If you are reading this article now then you are probably investigating if network marketing is a scam or legit business. I will give you my answer straight away before going on to explain why. Here is my direct answer, network marketing is a scam and you got to be aware of ponzi and pyramid schemes. Any network marketing or MLM business is either a ponzi scheme or pyramid scheme which are all scams.
I am writing this article in response to coments from my whatsapp status and facebook profile on a post I made saying that network marketing is a scam which I still stand with that.
Some Definations Surrounding Network Marketing (MLM) business.
Before we move on let us first of all understand the defination of the following words or phrases in relation to our topic confirming that network marketing also known as MLM (Multi Level Marketing is a scam.
Network Marketing
Network marketing as define by thebalancesmb.com is a business model that relies on a network of distributors to grow a business. It typically involves using three basic types of systematic strategies to make money: lead generation, recruiting, and building and management. There are many types of network marketing, including single-tier, two-tier, and multi-level.
Network Marketing as defined by wikipedia.com: Multi-level marketing (MLM), also called network marketing or pyramid selling, is a controversial marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company’s products or services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system. An MLM strategy may be an illegal pyramid scheme.
Network marketing as defined by investopedia.com is a business model that depends on person-to-person sales by independent representatives, often working from home. A network marketing business may require you to build a network of business partners or salespeople to assist with lead generation and closing sales.
Pyramid scheme
A pyramid scheme as defined by investopedia.com is a sketchy and unsustainable business model, where a few top-level members recruit newer members, who pay upfront costs up the chain, to those who enrolled them. As newer members in turn recruit underlings of their own, a portion of the subsequent fees they receive is also kicked up the chain. Often called “pyramid scams,” these operations are illegal in some countries. A pyramid scheme is an illegal investment scam based on a hierarchical setup of network marketing. The most famous kind of pyramid scheme is, perhaps, the Ponzi scheme.
A pyramid scheme as defined by wikipedia.com is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.
Ponzi scheme
A Ponzi scheme as defined by wikipedia.com is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from legitimate business activity (e.g. product sales and/or successful investments), and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.
Ponzi scheme as defined by investopedia.com is a fraudulent investing scam promising high rates of return with little risk to investors. A Ponzi scheme is a fraudulent investing scam which generates returns for earlier investors with money taken from later investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers.
My Stake Why I Said Network Marketing Is A Scam and People Got To Be Aware of Pyramid and Ponzi Schemes.
Looking at the different defination above you must have gotten a oview of what this network marketing is all about. Truthfully the actual defination is creating a network of persons selling for a company, but turning it in MLM is where the problem begins and today MLM companies even exist with no product but yet people fall for it.
In the first place any business with no physical products or services is as good as a big scam. Never you invest your money into any company without product again in case you ever did so. However having product is no guarantee as long as it is an MLM scheme. A pyramid scheme is one with products and levels of payment, a ponzi scheme got no product at all.
How a pyramid scheme network marketing works.
In a pyramid scheme a product/products actually exist. The company hires individuals to sell for them at different levels by paying them to bring new indidivuals.
The first problem here is that no company is out for losses, so because they pay you to bring another man or causing another person to buy already means they are selling at inflated prices. The tricked you by telling you, you will not have to bring any body in order to earn.
The sad part of the story is that only those who joined earlier shall benefit and the rest will have to work for their lives.
By the time the number of people that where supposed to join have already joined, the last sets to join will have no one to add meaning they will not be able to earn hence have been scammed off their hard earned money.
Imagine a village of 156 persons being exposed to a MLM business where you got to put people to earn. Imagine the first among the 156 persons to introduced the business managed to convinced 5 persons to join making 5 new members and a total 6 members, and the 5 persons convince 5 persons each to join making 25 new members and a total of 31 members. Imagine the 25 members convincing 5 persons each making 125 new members giving a total of 156 members. At the end of the day the last 125 persons will have no one to add hence the have been scammed by the rest of the other members in collaboration with the supposed company.
It means that out of 156 members, 21 benefited while 125 where scammed. If we cannot call this scamming what else can we descripe as scamming?
