How Multi Level Marketing (MLM) schemes with Pyramid Structure works ?

POSTED BY manish ON October 29, 2012 COMMENTS (196)

Today we are going to talk about MLM or Multi Level Marketing Schemes which have a pyramid kind of model. For years and decades, these kind of schemes are active and a lot of people get trapped in these Pyramid Schemes and lose their hard earned money. In this article, we will see the common mechanism they work on and their characteristics. We will also create a dummy Pyramid scheme to show you the traps & pitfalls. Before we move ahead, get this fact that we are talking about those pyramid schemes which also have different levels of people one on top of other and where one guy pays money which gets passed on as reward to another.

Multi Level Marketing Plans

How Multi Level Marketing schemes work?

Multilevel marketing schemes are generally network based marketing schemes, in which a person has to add more people under him. The people obviously pay some money to “join” the business and then they add more people under them. In almost all the schemes, the person is incentivized for adding more people under them.

You all must have heard about the AMWAY business model, which is nothing, but a great example of Multi Level Marketing, while the business is legitimate and there is no fraud in it, still it also falls under a pyramid model. Even I have attended its meetings once when I was novice child :). The business model looked so easy, just pay Rs 5,000 to join the business and then keep adding more people to “business” and you get some percentage from the entire sales under your Tree. There are various ranks like Silver, Gold , Diamond etc., and the higher your rank, the more you make. Lot of people make money in it through legal way, and more you work harder , the money you can earn, but the point is , people who get in early make more money and the people at bottom struggle a lot.

Why most people lose money in Fraud Pyramid Schemes?

Guess what?!  A lot of people make money in these Multi Level Marketing business models, and they become the ambassadors of the business. They flaunt the cheques and the money they make and believe me, some of them are real!. They really do make money and we will quickly see more on that, but the point is, that the majority of the people lose lot of money and struggle in these kind of get rich quick pyramid schemes. And that happens, because there is a limit to adding people. You can’t add more people in the tree after a certain point and when the tree becomes bigger, than it’s trouble point, it’s reaches a  kind of saturation level when the biggest chunk of people who are at bottom lose all the money. Here is an example graph which will give you a good idea of what I am talking about.

How MLM or Pyramid Scheme Works

Example of SpeakAsia

You must have heard about the latest craze called Speak Asia Online! I will really not be surprised if you tell me that you were part of it! I will not be even surprised if you tell me you made lot of money too! That might happen if you started earlier! Because then, the scam was still in the making! If you joined at the end, you were at the bottom of the tree you lost your money. This is how it worked!

A person can join SpeakAsia by paying Rs 11,000 and becomes a “panelist.” He then starts getting 2 surveys per week and getting Rs 500 for filling up each of them. That’s around Rs 4,000 per month and 48,000 per year and that was how Speakasia was promoted by its member to lure other members. This was at the start and though the amount of money  coming IN was less than the amount of money which went OUT, and the whole model was unsustainable in long run, it was definitely sustainable in short term. Just think about it! Is it not easy to pay 10 smaller bakras if 100 bigger bakras join the next batch?

And after all that, it crashed! But still there are innocent people out there who claim that it was genuine and it worked for them. They are not wrong! It really worked for them and they made money, but that was part of the game. They wanted you to make lots of money so that you can bring more people in and then one fine day when they make a really big pile money that they can just vanish! Poof!

Breaking Relationships !

The biggest other bad thing about these pyramid schemes are how the relationships become sour and messed up when the person who is part of MLM tries to add all their friends and relatives into the MLM, suddenly they start looking at humans as “targets” , Here is one incident which happened with Shantanu 

I know about this as I faced these offers couple of times from my very close friends and relatives. And I know how hard it was for me to tell them “I am not interested”. Those who is a very extrovert in nature and also convince people more, like insurance agents can get success. But most people are in the other side only. In fact one of relative faced very tough challenge later on when people found his scheme a scam. Anyway, I think after such articles also these schemes will come in future and again many will trap in them also.

In one other incident, one of the Fraud scheme called as “Japan Life” made someone lose his girlfriend

Long time back in 2000, my girlfriend got stuck up in a similar scheme called “Japan Life”. They used to take 80,000 Rs. and will give you a magnetic mattress. She tried to get me in as well and I was almost about to get trapped but sanity prevailed and I escaped, however since I did not join, I lost my girlfreind forever. I remember this fraud came up in Star News and I could see so many people getting cheated. This was around New Delhi and surrounding areas

Some other popular Multi Level Marketing and Pyramid businesses which were actually a scam were GoldQuest, StockGuru , UniPay2U etc etc (add more name in comments section if you are aware about them). Moneylife has also done this story on Multi Level Marketing companies in Forex trading, Have a look at it.

Jagoinvestor MLM Scheme – Lets create a SCAM Plan right now

Let me know you how simple it is to create a pyramid scheme and it will look so attractive . You all know I have written a Personal Finance Book called “Jagoinvestor – Change your Relationship with Money.”

Now here is a scheme

  • Pay Rs 1,000 and become a member of the scheme
  • You get the book FREE on signup
  • Make a person join the pyramid scheme and get Rs 250 for each person
  • You can add any number of people to this scheme

You realize that if you add 4 people to the group, you will get a 1,000 bucks and a Free Book! So it’s extremely easy for you if you join the scheme early.

Let’s say 10 people join under me.

Level 1 – Add 10 people

So 10 people will pay 1,000 each and I will make Rs 10,000 total , and I will send back a FREE book to all the 10 people. I incur Rs 5,000 expenses and make a cool profit of Rs 5,000.

Level 2 – Add 100 people 

Now let’s see… Each of these 10 people persuade 10 more people under them, and 100 more people join the scheme. They will pay Rs 1,000 each to me;, that means Rs 1,00,000. I will spend Rs 50,000 for the 100 books , and I will be left with Rs 50,000. But out of this 50,000, I need to give a share to each member at level 1, for 1 person the incentive is Rs 250 , so for 10 people, the incentive is Rs 2,500 for each person at level 1, and because there are 10 people at level 1, I will have to pay Rs 2,500 to each at level 1, and I will have to share 50% out of 50,000, that’s Rs 25,000. But I still keep Rs 25,000 with me.

So now you can see, I made a total 5,000 from 10 people at level 1 and Rs 25,000 from 100 people at level 2. And each of the 10 person at level 1 made cool 2,500 from 10 people they added under them, they not only recovered their 1,000 back, but also got extra Rs 1,500 and a FREE book! Wow! This business model is amazing!

Level 3 – Add 1000 people 

So the business is expanding and the word is spreading and my book ambassadors are in the market advertising this scheme and showing the kind of money they are making and the free book they get! Dude! They also have a valid cheque with them! No fraud! . So the word has spread like wildfire now and everyone wants to join this business.

Now, lets say each person at level 2 adds 10 more people under them again, because the word is spreading about this awesome business. There will be 1,000 people at level 3, paying 10 lacs to me and I will incur 5,00,000 expenses. I will pay 2,500 to each person at level 3,  that means 2.5 lacs in total, but I will still keep 2.5 lacs with me.

Level 4 + 5 + 6 

Can you see, how it’s growing? And how people are making money? From 1 person to 10 people, and from 10 to 100 and them from 100 to 1,000? But what next? Level 4? Level 5? Level?

When this reaches level 6 , there will be 10 lakh people under this scheme and they will be paying 100 crores to me! . You guys are going to hate me at that level! . Because you will never see me again! . Neither will I send any more books to anyone!, Nor will I send any share to anyone. I will just run away and you wont be able to trace me! . Any person who would have joined in at the start would find it easy to grow and spread the business. But people at bottom will just not be able to do anything, they are the last batch of fools!

Real Life Examples related to Fraud Schemes

Krishna shares

During my College days there were 2 such schemes ( 7000/- & 1200/- each) introduced to me by my friends & asked me to join them. I explained them that they are highly unsustainable by using simple exponential formula (2^e). But still they thought i am a fool & not making money out of this wonderful Golden “Pyramid”. Thanks to God for that!!!. I just want to say that “User Pure Maths” before entering or dealing with any thing with your hard earned money. Be on your foot not on air.

Sam shares

In 2007, one of my good friend called me when i was out of station. “Sam, i have something great to share with you, when are u coming back? i cant wait to meet you etc etc”. I was kinda surprised and was very curious what he is gonna talk about. He took me to this office where many others showed cheques explained business model, asked me to buy some product and become a member. People were so promising that they will help me , let me grow & earn lots of money and all.. It was ‘Gold Quest International’. That day i made the biggest mistake of my financial life. They made me buy some Gold & Silver coin for Rs.38000 rupees using my credit card. After i joined i tried to reach out to some people in my circle and most of them are already part of it & others are not interested. To pay this credit card bill, i had to take a small personal loan. It was the initial days when i got into job and all these incidents made my financial position worst.

Sachin Shares

I lost 20 K in this MLM bullshit … it was with the name Cossets in Delhi . They arranged a huge pomp show in Siri Fort to show off the happiness of the people who had made money and became millionaires. There were multiple stores in Delhi where u cud purchase if u were a member Then some Ex army also got fooled joined in and invested smthng like 4-5 Lakhs his life savings got duped and then he made a case on the company . Phew Cossets was like GAYAB.

Suhas Shares

My brother was a victim of it late in 2002 in scheme(scam) called netkhazana.He lost around 17k at that time.And from that time I have got recommendations from freinds(?) and relatives(?) in to hell lot of schemes but never got into any because of the first bitter expereince. I suppose this schemes are gr8 if you have selfless people involved but that does not happen as the corpus grows to crores of rupees and people at top tempt to cut the goose.

