Greed And Pyramid Schemes On The Rise In Thailand

[asiawatcher]

Pyramid Schemes

What is it?

Is every Business that sells a product to another, then they sell it and so on, down level after level a Pyramid Scheme ?

No is the simple answer,

In UK BT sell there phone lines direct + sell to other companies that have agents then come knocking + or and advertize, all the different home phone companies, still use the BT phone line..

Insurance Companies here and most places in the world do the same, Kleen-Eze, Amway, Avon, Tupperware... the list is endless

I think lots of people get muddled, I was told years ago that a Person/Company that sells a product is not classed as Pyramid Scheme..

It get confussing, Take Honda, Private people open a garage/Showroom and sell Honda cars, they have people selling cars many on Commission only, when I boubht a new Honda here I was also given a list of what to say to friends and if I got someone to buy a Honda then I would receive 10,000 baht, for each car. It is the same thing is that Pyramid Selling ?

Most of the so called legitimate sellers who work on commissions structures and compensation plans are simply sophisticated Pyramid Schemes. Yes they DO have a product or two and YES they are way over priced.

Do the maths on the way the commissions are structured and realise they can't pay out %ages like 50-60% without having LOADED the original price. The NuSkins and Amway's have been successfully doing it for years but the people who get sucked into these schemes do not realise the pricing is far above retails. Once product leaves factories or warehouses of these MLM companies they simply have already made their profit. You as a 'distributor' get commissions on top of their profit structured into their pricing structure.

Cosmetics cost zilch to make and sell for stupid money - 10 cents of ingredients and sells for 30 dollars to some consumer who feels they look better because of that product and yes some are good, but way over-priced. Take water filters from Amway at around 30,000 Baht - you can buy them for under 15,000 or less at any retail outlet but the over pricing pays the margin split to the poor fools who sell them. YES it makes money.

But under these quasi legitimate MLM schemes, when you fail to reach certain levels or minimum monthly volumes, your 'business' rolls over you to the man above and you start again (if you are that stupid). Nu Sin is notorious for that ploy.

These companies have been doing this for ages and yet they can still recruit members and sell a 'business in a box' to get suckers started. Glitz, glamour and bordering on fraud. Caveat Emptor - let the buyer beware...

But a TRUE Pyramid scheme is when a seller sells nothing or 'an idea' for cash and then on reselling the same idea, pays commissions from the next 'investor. Madhoff did this! Boiler rooms in Bangkok sell shares that don't exist and simply close when the heat is on. People invest their savings and it simply evaporates. Commissions get paid to 'coolers', 'openers' and so on and usually around 50% of monies collected and then the owner shuts the 'room' and simply opens another. Same brokers, different name and so on. Philippines, Cambodia and Thailand are rife due to lax laws to protect consumers.

Pyramids have been around for years like the "Plane Game" where you buy a seat from passenger to Pilot. After you collect from the pool you simply rise to the top and drop out as the pilot and earn from other people buying 'seats'. There is no product and never was!

[WatersEdge]

Quick Ways to spot an MLM (Multi Level Marketing).

1. a. A person you don't know wants to become your best friend.

It's like hitting on a girl in a bar,

but they approach you in an airport or grocery store.

b. A person you know very well just discovered a great way to make a ton of money.

2. The salesman is furtive, very careful to be totally polite and cheery.

They will do anything to avoid answering the question,

Is this an MLM?

Well, No actually, it is networking, it is membership, it is anything but Multi Level Marketing

3. The product is some obscure purpose miracle deal...but always overpriced.

It is always something you can live very nicely without...they sell mainly the sizzle.

Something that the claims are difficult to prove don't work.

Fuel additive tablets

Odor elimination spray

3-D Camera

4. You are asked for money in order to be able to sell this amazing product yourself.

Yes it costs $300 to join, but as soon as you sign up 5 of your friends you get it all back.

And you will sell a lot of this product to people all over town.

But the big news is that you get 10% of everything those 5 friends sell too....this really adds up!

5. It preys on friendship and family...

Sign up your Mom, she knows a lot of people.

If a friend approaches me with an MLM, I say straight up,

Sure wish my friendship was important enough to you,

that you'd never think of asking me to join an MLM with you EVER again.

Yes, they act offended, because it's vital that they enlist family and friends,

depending on friendship to cover their gross encroachment on that tie.

If that friend declines, it's another lost prospect, and he only has so many friends.

It's kind of like the lottery, but in the private sector...

a tax on people with poor math skills.

It is a huge favor to your friends to slam them very harshly,

the first time they try an MLM on you,

because you will save them the humiliation of asking another person

and wasting their good name on a fraud.

Proposing an MLM is the same as telling your smart friends you are an idiot.

Only your dumb friends will believe you,

and if your smart friends don't give you an answer,

it's because they just wrote you off as a prospect for future friendship.

Afterward, you will have only dumb friends.

Friends don't let Friends do MLM!

[anotherpeter]

Quick Ways to spot an MLM (Multi Level Marketing).

Is MLM the same as Pyramid schemes? I don't think so.

Everyone can make money out of MLM, if you can sell. If you're not a salesman then you can't sell anything whether you are paid a salary in a retail store or are in MLM.

If MLM is selling actual product, then it comes down to being a salesman. If you can't sell, you can't make money. That doesn't mean the MLM is bad (yes, there are bad ones that dump you if you don't meet there very high expectations).

The fraudulent pyramid schemes are the ones where the sole aim (and the only way to make money) is to get other people to pay to join.

[ingvar]

There has been mentioned some companies here in the context of Pyramid schemes. I do not know of the others, but I do not see Amway as a pyramid scheme. I do not like the way their products are sold and the way they gather in conventions like some religious gatherings and so on, its all very silly and I would be much happier if the stuff was sold in shops. As I understand there is a pyramid like structure of the dealers, but there are actual products being sold and actual profits are made.

On the other hand I like their products enough to tolerate buying the stuff from my Amway acquaintance. The core products are really good stuff, Everything is organic like the vitamins, Protein powder, Toothpaste, water filter etc.. The cost is usually higher than comparative shop items, but last about 3 - 4 times longer due to no fillers in the product.

I do'nt care for the cream and makeup rubbish which is not really the core but has been added because Thai people are crazy about external care rather than internal.

[Thai at Heart]

EVERY sales company in the world rewards managers for the efforts of thier staff (direct hires). That doesn't make them pyramid schemes.

The fraudulent schemes are the ones where most of the money made is from people paying to join, not from sales commissions.

Guaranteeing a clip to the person who hired you is very different from incentivising you to manage people. Paying the person for hiring you is also a big no no. Compelling them to purchase stock of products is a red flag too.

Of course people are incentivised to produce, however, another part of the issue is whether the person who hires you discloses at the very beginning that they are going to get a direct clip on your ticket. It is theoretically possible to make a wonderful living from many of these systems by selling nothing yourself and simply hiring more and more people and that is a pyramid.

I know that wikepedia isn't 100% but on this it is close enough.

http://en.wikipedia.org/wiki/Multi-level_marketing

Because pyramiding (getting commissions from recruiting new members including "sign-up fees") is illegal in most states,[14] to remain legitimate in the U.S. a company that uses multi-level marketing has to make sure commissions are earned only on sales of the company's products or services if they cross state boundaries. If participants are paid primarily from money received from new recruits, or if they are required to buy more product than they are likely to sell, then the company may be a pyramid scheme, which is illegal in most countries.