Lately, the Enforcement Directorate has frozen the assets of Amway India Enterprises Private Limited, which has been accused of running a multi-level marketing scheme by the agency. The Enforcement Directorate (ED) has accused Amway India, which sells a variety of items as well as “enterprise possibilities” to clients, of being a “multi-level marketing scam” whose main goal is to persuade people to sign up for its “exorbitantly priced products” rather than to sell them. The ED claims that Amway is “operating a pyramid scheme” under the cover of direct-selling multi-level marketing (MLM) networks in its list of complaints against the corporation.
Well, this is not something new, for years these MLM companies are making fools of people. In several instances, people have lost huge money. Today, in this article we are going to discuss this issue.
Difference between MLM and Pyramid scheme:
Some direct sales organisations MLM as a strategy for selling items and services. Existing MLM members are urged to promote and sell their products to others, as well as recruit new recruits. Distributors are paid dependent on how much their recruits sell. New recruits join the distributor’s downline, or network, and are urged to make sales in order to earn money. Although many MLM systems are legitimate, there are some that operate illegally as pyramid scams.
A pyramid scheme, on the other hand, is a deceptive method of obtaining the money that involves enlisting the help of an ever-increasing number of “investors.” The first promoters bring in investors, who bring in other investors, and so on. The system is referred to described as a “pyramid” since the number of investors increases with each level. The small group of top promoters needs a wide base of later investors to fund the plan by paying out rewards to the early investors. They often promote their scheme through grand events.
You must distance yourself from such folks, who take you to an unknown location for a so-called seminar. In these events, organisers show off their luxurious lifestyles and urge attendees that if they want to live a life like this, they must join their plan right away and bring their friends and acquaintances to the next meeting.
How do these companies target youth?
- The MLM’s operators are solely interested in the gullible and distressed adolescents.
- These people often fail to see the scheme’s shortcomings since it will be presented in such a way that one can fall easily into the trap.
- Agents come into contact with affection and flaunt a lavish lifestyle to attract the youth.
- This compulsion instills in the youth a picture of a utopia, and they begin to believe that they, too, should have it all.
- These people do not meet the youth over a cup of tea, but rather invite them to seminars at opulent hotels.
- These seminars will draw large numbers of those who are interested in learning more. A three-piece suit will be worn by everyone.
- The presentation will explain how you can drive a jaguar as well.
- Many young people fall into this trap.
End investors lose money:
Pyramid schemes are often advertised on social media, the Internet, corporate websites, group presentations, conference calls, YouTube videos, and other platforms. Promoters of pyramid schemes may go to considerable measures to make the scam appear to be a legitimate multi-level marketing (MLM) programme. The fraudsters, on the other hand, utilise money from new recruits to pay off earlier-stage investors. The schemes grow too big at some time, and the promoter is unable to obtain enough money from new investors to pay previous investors, resulting in individuals losing their money.