Direct Selling, Network Marketing & Multi-level Marketing Scams Explained







Direct Selling, Network Marketing & Multi-level Marketing Scams Explained:

Please Search for Ponzi Scam in Newspapers or Internet. There will be news from India. One person was arrested from West Bengal,  From Karnataka, there might be another person who will be arrested. 

After 1 month, just search, you will find news-that People may be arrested for Ponzi Scams. 

What is this Pozi Scam?

We don’t know about Ponzi Scam, but if it is Multi-Level Marketing some people may know it. The other name is Pyramid Marketing. 

The Latest names given to these scams are Direct Selling or Network Marketing. 

What is this Network Marketing?

How can we win and Earn money?

Can we succeed in Network Marketing?

We will answer these questions in this video.

Beloved Tamil People. Greetings from Tamil Pokkisham.

In 2020 Coronavirus hits and people were stuck in their houses. Many requested for these topics called Network Marketing, Direct Selling and Multi-Level Marketing. These people were approached for a job in these fields. We had a lot of comments stating to speak about this topic. 

So everybody could have been approached for Multi-level Marketing. For Ex: Your Friend might have approached you of a business idea. There were advertisements saying that “Pay Money One time and earn Money in Millions”. Advertisements are opposite to Network marketing. 

To understand this clearly, For Ex: If there is a farmer, We cannot approach the farmer directly asking for a smaller quantity of goods. So the farmers use markets to sell their goods. The farmer will sell to the Wholesale dealer. The Wholesale Dealer will sell to retail shops. People purchase goods from Retail shops. So the goods pass through 3 to 4 dealers before it reaches the buyer. 

To sell these goods they need advertisements. So if you watch TV or youtube you will see a lot of Advertisements. They have to make the buyers purchase their goods so Advertisements. 

Direct Selling means a product which is produced will be directly sold to the buyers. For Ex: If a farmer produces 5kg Tomotatoes and a person buys the good, then it is called Direct Selling. If the goods have been sold through dealers then it is called In-Direct Selling. 

What is the difference between Direct Selling and Indirect selling?

There will be dealers in Indirect Selling. There will be no dealers in Direct Selling so the cost of the goods will be low. You Can buy more products for less money. This is the Concept theory. 

There is no link between this theory and the frauds or scams which has been done. 

Network Marketing a new name was given in 2020. When it comes to Direct Marketing this name was given in 2018. Multi-Level Marketing name was given in the year 2008. So for many years Direct Selling and Network marketing have existed. It started in 1855. 

In 1855 there was a novel released. The Novels name is Little Dorrit and was written by Charles Dickens. So in the Novel, Charles Dickens gives hints for making a profit using Direct Selling. 

Direct Selling can be traced back to Russia. Communism started Direct Selling. In Communist countries, there will be no Employers. So When there are employers there will be dealers or agents and big profits. So for normal people to receive these goods in normal prices, the normal people must sell these goods, not some Employer or Rich men. 

From 1890 to 1895, Alexander the second and Nicholas are ruling Russia. In those days Direct Selling and Multi-level Marketing has been created and it was successful. So this new strategy goes to America as well. From America, it spreads to Europe and its colony countries. Russia then recognized that it is not a selling strategy but a death pit for the normal people. 

In those times, Cycles were very popular. They have created Cycles which are modern and advanced. So buying a cycle was a dream to people on those days. The Cycle’s price was 50 rubles Russian Money. Many were unable to pay the money to buy the cycle. 

Many were thinking of marketing the cycle and earn profits. They announced a Scheme stating that by paying 10 Ruble you can buy the Cycle. So the people flocked the company which was selling this scheme. There was a twist by the company for the people. So When the buyers give 10 Ruble they will be given 4 coupons. One Coupon price is 10 ruble. The 4 Coupon which is 10 Ruble should be given to four friends of the buyer. The four friends will buy pay the 10 rubles to the seller. Thus the First buyer will receive his cycle by paying 10 rubles and giving the 4 coupons to the four Friends thus introducing them to the company. When the 4 Friends pay their 10 Rubles the first buyer will be the owner of the Cycle by paying only 10 Rubles. So this will go on and on and this scheme will spread to many people. This is called Multi-Level Marketing on those days. 

So 1 Buyer + 4 Friends + 16 Members and it continues. This will be in a pyramid Structure. 

How many of the people who will benefit from this scheme?

Only 13% of people will benefit from this Scheme. The remaining 87% of People will face losses. The reason for the losses is this structure. 

In this structure, the 4th stage will have 1000 people, the 5th stage will have 7000 People. But if we go to the 6th Stage there will be 49000 people. The 7th Stage will have upto 2,79,000. So right now the count is 2,79,000 suppose if these people are unable to add the 4 members into the scheme. The 49000 People will receive the Cycles who were in the 6th Stage. But the People who joined the Scheme in the 7th Stage will not receive their cycles and they will lose their 10 Rubles. So thus resulting in an 87% People fail. This is called Pyramid Marketing and Ponzi Scheme. 

