice Autoresponder. Very interesting, looking forward for details.
  • Lead management – is it for LSN leads, or external use?
  • Lead capture pages – same as above
  • Chat. A chatroom? Who you gonna talk wiht there? There are plenty of free chats.
  • google hangouts – really? It is free
  • Postcards (post leads followups). Who will pay for stamps? In which countries will it work? Anyway, interesting.
  • Webinar room. For how many people? Is it stable?

In $100 pro packet there is also mobile app creating tool. There are free tools, maybe this one will be better. And bulk mailer?. To do… bulk mail? To who?

100% commission

Very interesting. The company promises 100% commission. I wonder how? And if so, how do THEY earn money? Who pays for the tools costs (server, transfer)? Let’s not be naive. Santa Claus will not pay for running those tools.

I see a simple solution to this puzzle – you pay $50 a month, and your “sponsor” gets $30, and this is called 100 % commission . The company gets $20 (19,95 to be exact), sponsor gets $30 and he is convicted that he gets 100%. Everyone is happy 🙂

Note also that the 100% commission is for $30 products only. And just for customers you find directly, not those that spillover (or spillunder) in the matrix.

In the case of the pro package ($100) however, the commission is 50 %, and the other half goes to the “matrix”

$1000

Many people are excited by the fact that they can get $1000 without recommending others – just for the registration. But remember, that you need to spend $150 on products first ($100 for pro , $30 for basic and $20 for nothing)

You must also have 3 levels of paying members – 3 + 9 + 27 people = 39 people , paying a total of 39 * 150 = $5850 per month.  And remember that you will get $1,000 without sponsoring anyone just once, if you want more – then you will have to find person willing to pay $ 150 a month.

Note that this is not so, that you sign up you pay $150 and get $1,000. You also need to have 39 people under you in the matrix , each paying $150 a month.

And what if you do not have so many people that bought the pro version ? Then perhaps you will be paying $ 150 a month until you find them 🙂 For example, if you have 2 people under you, each paying $150 you will earn 2$. See first comment after this article for explanation (thanks, WealthTeam 🙂 ).

Here we return to the story of Santa Claus – do you think that someone will give you $1000 for nothing? Or maybe instead of giving that money to you the organizer of this MLM should enter himself in that position and collects $1000 himself – why don’t he/she do it? Continue reading