Other Models of Scam

There are many other multi level marketing scams, which are not in a pyramid model, but they ask for money for some awesome investment based on some logic and then they really give back awesome returns to handful of investors, who spread the word about the scheme and them more and more people join the investment scheme and once it becomes very big, the person who started that scheme vanishes. The Govt is going to take some tough measures on these kind of fraudulent schemes. Here is a nice video which explains more about this.

Beware of these Get Quick Rich models

There are a hell of a lot of schemes and businesses running which show promises of making awesome returns from gold, stock market, real estate and many other kind of investments. They mostly will look really attractive and credible, but always remember that if someone is offering you anything better than bank fixed deposits, there is no doubt that there is some of the other risk involved. The bigger the potential return, bigger the risk.

Disclaimer : Note that we have just discussed how Network Marketing works and the basic mechanism. There might be various businesses and models which are making money, and might be good. This article just wants to bring awareness among people on the concept of pyramid schemes and they fool and loot majority of people in our country .

If you come across any Business like this, first make sure you check that its a member of India Direct Selling Associationwhich kind of gives a legitimate name and also they follow certain code of ethics. If its not part of this, I would say better stay away from it. Amway is part of it. So, not all Multi level marketing models are fraud, a lot of them are genuine also. Here is what Sunil shares about this

A Multi Level Marketing is different from Direct selling. Any company selling directly to the customer, removing all the supply chain management commissions behind, will be governed by Indian direct selling association, https://www.idsa.co.in (within India) and world federation for direct selling association, https://www.wfdsa.org . There are many companies like Avon Cosmetics, Amway, Oriflame, Herbalife, Tupperware etc.. registered under these federations. These companies work under the ethics defined by the IDSA or WFDSA and are very harsh on the people who dont adhere to these ethics. Many people reading this article will agree that the quality of the products they produce are amongst the best in the world. Many people are under the impression that these companies are similar to the other ponzi schemes.

Let us know what do you think about the concept of Multi Level Marketing and associated businesses. What is the biggest reason you think people fall for them and get trapped?

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196 replies on this article “How Multi Level Marketing (MLM) schemes with Pyramid Structure works ?”

  1. anil says:

    Hello I want to know according to govt law 2016 for mlm pyramid sceam is not legal .then Amway or vestige is doing work pyramid sceam .what is right .

    1. Give the link for that law

  2. Karam says:

    Hi Manish, Thanks for sharing your thoughts on MLM. Can you tell me what i can do as i am looking to start a MLM Business. Can you help me to design a plan or can you share any company who is doing great in a MLM Business.

    Regards
    Karam

  3. abhishek says:

    Dear Manish,

    I am a big fan of yours. Always learnt a lot from you…BUT

    You are wrong here. Not a single point which describes the “characteristic”of a Network Marketing Company is correct. I have been a part of this for 4 years now and not made a single member! Not convinced anyone. Not forced anyone. Never lost on relationships. Yet earned tonnes of money!

    The issue is that middle class people do it the wrong way. They are dominated by greed. Also, if you check the people who have failed in network marketing business have generally never done great anywhere else also because THE WAY YOU DO ONE THING, THE SAME WAY YOU DO EVERYTHING.

    Also, before making an opinion about NM through google, please check the authenticity of the website which google returns on your search and the authenticity of people writing the blogs.

    Anyways, I am still a big fan of yours,

    Regards,

    Abhishek Singh, I.E.S.

    1. Hi abhishek

      Which line is incorrect, please point that to me . Also which business are you doing in MLM , can you share ?

  4. u.s.bharti says:

    I want mlm plan

  5. Deepak says:

    Hi Manish,
    Nice article although old, its still valid in many respects.
    Recently I have been approached by one of my close friend for joining QNET (previously Goldquest, QuestNet..)
    Any idea if this is legitimate. There products are highly priced and so is the joining fee.
    Thanks.

    1. I suggest against it . BEtter not join !

  6. R.H +ve says:

    did you see this list where strategy india has declared 1200 + companies as scam ??? has anybody noticed ?

    1. Can you share that link with us ?

  7. Concerned says:

    Hi Manish,
    I have recently been contacted by my friend’s acquintance, who is trying to lure me into joining his moneychain system operating out of Bangalore.

    I have clearly expressed my disinterest in the business, but now I also want to report this to govt/police. Since I have not joined the business, I have not lost any money.

    What is the best way to report this without getting entangled in the legal aftershocks.

    Since I am in the IT industry, I don’t want to get pulled into any court cases related to this.

    Thanks !
    Concerned Citizen.

  8. Sandeep Patel says:

    I have a little different perspective on this one …. Let us bring them under the ambit of the law and monitor their activities. There are opportunities for regulating this business and bringing back some money to our country ……

    All IR’s (customer-distributors) in service tax parlance, with an annual income of over 10 lacs should be paying service tax for advertising and promotional services which they provide to Qnet as well as to the common public for promoting and distributing Qnet’s products… Is that happening ??? … needs to be checked by the IRS, RBI, DRI etc and the defaulting parties should be penalised. As one knows and from the various articles and pages published on social networking sites, the income generated from kthe business is huge for the top 20% of the members of the pyramid and there exists the potential of a revenue loss for the Government in case the IR’s or Qnet or Vihaan or Vanamaala any of their subsidiaries (with multiple cross holdings) fail to submit / pay the requsite taxes. one needs to understand that all IR’s themselves are business entities and need to have certain registrations as mandated by law. The bifurcation (if any) of the TDS for commision payouts to IR’s by Vihaan/ Qnet needs to be checked.

    Having worked in the area of Excise and Service tax as a professional one basic premise I have learnt – Ignorance of the law is not an excuse for not following the law and the above mentioned rule on service tax applicability for customer-distributors have been in existence since 2006… Lot of money for our Government especially from the top 20% of the earning members of Qnet or could be more …

    I am not saying that the business is illegal, however, within the existing framework of the law the above needs to be checked and Vihaan’s financial records and payouts to all IR’s should be verified.

    The policy and procedures of Qnet clearly state that an IR is a contractor and not an employee of the company… Therefore QNet themselves declare that IR’s are outsourced agents who are promoting their products and services via word of mouth … earning a commision for doing so and are therefore individual business entities ….

    Some interesting facts to be noted:

    Also a point to note that while Vihaan is registered with the MCA since Oct 2011, they have yet to file their balance sheet with the ROC at Bangalore. While the e-filing status is active, the digital signature certifacates have expired. One of the directors also holds a position of a director in another company where the same phenomena can be noticed. Understand from colleagues who are CA’s that while DSC’s are not mandated by MCA it brings about a transparency in the manner in which a company operates.

    I was also little surprised to see that one of the directors of Vanamaala tourism (as listed in the MCA company master data) is also an employee of QVI club… A first glance seemed to be a conflict of interest… QVI earns money from the services it sells to IR’s, the director also earns money from the services rendered by Vanmaala (takes home a neat profit) …. but who pays for it … all the IR’s. After all the IR’s are the only customer this company has….

    Prana health resorts – a QVI club resort is owned by one of the members of the management team of QNet… So while an IR utilises the package and also pays Prana Health resort for occupancy, also pays Vanamaala (owned by an employee of QVI) for availaing the services and the yearly usage fee … I am not sure any more as to what pay backs are happening in the entire system …

    All this has been gathered from the internet … are facts based on actual links and photos from various forums and I have validated the same with a couple of IRS officers who are known to me… I would like to use this forum for the “MOTIVATED IR’s” to check and see for themselves as to how deep the water is before making any further comments … The social media truly is the 9th wonder of the world….

    1. Thanks for sharing so many facts on this issue .. I am sure there is a lot of to be done by income tax department to unearth things ..

  9. Namit says:

    QNET is a fraud company plz don’t go in it.

    1. Thanks for sharing your view on that

      1. saurav bhaskar says:

        is secure life is genuine or froud mlm company?

  10. Venki says:

    Few of the readers opinion is to support network marketing (or form of MLM). I know few companies distribute their products based on MLM. For some time my sister family used a well known company products. Their bad, the products are pretty costly and by committing to be in the network they missed to gain the price advantage due to competition in the market. I mean, we will get the same quality product in market at better price.

    They are people (mostly marking guys) who convince that these are best products at any cost.

    Retail investors should take call on such products.

  11. amol says:

    Such MLM schemes are also there in USA. I have saved 3-4 times in getting into this trap. Some indians introduced themselves by hook or crooks and later follow to become their member.

    1. Thanks for sharing that Amol

  12. Manish says:

    Network Marketing concept is really good, if we work on this with member companies of IDSA with ethics then it will really benefit us. Middlemen expenses, marketing expenses will be eliminated. Elimination of these costs will benefit to consumer only. I would recommend to read Robert Kiyosaki’s books “21st Century Business” & “Business School” which throws light on network marketing concept.

    1. Thanks for your comment manish

  13. Chetan Thakur says:

    it was 10 cr a day ..pardon my typo

  14. Chetan Thakur says:

    1.they fail because they do not understand the business and think we have to make chain… 1st check do they really understand the concept of this business
    2. they do not promote , yes there are so many people around you who are into this business but are ashamed of promoting the business. Dont do it if you cant promote it.. person who involved you in the business did you really sit with him to understand the concept. no you didnt but yes you did crib about the business 🙂

    What is SCAM in mlm??
    Scam happens in every industry but since this concept is so strong people use this concept to fool the people.
    example : someone is driving a car and he kills a person with it. who is responsible for it ?? car or the person.. and is person
    a knife can used for chopping vegetables and slitting a throat. whos falut it is ..person or knife …off course person
    same way mlm is a toool ppl who drive it are the culprit not the concept

    What is illegal mlm??
    suppose you are going out with a kid say an infant of 2 years and he sees a dog baking ..you tell him its bow bow now after some times he sees a cat and says bow bow you tell him its meow not bow bow …same way you need to understand the diff between legal and illegal
    here is illegal mlm
    1. where no product is involved but just the money .. you get some one and then he will get some one … IT IS ILLEGAL… there is NO PRODUCT but just the COMPENSATION
    2. company gives you COUPONS instead of compensation .. again it is illegal … there is NO COMPENSATION
    3. Company tells you get more members and we will give compensation after few months ..once we will expand…. there need to be a specified compensation plan .

