Do you know how to spot a pyramid scheme in Malaysia?
I know many people have spoken about pyramid scheme, however from my experience, most people are not very sure how it looks like.
In this article, I will share 10 characteristics of a pyramid scheme in Malaysia.
The list is based on an authoritative web site which is the Direct Selling Association of Malaysia (DSAM).
You can check out DSAM article here.
Are you ready?
1) High entry fee
Pyramid schemes often disguise high entry fees as part of the price charged for required purchases of training, product inventory etc.
Pyramid schemes make virtually all their profits from recruiting.
In order to get into the scheme, you are required to invest a large amount of money.
The person asking you to invest will say the investment is meant as the initial product stock up for the business.
2) Disguise as a legitimate business
Most pyramid schemes are frequently disguised to appear as legitimate direct selling companies.
Pyramid scheme companies do not have a legitimate license to operate a direct selling business in Malaysia.
If a company claims to have a direct selling license, check the license number with the Malaysia Ministry Of Domestic Trade And Consumer Affairs.
3) No inventory buy back
When you’ve bought products from a pyramid schemes, you will not be able to get your money back if you change your mind.
The company will not buy back unsold inventory.
Such schemes will collapse very quickly if there is the condition for re-purchase of goods.
4) Get rich quick
Pyramid schemes has one very tempting Unique Selling Proposition (USP) which is you can get-rich in a short amount of time.
The nature of the pyramids, in which large numbers of people at the bottom of the pyramid pay money to a few people at the top, clearly explains why the scheme cannot sustain itself for long.
5) Position could be purchased
For a pyramid scheme, you can buy yourself into a certain position or ranking in the business.
6) No repeat sale required
Pyramid schemes are not concerned with repeat sales from the users of the products.
Profits are made on volume sales to new recruits who buy the products not because they are useful or attractively priced, but because they must buy them to participate in the scheme.
As a result, new participants are stuck with products that they bought when they got into the business in the first place.
The product are way below the market value in relation to the high entry fees paid by them.
Should the pyramid scheme collapse, there is no way for the participants to recover their “investments”.
7) Knowingly deceiving people
Promoters of a pyramid scheme are engaging in fraud, knowingly deceiving participants in the schemes.
Some promoter of pyramid scheme will also tell you upfront that it is a business plan for short term only.
8) Have to buy lots of stock
Participants in a pyramid scheme have no choice but indulge in inventory loading in the beginning.
This is the high fees to participate in the scheme.
You may also be required to buy stock every week or every month.
9) Business is based on recruiting only
Participation is essentially based on recruiting, not necessarily on the sale of products or services.
10) Outlawed in many countries
Pyramid schemes have been outlawed throughout the United States and many countries around the world.
It is the same here in Malaysia.
My business journey
In the section, I thought of sharing my story how I joined a legitimate network marketing company in Malaysia.
Back in the year 2016, my husband’s job was the only source of income for our family.
Though I get a monthly household allowance, I felt bad every time I wanted to buy something nice for myself.
I didn’t want to rely financially only on my husband’s income.
Because of that, I took advantage of the BE International “Golden Opportunity” and started making +RM1000 monthly commission.
If you want to read my journey building a home business using a very unique product, you can read my story below.
Thank you for reading this article and I hope it was informative for you.
If you have any question, please click the link below to message me on WhatsApp and I will assist you.