Example of pyramid scheme network marketing business in Cameroon includes; Longrich, AIM Global, ETC.
How a Ponzi Scheme Works.
A ponzi scheme is by far worse than pyramid scheme in that they have no products nor services to offer, they are valueless and work entirely on deceid.
A ponzi scheme of network marketing business operates on tricks, their procedure is same as a pyramid scheme except that they tell lies about products and services when they don’t have any.
Ponzi scheme makes victims to belief they have investment shares in oil companies, agricultural companies, contruction companies, etc that generates huge profit, hence the money you give to them is use to invest in such companies to generate the interest they pay you back which is all fake news.
Some goes to the extend of decieving people by making them believe they own an online shop which is being stock with products bought with the money they pay after registration. In such scheme the victim is given an online shop loaded with the required product images which make the victime confortable believing the have products which are being sold online. Virtual products for that matter.
How can someone sell you a product at a lesser price and then resell the product on your behalf at a higher price and then gives you the profit. Is that not craziness, I am really surprised how come some human beings are still falling for such shit.
What actually happens is that they take your money, keep part and give part to the person who brought your. When you bring in a new person, they collect money from the person, keep a bigger share of the money and give you a small pinch. This is called “Robbing Peter to Pay Paul. They send you to steal, bring the money, they take the lion share and give you a widow’s might.
Such business will remain sustainable as long as there are new people to join. Once the number of new members start approaching zero, they will certainly pull a trick that will prevent them from paying out, giving them an ample time to finish collecting money before crashing the system.
The trick they always brough forward is UPGRADE. once you hear upgrade just know the business is approaching extinction. The old members are told they need a particular amount of money to upgrade to the next level and that, the money will come from their usual earnings, hence they will no longer be paid since the company has to keep their payment untill it reaches the upgrade amount. So that they will be upgraded and start receiving a bigger amount. While this upgrade promise helps to keep the old customers a bit longer with no worries, it help the company to collect money from the remaining few people who will join.
After the upgrade hoax, the unavoidable will certainly happen, which is the system crashing intentionally. They will crash the system and you shall have no one to hold responsible since the business is entirely online.
I am writing this article with the intention of helping others from falling a victime to this nightmare. I understand those who have already paid money into such schemes will never want to believe but this is the reality and you got to be wise.
Some Scamming Network Companies That Exist or Existed In Cameroon and How they Operate. (Ponzi or Pyramid).
A) Some Ponzi Schemes Network Marketing Companies.
- Momopays: Momo Pays has gone to extinction after scaming thousands of Cameroonian in a fake Get-Rich-Quick scheme. Momo Pays is one of the first MLM scam in Cameroon, deceiving people to buy a useless e-book where they send you to cause people to join and the collect money from new members and share with the referrer. Momo Pays ended with an upgrade and then the system crashed.
- Bitworld: Bitworld was just an open scam claiming to be directly affiliated to the bitcoin company. Taking money from people and promising them a miraculous get rich scheme which many ended of crying. Bitworld ended with an upgrade and then the system crashed
- Bitclub: Bitclub had same story line as bitworld and also went to extinction after upgrade and crashing.
- Chymall: Chymall is amongst the latest ponzi scheme business that is still around the corners in cameroon, facing upgrade which will eventually lead to crashing. Chymall was earlier banned in Cameroon under the name Sairui Mall, before rebranding itself as chymall.
They are many more of such Ponzi schemes in Cameroon and around the world. I encourage everyone to be careful.
B) Some Pyramid Schemes Network Marketing Companies In Cameroon
- Longrich: Longrich
- Aim Global
Both longrich and AIM Global have real products for different purposes, but like I said, since you need to put someone to earn, the last people to join are going to be scammed and it is already happening.
People who recently join these companies in the last 24 months or more are working for their life and not earning anything compare to the scammed promises. They are there under serious regret working out their soul in an attempt to recover even their initial capital. It is no big deal that those who entered earlier and are ontop of the pyramid are benefiting while those at the foot of the pyramid suffers for their life.
There are many such companies around and everyone got to be aware of what they are getting into.