Get rich quick
MALCOLM LIM used to earn over $3,000 per month when he was a teenager, by selling health products to his friends through multi-level marketing (MLM). Now in his mid-20s, he has quit the business for good because, in his words, "I don't want to be a legal conman."
Malcolm (not his real name) is among the thousands of Singaporeans who had been lured to join these schemes in the hope of getting rich quick. He made - but also lost - lots of money. Now he wants to "expose MLM's dirty tactics."
Malcolm reckons there are about 10 big MLM companies here, plus another 50 to 80 smaller firms.
Because of the recession, many people have joined these schemes - from clerks and secretaries to doctors, bankers and stock brokers.
What, exactly, is MLM?
Also called Network Marketing, it is a system of selling products - usually health supplements or beauty care products - through friends and relatives.
The emphasis is on building a large network. If you get 10 people to join, and each of them get another 10, you will have 100 people selling the products under you.
If each of the 100 recruits another 10, you will have 1,000. They are your "downlines". The commissions you earn from their sales can be substantial.
MLM companies commonly claim that a person could EASILY be earning $10,000 per month within six months.
"That's in a perfect scenario," Malcolm says. "It never happens in the real world."
They further claim that the products are sold at reasonable prices because shop rentals, advertising and other high costs have been removed.
Malcolm reveals that the typical profit margin is at least 500 to 1000 percent. The bulk of the profits go to the MLM bosses. Only about a quarter is distributed as commissions.
Pyramid selling
MLM is similar to "pyramid selling", which is banned in Singapore. But most have been modified to operate within the law and the Singapore government is now reviewing the ban, to avoid penalising companies that are legitimate.
Malcolm argues that the government should impose stricter controls instead. "Even if the companies operate legally," he says, "they cannot control what their members do."
Malcolm joined his first MLM programme when he was at the Polytechnic. "The response was fantastic," he recalls. "Young people are not interested in health products, but when you tell them they can make money, they all join.
"In three months, I had more than 1,000 downlines. I was a money-making machine for them.
"But as I rose up the ranks, I began to discover things that I did not know before. For example, the 'consultant' who made the presentation.... his big house and big cars, they are all sponsored by the MLM boss. It's a false front, to give the impression that he is successful.
"Once, I was aiming to reach the manager level. They told me I needed 8,000 points. I was doing so well that I could achieve 80,000 points. But if I did that, the extra 72,000 points would go to the person above me.
"So I slowed down my activity. Then, just before the month was up, they said there was a computer error and actually I needed 20,000 points. They use dirty tactics like this to prevent you from moving up."
Then there is a monthly maintenance. "Every month, you have to buy $200 to $300 worth of products. If you are in a higher level, you may have to buy more than $1000 worth.
"You either keep recruiting new people, or you keep buying. Otherwise, they forfeit your commissions."
Malcolm left the company and joined another. After attending more than 10 presentations, he thought he picked the best. It turned out to be even worse.
Ran away with money
"They cooked up a story that one of the shareholders had run away with the money. So they withheld about $30,000 worth of commissions and bonuses from me."
Is he sure the story was cooked up? Perhaps someone did run away with the money?
"I had friends in secret societies," he reveals. "They managed to catch this guy and he admitted that he took some money. But not all of it. About $2 million was missing, but he took only $500,000. The other shareholders must have taken the rest.
"To succeed in this business, you need to have absolutely no conscience," Malcolm says. "Do you seriously think they sell health products on the concept of health? Everytime I tell my customers how good the product is, my conscience keeps telling me what an asshole I am.
"I decided to quit. When my children go to school, I don't want their friends to say, 'Wah... your father is a legal conman!"
Published version in TODAY
was edited and cut by about half
Courtesy from
http://forums.hardwarezone.com/showthread.php?t=1682264&page=23&pp=15