MLM (ehhh......legal one or illegal, in my book just as bad) [Archive]

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Koo

27-09-2006, 02:50 PM

Wednesday September 27, 2:17 PM

Battling misconceptions about multi-level-marketing

SINGAPORE: It's been over five years since the law was amended to allow legitimate multi-level-marketing (MLM) firms to operate here came into effect, but the direct selling industry remains dogged by the negative image many associate with pyramid selling.

"In the early tough days, legitimate direct sellers were held back by suspicion. But sadly, this scrutiny of legitimate direct sellers continues till today; it is uphill still for us," said Mr Benjamin Tan, a founding member of the 30-year-old Direct Selling Association of Singapore (DSAS).

To improve its image and win public confidence, the body - which is made up of 22 of Singapore's biggest direct-selling companies - is calling for tougher self-regulation.

It is drafting rules to tighten loopholes in the industry - currently the association doesn't step in if any of its member firms collapse. With the new rules, it will step in to help affected consumers.

Also, it will step up on checks on its members: Those who repeatedly don't abide by its code of ethics and conduct will face expulsion.

"We will look into how we can better protect consumers' interests, whether through further collaboration with the Consumers Association of Singapore, or through local regulatory and industry partners," said Mr Nicholas Chia, chairman of DSAS.

The association is setting up a one-stop information centre for the public next month.

This centre will allow consumers to check - for free - the legitimacy of any direct-selling company, and help organise public education forums to inform the public on the differences between direct selling and pyramid selling (see box).

"However, if the negative mindset about the industry persists, we are under severe threat of losing a large pie of the potential multi-billion revenue that the global industry will generate," said Mr Chia.

While one in every 10 Singaporean buys from direct selling companies now, Singapore is still falling behind the rest of South-east Asia in grabbing a share of the US$101 billion ($160 billion) global direct selling industry, he said.

Last year, Singapore generated US$330 million in direct sales, compared with Malaysia's US$1.4 billion and Taiwan's US$2.1 billion.

Said Mr Chia: "We need a big mindset shift fast or we will be outstripped by other stronger direct selling markets in Asia for a large share of the global industry pie."

Multi-level marketing (MLM) and single level marketing (SLM) are the two forms of direct selling practised in Singapore. Consumers still tend to confuse the two forms of direct selling with pyramid selling, which is prohibited in Singapore.

"Direct selling is the sale of a consumer product or service, person-to-person, away from a fixed retail location. It is a popular alternative to traditional employment for those seeking to supplement their household income, or whose responsibilities or circumstances do not allow for regular part-time or full-time employment," said Mr Tan.

Pyramid selling on the other hand, requires participants to make a lump sum payment upfront to join the scheme, and the driving force to recoup the initial fee is the recruitment of more members, rather than the sale of goods and services. Many participants lost huge amounts of money under the scheme, and subsequently an Act was passed in 1973, declaring pyramid selling illegal in Singapore. - TODAY

kazuki

27-09-2006, 03:14 PM

one thing why mlm cant be really stopped is coz it is really generating a lot of money.

Best thing is that it is quite similar to pyramid selling, and pyramid selling is illegal in sg...
pengz.....:beatup:

Koo

27-09-2006, 03:23 PM

kazuki

27-09-2006, 04:35 PM

I'm still pretty sure pyramid selling is still happening in Singapore. :thinking: the worst kind of marketing ever in the face of the world, dun know who thought out this pyramid selling thing. Hope MLM will die out in Singapore as they do not provide "real jobs".:|

I have a camp mate. Coz we are the rare few chinese in the unit, so i say we are quite good friends(enough our men and encik are non-chinese...)
But all the officers to chief clerk to enciks and men like him wan. He is those charismatic chap who is good looking. Even one of our dxo was sian by him lor.:salute:
One fine day after we ord, he suddenly sms me asking if i free to meet up for something. He was asking another chinese camp mate along too. I knew something was wrong coz we hardly contact also. But still went.

He brought us to a salon in Tanjong Pagar. It is a salon on the 1st flr, 2nd level is bursting with many ppl in business attires. He started to intro us that he is doing a mlm biz selling beauty products.
Of course we were abit disappointed in him. He "betrayed" our trust in him. He actually tried to get us in with him. He kept saying that he asking us in is hoping that we can make big bucks together.
He has a decent job in stat board wan lor.

Few mths later, saw him with a new gf at a mrt stn. Said Hi to him, and asked him how was his biz. He paiseh paiseh brought it over. I know that he has burned himself on that already...[-X

piglet

28-09-2006, 12:03 PM

kazuki

28-09-2006, 01:13 PM

Thought MLM is equivalent to pyramid selling?

cant really say so coz mlm is legal and pyramid selling is illegal.
Though IMO both's operations look the same to me....

We have a lawyer in HH right. Maybe he will know?

Koo

28-09-2006, 02:53 PM

Thought MLM is equivalent to pyramid selling?

To me MLMs is the tweaked and softer version of pyramid system of marketing, the both system of marketing is almost similar. By all counts, MLMs or pyramid people that join later are the worst off always "kenna eaten" by all sides even by your own "company/employer".

Leslie

28-09-2006, 03:21 PM

No need to be a lawyer to know the difference mah - the distinction between the two is clearly highlighted in the article:
"Direct selling is the sale of a consumer product or service, person-to-person, away from a fixed retail location. It is a popular alternative to traditional employment for those seeking to supplement their household income, or whose responsibilities or circumstances do not allow for regular part-time or full-time employment," said Mr Tan.