    THERE SHOULD BE A PRODUCT AND COMPENSATION involved

    after reading above reviews it seems people who never did mlm and was just a PART of mlm are writing there reviews here….
    but you would like to take tips from SR Tendulkar if its cricket instead of SRK …coz you need to check the expert.

    if you are doing mlm do the research and then do the business and speak with the experts of the business… I can write more but there is a lot to write.. so please send me your questions and I would love to answer them …mlm is a boon and its the future

    1. Thanks for yout comment, so you are supporting MLM frauds which happen ?

  15. Chetan Thakur says:

    hahaha…. really great article.
    guys please clear your mlm concept 1st the preach about it.
    if you have any doubt then please youtube bill Clinton and mlm.

    its easy to write anything about you dont even know ..but do you really understand the concept

    mlm is just a substitute of advertisement, if you see Amway , Amway never uses any personality in their ads, just the product …
    please dont ask any failed student about the subject , he will always blame the teacher or the subject…. u need to pick the person carefully

    what is mlm??
    ans : lets start with an example of any mobile phone
    you see an ad on tv, that ad costs 10 lakh for 10 secs and if on diff channels you find that , say 100 times a day .. you are spending 1 cr a day… or say 30 cr a day..
    how does company recover that money.. the answer is from the product.. who pays for it , its consumer.
    now question is how do we purchase a mobile ..
    ans is either we ask the shopkeeper, or check for reviews on the net or any other place
    so what actually happened in the whole process..
    1. ad maker made the money
    2. TV channel made the money.
    3. model used in the ad made the money
    4. friend who actually helped in getting the mob. got nothing
    5. who paid ??? you

    now the fact is 80% of the product we get from the market is by referral.
    who makes the benefit. your favorite superstars who never use that product but promotes that and you pay for that
    in mlm , no ad is used to promote the business but the person refers to his friend ONLY after using it.
    Its TOTALLY your call if you want work further as a distributor or remain a consumer
    MLM compnay pays that 30cr of ad money to the person who actually helps in flourishing the buisness rather then any ad maker or any famous personality
    In short this is mlm.

    NOW MLM IS A BUSINESS, PURE BUSINESS
    pick any business, 80 % of the business fails in 1st yr.. either of working capital or staff issues. and from remaining 20% ,with in next 5 yrs ..80 % fail again

    look at your self and other business you TRIED… like restaurants so yes people can fail in this industry too.

    WHY DO PEOPLE FAIL

    1. Venki says:

      You might be in the MLM, and seems to be an expert in MLM. Can you explain us how AMWAY works? Can you compare product benefits over peer products in the market?

      Remember, there will always be pros and cons. But, it is freedom that decides who will be successful. It doesn’t matter about statistics of how many businesses failed. There are so many dynamics that decides business success. If the product accepted by the consumer base, the company will surely succeed. There is no proof that MLM is future, otherwise every business would have now been opted MLM.

      Your comments please.

  16. anil dcunha says:

    Dear Manish,

    I have gone thru ur article in detail and i would compliment u in shedding light on MLM and related businesses prevailing in the Indian market.

    I would like to put up some questions which i suppose people should ask and then enter into such schemes only if the answers are YES.

    1. Is the company a member of the IDSA?
    2. Since how long it has been operating in India?
    3. How many countries is this company operating or is it a fresh company ?
    4. What is the turnover of the company and what is being paid to the associates?
    5. Is there a plan?
    6. Is is compulsory for you to make members or one can join individually and buy products for self consumption?
    7. Are the products genuine ?
    8.Have u used the products and ascertained yourself about the claims being made by the company?
    9.If the products are costly then have you met someone who has used the products and taken first hand information from one of the users known to you or somebody?
    10.Have you attended the seminar conducted by these companies personally or are you relying on information from your friends or the agent?
    11.Have you cross-checked from the person who is making claims of HUGE MONEY by your self checking the financial credentials of the person introducing you the plan/scheme?
    12.If the person introducing the plan says he is making money have you checked his bank account to make sure that he is getting the commissions as told to you?
    13.Is it a fair biz model, i mean the person who is doing the work should be earning rather than a person who has joined earlier in the biz? only and only then it is a fair biz!!!!!!!

    These are some of the questions which could be asked and many can be added so that atleast we can ensure that few people fall for the trap of making quick money which i suppose is not possible without putting in hardwork.

    To further tell you i am an member of Amway since last 10 years and i have found that it is a company which gives fair chance for members to make money but it is equivalent to the amount of effort put in by you.

    They do not force you to make members infact the JOINING IS FREE. THERE ARE NO CHARGES FOR JOINING AMWAY.

    I have never found once Amway forcing you to make members. They say that you use WORLD CLASS products and if you feel they are worth then SHARE the information with like minded people and let people use the products ( they have a 30 days money back GUARANTEE for all products manufactured by them)

    Only after using the products if the person feels they are WORTHY then either he has the option of buying from a member or the person can himself become a member ” AS JOINING IS FREE “.

    Please dont think i am making any biz proposition but i have read you article and some of the comments as well and i thought even i need to contribute as i am regular subscriber of JAGO INVESTOR and i am a member of AMWAY and i need to put up my point of views.

    So i would suggest people to take their own decisions based on their UNDERSTANDINGS & KNOWLEDGE as nobody is forcing you to join AMWAY or any other biz as a matter of fact. if there is anyone forcing you, then be BRAVE and say NO as you live in a FREE and DEMOCRATIC COUNTRY.

    1. Very nice comment. .I think you have put the checklist which will just filter out all the nonsense MLM businesses .

      1. SUNIL AGGARWAL says:

        Leave aside all complications. Just see whether the product being sold by a person (member of ‘MLM’) is “value for money”i.e. quality product at a competitive price. If yes, the scheme is likely to survive although the person at the bottom of the pyramid will have to work hard to earn enough. More likely, the product should have an edge over others available at the shops as a customer would prefer to buy from a shop if there is no benefit of buying from a person. Selling the product to known persons would be a very limited market; hence the product has to have a competitive edge. This is likely Direct Selling Agent with a difference that the Agency is managed and grown thru Members only.

        1. Thanks for your points Sunil !

  17. Pradeep says:

    Hi Manish.. Really a nice article.
    I have faced the situations many times from my friends, where they compel to join the MLM business (be it Amyway, GoldQuest or anything). I was consciously aware not to join it.
    I have been lured atleast 6 times in the last 1 year in US, by unkown desi guys to join some sort of MLM. They will speak as if we know them for years. Finally at the end of the conversation they ask out phone number.
    Now if someone talks to me nicely also, doubt lingers in my mind if he has any hidden agenda.

    I came across this short story in youtube about MLM (comedy):
    https://www.youtube.com/watch?v=leQ0eLJpsnk
    This is in Tamil (but has English subtitles). This summarises everthing about MLM.

    You are doing a good job in promoting financial literacy. I came to know a lot of things from your articles. Great going!!

    1. Thanks for sharing that video and your experience .

  18. Rayan Fernandes says:

    Hello Manish,
    an eye-opener article to those who fall prey to money-laundering MLM companies like NMart, Amway, Unipay2U, Visarev, Unigold2U, Nanogorex, Bizzree, Deo Soft, RCM, RMP, Tycoons Empire and many more.
    Please explore the belove link-
    https://corporatefraudswatch.blogspot.in/

    Thank you.

    1. Thanks for that link , will look at it !

  19. VIKAS says:

    Great Article, Well explained in advanced.
    If any body wants to check, the maths of doing MLM follow the link to a ponzi scheme
    https://www.youtube.com/watch?v=BCSXnOa1TIk&feature=g-crec-u
    (a great video from khan academy)

    1. Thanks for that link Vikas .. Good to see that

  20. Srinivas says:

    There are two ways of seeing this article.

    From a sellers perspective(if i am already a part of MLM or furthering the cause and advise it to my clients) or from a buyer’s perspective(i want to know what it is and if i fully understand and feel compatible, may join.Either of these two threads can be clearly seen in each and every response. Of course, there are many painful experiences of various individuals who burnt their fingers.

    If one is looking from the first perspective, there is nothing much to be added in the article.

    However, it provides a logical explanation(with a good illustration) as to how the scheme functions, for the benefit of the second group.

    The article doesnot say MLM is good or bad. In my openion, it only sensitses a lay man to understand and take a wise decision.

    Lot of comments saying that “I lost” and no/very few comments to the contrary is self explanatory.

    1. sachin kumar says:

      There is a third view and that is that you are an idiot

    2. Thanks for your comment Srinivas , exactly the same thing which I wanted to communicate !

    3. Gopi Krishna Settur says:

      My dear warren buffet-II,

      Iam the eye witness and saw three of myfriends who fall prey and became like psychos after joining MLM scheme. I attended their sessions to only realize that people’s crave for extra income is beeing cashed.

      I saw it not only in India, but also in USA. where many people mainly desi guys / girls who are on dependent and student visas joing to earn extra income to reduce the burdens on their families india but ultimately ending up losing every thing.
      and also i tasted the milk powder drinks they sell like verry blast and my stoach balsted that out almost instantanelously.

      in turn the links in MLM (people) exaggerate that their products are very superioor and matches no product in market, if that was the se why dont they release in open market and advertise the so called fact.