In India, this Ponzi Scheme is called as Multi-Level Marketing, Amway marketing and magnetic Marketing. Thus chit funds operate. 

How we are fooled by using the strategy?

It is very easy to fool the Middle-Class people. He will earn some money, but they will stimulate his greed. They will ask the Person to join the job as Parttime. When the Economy of the country is down these businesses will be a huge success. 

The Economy of India is low due to Coronavirus. People are thinking to earn money from Home. In this time of need, they will come with this plan. 

They will call you for a meeting. They will say that Coffee, Tea and Food will be available. So people will think it’s just a meeting and will attend it.  A guy well dressed and well-spoken will come and say that he is earning money. They will try to low your confidence by examples from their company. They will ask you to just register with the company and addon two of your friends. This is how you will get scammed. 

So people will try to get two of their friends to join the chain. They will only tell you that you will earn money but they will never say how much you have to pay. 

So in Amway or other strategies you have to pay a certain sum of money to join the chain. For Ex: They will ask 10000 rs to join and give you a product worth of rs6000. But if you look that product in our Indian market its cost will be only 3000 to 3500rs. So the first product which you buy will give you a loss of rs2500 + your Registration fees which maybe rs1000. Now you have to ask your friends to join that company. They must buy the Rs6000 products + Registration fees. This will happen every month. So if you calculate accurately you will understand that a single person will earn the company a profit of rs2000. So when this chain reaches its maximum, many people will be involved in this scam. Now, look at the Profit these MLM Companies will earn. 

So remember the Direct Selling method will be profitable to the people in the Upper part of the Pyramid. 

We discussed that 87% of People will face losses. The 13% who earn profits will try to confuse you will their profits. They will also say that Direct marketing and MLM are failure models. 

Just research the History of Amway. They say that 40% of the people have moved from one stage to another. So taking a membership is the first stage. After the first stage, the People who fail to add two more members are nearly 60%. So this 60% of the people will pay 6000 + Registration fees and their money is gone. 

In the 40% who earn profits. The people who earn in lakhs in Amway, their ratio is 0.03. The remaining people are losing their friends or relatives. 

People believe in this illusion and ask their friends and relatives to join the company. People think that they will be successful. Their greed is the reason and their downfall. 

Try to understand that this is not your part-time job. This is not a job but a business. If you’re out your full effort on daily basis then only you can earn a little. This is not a part-time job. 

There is another group which only asks for money. Their scam is different. They may ask you rs20000. They will also say that they will give you a gold coin. Now they will change the amount to rs50000. So by giving rs50000 you will receive 8Grams gold which is worth rs35000. So the rs15000 is already a profit to the company. The loss rs15000 will go away when you join two members in the chain. You will receive a check of rs7000. So the two members who you made to join the company will have paid rs50000 and already they will face a loss of Rs30000. From that Rs30000 which is a loss to your friends or relatives, you will gain rs7000. So the remaining rs27000 will be the profit of the company from three people. When the chain goes to the next level you will receive the same rs7000 but the company will receive three times the profit. So please understand the strategy they use to fool you. 

So if you are in the Top Level you will earn profits. Nobody can hold their positions in the top Level. So as long the chain is not broken you may be safe, but if the Chain breaks you will face huge losses. The Company will keep pressuring you to find more members so they can earn huge profits. This is a huge scam which will never end. Nobody has been successful in this scam says history. If they are successful they will come under the ration of 0.03. 

This Business has taken many shapes and forms. We will give you a small list. 

You would have heard Emu Farming. In the 1990s The Goat farming Project. The next is Auction Ticket. The Scam of 7 Star Electronics. Amway Thefts. Teak Wood Projects. Anubav Plantation. Sterling Tree Magnum, Chicken Farming,  Sneham Chit Funds, Vivegam Chit Funds, Ramesh Cars, Kalaimagal Saba, Resorts and Club Scams, TLC insurance Scams, Royepettai benefit fund, We Can, Conybio, Gold Quest. The now companies like Rnet and Qnet. 

So in many shapes and forms, these scams are reaching and following the people. 

If you take the list of the people who have been fooled by these scams in the world, using methods, Direct Selling, Network Selling and MLM. The Numbers are huge. The people who have been fooled are in the middle class. 

You may ask us a question,

Will the govt and the Police take actions against the Company?

When it comes to the marketing of these companies. The highest authorities, officers or Politicians are the ones who lead this scam. Many Police officers have been arrested in these scams. 

There is a woman called Sivakasi Jeyalakshmi, she did this MLM project and many Police officers were arrested because she convinced some Plocie officers and through that network, she scammed the people. 

So it’s not only the middle-class people, The Educated Officers and Rich men have suffered loss by these scams. 

So try to understand this scheme.

Is every Scheme a scam?

No. Out of 100% only 13% of the people will be successful in this business. But 87% of People will face failure. 

People who want to be scammed, and want their friends and families to be scammed can involve themselves in Direct Selling. 

There will be issues when your chain breaks. You will lose their Friends and Relatives in this Scam. 

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