SCAMWATCH
“Would you like to work from home and become a millionaire?”
There is always that brief moment after someone you barely know reaches out through Instagram with an amazing #bossbabe work opportunity and it makes you wonder, could it work? The temptation is real, with success stories flooding social media of globe-trotting insta-savy women making cash quickly and easily, and the best part is that for just a small start-up fee, that can be your life too. But as they always say, if it’s too good to be true, it probably is. Pyramid schemes and Multi-Level Marketing companies have been a staple part of Australian suburban life for decades, with the door knocking Avon ladies of the 1960s now taking on the form of sleek websites and social media campaigns, promising the perfect work-life balance for Australian women. These get-rich-quick schemes appeal to everyone, and through psychological marketing have reached an estimated 576 000 people this year alone, accumulating to $1.38 billion in sales annually. But, for such a successful marketing scheme an estimated 99.4% of recruits lose money. So how do they work? There’s a big difference between Pyramid schemes and Multi-level Marketing (MLMs), with pyramid schemes now illegal in most countries including Australia. Pyramid Schemes survive on recruitment, charging new members a start-up fee to join. Once you’re signed up, it is then expected for you to recruit others, starting an endless cycle of promoters at the
14
top of the pyramid making money on new recruits. Big up-front costs and high collapse rates leave a majority of members out of pocket with nothing to show, with horror stories often outweighing the select few successful ones. Often pyramid schemes will use overpriced, poor-quality products to disguise their true purposes, however this is almost always a way to hide their main objective of recruitment. Whilst Pyramid Schemes make money through recruitment, Multi-Level Marketing is a strategy used by direct stake companies who encourage distributors to recruit new distributors and pay a percentage of their recruits’ sales. This legal system allows representatives to earn a commission on the products they sell and for every new recruitment you employ. Whilst there are fundamental differences between pyramid schemes and MLM’s, it is often hard to distinguish the two, with many pyramid schemes hiding behind the legality of the title ‘MLMs’. Whist statistic after statistic proves the majority of people in these sales structures don’t make money, often revealing financial losses instead, why do people still join? Companies such as Tupperware, Younique, and Young Living are still seen by many Aussies as a legitimate and worthwhile way to try and make some extra cash.