      Work hard and you will getit. once you get it spend it on necessities not luxuries. save and invest wisely.

      not in this cheap MLM tricks

  21. Rohit says:

    Hi Manish

    I recently ran into a business offer. They say its a data entry job. Online surveys etc. They are charging around Rs.2500 which they claim is reimbursible with the 1st paycheck. And a monthly paycheck is promised based on the quality of work. Is this similar to MLM? Is there any method to check out if these companies are authentic?

    1. I think I already answered it on our forum

  22. Sandeep Sudhakaran says:

    I wish there was some genuine MLM scheme which never gets saturated and no one get cheated. I actually liked the idea of banned SpeakAsia, where even though there is some enrollment fees, then people get paid up for the amount of work done (completing surveys). With this many can earn extra by working online.

    1. Srinivas says:

      Good wish. I too join you in wishing.

      In such case, one has to ask a logical question. Am i doing any value addition by answering the surveys. What i mean is i filled a survey and my 10 years son filled a survey. Is there any difference.

      It is logical to wish for a return, only if one does value addition. Or are there free lunches?

    2. No business in world will pay you money less than your efforts,esp for long term , its as simple as that.

  23. Ramakrishna Gunisetty says:

    Hi Manish,

    Very nice article and an eye-opener for all.
    Recently, I came across one guy with well dressed in formals in a shopping mall and he pretended that he had seen me somewhere and told me that I am very well known to him. By then I sensed its a trap for some MLM business but exchanged our phone numbers. The next day morning he called me and asked for my appointment to discuss some business proposal, in short he said its like MLM. I just ignored him and taught him a lesson in my way.
    These kinda of MLM business just spoils the face-value and relationships if the others are not interested in them.
    This is my opinion.

    1. Thank for sharing your experience with all of us .

  24. jatin says:

    manish sir, very well explained and nice article. i was thinking to ask you about same article bcoz some of my frnds are trying me to join qnet like mlm scheme. can you brief me about reality of qnet scheme as it is banned in so many countries.

    1. Its just like another MLM i guess, see comments section , someone has talked about it

    2. Manish says:

      Do you mean people who are in direct selling are not honest and cheap. You know Warren Buffet itself own few network marketing companies.

      1. sachin kumar says:

        Bhai tere me Keeda hai kya

  25. Karthik says:

    Warren Buffet says “Honesty is very expensive gift. Don’t expect it from cheap people”

    1. thanks for that quote !

      1. Manish says:

        Do you mean people who are in direct selling are not honest and cheap. You know Warren Buffet itself own few network marketing companies find out on net.

        1. We are talking about fraud schemes here , not all kind of MLM businesses .

  26. BD says:

    Have you heard about Qnet https://www.qnet.net/ which is similar kind of MLM scheme though it is little more business model oriented vs. similar so atleast you get some product when you first become member. I have few people who are CA’s or left their jobs to do this full time. May be its true to make quick bucks in these schemes but i never believed in making money easy ways anyway…

    1. In that case its just another MLM , there are tons of MLM’s where you join and get products, thats the catch, it does not look like a MLM , becuase you feel I dont loose anything . No doubt people will be making money in it , seems a new one 🙂

      1. Sudipto says:

        QNET is going to be another big scam in the next 2 years for sure.

        Most of these MLM vanish just to reappear again with a different package but with the same core idea of fleecing people. Gold Quest International became Quest International (QI) and now became QNET. Gold Quest has been banned in several countries but now the same people have started this new scheme related to travel, tourism and wellness industry. A lot of people are pitching for QNET these days.

        Only the people at the top make money. The middle tier of the pyramid hardly make any money because the way these scheme works, you have to start investing your family silver to make left and right leg. So you end up investing money in your wife and family member’s names and thus have a big exposure.

        1. Thanks for the comment Sudipto , exactly the same thing which I wanted to communicate !

  27. Dinesh Jain says:

    Hi Manish,

    Find the below link for an article titled “India May Introduce Direct Selling Act in 2012”

    https://www.forum4finance.com/forum/other-laws/icdsi-india-may-introduce-direct-selling-act-in-2012/

    1. Thanks for that link , I think its in favour of curtailing MLM , right ?

      1. Dinesh Jain says:

        Yes Manish,

        Once this act comes, all chindi pindi companies will get wiped out and only genuine MLM companies will stay

        1. Thats great to know . We want those kind of acts , they are required in our environment !

  28. Dinesh Jain says:

    Franchisee model (like Mc donald, pizzza hut. kfc) are one of the most successful business model . But for all the educated people i would like to inform them that when this franchise concept came out initially in 1950’s , it was being seen as a scam bcz of xyz reason bcz the concept was new and most of the new concept is being ridiculed by common and middle class person. It’s only the person who have the vision to see tomorrow as on today, adopt and accept such concept. Once the concept is popular, then the common public accept it.

    When computer came in India, people ridiculed it and were under impression that it is going to eat away the job of many people. But just see today, without computer and laptop, nothing is possible.

    Most of the culture in India is getting exported from foreign countries. Fax , washing machine, laptop, desktop, mobile, shopping malls are some of the examples.

    So just wait and watch Direct selling / Multilevel mktg will make their mark in India.Regulatory body might come very soon. And good companies will keep on doing their business

    1. Franchise model is not MLM , there is no tree being made , Its altogether a different concept . Here there is a business run by someone and the end product is sold to someone to make profit, not to make him part of the business.

      1. Dinesh Jain says:

        Manishji,

        What i am tring to say is every new concept is being ridiculed, same was the case with franchise model, but now it’s widely accepted.

        The same acceptance is going to happen for MLM also.

        1. You have got a genuine chance here to speak about it , can you share some genuine business model , we can discuss about it here and also share it with more people. Good things always deserves to be shared .

          1. Dinesh Jain says:

            i would like you to go through

            https://www.rmp-infotec.biz

        2. I agree with you , great idea’s are always ridiculed, so are you saying that Pyramid MLM models are great concepts with potential for everyone who joins it in equal manner ?

          1. Dinesh Jain says:

            Not all the companies who follows this model…

  29. Himanshu Rathore says:

    What is the biggest reason you think people fall for them and get trapped :: reason is simple, their are no free lunches but everyone wants one.. everyone wants to get rich fortnight…

    1. Thanks for sharing your views 🙂 .

      1. Himanshu Rathore says:

        Your welcome… I am still waiting for your comment on following link..
        https://www.jagoinvestor.com/forum/is-it-worth-investing-in-aegon-religare-term-plan/3982/#comment-18253

          1. Himanshu Rathore says:

            Thanks 🙂

  30. Satish Kumar says:

    Hi Manish,
    May be the point we are missing here is that a Multi Level Marketing is different from Direct selling. Any company selling directly to the customer, removing all the supply chain management commissions behind, will be governed by Indian direct selling association, https://www.idsa.co.in (within India) and world federation for direct selling association, https://www.wfdsa.org . There are many companies like Avon Cosmetics, Amway, Oriflame, Herbalife, Tupperware etc.. registered under these federations. These companies work under the ethics defined by the IDSA or WFDSA and are very harsh on the people who dont adhere to these ethics. Many people reading this article will agree that the quality of the products they produce are amongst the best in the world. Many people are under the impression that these companies are similar to the other ponzi schemes. A very good article differentiating both is https://theviewspaper.net/network-marketing-101/

    Tip :- If any company says that you earn money just because you make other people join the business, then please dont go near to that. If any company says that you earn money because you sell the products, you need to think of it as a business opportunity.

    Note:- I am NOT a member of any MLM or Direct Selling company.

    1. Umesh says:

      Very good perspective.

    2. Satish

      Thanks for that point . Yes agree that there are companies which are not ponzi schemes . The article is just referring to the structure under which they operate. If the money one is making is coming from the other guy fees for joining, then over a very long term, the people at the bottom of the tree will struggle fining more people.

      1. Satish, I have also added those points you mentioned in the article for more clarity , thanks for your contribution .

      2. Ritz says:

        Manish

        But its the same situation in every business. People who get early into it make money and bottom level always struggles. I am not in favour of MLM or Pyramid, but every business saturates at one point or another. So how MLM is different from that.

        1. Yes, but we are talking about MLM structure onmly .

  31. Yusuf says:

    Manish,

    You forgot to include the social cost of MLM. Suppose a person joins a MLM then people around him start ignoring him like the plague. The only thing that ever comes out of the person’s mouth is a sales pitch. Very irritating.

    Another aspect is that suppose he makes 10 members and the scheme goes under (most likely scenario). In that case, he loses face with those 1o members. So for me, the cost of MLM is much higher than the profits.

    PS: never got cheated in MLM but am a victim of the “teak tree” scam

    1. Yusuf

      Thats a nice point actually. A person once into MLM then starts looking at people only as targets and not humans !

      1. Dinesh Jain says:

        Hi Manish,

        You said “A person once into MLM then starts looking at people only as targets and not humans”. That’s the PERCEPTION of the people based on their personal experience. But the problem with the human being is that they consider their personal experience as a REALITY whereas this is a PERCEPTION only.

        There are always two sides of the same coin. Life and Death, Sun and moon, thorn and roses, childhood and adulthood, successful and unsuccessful, win and failure, happiness and sadness. It’s a foolishness to give opinion looking at only one side of the coin.

        People don’t know what they don’t know and they are not trying to know what they don’t know.

        1. Yes, thats true Dinesh. Agree with you .

          Request you to give your opinion on this subject .

          1. Dinesh Jain says:

            Hi Manish,

            In case you get time, go through these books..

            “the business of the 21st century” by robert kiyosaki
            “Copy cat marketing” by burke hedges..

