My Experience with a Pyramid Scheme Disguised as Network MarketingBy Godwin Nwaokike In Life & Meaning On 2020/10/02
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“It’s not about the money any more. It is about the people I am able to help,” she said. But that was a lie and she knew it. But she was on air, on radio promoting the “supermarket business” in which you shop once and earn daily. That drew my attention. I get to shop once and I get paid daily? How? So I made up my mind to attend the “expo” for which I paid. The income I was having then from the small business I had ventured into was negligible. I thought extra cash or daily cash would make some sense. At the “expo,” they talked about the system in which selling is not compulsory and there was no target. What one had to do was to bring in people into the system. It started with a challenge of bringing in two people in the next one month. I bring them in and I get referral bonus for each and matching bonus for both. They projected the potential income for twelve months – over ten million naira. Eyes of the attendees at the “expo” popped but not mine. Ok, my eyes kinda popped too. Heck, my eyes POPPED. But that income was the least potential income. It was the potential income of those coming in with one spot. Those coming in with three spots or seven spots would have a potential income of twenty-one million or seventy-four million naira respectively. The higher the number of spots you come in with, the higher the amount you pay to become a “partner” in the “business”. In this “business,” you are not mandated to sell even though you would be given pack(s) depending on the number of spots you come in with. In the “business” you do not render a service. The “business” is that of recruiting people into the organization.
At the “expo” they were careful to avoid mentioning the word “pyramid.” Neither did they display the diagram of a pyramid with the PowerPoint presentation. But if it looks like a pyramid then it probably is a pyramid. At the “expo” I was not logical. Reason escaped me and greed took over. I wished I had the money for three slots because I saw the “business” as my financial breakthrough. But I paid for only one slot and left determined to get the money to enable me upgrade to three.
It is a pyramid scheme when you are paid for recruiting people with or without selling a product. It is sometimes wrongly or deceptively called network marketing. Pyramid scheme is a system that enriches few at the expense of most. It is a system that is designed to fail. Its’ scheme is closer to being a con.
They claimed it was a “supermarket system” which sells products and hence have the capacity to pay partners in the “business” – the “business” of recruiting people, not selling. But this system is a clever design which uses both the “supermarket” and the products as a cover to legitimate the real money-making system which is the recruitment.
The real profit of pyramid schemes disguised as network marketing comes from the fee that is charged up-front whether it is called “distributorship” fee or “partnership” fee. In a real business which is not a pyramid scheme, money serves as a store of value and with it there is an exchange. You therefore give money in exchange for a product or service. In a pyramid scheme, you pay money without getting a corresponding value in products or service. What you pay is for you to join the “business.” How do you make money from the business? By recruiting other people who will pay without you giving a corresponding value in products or service..
After paying the registration fee to become a “partner” in the pyramid scheme venture, I was added to the WhatsApp group. Daily we were given an overdose of motivational quotes. More than that was the appeal to greed and materialism. You see someone showing her bank account to be over N900,000. Another posts her picture in which she is standing in front of her new car. “Partners” are addressed as millionaires and sometimes billionaires even though the overwhelming majority are not. “Happy birthday to you. More matching bonuses,” was a common message for birthday celebrants. These should not necessarily be part of a network marketing system but it usually is. The question is, “Why the appeal to materialism or greed?” Is it a trap to keep my brain turned off? Why not focus on the product or service like other companies with real businesses do? But pyramid schemes disguised as network marketing business have recruitment as the goal not product or service. Common sense and good judgment take back seat in the presence of greed. This is how “partners” get stuck with the organization even when they do not see the money coming in. They are stuck with videos and presentation scripts called tools.
You pay to join, that is your capital. You recoup your capital by recruiting. To recruit you spend money – your own money even when you have not made a dime after “investment.” As a “partner” you are expected to send videos to prospects (who were sometimes called suspects), make three-way phone calls (you, your prospect, and your “coach”), invite prospects to your house so you can make a presentation. The problem is that after paying a sum to join and not having made a dime, you spend your data to send videos, spend your airtime to make three-way phone calls, spend your money on entertaining those you invite to your house. More often than not, you will not be successful in converting your prospect. And when your enthusiasm begins to wane and you almost begin to question the whole design, boom-boom-boom! They hit you with another seminar with motivation overdose. Even when you do convert prospects and are paid, the money that reflects in your account with the pyramid scheme organization has no information about what you have spent to get it. To get more you have to spend more. They hit the million target they had when they started but they hardly tell you about the amount spent on adverts and halls for seminars. After all these and you make converts, you are paid a token and those above you who have done little or nothing also get paid. When your ethics have been compromised, you will have no problem with this simply because you hope to get paid someday through the effort of your downlines for doing virtually nothing.
