MLM vs. pyramiding scams: Know the difference

By Lynda C. Corpuz

Amway, a direct-selling company founded in 1959 by Rich DeVos and Jay Van Andel, proved to be a good proposition to those who want a business of their own. But no matter how established, what with its presence around the globe and the success stories it chronicles throughout its 50-year existence, it also took a beating from the pyramiding scams in the 90s that hounded the Philippine direct-selling and legitimate multilevel marketing (MLM) industry.

To fight this, Amway partnered with the Department of Trade and Industry (DTI) in producing a brochure warning the public about pyramiding – those illegal schemes that generate income mainly from recruiting members or agents rather than from selling products or services.

And if you intend to join any direct-selling or MLM group and be like Amway IBOs Mar and Babes Tero, here’s a quick guide to differentiating a legal MLM versus a pyramiding scam:

•    It may be an illegal pyramid if it proposes commissions for recruiting additional distributors.
•    A MLM may be fake if you are asked to purchase expensive inventory.
•    Continuing to grow your down line (the commissions on sales made by new distributors you recruit) is not the way to earn in a MLM. True MLM plans make money out of sales you made yourself.
•    Ask for hard evidence for any plan which claims to sell miracle products or promise big income in an instant.
•    Take note of decoy references paid by a plan’s promoter to make people believe about their fictional success.
•    Do not sign any contract in an opportunity meeting or any high-pressure situation staged by a MLM. Rather, insist that you will carefully think first about joining.
•    It pays to do your homework so check with the Securities and Exchange Commission and the DTI about any MLM you are considering.

3 thoughts on “MLM vs. pyramiding scams: Know the difference

  • July 1, 2009 at 4:31 am
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    Well a few years back, I was recruited on this pyramid scheme. But the important thing that I learned was you can’t earn money while doing nothing or on easy way. To know that it is legit, sweat and hard work will be the evidence.

  • April 5, 2011 at 7:28 pm
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    100% true.
    1. recruiter approaches you as a friendly, rich and successful and sharing how to make lots of money quick and easy. this person is usually the third sex with collaborators, open or secret to agree with the recruiter. The person may be also well known in entertainment industry.

    2. Pay a joining fee, buy an expensive kit and try to the sell the overpriced product to your friends and relatives who find it hard to say no. Although they know they can find a similar product , be in a vitamin or food supplement, personal care product cheaper at a store.

    3. In the free seminar get together, you are given cheap refreshments, and the host-recruitment trying to show off how he scamed successfully.
    Applauded by his group of co-scammers. He does not pay any taxes.

    4. After buying from this person, you will find many leftover stocks that you will have to use yourself. Naluluto ka sa sariling mantika at mga kaibigin mo nasabit may galit sa iyo!

    GUSTO MO IYAN?

  • October 29, 2011 at 11:29 pm
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    Is First Vita Plus Mktg. Corp. a legit MLM company or a pyramiding scheme? They have a product that you sell and you can earn eithe through direct selling or by recruiting downlines since you get a commission once your downline buys a product worth P7699 and becomes a dealer and that downline in turn recuits downlines too and you also get a commission from that one.

    Can you help me on this one so that I can decide whether I will continue on this endeavor or it might just be a waste of time.

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