            These books will give a proper clarity on direct selling/mlm

            1. Ok sure .. will check them

  32. Amit Patel says:

    Really an awesome article. I faced and met lots of MLM (agents) people in India, USA and Australia too. Most people I met were Indians. I attended first hall meeting (amway/bww) in 1995-96 after school. I found various types advertisement in Newspaper in 95, group discussion in schools, colleges and hostels in 98-99, neighbor kitty parties (plastic items), email/website chains in 2000-2003, skype and google hangout for business model understanding in 2011-2012. Many Indians in Australia were students and joined Amway. Amway ads in famous Australian newspapers have Indian faces and names 🙂 (at least not for racism attacks)
    Such MLM requires few good skills. If you have these skills then start your OWN Business (not MLM). Such schemes exist for plastic items, insurance, FMCG products, websites, books and so on.

    1. Thanks for sharing your experience Amit .

    1. Manish

      Thanks for that link. You might be talking about some legal and ethical business. In this article , we have tried to explain about those MLM businesses which just wants to extract money out of new joinees and pass on to the top . Read the disclaimer at the end of the article.

      Can you explain more about your business model .

  33. Suhas Patil says:

    Manish,

    Thats a gr8 article….One more feather in the Blog….

    My brother was a victim of it late in 2002 in scheme(scam) called netkhazana.He lost around 17k at that time.And from that time I have got recommendations from freinds(?) and relatives(?) in to hell lot of schemes but never got into any because of the first bitter expereince.
    I suppose this schemes are gr8 if you have selfless people involved but that does not happen as the corpus grows to crores of rupees and people at top tempt to cut the goose.
    I have observed one thing some people get addicted to such type of schemes and they move from one scam to another scheme making money in some and loosing in others.I think if the product is strong then it sustains for a while like “tupperware”
    The first MLM scheme was started by Charles Ponzi in 1903.
    below is the link for more details.
    https://www.rediff.com/business/slide-show/slide-show-1-special-why-speak-asia-seems-to-be-like-a-ponzi-scheme/20110526.htm

    1. Suhas Patil says:

      Here is one link on chales Ponzi.I liked the term “robbing Peter to pay Paul”.
      I hope Mr Dinesh Jain has a look at it.

      https://en.wikipedia.org/wiki/Charles_Ponzi

      1. Dinesh Jain says:

        Dear Suhas,

        Robbing peter to pay paul is applicable most of the places. When a client buy insurance, commission gets deducted from the client’s (Peter) premium to pay the agent (Paul).

        Same is with mutual funds also. But the most funny part in dividend based mutual fund is that “Peter is being robbed to pay Peter”.

    2. Thanks for that point and sharing your experience, I would say, if a scheme is pretty new, then there is a great chance of making moeny in it , because millions of fools will enter it after you 🙂

  34. Sushil says:

    Manish…Your Article once Again is Excellent. I am surrounded by many such people who try to motivate me in joining such MLM schemes but i never joined except one dauphintouchnetwork where i was offered a Bazaz Allianz ULIP ….That my First and Last MLM …somehow i managed to come to breakeven pooint of ULIP and then i surrenderd the ULIP…..Never made money through any MLM…. in Fact, I already calculated that only starters make money in MLM schemes and followers are always loosers……Even as on today, MLM like RCM are pressing me to join….I just replied to my friend ” You need Joining in RCM or you need Relationship?” So This was the only way to stop him…

    1. manish says:

      Hi Sushil ,
      Respect your decision not to join any MLM but i would like to provide some basic diff between MLM and Schemes.

      https://www.network-marketing-business-school.com/pyramid-scheme.html
      https://www.wikihow.com/Distinguish-Between-a-Pyramid-Scheme-and-Multi-Level-Marketing

    2. haha .. thanks for sharing that experience ! 🙂

  35. Manish says:

    Find out diff between MLM and Scheme. DHIKHAWE PE NA JAWO APANI AKAL LAGAWO. most of people don’t know what is scheme.

    https://www.network-marketing-business-school.com/pyramid-scheme.html
    https://www.wikihow.com/Distinguish-Between-a-Pyramid-Scheme-and-Multi-Level-Marketing

    1. Manish

      I am not sure why you have given those links , we are aware about it . We are talking about the model and how top people make more money than bottom and not all companies are PONZI , some are legitimate businesses, the point here is the model and the promises. Nothing else.

      1. Manish says:

        Manish,
        That’s what it is not always true that people on top always make more Money. The truth is people who put more effort make more Money. I have in my organization people are making more money then me. One more thing you have put Direct selling with ponzi schemes. They both are different. you have to bring out that in your blog. Here you are almost warning everyone not to join it. In ponzy schemes people are on top make more money but in direct selling who works more get more money. If you want proof I can provide it to you.
        Another thing regarding saturation you have planted very hypothetical scenario it is not possible all the people who join direct selling will work.
        Requesting you to come up with blog where you provide the check list before joining the direct selling business, Diff between direct selling and ponzy schemes and educate this is not quick money thing. Please don’t threaten people not to join it.
        Like insecure industry you have explain ULIP in very good manner where you explain how we can get maximum benefit from it. In ULIP also many people loose money but it is not bad investment at all if you understand it well and take advantages of it’s switching feature. I can not explain everything in one comment. Hope that make sense for you and if want discuss off line I am ready for it (Dont worry i will not ask you to join my org). I have already sent you private message on Facebook hope you reply to it.

      2. Manish says:

        Manish,
        That’s what it is not always true that people on top always make more Money. The truth is people who put more effort make more Money. I have in my organization people are making more money then me. One more thing you have put Direct selling with ponzi schemes. They both are different. you have to bring out that in your blog. Here you are almost warning everyone not to join it. In ponzy schemes people are on top make more money but in direct selling who works more get more money. If you want proof I can provide it to you.
        Another thing regarding saturation you have planted very hypothetical scenario it is not possible all the people who join direct selling will work.
        Requesting you to come up with blog where you provide the check list before joining the direct selling business, Diff between direct selling and ponzy schemes and educate this is not quick money thing. Please don’t threaten people not to join it.
        Like insecure industry you have explain ULIP in very good manner where you explain how we can get maximum benefit from it. In ULIP also many people loose money but it is not bad investment at all if you understand it well and take advantages of it’s switching feature. I can not explain everything in one comment. Hope that make sense for you and if want discuss off line I am ready for it (Dont worry i will not ask you to join my org). I have already sent you private message on Facebook hope you reply to it.
        Forgot to mentioned on thing you have asked where i am biased. I told you biased because you talked about Amway business model and that is not Scheme that is an legal business model running in more than 80 counties.

        1. I have incorporated some part in the blog at the end . Finally its all about showing people the stucture which these fraud schemes work , Its not against any kind of business. Its just telling people who those fraud schmes make money and loot people .

    1. That does not change any thing . the views are still same . Any company can do all this, but the point is the model is such that people are shown more promises than they exist for majority

  36. Manish says:

    I think, information you have given is half true. Network marketing or Direct selling is way where even ordinary people can make extra ordinary money. In India there is no regulation for these companies so even good name also suffer because of some chit fund.
    Its really good model to work with if you can choose good brand. they have even 100% money back guaranty on all their product. people failed in this business because they think it is easy. It would say it is simple but not easy. You have to generate turnover the way all other business run. If you leave the chit fund where only money float but not product those are not good and for that govt has to bring some kind of legislator for same.
    Manish I was not expecting totally bias article from you regarding same. there are few pros and cons about all the industries you have to bring out that. If you want we can talk off line about it and come up with some really unbiased article on same.

    1. Which part of article do you not agree with , can you quote that ? Also we are talking about the model here and how some pyramid schemes use multi level marketing concept and show starts to people . Dont you agree all this is going on ? Where do you think is biasness ?

  37. Venki says:

    Very good article Manish.

    There is interesting question at the end of article “What is the biggest reason you think people fall for them and get trapped?” Every one should check whether (s)he is in that category.

    It would be better to give a mathematical expression on how the multilevel (in many cases the branching factor is 3) tree grows exponentially. Your explanation is quite interesting.

    Above these facts, there are serious consequences. Please include these in the article if makes sense,

    1. Most of the people fall under immediate next level are friends/relatives/known acquaintances. Once the bubble bursts, many of these relations will get fainted. May be they get worsened for a life time.

    2. If an immediate person is stronger physically/socially he will threaten the one who introduced him. I have seen this happening to my colleague, he paid about 7 lac (all his US trip earnings) in 2009.
    —————————————————————————————————–
    Few other companies that I heard were Quantum and DSP (both in Andhra). Quantum story was during my +2, it has some products and there was some joining fee. DSP was my college days story.

    One more story I read in news paper was on matrices. Concept is like buy a matrices for 30K, and make three more people to buy. The matrices were believed to have some magic to heal body pains. What a nonsense.

    My Story:
    I came to know about Quest through my colleague. I have explained him on how it works using some data structures ( in which I am good at 🙂 ). To my surprise he joined and introduced three of his college friends. About three months after the incident, police cases were filed in Andhra, Tamil Nadu and Karnataka. Even disgusting fact was, two of my close friends told me after the police case, they too joined :(.

    1. Haha .. yea the points raised by you is very valid , the big ill effect is souring of relations due to this MLM thing . I will include few points which you have mentioned. thanks for sharing and value addition to this article through your comments

      1. Venki says:

        See some latest post on https://speakasiaonlinemarketing.blogspot.in/

        God help those who think to be overnight billionaire.

  38. sachin kumar says:

    I lost 20 K in this MLM bullshit … it was with the name Cossets in Delhi . They arranged a huge pomp show in Siri Fort to show off the happiness of the people who had made money and became millionaires. There were multiple stores in Delhi where u cud purchase if u were a member
    Then some Ex army also got fooled joined in and invested smthng like 4-5 Lakhs his life savings got duped and then he made a case on the company . Phew Cossets was like GAYAB.