“Shop once and get paid daily,” was what this particular pyramid scheme “partners” tell prospects with very little information about the true nature of the “business” but with emphasis on it being the “opportunity of a life time” to make millions. You join only to find out that you are a long, long, long way from getting paid daily. The very person that told you, “Shop once and get paid daily,” is not being paid daily. You pay and you join. How do you get back your money? By promoting the lies. And you do it. You begin the promotion of values contrary to your belief system. You begin to coerce your family and friends. Your materialism takes over and your values take flight.
In a seminar I attended, organized by the “partners” of the pyramid scheme organization, the moderator mentioned that questions about any of the products of the organization would not be entertained. “We are not here for the products. Let us talk about what is important, how to make the money, which is why we are here,” he said. No question about any of the products was asked and some “partners” were selling these products. The untrained pyramid scheme salesperson ends up promoting the product in a shady manner. When a suit arises as a result of this, I guess the pyramid scheme organization will make it clear that the “partner” was “independent” and probably was overzealous.
I got very disappointed when the man under whom virtually everyone in the room at the seminar was in the organization, said that education has failed us. According to him, what is needed is skill. I do not need to argue for the importance of education especially in this age. But this was a man who was almost an idol before his downlines and at the seminar, a lot of people clapped for him for some sentences he made.
In the “training” I was given by the pyramid scheme partners of the organization I joined, trainees were told to contact those they knew – those on phone contacts, colleagues at work, brethren at church. Not even family was spared. Everybody is a prospect whom they sometimes called “suspect.” Everybody except your mother. But how sure am I that somebody has not made a presentation to his mother with the hope of converting her? One thing we were told was that if you do not talk to that prospect (or suspect), another person will, thus, you lose a downline and the bonus. So, before someone else converts mother, “Mummy, let me tell you about this wonderful business opportunity…”
Some have left their jobs to pursue their “dreams” in a pyramid scheme. When they are fully in and they see the difficulty associated with it, they become desperate not wanting to admit defeat. Family and friends are prospects and the neighbourhood is a market. One can start viewing a prospect who did not convert as an enemy. Polarization can be the consequence.
One of the reasons that prompted me to write this article was that these pyramid schemes that disguise as network marketing businesses exploit the vulnerable and the poor. Some like me join after paying with borrowed money which could have been used for some other noble goal. For most, the whole pyramid scheme thing ends in loss and failure and it is sidelined. The consequence of failure could be being embarrassed about ever participating in the pyramid scheme or becoming even stubborn to call it quits with the pyramid scheme. People with the second situation chase after the latest “get rich quick” scheme and end up with similar result. They may even blame one of their friends with many friends, “If only David had joined…” This may deepen polarization.
There was deception at the “expo” I attended before joining the organization believing it was a legitimate business. Attendees were told that if two downlines who would be matched were placed under them without their effort, they would get their matching bonus. At the seminar I attended after joining them, new “partners” were told that downlines (the ones that come in without your effort) are placed to the left by uplines which means you must recruit to place a downline to your right so you can get a matching bonus. Why the initial deception? On her website, one of the speakers at the “expo” said that she joined by purchasing three slots. At the expo, the same person said she joined with seven slots. Why the lie? How low can one get just to recruit to get paid bonuses?
This was my experience with this pyramid scheme that disguised as network marketing business. After a few months I left and I hated anything named network marketing or Multilevel marketing. It is because of practices like the one I just narrated that a lot of people hate network marketing and network marketing companies.
You reading this post may even have your ugly experience with such schemes and you may have decided never to engage in anything related to network marketing. That is like throwing the baby away with the bath water. The real network marketing business does not need to involve deception. If you could understand the real network marketing model, find a good company with a good product, a good compensation plan, a good system, and a credible and compassionate founder, I, who have had such an ugly experience as I have narrated, may not ask you to say no to it.
There is a difference between a pyramid scheme and network marketing. Network marketing can be done honourably without deception.
It was in 2016 that I came in contact with the “supermarket system” people starting by listening to them on radio proclaiming, “Shop once and get paid daily.” In 2019, I heard them on radio again. They were proclaiming, “Own your life,” and added that they were “here to help you generate money to start your business or achieve that project you have.” I found out it was them when I went online and googled
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