Pyramid selling on the other hand, requires participants to make a lump sum payment upfront to join the scheme, and the driving force to recoup the initial fee is the recruitment of more members, rather than the sale of goods and services. Many participants lost huge amounts of money under the scheme, and subsequently an Act was passed in 1973, declaring pyramid selling illegal in Singapore.
Basically, pyramid selling is a confirmed unsupportable system because you are trading nothing but air. With MLM, you are ostensibly tied to marketing a product so there is more substance, and (marginally) qualifies it as a legitimate form of business, albeit with a different remuneration scheme than more traditional forms of employment.

That said, of course there is no guarantee that merely tying the system to a product will mean you can make money - and as Koo pointed out, those who join lower down the chain will have to work to establish their own downlines just as the person who recruited them did so. However, that is at the end of the day a commercial decision for each potential recruit to make - can I sell this product to others, and convince others that they can make money selling it too?

[Added]
At the end of the day, policymakers have a difficult task of balancing the means of enterprise against human gullibility and propensity for greed. Ultimately, the law cannot always be responsible for protecting people from the results of their gullibility and greed. It is always a matter of degree as to how far the law should go in restricting human activity. For example, a Ponzi scheme or pure pyramid scheme is seen in major jurisdictions such as the US and the UK, as a scam. Does it mean that a legal MLM in Singapore doesn't play on the same instincts that makes a Ponzi or pyramid scheme successful? No. However, there is at least a tenuous link to legitimate business that allows people to evaluate their chances of making money. Where do we draw the line against protecting the simpleminded? If we were to take such an attitude to the extreme, I assure you that Singapore would be a very much more restrictive place than it is today - which is really saying something, isn't it?

That being said, I wish to have no truck with MLM, and frankly am inclined to view many (legal) schemes as exploitative - though whether they are very much more exploitative than traditional or accepted forms of business, I am not so sure.

Koo

28-09-2006, 04:14 PM

Miracle

29-09-2006, 12:23 AM

LoneWolf

29-09-2006, 09:41 AM

piglet

29-09-2006, 10:12 AM

Dun know how many companies is in or listed as MLM or pyramid system? I want to share a few "big" ones :

1) Astromat (air bed?)

2) Elkan (health/beauty products)

*Please add on if you know any companies under MLM or pyramid system so as HH younger members can be aware about them.

Coslab (Selling skin care product)

Asayo (magnetic matress) - close down already

Another one forget the full name, but is sometink like mag.... (selling health product and matress also)

Even now, i still have friend working there and is like not bad for them lor. One of my friend even drive a BMW given by the company to him cos he hit the sales target.

I went there before and was quite tempted to join too. Went there for some lesson and listen to testimonial before.

piglet

29-09-2006, 10:13 AM

Btw is Amway and Forever Living consider MLM or pyramid selling also?

kazuki

29-09-2006, 11:14 AM

kazuki, was that place NTI?

Basket... My stupid friend ask me go then I paid S$300+ just to leave that place.... ZzZZz...

They were like selling concepts, totally no products at all. Any methods that I can take legal actions against or make a report to since what they are doing fits the description of Pyramid selling.

Cant rem the company's name liaoz.
I can assure u, they cant force u into buying things. They also cant hold u back if u wanna leave. Singapore is a country with law. That is as long as u didnt anyhow sign black&white with them lah...[-X

I very easy wan. I can "one ear in, other ear out". As long as i dun like what someone say, i can just filter it out. Let them say lor. Finish saying liaoz, just say "dun like, dun want, goodbye". They dun let u out, take out your hp liao lor. They cant touch u, if they do, they die liaoz...

Right lawyer???

superzeroes

29-09-2006, 01:10 PM

well, i do agree MLM do not provide real job actually. and if i am not wrong.its just some ang mo "idealist" idea who started all these. cos first of all, asian are more down to earth..other den gambling etc..hee..

westerners have alot of "great" ideas..one of it is MLM..(correct me if i assumption is wrong). tat is why in their countries. due to their culture and people's different mindset.. this is a great idea..but still not so acceptable here ..especially in spore.

i cant say its illegal.just how u see it..those belive in it. or have earned big bucks in it..will find it alrite.

maybe this is just like the City Harvest Church thingy. some ppl find them irritating and those who are in it..will really become "obsessed"..

rite or wrong? good or bad..black or white? nobody can really conclude.

Koo

29-09-2006, 01:14 PM

some ang mo "idealist" idea

If I'm not wrong my firend who is into entrepreneurship told me before is an "amercian" who thought up the MLM system or was it pyramid system.:thinking:

Leslie

29-09-2006, 01:23 PM

I can assure u, they cant force u into buying things. They also cant hold u back if u wanna leave.
Well, it certainly doesn't take special legal knowledge to know that indeed you should not be unduly restrained or imprisoned by a private party, and that no-one is supposed to make you sign anything against your will.
[added] Of course, whether you can subsequently do anything about being falsely imprisoned or coerced into signing something depends on a number of other factors which you can approach a practising lawyer to give you proper advice on. Obtaining redress is not always a straightforward, cheap or easy process, even if one is successful. Which is why it is always better to be prudent and not put oneself in a situation whereby redress will be needed. Prevention better than cure wor.

well, i do agree MLM do not provide real job actually. and if i am not wrong.its just some ang mo "idealist" idea who started all these. cos first of all, asian are more down to earth..other den gambling etc..hee..
How do you define a "real job"? Frankly I don't see anything wrong with the basic concept of wanting to leverage off other people's time and effort - that's the concept behind any hierarchical organisation, except that in MLM's case the remuneration scheme makes the relationship far more explicit. But all vehicles and schemes to make money become more complex over time, and that is where one has to be careful of the details. Just take a look at how a simple idea of owning a share in an incorporated entity, or even the concept of an incorporated entity itself, has expanded into the complicated stock market/company law of the present-day.