    The internet chat is the place where they lure ppl for easy money making chutzpah

    Once finger burned. Now i never even look or give a second thought to these pyramidal magical QUICK BUCK schems.

    1. You learn from your experience or foolishness as you call it 🙂 .

      I am glad you got your lesson .

  39. Sunny says:

    Dear Sir,

    Speakasia is not an MLM

    Its not compulsory to join members to earn,people can earn through survey,no need to join any members to earn…

    1. Sunny

      SpeakAsia is not MLM, it has actually gone beyond MLM, I can only respect them for their amazing planning and brilliant execution , things to learn from them .

  40. Anand says:

    There are a lot of false companies and good that the govt is awakening now to put in regulations. Few of my friends I know (who were academically also very good) joined and started the Amway Business with absolutely no payment and with a lot of hard-work and dedication they are earning good residual money after couple of years of work. This seems a genuine business since for me the products work out very cheap on a monthly basis – the the label shock is there 🙂 – however, with the company guidance, my family finds it competitive (even cheaper) compared to similar and inferior quality products available in the market.
    So I guess, as with any business (my family is into traditional business) – it MUST have a product and/or service to have the money come into the system. And Amway surely seems to have it! Thats why I guess its running successfully for the last 60 yrs or so! Surely there are a lot of “Amway agents” who really do not know how to build the business and mess up with relations 🙂

    1. I never said its not a legitimate business. All I am talking about the rosy picture it paints for everyone . How on earth can “everyone” earn from it ? Its just mathemtically not possible, unless you challange Maths !

  41. Krishna says:

    Dear Manish,

    I dont agree with you..First for any business model to succeed, the product that you market should be the base and not the profit that you would make out of it..the people who have failed would have joined a pasy scheme where is no tangible product / service to offer, second they would be horrbile in marketing..I also came across so many such models, I chose not to because I know I will not be able to convince people.. There are MLMs which are still functioning for years and decades..

    Let me put you a straight forward poin..how did you choose buying a bike / car / laptop is by actually asking you friends and once you buy it you either become an ambassador for the brand if your experience was good or a critic if it was a bad experience..if the MLM is coming up with good products then you are actually recommending that product and get paid for being the ambassdor..you dont buy an i10 because Sharuk has did the Ad because your friend told you that it was good..

    1. Krishna

      I am not sure which point do you not agree with , I am not commenting on people who have made money ? I know that happens , even I know people who have made tons of money in speakasia , but thats 1% people . I am talking about how 99% rest of the people get trapped. Can you quote the sentence which you do not agree with ?

      1. Krishna says:

        Manish,
        Speakasia was not a product based company thats one of the reason why it failed.. with MLM people come with the attitude that they dont have to make anything but still they want to earn thats not true those who put their efforts still succeed. I know people who joined almost at the same time few are still earning and the others are not..purely bcos of the efforts..
        I dont agree to your point that the chain would saturate..does our needs ever saturate ?? does our salary / income ever saturate ?? the MLM compant has to be agile in finding the changing needs of the consumer and replinish with new set of products / services every now and then..thats why companies like Amway, Oriflames have survived for decades…

        1. Krishna

          I am talking about number of customers saturation . Amway and Oriflames have not yet saturated, but they will eventually at some point of time, if it keeps on working on “adding more people” model, or they will have to bring in more innovation into how they make money .

          1. Sagar says:

            Hi Manish,

            And I believe it will never saturate as well. Reason: in US still people are coming in to business and its already 50-60 yrs old there. we can conclude from history as well.

            Sagar

            1. May be .. only time will tell . .

  42. KARTHIKEYAN V says:

    what do you thinking about the MLM of PACL India Ltd ?
    please tell me my father is investing 3000rs per month.

  43. Sam says:

    Good Article Manish !!

    Here is my experience–
    In 2007, one of my good friend called me when i was out of station. “Sam, i have something great to share with you, when are u coming back? i cant wait to meet you etc etc”. I was kinda surprised and was very curious what he is gonna talk about. He took me to this office where many others showed cheques explained business model, asked me to buy some product and become a member. People were so promising that they will help me , let me grow & earn lots of money and all.. It was ‘Gold Quest International’. That day i made the biggest mistake of my financial life. They made me buy some Gold & Silver coin for Rs.38000 rupees using my credit card. After i joined i tried to reach out to some people in my circle and most of them are already part of it & others are not interested. To pay this credit card bill, i had to take a small personal loan. It was the initial days when i got into job and all these incidents made my financial position worst.

    When i was in Bangalore, my flat mate was regularly invited to some ‘great’ meetings & they reveal the name of ‘Amway’ only at the end of the meeting. When he tried to stay away from it, people used to call him and say ‘You are loosing a great opportunity in your life etc etc’. He was smart enough to stay away from Amway but couldn’t escape from frequent calls/invitations/visits by Amway people. There are so many people part of it that its totally unbelievable, even software engineers.

    I’ve learnt in my life that we can never make money easily. It should be hard earned. I hope every one stay away from these kinda businesses.

    1. Dinesh Jain says:

      Dear Sam,

      Mr. xyz lost his hard earned money in 1992 stock market scam, same person again lost money in IT boom in 2000. Now this person has made the perception that all the companies listed in stock market are cheater and now he is not at all investing his money in stock market.

      What would you have done if you would have been Mr. xyz..

      People put their money and if they earn they think it is bcz of their smartness and if the same person is loosing the money, he thinks that the companies of the stock market are cheaters.

      Rgds
      Dinesh

    2. Thanks for sharing those experiences and those 38,000 will really help you in life 🙂

  44. Dinesh Jain says:

    Going by the logic of the article,

    Each and every corporate company is also MLM company bcz the CEO at the top is taking the maximum salary and the people at the shop floor gets the lowest pay.

    1. You can look at it that way , but people get paid at bottom by the company itself, they dont bring money in and dont add more people below them by charging money .

  45. Santanu says:

    Good analysis Manish.
    I know about this as I faced these offers couple of times from my very close friends and relatives. And I know how hard it was for me to tell them “I am not interested”. Those who is a very extrovert in nature and also convince people more, like insurance agents can get success. But most people are in the other side only. In fact one of relative faced very tough challenge later on when people found his scheme a scam. Anyway, I think after such articles also these schemes will come in future and again many will trap in them also.

    Thanks
    Santanu

    1. Dinesh Jain says:

      Dear Santanu,

      Scribbling becomes writing under formal training, talking becomes communication under formal training, exercise becomes wellness programme under formal training, a player becomes a champion under formal training. Similarly an intovert can become extrovert under formal training. Hence remove the perception that success is for few selected people.

      But only few people get success bcz they invest money in training programmes, attend them and implement in their life.

    2. Thanks Shantanu . the best thing to tell people in this kind of experiences is that “I just lost job, can you help me with 50,000” .

  46. Krishna Kishore Appala says:

    During my College days there were 2 such schemes ( 7000/- & 1200/- each) introduced to me by my friends & asked me to join them.

    I explained them that they are highly unsustainable by using simple exponential formula (2^e). But still they thought i am a fool & not making money out of this wonderful Golden “Pyramid”. Thanks to God for that!!!

    I just want to say that “User Pure Maths” before entering or dealing with any thing with your hard earned money. Be on your foot not on air.

    1. thats the brilliant point 🙂 , Use maths , not even god will dare to challange that 🙂

      1. Dinesh Jain says:

        By reading the word “Pure Maths” i could recollect a famous saying which goes like this:

        “The problem with the world is that the intelligent people are full of doubt while the stupid ones are full of confidence”. By Charles Burkowski

        1. Thats a great quote, can you also corelate it with this article, whats the take away from that, lets come to the point .

          1. Dinesh Jain says:

            TRUST and MATHS are opposite to each other. When there is TRUST people don’t use MATHS and in the absence of TRUST , people use MATHS.

            I do not use MATHS in every places..

            1. Srinivas says:

              In case of doubt, in financial matters, trust maths.

        2. amol says:

          Dinesh,

          life can not be lived on quotes by someone…we have to use our life experiences, common sense too…

          tell me few things,
          1. if Amway is not spending on advertisement and distribution cost then why their product prices are high ? I know many Amway guys also sell their product so how the end consumer(common public) is getting benefited in price saved over different factors like advertisement ?

          2. Why do you guys break relation when somebody genuinely does not show interest in your business proposal ? Is it wrong to say “no” ?
          two such people who use to be nice with me suddenly stopped contacting me when I just said “no” to participate in their proposal. Third guy don’t even pick up my calls. Until I said “no”, they were quite friendly with me.

  47. Dinesh Jain says:

    Hi Manish,
    Nice article again. But through your forum i would suggest people to read a book called “Business of the 21st century” written by Robert Kiyosaki and another book called “Copy cat marketing” by Burke hedges.
    Network marketing /Multilevel Marketing/Direct Selling is considered as a full fledged career in countires like USA and EUROPE. To further prove this point, read another book called “Next Millionaires” by Paul Zane Pilzer.
    Example: During 2008, the whole environment was negative in stock market. Hence people were not willing to invest in good companies also. Similarly as of now in India, the environment for direct selling company is not good bcz of which people are ignoring good companies. But once the law to regulate direct selling comes, which should come in near future, the perception of the people are going to change.
    McDonald is nothing but a network of 30,000 (approx, correct me if I am wrong) restaurant. HDFC Bank is a network of branches.LIC is getting most of their premium through their agent’s network. So one thing is very clear if someone wants to be wealthy , that person has to be the owner of a network. But to create a network one need huge amount of capital, infrastructure etc. But by being a distributor of network marketing companies, a common man can create their network without capital, infrastructure etc.

    1. Dinesh

      there is difference in Legitimate MLM and Fraud MLM . And all those things you mentioned in your example are more of Franchise business, it does not add “humans” by charging them and promising them stars when they add more people like SpeakAsia and GoldQuest, dont you agree.

      Note – We are not talking about all MLM , only pyramid schemes with fradualent mind and this article is more of awareness article for people to think before they join something , I am just wondering how can you argue on this matter, its like Congress oppposing anti corruption movement.

      1. Dinesh Jain says:

        Manish,

        I have tried to explain the concept in a very brief manner.And not at all trying to argue. Concept is outstanding. But most companies are misutilising this concept.
        So definitely people need to be careful.

        1. gaurav says:

          Manish ji , i myself was duped by Japan Life.

          After my failure i found about few things about MLM.The Mattress japan life was sellin for 80,000 can be directly ordered from any health company from Japan & its actual value is only Rs. 15000. so you can see that product is highly overpriced and the loot was distributed among the top who keep the ball rolling by showing there cheques.
          Also I like to say to Mr Dinesh Jain ji that in your rmp mlm same will be the case , just think all commisions make product 30-40 percent costlier . also people like variety and freedom in choosing which people dont get by joining these limited product based mlm , saturation will come early and that will not affect people at the top but those who are new.

          1. Dinesh Jain says:

            Dear Gauravji,

            In rmp mlm (as per the word you have used), till now there are around 70 lakhs distributor. Now use MATHS and tell me the date when saturation will come.

            When you buy a medicine,pepsi, mineral watter bottle:
            1. Do you know their manufacturing cost ?
            2. Do you know how much is being paid to the wholesaler,retailer,distributor,c&f agent etc.
            3. do you know how much is being paid to bollywood actor,cricketers etc for the promotion.

            Dear Gauravji,
            At whatever MRP you are buying at , its inclusive of manufacturing cost, profit margin of retailer, wholesaler, c&f agent, ad fee given for promotion to actors/cricketers etc. But Gauravji, have you ever questioned the basis for the calculation for MRP. Absolutely No. Bcz not only you, we all are used to this traditional system of business.

            But when some genuine companies , comes out with a business idea where they eliminate all the middleman and gives the end consumer an opportunity to earn commission (which was being paid to retailer, wholesaler, c&f agent, cricketers,actors,actress) just by doing word of mouth publicity, this end consumer starts doubting it.

            This end consumer will live his entire life in compromise, this end consumer will spend his entire life by being an employee although not happy, this end consumer will always feels the lack of income, this end consumer will spend his entire life full of doubts, this end consumer will stop taking chances after one failure, and this end consumer will blame government policies, inflation etc

            1. gaurav says:

              please stop living in denial , it is impossible that everyone will make money , and the person who have put his money & effort for this so called opportunity these companies are selling will be a loser after all. all the things are you taking about retailers , actors etc. they all get paid for there serivice and accordingly in this highly competitive market . one more thing the market has brain of its own it will not oppose coming of the new idea opposite to that it will drift itself to a more solid business technique which creates more value by consuming less resources and thats how the” end” customer actually benefits . but mlm companies like yours tell people to put there money , effort etc. and sell them this so called opportunity eg. a network , backoffice etc. and try to prove them it will benefit them in the future which is a wrong strategy because if you are company you can have all these services directly from the market at competitive rates and they will be answerable to you and not the owners of the mlm company . again everyone in traditional business get paid for there service at market rates , these companies actually sell a idea ……..the service market is reliable but the idea market can never ever be sure………….market has the tendency to go from one style to another style that gives more value……………mcdonalds burger sell at Rs 25 because they know in cities people are happy to pay Rs 100 for a snack than to spend time on preparing one at home…………..i. think i prove my point.i can go on on with this topic but the problem is first you have to come out of the cult behaviour these companies create…………& learn to question yourself and every aspect of the mlm business again & again not to prove something is wrong but actually to perfect this style of business.

            2. Dinesh Jain says:

              Gauravji,

              That’s where the problem is. Whatever i say is cult behaviour and whatever you say is absolutely logic. Ha…ha….ha….

              Agreed, i am not as intelligent and as logical as you are, but my Dear Gaurav through your above reply you are questioning the intelligentcy and ability of the following person.

              1. Burke Hedges – read his book “Copy cat marketing”
              2. Paul Zane Pilzer – read his book “Next millionaires”
              3. Robert Kiyosaki – read his book “Business of the 21st century”
              4. bill gates – read his comments on network marketing at google search
              5. Bill clinton – read his comments on network marketing at google search
              6. Warren buffet
              7. Donald Trump – he himself is the owner of a network marketing company called “Trump Network”.

              Even after this also you don’t get convinced, then also don’t worry. Bcz if you get convinced, i am not getting any profit and if you don’t get convinced, i am not incurring any losses.

              Gauravji, let’s not waste our time in replying to each other

          2. Thanks for your comment Gaurav. I am sure you must have learnt from your experience !

  48. kvi says:

    Manish,
    Very good information.There is a need to understand’Sustainability” for every one…We all know the evident perils of sucking petrol and mining ….Those who went into business early made money but the future generations suffer…
    As for rohit’s views there is riddle which says a frog can jump only half its target every time.So theoretically the frog will never reach its target!!!
    Manish try to reach this to school and colleges…the children should not be duped.One good product and very high profits ruin hard earned money …

    1. Dinesh Jain says:

      Dear Kvi,

      Can you pls elaborate what is the meaning of “very high profit”. You get a bisleri bottle from a kirana store at Rs. 15, from a normal AC restaurant @ Rs. 30 and from 3 star and 5 start hotel @ Rs. 100. Now pls tell me are 3 star and 5 star hotel are ruining hard earned money.

      1. kvi says:

        Dinesh,
        It is important to assess once own capacity and then arrive at the level of spending/investing etc.For the rich, the money which is in excess of their generations need has to come back and be put into productive use.So a 5 star or other luxuries bring them out as opportunities for employment and re use.However for daily wage worker or salaried employee, carrying a water bottle from home is a better option .This will be frugal and sensible. Better still is to make the admn provide potable water th taps ( which is a pipe dream in india now).The moot point is the redeployment of the earned profits is critical & every one should not attempt high profits……. which becomes unsustainable.

        1. Dinesh Jain says:

          “The moot point is the redeployment of the earned profits is critical & every one should not attempt high profits……. which becomes unsustainable”..

          Dear Kvi,

          Am still yet to meet a person who is not attempting to get high profit

          1. kvi says:

            We have many examples…Nano & bajaj scooters& A/R are econoically priced for reasonable profits.Pl read about social business initiative by mohammad yunus or grameen bank.

            1. Dinesh Jain says:

              Hi Kvi,

              You are using the word “very high profits”, “economically priced”, “reasonable profit” That’s your perceptions and not the reality.

              As a financial planner, i meet a lot of people who gives 15k immediately but some prospect thinks its highly priced. I can’t say one person is wrong and the other person is right. It’s just their perception.

      2. Ashwin says:

        This should not be the case, if bottled water has an MRP of 15, then they need to sell it @15 everywhere otherwise its against the law. You can file a case against the organization that demanded more than the MRP. Unless, they sell it in “loose” like the sell Pepsie/Coke in Multiplexes, thats not bottled and has no MRP. They can charge, 80Rs for 200ML when outside its just 15.

        1. Swetank Saroj says:

          Hi Ashwin,

          What you say is right.

          It used to be the case. I exactly do not remember many years back the first case files with consumer department was against Nirula’s at Delhi. The consumer won it and it was made sure that only MRP wil be charged but after that somewhere the law got tweaked and now these restaurant or hotel owners say they provide service and many times they serve you in glass and have the authority provided by our great Indian laws,,:P

          Hope I have made my point clear.

          Thanks,
          Swetank

    2. Yes, from your comment, I can make out that you are talking in favour of the article 🙂 . right ?

      1. kvi says:

        yes for sure…

  49. Gopi Krishna Settur says:

    Waiting for this from you Manish. This is a Huge menace among the Indian people In USA. it bwas known was Amway Quickstar. Many innocent indians fall prey for easy money shown by already exisiting members and spend all money and end up no where.
    many desi guys (already a member) hang aorund Walmarts and Target super stores and say hai to fellow indians and say that they have a good job opportunity. when you start listenting to them fnally you understand that you need to be come a member by paying money and take a welcome pack of cheap products whose price is bloated and inturn you will take turn in waiting at these stores for baits.

    One more thing is They brain wash its members that ” who doesn join this business By listening to you is a enemy of you and no need to talk and meet them”

    Many of my friends became amway members and made me their enemy 🙂

    1. Rishi says:

      Gopi – this is called cult behavior and all MLM schemes encourage that. Typically, it’s an us vs them mentality -you are either a friend who is part of the cult, you believe in what they believe in, or you are absolute nothing. These people lose their perspective and look at everything from their cult’s point of view.

      1. Dinesh Jain says:

        Rishi,

        People who are not a part of MLM do also have a cult behaviour . These people like people who don’t like MLM.

        Waise bhi, MLM sayane logon ka kaam nahi hai, ise paagal log hi karte hain. Aur duinya main jisne bhi itihas racha hai, initially use log pagal hi bolte hain…

    2. Haha. .good one . Relationships are destroyed with these Pyramid Schemes !

  50. Siddhesh Ayre says:

    Nice explanatory article, Manish. I hope people get some lessons from this and stop falling for such schemes.

    1. Yea .. thanks Siddhesh

  51. Rohit Varma says:

    Nice Article Manish..
    One thing i Don’t understand is how does the saturation happens. if the tree keeps on growing then everyone is at profit. Its just that people at the top will be earning much higher profits as compared to those down the chain. ?

    Moreover you also mentioned that “Because you will never see me again!” ..This may have happened in some schemes, but if we talk about Amway ,then i guess its still flourishing. So how are people actually getting duped ?

    1. Mihir Naik says:

      To my accord, Amways is still running because they are selling some products..! Its not a pure MLM..!

      1. Mihir

        How do you define a MLM ? In my view , when you have to add more people and they pay for getting added (in any way, by purchasing products or whatever fees) , the tree gets formed, I define the MLM that way .

        1. Mihir Naik says:

          Pure MLM means a kinda of fishy scams..! Like SpeakAsia..! Amway is somehow selling some genuine products(some customers are even appreciating those products..! though I havent used any).

          So Long story short, This is the reason, prima faciely, I find behind amway..! Or You can say.. Amway is the most successful scam ever.. 😛

          1. the issue is the model and the promises it makes, not the products, like I sharing in article my “Jagoinvestor Book MLM” , the book is excellent , but the model is fradulent !

            1. Mihir Naik says:

              Ya..! That’s the point..! I told this because the guy asked me why still Amway is flourishing..!

              Well, you didnt comment on this one…! “Amway is the most successful scam ever.. “

            2. I dont think Amway is a scam, the issue is business model . Scam is where the business owners fly by night with all the money . Amway model is very simple , just search 10 more fools like you to make money , now the moment you search 10 fools and get them enrolled, you rollback your “fool” status and now you are part of “intellegent” club 🙂 . Dude, you are then really intellegent , i must say, I will hire you to run my Jagoinvestor MLM scheme !

            3. Mihir Naik says:

              😀 ..

              Lol

              Last 2 lines are not clear to me..!

            4. Was just kidding 🙂 .. over sarcasm in my comment ..

            5. Sagar says:

              Hi Manish,
              Yes, I agree with you that the Model is different from traditional ways of doing business, but I somehow Disagree with the example u gave as “Jagoinvestor Book MLM”. in ur example of Jagoinvestor Book MLM ur initial charging of 1000 triggers a scam because the worth of the book is not 1000. in Amway u pay for buying products and not for any business activities or promotions and that’s also not compulsory/obligation to buy. Amway never tells you to add more people in ur network to have more commissions. it gives commissions based on volumes. The more volume u create the more return u get. If you look in traditional business, the distributor plays the same role. the more volumes he gives to the company the more commission he gets . U buy products from Amway directly and there is nobody in middle. it gives people chance to earn money by acting as a distributor. Now in order to have fair business it has created a model of networking people and if you see it closely it pays the difference in commissions u get from ur team. Well it will be too lengthy to discuss here. I assume before posting this article U have gone through the business model of this company and its way of working. The chances of scam is more when u pay more for less worthy product. Amway operates in 97 countries “https://www.amwaywiki.com/List_of_Countries_and_Territories_where_Amway_operates” and from half decades I suppose. If it is scam you could know its existance like other MLM scams.. 🙂

              Sagar

            6. How do you know that Amway products are worth ? They just labled it with 5,000 and charged 5,000 , so its ok ? and the book price is decided by the publisher as 499 , hence thats the issue . Think about it !

            7. Sagar says:

              I can say it because wherever u buy those products u will get it with the same price. It is worth or not only user of that product can say. In Ur example ur book cost is 1000 INR but in reality I can get it in 499. Evan u r business owner in Amway u dont pay anything more other than product cost. In ur example I am paying more than book cost… which seems fishy..:). If you would have come with book price as 1000INR from beginning I would have not objected it… 🙂

            8. Yes Sagar , I get your point on that .I am aligned , but what I am saying is that in case of AMWAY , the scheme is run by the same person who is fixing the price . What if the MRP internally was Rs 3,000 (hypothetical case) , the same thing is with the Gold Quest, where a gold plated coin is priced at Rs 28,000 , Who no one questions .

              In my example , its a different model compared to Amway . There You are not paying Rs 1,000 for the Book , you are paying for the scheme business joining fees and with adding 2 more people you will recover that too .. So yes, the risk is there . I think we are both alighned , just that we are not getting each other point . No issues there !

            9. Sagar says:

              Well, At this point I can say our basis of comparison is not correct. Amway never pays for adding more people in ur group. It pays on the volumes u create. The structure of Amway Business and ur example is entirely different. Amway doesn’t run on pyramid structure, where ur scheme does.

            10. Yes, the article is not comparing them , Its just sharing how different kind of models exist

          2. Jay says:

            You are right mihir at one point that Amway is selling genuine products,but they do thru this MLM model,Even i have attended Amway seminar,Amway says that they don’t use money in marketing/advertising for selling that products and those bunch of money,they use to distribute in Amway chain people.but Is there is guaranty by Amway that they never change their MLM business plan ? even nowaday I am seeing Advertisement of Amway products in TV/OOH,
            I think Tomorrow,once they(Amway) sees that there is not much growth in their product sell,then Amway may switch their business plan from MLM and can enter to direct marketing/Advertising.so till that point people who are in Amway chain,can make money n Njoy .. 🙂

          3. Rajan says:

            Hi!
            Amway is not a simple MLM scheme. Apart from the fact that they sell decent products, they also have direct sales to customers, bypassing the middlemen. In a ‘Amway’ kind of model, members are rewarded at all levels in the heirarchy, although the rewards dwindle to ridiculously small amounts when the member is way down in the pecking order 🙂
            All of these (with the exception of the well-known Amway) fall in the ‘borrow from Peter to pay Paul’ scheme, started by Charles Ponzi (https://en.wikipedia.org/wiki/Charles_Ponzi)…
            Why do people fall for such schemes? Simple: basic human greed and the belief that you can get something for nothing!

            1. Thanks for sharing your thoughts !

    2. how Saturation will happen, I wonder how you can not imagine this . There are 10000 people , you need to talk to atleast 10 people to make 1 member and earn profit . when no one knows about it, its easy to sell and make member, by the time 100 people become member, all 10,000 people already know about it , at one point of time, it will not be easy to add more members, because no significant number exists . Thats exactly what happens in all the schemes, yes Amway is growing still, I never said it has reached saturation level. Talk to 100 people on Amway and see how many know about it already .

      Same happened with Speakasia, there was a time , no one knew about it , and then it reached saturation, thats also the time when the news of fraud comes in .

      1. Dinesh Jain says:

        Dear Manish,

        Saturation is not there in the market, it’s there in the mind.

        TV is there is every house which means that TV industry is saturated and all the companies who are into selling TV’s should incur losses.

        but that’s not the case even today also TV industry is growing at a healthy rate. some one flat TV, some want LED, some want LCD.

        Talk to 100 people on AMway and see how many know about it already. Agreed all of them knows about Amway but how many of them are earning through Amway bcz to earn one has to go in the market, meet people, face rejection which most of the people are not comfortable with

        1. Sir , just think which example are you giving , TV’s get recycled, TV models change and they have a life , so people buy next version of it . Do you really think you can compare consumer goods with Pyramid Schemes ?

          Regarding Amway, I again said , its the model we are talking about , not the people who are making money through it, my own known people make money from Amway and make good amount. that does not means all can do it , its just not possible for “everyone” who joins it to make money at the end of the day . Dont you think there are always 10 people making money out of 100 people ? Now what about the rest 90 people , they will also make money somedays, but at the cost of other 900 people ? What happens to them at the end of the day ?

          Dinesh, can you share if you belong to any MLM pyramid business ?

          1. Dinesh Jain says:

            Manishji,

            I am a proud distributor of a company called “Resource Money Power Pvt Ltd” https://www.rmp-infotec.biz

        2. Amit says:

          Interesting discussion is on. If you see that growth of MLM globally it is growing over time. But it is also true that IDSA has published a report that not even 1% networker are successful(millionaire).Failure rate is 99%. In this business to become successful you need a very high level of leadership skill.I was involved in a indian MLM and created a team of 2000 people. But due to lack of proper leadership in my down line and lack of communication skill, I could not help the people in the bottom to generate income and finally network crashed & I found at one time turn around will be so high that whole business collapse. I know one gentleman from US he is doing research on sustainability of MLM business and trying to create a model where failure rate could be reduced from 99% to 25%.If he is successful, then entire MLM industry will have a different recognition.

      2. Dinesh Jain says:

        For every company like Speakasia, there is a genuine company also. But everyone is talking about Speakasia. And no one is talking about those genuine comapnies. Bcz people like negative things

        1. Manish Ghugaradare says:

          Hi All,

          First let me clear, I really appreciates the work done by this blog for enhancing financial life of people. But I am quite disappointed by this MLM article. It looks like this article is becoming bias on one side.
          Please do not mix pyramid scemes with Pure Network Marketing Business Model. It is as simple as you are eleminating the middlemens & markeing expenses & sharing some part of this saved revenue with the ones due to which sales are done. I would recommend to go through two books on this subject namely….Business of 21st Century & Business School for people who like helping others by Robert T Kiyosaki. I personally feels network marketing business model is really good for all, if taken in the right spirit!

          1. What you have said is already part of disclaimer .

    3. Bhat says:

      This is a great article.. I have been trying to stop my cousin who has been very active in many of these schemes (Free India Concept, Speak Asia Online etc..). Hope this article is able to do it. He recently email me about a new scheme called MMM-2011. It is so sad that those people who get very active in these schemes don’t want to listen and really believe that there is nothing wrong with it. For example with this MMM scheme which has just started in India now these people believe there is a huge government conspiracy against the owner of this fraud Sergei Mavrodi. He has already been convicted but these people call him a genius (there are videos on youtube about it and they have started their marketing on large scale) https://en.wikipedia.org/wiki/Sergei_Mavrodi . In MMM they are trying to create a new currency “Marvo” … Grrr… Hope the government stops such companies and takes firm action against them. Also averseness is the key so thanks for this article..

      1. Thanks for sharing that ! .. I am sure such companies will come down soon ,but it shoudl not get too late !

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